<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1999
or
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From __ to ____
--------------------
Commission File Number 0-24762
FIRSTSERVICE CORPORATION
(Exact name of registrant as specified in its charter)
ONTARIO, CANADA NOT APPLICABLE
(Province or other (I.R.S. employer
jurisdiction of incorporation identification number, if
or organization) applicable)
1140 BAY STREET
SUITE 4000
TORONTO, ONTARIO
CANADA M5S 2B4
(416) 960-9500
(ADDRESS AND TELEPHONE NUMBER OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
FIRSTSERVICE CORPORATION
580 VILLAGE BLVD., SUITE 330
WEST PALM BEACH, FLORIDA 33409
U.S.A.
(561) 697-9983
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE IN THE UNITED STATES)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes /X/ No/ /
Indicate the number of shares outstanding of the registrant's common stock as of
the latest practicable date:
Subordinate Voting Shares 12,933,180 as of June 30, 1999.
<PAGE>
FIRSTSERVICE CORPORATION
FORM 10-Q
For the Quarter Ended June 30, 1999
INDEX
PART 1. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Item 1. Condensed Consolidated Financial Statements PAGE
----
<S> <C> <C> <C>
a) Earnings Statements
For the Three Months Ended June 30, 1999 and 1998............... 1
b) Balance Sheets
As of June 30, 1999 and March 31, 1999........................... 2
c) Cash Flows Statements
For the Three Months Ended June 30, 1999 and 1998................ 3
d) Notes to Financial Statements.................................... 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................................... 6
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K........................................ 10
Signature................................................................................... 11
Exhibit Index............................................................................... 12
</TABLE>
<PAGE>
FIRSTSERVICE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands of U.S. dollars except per share data)
(Unaudited)
<TABLE>
<CAPTION>
For the three months
ended June 30
1999 1998
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Revenues $84,907 $64,686
Cost of revenues 56,070 42,836
Selling, general and administrative expenses 17,593 12,736
Depreciation 1,470 1,192
Amortization 814 629
Interest 1,763 1,302
- ------------------------------------------------------------------------------------------------
Earnings before income taxes and minority interest 7,197 5,991
Income taxes 2,859 2,406
- ------------------------------------------------------------------------------------------------
Earnings before minority interest 4,338 3,585
Minority interest share of earnings 754 382
- ------------------------------------------------------------------------------------------------
Net earnings $3,584 $3,203
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Earnings per share: Basic 0.28 0.26
Diluted 0.26 0.24
Weighted average shares outstanding: Basic 12,924 12,346
(000's)
Diluted 13,788 13,263
</TABLE>
1
<PAGE>
FIRSTSERVICE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars)
<TABLE>
<CAPTION>
As at June 30 As at March 31
1999 1999
- -----------------------------------------------------------------------------------------------------------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $10,290 $4,627
Accounts receivable, net 54,321 41,360
Inventories 9,383 7,969
Prepaids and other assets 6,489 8,475
- -----------------------------------------------------------------------------------------------------------
80,483 62,431
- -----------------------------------------------------------------------------------------------------------
Other receivables 4,391 3,425
Fixed assets 27,605 25,847
Other assets 4,339 3,429
Deferred income taxes 1,839 410
Goodwill 100,272 88,764
- -----------------------------------------------------------------------------------------------------------
138,446 121,875
- -----------------------------------------------------------------------------------------------------------
$218,929 $184,306
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
LIABILITIES
CURRENT LIABILITIES
Accounts payable and other current liabilities $35,083 $27,737
Unearned revenue 13,287 6,099
Long-term debt - current 2,572 1,726
- -----------------------------------------------------------------------------------------------------------
50,942 35,562
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
LONG-TERM LIABILITIES
Long-term debt less current portion 100,079 84,516
Deferred income taxes 166 319
- -----------------------------------------------------------------------------------------------------------
100,245 84,835
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
Minority interest 5,525 4,889
Shareholders' equity
Capital stock 53,704 53,654
Receivables pursuant to company's share purchase plan (3,294) (3,294)
Retained earnings 9,751 6,168
Cumulative other comprehensive income 2,056 2,492
- -----------------------------------------------------------------------------------------------------------
62,217 59,020
- -----------------------------------------------------------------------------------------------------------
$218,929 $184,306
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
FIRSTSERVICE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended
June 30
1999 1998
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Earnings for the period $3,584 $3,203
Items not affecting cash
Depreciation and amortization 2,284 1,821
Deferred income taxes 544 (575)
Minority interest share of earnings 754 382
Other 110 76
- -----------------------------------------------------------------------------------------------------------
7,276 4,907
Changes in working capital, net of acquisitions
Accounts receivable (5,885) (6,901)
Inventories (1,413) 470
Prepaids and other 736 907
Accounts payable and current liabilities 1,384 (3,495)
Unearned revenue 1,963 (1,093)
- -----------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 4,061 (5,205)
- -----------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Acquisition of businesses (5,822) (25,435)
Increase in fixed assets (2,245) (1,457)
(Increase) decrease in other assets (160) 121
Increase in other receivables (967) (282)
- -----------------------------------------------------------------------------------------------------------
Net cash used for investing (9,194) (27,053)
- -----------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net increase in long-term debt 11,833 25,571
Financing fees paid (531) (741)
Issuance of subordinate voting shares 50 638
Dividends paid to minority shareholders of subsidiaries (83) (71)
- -----------------------------------------------------------------------------------------------------------
Net cash provided from financing 11,269 25,397
- -----------------------------------------------------------------------------------------------------------
Effect of exchange rates on cash (473) 4,504
- -----------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents during the period 5,663 (2,357)
Cash and cash equivalents, beginning of period 4,627 2,629
- --------------------------------------------------------------------- -- ------------- --- ----------------
Cash and cash equivalents, end of period $10,290 $272
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
FIRSTSERVICE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1999
(UNAUDITED)
1. DESCRIPTION OF THE BUSINESS - FirstService Corporation (the
"Company") is a provider of property and business services to
corporate, public sector and residential customers in the United
States and Canada, principally in Ontario. The Company's operations
are conducted through two principal operating divisions, Property
Services and Business Services. The Property Services division
includes community association management, security, franchising and
lawncare and represented approximately 80% of the Company's revenues
for the year ended March 31, 1999. The Business Services division
provides outsourcing services such as transaction processing and
literature fulfillment for corporations and government agencies.
2. SUMMARY OF PRESENTATION - The condensed consolidated financial
statements included herein have been prepared by FirstService
Corporation, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission for the presentation of
interim financial information. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with U.S. generally accepted accounting principles have
been condensed or omitted pursuant to such rules and regulations,
although the Company believes that the disclosures are adequate to
make the information not misleading. In the opinion of management,
the condensed consolidated financial statements contain all
adjustments necessary to present fairly the financial position of
the Company as of June 30, 1999 and the results of its operations
and its cash flows for the three months ended June 30, 1999 and
1998. All such adjustments are of a normal recurring nature. The
results of operations for the three months ended June 30, 1999 are
not necessarily indicative of the results to be expected for the
year ended March 31, 2000. For further information, refer to the
consolidated financial statements and footnotes thereto for the year
ended March 31, 1999 contained in the Company's annual information
form included as an Exhibit to its Form 6-K for the month of August,
1999.
3. ACQUISITION - Effective June 1, 1999 the Company acquired American
Pool Enterprises Inc. ("APE") which is the largest commercial
swimming pool and recreation facility management operation in the
U.S. APE, headquartered in Beltsville, Maryland, provides
management, repair, maintenance and renovation services to more than
1,100 apartment, condominium and community association swimming pool
and recreation facilities, through 11 branches in 9 States. APE
generated revenues of $20 million for the year ended December 31,
1998.
4
<PAGE>
The results of operations of this acquisition have been included in
the condensed consolidated financial statements included herein since
the date of acquisition. This acquisition was accounted for using
the purchase method of accounting. As a result, the purchase price
has been allocated to the assets acquired, including intangibles,
based on their respective fair values. The purchase price allocation
is preliminary and subject to adjustment.
4. ANNOUNCED ACQUISITIONS SUBSEQUENT to June 30, 1999 - On July 1,
1999, the Company acquired DDS Southwest Distribution Services
Limited ("Southwest") through it's 89% owned subsidiary, DDS
Distribution Services Limited. Southwest provides order processing
and fulfillment, kit preparation, invoicing and accounts receivable
collection to customers in the educational publishing industry. The
acquired company generated revenues of approximately $8 million for
the year ended December 31, 1998.
5. LONG-TERM DEBT - On April 1, 1998, the Company amended and
restated its lending agreement increasing credit availability by
approximately U.S. $30.0 million and splitting the facilities into
tranches of Cdn. $50.0 million and U.S. $130 million. The amended
facilities which will be used for acquisitions, capital expenditures
and working capital provide a more tax efficient structure and more
effectively match long term U.S. dollar denominated assets with U.S.
dollar denominated debt.
The revolving facilities provide that the Company may borrow using
Prime, LIBOR or Bankers Acceptances interest rate options that vary
within a range depending on certain leverage ratios. Borrowings
currently bear interest at the lenders cost of funds rate plus
1.25%. The Company has an interest rate swap contract to December
31, 2002 at a fixed rate of 5.3% in the amount of $20 million to
hedge against interest rate exposure on a portion of its revolving
facilities.
As security for the revolving working capital and acquisition
facilities, the Company has granted the lenders various security
including the following: an interest in all of the assets of the
Company including the Company's share of its subsidiaries, an
assignment of material contracts and an assignment of the Company's
"call rights" with respect to shares of the subsidiaries held by
minority interest. The Company is also required to comply with
certain operating and financial ratios.
6. COMPREHENSIVE INCOME - Total comprehensive income for the three
months ended June 30, 1999 and 1998 was $3.15 million and $6.55
million, respectively, which included net income and foreign
currency exchange adjustments.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1999 AND 1998
Revenues increased $20.2 million, or 31%, to $84.9 million in the first
quarter of fiscal 2000 from $64.7 million in the first quarter of fiscal
1999. Approximately $11.0 million of the increase was attributable to
acquired companies owned less than one year including California Closets,
American Pool Enterprises and several smaller companies. The balance of the
increase resulted from internal growth.
Earnings before interest, taxes, depreciation and amortization ("EBITDA")
increased 23% to $11.2 million from $9.1 million in the prior year period.
EBITDA margins for the three months ended June 30, 1999, were 13.2% compared
to 14.1% in the first quarter of fiscal 1999. The margin decline primarily
reflects a change in the seasonal mix of business impacted by strong growth
in the non-seasonal operations which generate consistent EBITDA margins
across four quarters relative to the seasonal businesses which generate very
high margins in the June and September quarters and losses in the December
and March quarters.
Depreciation for the quarter ended June 30, 1999 was $1.5 million up 23% from
the previous year quarter due largely to acquisitions. However, the increase
also reflected a sharp step-up in capital investment in management
information systems over the past year. Generally, these investments are
depreciated over a short time frame relative to the Company's other pool of
assets. Amortization was $0.8 million, up 29% due to the increase in goodwill
that has resulted from acquisitions completed during the past year.
Interest expense increased 35% over prior year levels to $1.8 million as a
result of increased borrowings related to acquisitions. All acquisitions
completed during the past year have been financed through the Company's
credit facilities.
The income tax provision for the first quarter was approximately 40.0% of
earnings before taxes, consistent with the prior year.
Minority interest expense increased 98% to $0.75 million or 17.4% of earnings
before minority interest compared to $0.38 million or 10.7% in the prior year
quarter. The minority interest in the current year more accurately reflects
the average equity interest in the Company's subsidiaries held by management
and more closely reflects the expected expense ratio in the future. The prior
year consolidated minority interest expense was lower due to the deficit
position of an 80% owned, profitable subsidiary of the Company which resulted
in no minority interest expense being reflected for the subsidiary. The
deficit position was eliminated during the second quarter of fiscal 1999.
6
<PAGE>
Net income was $3.6 million, up 12% over the prior year, while diluted earnings
per share increased 8% to $0.26. Diluted earnings per share reflect a 4%
increase in the weighted average number of shares outstanding.
Revenues for the Property Services division were $69.1 million, an increase of
approximately $18.0 million or 35% over the prior year. Approximately $11.0
million of the revenue increase resulted from acquisitions including California
Closets and American Pool Enterprises, which closed effective June 1, 1999. The
balance of the increase resulted from internal growth. Property Services EBITDA
margin grew 30% to $9.2 million or 13.3% of revenue compared to an EBITDA margin
of 13.8% in the prior year. The margin decline reflects a change in the seasonal
mix of business as discussed above.
Revenues for the Business Services division grew internally by 16% for the first
quarter to $15.8 million compared to $13.6 million in the prior year. Business
Services EBITDA was $3.1 million or 19.6% of revenue, down slightly from 20.5%
in the prior year impacted by higher expenditures at our fulfillment operation
during the quarter to expand capacity.
Corporate expenses increased to $1.1 million in the first quarter from $0.7
million as a result of higher salary costs and increased travel relative to the
prior year.
SEASONALITY AND QUARTERLY FLUCTUATIONS
Certain segments of the Company's operations, which in the aggregate contribute
approximately 15% of revenues, are subject to seasonal variations. Specifically,
the demand for residential lawn care services, exterior painting services, and
commercial pool maintenance in the northern United States and in Canada is
highest during late spring, summer and early fall and very low during winter. As
a result, these operations generate a large percentage of their annual revenues
between April and September. The Company has historically generated lower
profits or net losses during its third and fourth fiscal quarters, from October
to March. The community association management, security, business services and
many of the franchise systems generate revenues approximately evenly throughout
the fiscal year.
The seasonality of the lawn care, painting and pool maintenance operations
results in variations in quarterly EBITDA margins. Variations in quarterly
EBITDA margins can also be caused by acquisitions which alter the consolidated
service mix. The Company's non-seasonal businesses typically generate a
consistent EBITDA margin over all four quarters, while the Company's seasonal
businesses experience high EBITDA margins in the first two quarters, offset by
negative EBITDA in the last two quarters. As non-seasonal revenues increase as a
percentage of total revenues, the Company's quarterly EBITDA margin fluctuations
should be reduced.
7
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Bank borrowings, proceeds from capital stock issues, and cashflow from
operations have historically been the funding sources for working capital
requirements, capital expenditures and acquisitions. Management believes that
funds from these sources will remain available and are adequate to support
ongoing operational requirements and near-team acquisition growth.
In December 1996, FirstService entered into a lending agreement with a
syndicate of chartered banks. The agreement - amended and restated in October
1997, again in June, 1998 and most recently on April 1, 1999, - currently
provides six-year committed revolving credit facilities for acquisitions of
Cdn $50 million and US $130 million. Outstanding indebtedness under the
facilities bears interest at a rate based on competitive floating reference
rates, as selected by the Company, such as LIBOR plus a margin of 1.00% to
1.50% per annum, depending on certain leverage ratios. The agreement requires
the Company to meet specific financial ratios and places certain limitations
on additional borrowing and the ability to pay dividends or sell assets. As
of June 30, 1999, the Company had drawn Cdn $4.7 million and US $92.5 million.
FirstService is exposed to foreign currency exchange risk through its U.S.
operations. The Company's exposure to foreign exchange losses may be mitigated
as the lending agreement provides that it may borrow in Canadian or U.S.
funds.
During the first quarter, capital expenditures were approximately $2.2 million
split approximately equally between management information systems and vehicles
and equipment.
FirstService does not anticipate paying dividends on its outstanding shares in
the foreseeable future. Management believes that it is in the best interest of
shareholders to retain all available funds to invest in its businesses with the
objective of building long-term shareholder value.
YEAR 2000
The Company is currently in the process of addressing the Year 2000 issue, which
is the result of computer programs being written using two digits rather than
four to define the applicable year. As a result, computer applications and
software may recognize an input of two zeros (00) as the year 1900. This
incorrect date recognition could cause systems and software malfunctions that
may have a material adverse effect on business operations. This potential
problem could affect not only the Company's internal information systems and
other infrastructure containing embedded technology, but also those of third
parties, such as customers and suppliers using systems that may interact with or
affect the Company's operations or, in the case of the Company's security
operation, systems supplied by the Company.
8
<PAGE>
COMPANY'S READINESS. Beginning in late fiscal 1997 the Company undertook a
comprehensive review of its software applications and computer infrastructure
and other infrastructure containing embedded technology that are likely to be
affected by the Year 2000 issue. The review was completed in fiscal 1999 using
the Company's employees and various computer consultants.
As a result of this review, new systems or upgrades were implemented at several
of the operations during fiscal 1998 and fiscal 1999 and several upgrades will
be completed in the first half of fiscal 2000. The Company's objective is to
complete all its Y2K readiness programs by the fall of calendar 1999.
The Company presently believes that it is largely Y2K compliant and that the
Year 2000 issue will not pose significant operational problems for its computer
systems.
The Company has identified its significant customers and suppliers that it
believes, at this time, to be critical to its various operations. Steps are
underway to ascertain their respective stages of readiness through the use of
questionnaires, interviews, and other available means to determine the progress
that those customers and suppliers are making in remediating their own Year 2000
issues. The Company is requiring that significant customers and suppliers
certify those products and services to be Year 2000 compliant. However, there
can be no assurance that the information systems provided by or utilized by
other companies which affect the Company's operations will be timely revised in
such a way as to allow them to continue normal business operations or furnish
products, services or data to the Company without disruption.
COST OF COMPLIANCE. Many of the systems upgrades which are dealing with Y2K
issue would have occurred in the normal course of business. In other cases, the
Company is accelerating normal course systems replacements or upgrades in view
of the Y2K issue. The costs incurred to date to replace non-compliant systems
that would not otherwise have been replaced are not material and the Company
does not expect its future Year 2000 costs to be material. All Year 2000 costs
have been funded with cash from operations.
COMPANY RISK AND CONTINGENCY PLANS. The Company's systems identified as
non-compliant or in need of replacement are being upgraded or replaced. The
Company expects this remediation to be substantially completed by the fall of
calendar 1999. If needed conversions to the Company's information systems are
not made on a timely basis or the Company's significant customers or suppliers
fail to make such remediations and conversions on a timely basis, it could have
a material adverse effect on the Company's results of operation or financial
condition.
9
<PAGE>
PART II. OTHER INFORMATION
Item 6. (a) Exhibits
3.1 Articles of Incorporation and Amendment
3.2 By-laws and Amendments
10.1 Credit Facility dated April 1, 1999 among
the Company and a syndicate of bank lenders.
(b) Reports on Form 8-K
None
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATE: AUGUST 13, 1999
FIRSTSERVICE CORPORATION
By: /s/ D. Scott Patterson
----------------------
D. SCOTT PATTERSON
SENIOR VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER
11
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- --------------- ---------------------------------------------------------------------- -------------
<S> <C> <C>
3.1 Articles of Incorporation and Articles of Amendment of -
Registrant.
3.2 By-laws of Registrant and Amendments thereto. -
10.1 Credit Facility dated April 1, 1999 among the Company and a
syndicate of bank lenders. -
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
[LOGO] Ministry of Ministere de ONTARIO CORPORATION NUMBER
Consumer and la Consommation NUMERO DE LA SOCIETE EN ONTARIO
Commercial et du Commerce 1348301
Relations
CERTIFICATE CERTIFICAT
This is to certify that these Ceci certifie que les presents
articles are effective on statuts entrent en vigueur le
APRIL 1 AVRIL, 1999
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
[illegible]
Director/Directeur
Business Corporations Act / Loi sur les societes par actions
____________________________________________________________________
ARTICLES OF AMALGAMATION
Form 4 STATUTS DE FUSION
Business
Corporations
Act
<TABLE>
<CAPTION>
<S> <C>
1. The name of the amalgamated corporation is: DENOMINATION SOCIALE DE LA SOCIETE ISSUE DE LA FUSION:
F I R S T S E R V I C E C O R P O R A T I O N
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Formule 4
Loi sur les
societes par
actions
<TABLE>
<CAPTION>
<S> <C>
2. The address of the registered office is: ADRESSE DU SIEGE SOCIAL:
1140 Bay Street, Suite 4000, Toronto, Ontario, Canada
-------------------------------------------------------------------------------------------------------
(Street & Number or R.R. Number & if Multi-Office Building give Room No.)
(RUE ET NUMERO, OU NUMERO DE LA R.R. ET, S'IL S'AGIT D'UN EDIFICE A BUREAUX, NUMERO DU BUREAU)
Municipality of Metropolitan Toronto, M 5 S 2 B 4
-------------------------------------------------------------------------------------------------------
(Name of Municipality or Post Office) (Postal Code)
(NOM DE LA MUNICIPALITE OU DU BUREAU DE POSTE) (CODE POSTAL)
3. Number (or minimum and maximum number) of NOMBRE (OU NOMBRES MINIMAL ET MAXIMAL)
directors is: D'ADMINISTRATEURS:
Minimum: 3, Maximum: 20
</TABLE>
<TABLE>
<CAPTION>
4. The director(s) is/are: ADMINISTRATEUR(S): Resident
Canadian
State
<S> <C> <C>
First name, initials and surname Resident address, giving Street & No. or R.R. No., Yes or No
PRENOM, INITIALES ET NOM DE FAMILLE municipality and postal code. RESIDENT
ADRESSE PERSONNELLE, Y COMPRIS LA RUE ET CANADIEN
LE NUMERO DE LA R.R., LE NOM DE LA OUI/NON
MUNICIPALITE ET LE CODE POSTAL
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
PLEASE REFER TO ATTACHMENT 1
<PAGE>
1(1)
ATTACHMENT 1
<TABLE>
<CAPTION>
4. The director(s) is are: ADMINISTRATEUR(S): Resident
Canadian
State
<S> <C> <C>
First name, initials and surname Residence address, giving Street & No. or R.R. No., Yes or No
PRENOM, INITIALES ET NOM DE municipality and postal code. RESIDENT
FAMILLE ADRESSE PERSONNELLE, Y COMPRIS LA RUE CANADIEN
ET LE NUMERO, LE NUMERO DE LA R.R., OUI/NON
LE NOM DE LA MUNICIPALITE ET LE CODE
POSTAL
- -----------------------------------------------------------------------------------------------------------
Michael H. Appleton 1166 Bay Street, Apt. 705, Toronto, Yes
Ontario, CANADA M5S 2X8
C. Robert Burgess 24 Brookshire, Thornhill, Ontario, Yes
CANADA L3T 7A9
Brendan Calder 121 Walker Avenue, Toronto, Ontario, Yes
CANADA M4V 1G5
Peter F. Cohen 32 Fifeshire Road, Willowdale, Ontario, Yes
CANADA M2L 2X3
Jay S. Hennick 164 Warren Road, Toronto, Ontario, Yes
CANADA M4V 2S5
Samuel Hennick 58 Chiswell Cres., North York, Ontario, Yes
CANADA M2N 6E1
Steven S. Rogers 868 Melton Drive, Mississauga, Ontario, Yes
CANADA L4Y 1K8
James R. Rollwagon 670 Brookside Lane, Mendota-Heights, No
Minnesota, USA 55118
</TABLE>
<PAGE>
2.
<TABLE>
<S> <C>
5. A) The amalgamation agreement has been duly A) LES ACTIONNAIRES DE CHAQUE SOCIETE QUI FUSIONNE
adopted by the shareholders of each of the ONT DUMENT ADOPTE LA CONVENTION DE FUSION
amalgamating corporations as required by CONFORMEMENT AU PARAGRAPHE 176(4) DE LA LOI
subsection 176(4) of the Business SUR LES SOCIETES PAR ACTIONS A LA DATE
Corporations Act on the date set out below. / / MENTIONNEE CI-DESSOUS.
--------------------
Check Cocher
A or B A ou B
--------------------
B) The amalgamation has been approved by the B) LES ADMINISTRATEURS DE CHAQUE SOCIETE QUI
directors of each amalgamating corporation FUSIONNE ONT APPROUVE LA FUSION PAR VOIE DE
by a resolution as required by section 177 RESOLUTION CONFORMEMENT A L'ARTICLE 177 DE LA
of the Business Corporations Act on the LOI SUR LES SOCIETES PAR ACTIONS A LA DATE
date set out below. /X/ MENTIONNEE CI-DESSOUS.
The articles of amalgamation in substance LES STATUTS DE FUSION REPRENNENT ESSENTIELLEMENT
contain the provisions of the articles of LES DISPOSITIONS DES STATUTS CONSTITUTIFS DE
incorporation of
FIRSTSERVICE CORPORATION
- ------------------------------------------------------------------------------------------------------------------------
and are more particularly set out in these et sont enonces textuellement aux presents
articles. statuts.
</TABLE>
<TABLE>
<CAPTION>
Names of amalgamating corporations Ontario Corporation Number Date of Adoption/Approval
DENOMINATION SOCIALE DES NUMERO DE LA SOCIETE EN ONTARIO DATE D'ADOPTION OU D'APPROBATION
SOCIETES QUI FUSIONNENT
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1140 BAY STREET LIMITED 1107607 March 30, 1999
FIRSTSERVICE CORPORATION 788412 March 30, 1999
</TABLE>
<PAGE>
3.
<TABLE>
<S> <C>
6. Restrictions, if any, on business the corporation may LIMITES, S'IL Y A LIEU, IMPOSEES AUX ACTIVITES
carry on or on powers the corporation may exercise. COMMERCIALES OU AUX POUVOIRS DE LA SOCIETE.
None
7. The classes and any maximum number of shares CATEGORIES ET NOMBRE MAXIMAL, S'IL Y A LIEU,
that the corporation is authorized to issue: /D'ACTIONS QUE LA SOCIETE EST AUTORISEE A EMETTRE:
Class of Shares Maximum Number
--------------- --------------
Preference shares Unlimited
Series 1 Preference Shares 2,500
Subordinate Voting Shares Unlimited
Multiple Voting Shares Unlimited
</TABLE>
<PAGE>
4.
<TABLE>
<S> <C>
8. Rights, privileges, restrictions and conditions (if any) DROITS, PRIVILEGES, RESTRICTIONS ET CONDITIONS, S'IL Y A
attaching to each class of shares and directors LIEU, RATTACHES A CHAQUE CATEGORIE D'ACTIONS ET
authority with respect to any class of shares which is POUVOIRS DES ADMINISTRATEURS RELATIFS A CHAQUE
to be issued in series: CATEGORIE D'ACTIONS QUI PEUT ETRE EMISE EN SERIE:
See Pages 4(A) to 4(CC) attached.
</TABLE>
<PAGE>
4(A)
Schedule "1"
1.00 THE PREFERENCE SHARES
1.01 The Preference Shares may at any time or from time to time be issued
in one or more series, each series to consist of such number of shares as
may, before the issue thereof, be determined by the board of directors of the
Corporation. The directors shall by resolution fix, from time to time, before
the issue of any series of Preference Shares, the designation, preferences,
rights, restrictions, conditions, limitations, priorities as to payment of
dividends and/or distribution on liquidation, dissolution or winding-up, or
prohibitions attaching thereto including, without limiting the generality of
the foregoing, the provision of a purchase fund, the right of the Corporation
to purchase such shares for cancellation, the rate of preferential dividends,
the dates of payment thereof, the date or dates from which any such
preferential dividends shall accrue, redemption rights including purchase or
redemption price, terms and conditions of redemption, conversion rights and
any sinking fund or other provisions, and authorize the issuance thereof.
1.02 The directors before the issue of any Preference Shares of a series
shall file with the Director appointed under the BUSINESS CORPORATIONS ACT,
(Ontario) or any successor statute of the Province of Ontario which is from
time to time in force (the "ACT"), Articles of Amendment designating such
series and specifying the number, designation, preferences, rights,
restrictions, conditions, limitations, priorities as to payment of dividends
and/or distribution on liquidation, dissolution or winding-up, and
prohibitions attached thereto, and shall obtain a certificate from the
Director with respect thereto.
1.03 The Preference Shares of each series shall be entitled to preference
over the Subordinate Voting Shares, the Multiple Voting Shares and any other
shares ranking junior to the Preference Shares with respect to priority in
payment of dividends and in 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, and may
also be given such other preferences over the Subordinate Voting Shares, the
Multiple Voting Shares and any other shares ranking junior to the Preference
Shares as may be determined with respect to the respective series authorized
to be issued.
l.04 The holders of the Preference Shares shall not be entitled as such,
except as required by law, to receive notice of or to attend any meeting of
the shareholders of the Corporation or to vote at any such meeting, but shall
be entitled to receive notice of meetings of shareholders of the Corporation
called for the purpose of authorizing the dissolution of the Corporation or
the sale of its undertaking or a substantial part thereof.
2.00 SUBORDINATE VOTING SHARES
2.01 The holders of the Subordinate Voting Shares shall be entitled to
receive notice of, to attend and speak at and to vote at, any meeting of the
shareholders of the Corporation, other than a meeting
<PAGE>
4(B)
of the holders of another class as such or the holders of a series of shares
of another class as such, and at such meeting shall have one (l) vote for each
Subordinate Voting Share held.
2.02 Subject to any provisions of the Act and to applicable securities laws
and the by-law, regulations or policies of any stock exchange upon which the
Subordinate Voting Shares may then be listed, all or any part of the
Subordinate Voting Shares which are then outstanding shall be purchasable for
cancellation by the Corporation at any time, in the open market, by private
contract or otherwise, at the lowest price at which, in the opinion of the
directors, such shares are obtainable.
2.03 The Subordinate Voting Shares shall not be redeemable by the
Corporation.
2.04 If the Act would in effect require in the absence of this clause 2.04
that an amendment to the Articles of the Corporation to delete or vary any
preference, right, condition, restriction, limitation or prohibition
attaching to any of the Subordinate Voting Shares, or to create special
shares ranking in priority to or on a parity with the Subordinate Voting
Shares, be confirmed in writing by the holders of 100% or any lesser
percentage of the then outstanding Subordinate Voting Shares, then in lieu of
such confirmation in writing such confirmation, may be given by at least
two-thirds of the votes cast at a meeting of the holders of the Subordinate
Voting Shares duly called for that purpose, and at such meeting each holder
of Subordinate Voting Shares shall be entitled to one vote for each
Subordinate Voting Shares held.
2.05 The holders of the Subordinate Voting Shares shall not have any right
to vote separately upon any proposal to amend the Articles of the Corporation
to:
(a) increase any maximum number of authorized shares of any class
or series having rights or privileges equal or superior to the
Subordinate Voting Shares; or
(b) create a new class of shares equal or superior to the Subordinate
Voting Shares.
2.06
(1) For the purposes of this clause 2.06:
(a) "affiliate" has the meaning assigned by the SECURITIES ACT
(Ontario) as amended from time to time;
(b) "associate" has the meaning assigned by the SECURITIES ACT
(Ontario) as amended from time to time;
(c) "Conversion Period" means the period of time commencing on the
eighth day after the Offer Date and terminating on the Expiry
Date;
<PAGE>
4(C)
(d) "Converted Shares" means Multiple Voting Shares resulting from
the conversion of Subordinate Voting Shares into Multiple
Voting Shares pursuant to paragraph (2) of this clause 2.06;
(e) "Exclusionary Offer" means an offer to purchase Multiple
Voting Shares that:
(i) must, by reason of applicable securities legislation
or the requirements of a stock exchange on which the
Multiple Voting Shares are listed, be made to all or
substantially all holders of Multiple Voting Shares who
are in a province of Canada to which the requirement
applies;
(ii) is not made concurrently with an offer to purchase
Subordinate Voting Shares that is identical to the offer
to purchase Multiple Voting Shares in terms of price per
share and percentage of outstanding shares to be taken
up exclusive of shares owned immediately prior to the
offer by the Offeror, and in all other material respects,
and that has no condition attached other than the right not
to take up and pay for shares tendered if no shares are
tendered pursuant to the offer for Multiple Voting
Shares,
and for the purposes of this definition, if an offer to purchase
Multiple Voting Shares is not an Exclusionary Offer as defined
above but would be an Exclusionary Offer if it were not for
sub-clause (ii), the varying of any term of such offer shall be
deemed to constitute the making of a new offer unless an identical
variation concurrently is made to the corresponding offer to
purchase Subordinate Voting Shares;
(f) "Expiry Date" means the last date upon which holders of
Multiple Voting Shares may accept an Exclusionary Offer;
(g) "Offer Date" means the date on which an Exclusionary Offer is
made;
(h) "Offeror" means a person or company that makes an offer to
purchase Multiple Voting Shares (the "BIDDER"), and includes any
associate or affiliate or the bidder or any person or company
that is disclosed in the offering document to be acting
jointly or in concert with the bidder; and
(i) "transfer agent" means the transfer agent for the time being
of the Multiple Voting Shares.
(2) Subject to subparagraph (5) of this clause 2.06, if an Exclusionary
Offer is made, each outstanding Subordinate Voting Share shall be
convertible into one Multiple Voting Share at the option of the holder
during the Conversion Period. The conversion right may be exercised
by notice in writing given to the transfer agent accompanied by the
share certificate
<PAGE>
4(D)
or certificates representing the Subordinate Voting Shares which the
holder desires to convert, and such notice shall be executed by such
holder, or by his attorney duly authorized in writing, and shall
specify the number of Subordinate Voting Shares which the holder
desires to have converted. The holder shall pay any governmental or
other tax imposed on or in respect of such conversion. Upon receipt by
the transfer agent of such notice and share certificate or
certificates, the Corporation shall issue a share certificate
representing fully paid Multiple Voting Shares as above prescribed and
in accordance with paragraph (4) of this clause 2.06. If less than all
of the Subordinate Voting Shares represented by any share certificate
are to be converted, the holder shall be entitled to receive a new
share certificate representing in the aggregate the number of
Subordinate Voting Shares represented by the original share
certificate which are not to be converted.
(3) An election by a holder of Subordinate Voting Shares to exercise the
conversion right provided for in paragraph (2) of this clause 2.06
shall be deemed to also constitute an irrevocable election by such
holder to deposit the Converted Shares pursuant to the Exclusionary
Offer (subject to such holder's right to subsequently withdraw the
shares from the offer) and to exercise the right to convert into
Subordinate Voting Shares all Converted Shares in respect of which
such holder exercises his right of withdrawal from the Exclusionary
Offer or which are not otherwise ultimately taken up under the
Exclusionary Offer. Any conversion into Subordinate Voting Shares,
pursuant to such deemed election, of Converted Shares in respect of
which the holder exercises his right of withdrawal from the
Exclusionary Offer shall become effective at the time such right of
withdrawal is exercised. If the right of withdrawal is not exercised,
any conversion into Subordinate Voting Shares pursuant to such deemed
election shall become effective.
(a) in respect of an Exclusionary Offer which is completed,
immediately following the time by which the Offeror is required
by applicable securities legislation to take up and pay for all
shares to be acquired by the Offeror under the Exclusionary
Offer; and
(b) in respect of an Exclusionary Offer which is abandoned or
withdrawn, at the time at which the Exclusionary Offer is
abandoned or withdrawn.
(4) No share certificates representing Converted Shares shall be delivered
to the holders of the shares before such shares are deposited pursuant
to the Exclusionary Offer; the transfer agent, on behalf of the
holders of the Converted Shares, shall deposit pursuant to the
Exclusionary Offer a certificate or certificates representing the
Converted Shares. Upon completion of the Offer, the transfer agent
shall deliver to the holders entitled thereto all consideration paid
by the Offeror pursuant to the offer. If Converted Shares are
converted into Subordinate Voting Shares pursuant to paragraph (3) of
this clause 2.06, the transfer agent shall deliver to the holders
entitled thereto share certificates representing the Subordinate
Voting Shares representing the Subordinate Voting Shares resulting
from the conversion. The Corporation shall make all arrangements with
the transfer agent necessary or desirable to give effect to this
sub-paragraph.
<PAGE>
4(E)
(5) Subject to paragraph (6) of this clause 2.06, the conversion right
provided for in subparagraph (2) of this clause 2.06 shall not come
into effect if:
(a) prior to the time at which the Exclusionary Offer is made there
is delivered to the transfer agent and to the Secretary of the
Corporation a certificate or certificates signed by or on behalf
of one or more shareholders of the Corporation owning in the
aggregate, as at the time the Exclusionary Offer is made, more
than 50% of the then outstanding Multiple Voting Shares,
exclusive of shares owned immediately prior to the Exclusionary
Offer by the Offeror, which certificate or certificates shall
confirm, in the case of each such shareholder, that such
shareholder shall not:
(i) accept any Exclusionary Offer without giving the transfer
agent and the Secretary of the Corporation written notice
of such acceptance or intended acceptance at least seven
days prior to the Expiry Date;
(ii) make any Exclusionary Offer;
(iii) act jointly or in concert with any person or company
that makes any Exclusionary Offer; or
(iv) transfer any Multiple Voting Shares, directly or
indirectly, during the time at which any Exclusionary
Offer is outstanding without giving the transfer agent
and the Secretary of the Corporation written notice of
such transfer or intended transfer at least seven days
prior to the Expiry Date, which notice shall state, if
known to the transferor, the names of the transferees and
the number of Multiple Voting Shares transferred or to be
transferred to each transferee; or
(b) within seven days after the Offer Date there is delivered to
the transfer agent and to the Secretary of the Corporation a
certificate or certificates signed by or on behalf of one or
more shareholders of the Corporation owning in the aggregate
more than 50% of the then outstanding Multiple Voting Shares,
exclusive of shares owned immediately prior to the Exclusionary
Offer by the Offeror, which certificate or certificates shall
confirm, in the case of each such shareholder:
(i) the number of Multiple Voting Shares owned by the
shareholder;
(ii) that such shareholder is not making the offer and is not
an associate of affiliate of, or acting jointly or in
concert with, the person or company making the offer;
(iii) that such shareholder shall not accept the offer,
including any varied form of the offer, without giving
the transfer agent and the Secretary of the
<PAGE>
4(F)
Corporation written notice of such acceptance or
intended acceptance at least seven days prior to the
Expiry Date; and
(iv) that such shareholder shall not transfer any Multiple
Voting Shares, directly or indirectly, prior to the
Expiry Date without giving the transfer agent and the
Secretary of the Corporation written notice of such
transfer or intended transfer at least seven days prior
to the Expiry Date, which notice shall state, if known to
the transferor, the names of the transferees and the
number of Multiple Voting Shares transferred or to be
transferred to each transferee if this information is
known to the transferor.
(6) If notice referred to in sub-clause 5(a)(i), 5(a)(iv), 5(b)(iii) or
5(b)(iv) of this Clause 2.06 is given and the conversion right
provided for in paragraph (2) of this clause 2.06 has not come into
effect, the transfer agent shall either forthwith upon receipt of the
notice or forthwith after the seventh day following the Offer Date,
whichever is later, make a determination as to whether there are
subsisting certifications that comply with either sub-clause 5(a) or
5(b) of this clause 2.06 from shareholders of the Corporation who own
in the aggregate more than 50% of the then outstanding Multiple Voting
Shares, exclusive of shares owned immediately prior to the offer by
the Offeror. For the subject of such notice shall be deemed to have
taken place at the time of the determination, and the shares that are
the subject of such notice shall be deemed to have been transferred to
a person or company from whom the transfer agent has not received such
a certification unless the transfer agent is otherwise advised either
by such notice or by the transferee in writing. If the transfer agent
determines that there are not such subsisting certifications,
paragraph (5) of this clause 2.06 shall cease to apply and the
conversion right provided for in paragraph (2) of this clause 2.06
shall be in effect for the remainder of the Conversion Period.
(7) As soon as reasonably possible after the seventh day after the Offer
Date, the Corporation shall send to each holder of Subordinate Voting
Shares a notice advising the holders as to whether they are entitled
to convert their Subordinate Voting Shares into Multiple Voting Shares
and the reasons therefor. If such notice discloses that they are not
so entitled but is subsequently determined that they are so entitled
by virtue of paragraph (6) of this clause 2.06 or otherwise, the
Corporation shall forthwith send another notice to them advising
them of that fact and the reasons therefor.
(8) If a notice referred to in paragraph (7) of this clause 2.06 discloses
that the conversion right has come into effect, the notice shall:
(a) include a description of the procedure to be followed to effect
the conversion and to have the Converted Shares tendered under
the offer;
(b) include the information set out in paragraph (3) of this
clause 2.06; and
<PAGE>
4(G)
(c) be accompanied by a copy of the offer and all other material
sent to holders of Multiple Voting Shares in respect of the
offer, and as soon as reasonably possible after any additional
material, including a notice of variation, is sent to the
holders of Multiple Voting Shares in respect of the offer, the
Corporation shall send a copy of such additional material to
each holder of Subordinate Voting Shares.
(9) Prior to or forthwith after sending any notice referred to in
paragraph (7) of this clause 2.06, the Corporation shall cause a press
release to be issued to a Canadian national news ticker service,
describing the contents of the notice.
3.00 MULTIPLE VOTING SHARES
3.01 The holders of the Multiple Voting Shares shall be entitled to receive
notice of, and to attend and speak at and vote at, any meeting of the
shareholders of the Corporation, other than a meeting of the holders of
shares of another class as such or of the holders of a series of shares of
another class as such, and at such meeting shall have twenty (20) votes for
each Multiple Voting Share held.
3.02 Subject to any provisions of the Act and to applicable securities laws
and the by-laws, regulations or policies of any stock exchange upon which the
Multiple Voting Shares may then be listed, all or any part of the Multiple
Voting Shares which are then outstanding shall be purchasable for
cancellation by the Corporation at any time, in the open market, by private
contract or otherwise, at the lowest price at which, in the opinion of the
directors, such shares are obtainable.
3.03 The Multiple Voting Shares shall not be redeemable by the Corporation.
3.04 If the Act would in effect require in the absence of this clause 3.04
that an amendment to the Articles of the Corporation to delete or vary any
preference, right, condition, restriction, limitation or prohibition
attaching to any of the Multiple Voting Shares, or to create special shares
ranking in priority to or on a parity with the Multiple Voting Shares, be
confirmed in writing by the holders of 100% or any lesser percentage of the
then outstanding Multiple Voting Shares, then in lieu of such confirmation in
writing such confirmation may be given by at least two-thirds of the votes
cast at a meeting of the holders of the Multiple Voting Shares duly called
for that purpose, and at such meeting each holder of Multiple Voting Shares
shall be entitled to one vote for each Multiple Voting Shares held.
3.05 The holders of the Multiple Voting Shares shall not have any right to
vote separately upon any proposal to amend the Articles of the Corporation to:
(a) increase any maximum number of authorized shares of a class or
series having rights or privileges equal or superior to the
Multiple Voting Shares; or
(b) create a new class of shares equal or superior to the Multiple
Voting Shares.
<PAGE>
4(H)
3.06 Each Multiple Voting Share shall be convertible at any time, at the
option of the holder thereof, into a Subordinate Voting Share, on the basis
of one Subordinate Voting Share for each Multiple Voting Share so converted.
The holder of Multiple Voting Shares desiring to convert such Multiple Voting
Shares into Subordinate Voting Shares on the basis aforesaid shall deliver to
the transfer agent for the time being of the Subordinate Voting Shares the
share certificate or share certificates representing the Multiple Voting
Shares which the holder desires to so convert accompanied by a written notice
duly executed by such holder or his attorney duly authorized in writing,
which notice shall state that such holder elects to convert the Multiple
Voting Shares represented by such share certificate or share certificates
into Subordinate Voting Shares in accordance with the provisions hereof and
which notice shall further state the name or names (with addresses) in which
the share certificate or certificates for Subordinate Voting Shares issuable
on such conversion shall be issued, and if any of the Subordinate Voting
Shares into which such Multiple Voting Shares are to be converted are to be
issued to a person or persons other than the holder of such Multiple Voting
Shares, there shall be paid to such transfer agent, for the account of the
Corporation, any transfer taxes which may properly be payable. If any such
certificate or share certificates representing any of the Subordinate Voting
Shares issuable on conversion are directed to be issued to any person other
than the holder of such Multiple Voting Shares, the signature of such holder
shall be guaranteed by a Canadian chartered bank or such other financial
institution as such transfer agent may require. Such holder shall, in
addition, comply with such other reasonable requirements as such transfer
agent may prescribe. As promptly as practicable after the receipt of such
notice of election to convert, the payment of such transfer tax (if any), the
delivery of such share certificate or share certificates and compliance with
all reasonable requirements of the transfer agent as aforesaid, the
Corporation shall cause the transfer agent for the Subordinate Voting Shares
to issue and deliver in accordance with such notice of election to convert a
share certificate or share certificates representing the number of
Subordinate Voting Shares into which such Multiple Voting Shares have been
converted in accordance with the provisions of this clause 3.06. Such
conversion shall be deemed to have been made immediately prior to the close
of business on the date on which all conditions precedent to the conversion
of such Multiple Voting Shares have been fulfilled and the person or persons
in whose name or names any share certificate or share certificates for
Subordinate Voting Shares shall be issuable shall be deemed to have become on
the said date the holder or holders of record of the Subordinate Voting
Shares represented thereby; provided, however, that if the transfer books of
the Corporation for Subordinate Voting Shares shall be closed on the said
date, the Corporation shall not be required to issue Subordinate Voting
Shares upon such conversion until the date on which such transfer books shall
be re-opened and such person or persons shall not be deemed to have become
the holder or holders of record of such Subordinate Voting Shares until the
said date on which such transfer books shall be reopened. There shall be no
payment or adjustment on account of any unpaid dividends on the Multiple
Voting Shares converted or on account of any dividends on the Subordinate
Voting Shares resulting from such conversion. In the event that part only of
the Multiple Voting Shares represented by any share certificate shall be
converted, a share certificate for the remainder of the Multiple Voting
Shares represented by the said share certificate shall be delivered to the
holder converting without charge.
<PAGE>
4(I)
4.00 DIVIDENDS AND DISTRIBUTION RIGHTS OF THE SUBORDINATE AND MULTIPLE
VOTING SHARES
4.01 (a) All dividends which are declared in any year in the discretion
of the directors on all of the Subordinate Voting Shares shall be declared
and paid in an equal or, in the discretion of the directors, a greater amount
per share than on all of the Multiple Voting Shares at the time outstanding.
All dividends which are declared in any year, in the discretion of the
directors, on all of the Multiple Voting Shares shall be declared and paid in
an equal or, in the discretion of the directors, a lesser amount per share
than on all of the Subordinate Voting Shares outstanding. If any stock
dividend is declared on Subordinate Voting Shares, such dividend may be paid
in Subordinate Voting Shares, such dividend may be paid in Subordinate Voting
Shares or in Multiple Voting Shares, or partly in one class and partly in the
other, if stock dividends in equal or, in the discretion of the directors,
lesser amounts per share are declared at the same time on the Multiple Voting
Shares and are payable in either Subordinate Voting Shares or in Multiple
Voting Shares, or partly in one class and partly in the other, regardless of
which class the stock dividend was paid on Subordinate Voting Shares. If any
stock dividend is declared on Multiple Voting Shares, such dividend may be
paid in Subordinate Voting Shares or in Multiple Voting Shares, or partly in
one class and partly in the other, if stock dividends in equal or, in the
discretion of the directors, greater amounts per share are paid at the same
time on the Subordinate Voting Shares and are payable in either Subordinate
Voting Shares or in Multiple Voting Shares, or partly in one class and partly
in the other, regardless or which class the stock dividend was paid on
Multiple Voting Shares.
(b) All distributions other than dividends (including, but without
limiting the generality of the foregoing, any distribution of rights,
warrants or options to purchase securities of the Corporation), and all such
distributions which may at any time or from time to time be authorized or
made:
(i) in respect of the Subordinate Voting Shares, shall be
authorized and made in equal, or in the discretion of the
directors, greater quantities or amounts per share than
on all Multiple Voting Shares then outstanding without
preference or distinction; and
(ii) in respect of the Multiple Voting Shares, shall be
authorized and made in equal, or, in the discretion of
the directors, lesser quantities or amounts per share
than on all Subordinate Voting Shares then outstanding
without preference or distinction.
5.00 SUBDIVISIONS, CONSOLIDATIONS, RECLASSIFICATIONS, WINDING-UP AND
LIQUIDATION, ETC.
5.01 No subdivision, consolidation, reclassification or other change of the
Subordinate Voting Shares or the Multiple Voting Shares shall be made unless
at the time an equivalent or comparable
<PAGE>
4(J)
subdivision, consolidation, reclassification or change is made with respect
to all of the Multiple Voting Shares and Subordinate Voting Shares,
respectively, which are then outstanding.
5.02 In any case where a fraction of a Subordinate Voting Shares or a
Multiple Voting Shares would otherwise be issuable on a subdivision,
consolidation, reclassification or change of one or more Subordinate Voting
Shares or Multiple Voting-Shares, the Corporation shall in lieu thereof
adjust such fractional interest by the payment by cheque (to the nearest
cent) of an amount related or equivalent to the then current market value of
such fractional interest computed on the basis of the last board lot sale
price (or the last bid price, if there has been no board lot sale) for the
Subordinate Voting Shares on The Toronto Stock Exchange, on such stock
exchange in Canada on which the Subordinate Voting Shares are listed or
traded as may be selected fur such purpose by the Directors of the
Corporation) on the business day on which such stock exchange was open next
preceding the date of such subdivision, consolidation, reclassification or
change or if the Subordinate Voting Shares are not then listed on any stock
exchange, then the current market price in any public market in which the
Subordinate Voting Shares are traded and otherwise in the discretion of the
board of directors.
5.03 In the event of the liquidation, dissolution or winding-up of the
Corporation or other distribution of the assets of the Corporation amongst
its shareholders for the purposes of winding-up its affairs, all of the
property and assets of the Corporation available for distribution to the
shareholders of the Corporation shall, after providing for preferential
payment of the amounts required to be paid under and in respect of any
Preference Shares or series thereof ranking in priority, shall be paid or
distributed in equal amounts per share on all Subordinate Voting Shares and
Multiple Voting Shares at the time outstanding without preference or
distinction and the holders thereof shall as such participate on a
share-for-share basis equally therein.
6.00 PROVISIONS RELATING TO SUBORDINATE VOTING SHARES AND MULTIPLE
VOTING SHARES
6.01 Notwithstanding any of the provisions of this Schedule, the Articles
of the Corporation hereby provide that, for the purposes of the take-over bid
and issuer bid provisions of the SECURITIES ACT (Ontario) and the regulations
thereunder, both as amended from time to time, (a) the Subordinate Voting
Shares and the Multiple Voting Shares shall be treated as, and are hereby
deemed to constitute, one class of voting securities, and (b) the published
market for such one class of voting securities shall be deemed to be the
published market of the Subordinate Voting Shares. For greater certainty, the
provisions of this Section 6.01 shall have no application in the event of a
purchase of Multiple Voting Shares at a price per share not in excess of the
aggregate of (i) the "market price" per share (at the time of such purchase)
determined in accordance with the provisions of the SECURITIES ACT (Ontario)
and the regulations thereunder, (both as amended or replaced from time to
time) together with any permitted premium, plus (ii) reasonable brokerage
fees or other commissions calculated on a per share basis. For greater
certainty, "market price" as at the date of these articles is defined in
Section 164 of the Regulation to the SECURITIES ACT (Ontario).
<PAGE>
4(K)
7.00 SERIES 1 PREFERENCE SHARES
The first series of the Preference Shares of the Corporation shall consist of
an aggregate of 2500 shares, all designated as "Series 1 Preference Shares"
(collectively, the "Series 1 Shares"), with each such share having a stated
value of $1,000. In addition to the rights, conditions, restrictions and
prohibitions attaching to the Preference Shares of the Corporation as a
class, the Series 1 Shares shall have attached thereto the following rights,
conditions, restrictions and prohibitions:
7.01 DEFINITIONS: As used herein, the following words and phrases
shall have the following meanings, respectively:
(a) "arm's length" has the meaning given thereto in the Income Tax
Act (Canada), as amended from time to time;
(b) "Board Lot" means a lot of not less than 100 Subordinate Voting
Shares or a lot consisting of at least that number of securities
convertible into or exchangeable for Subordinate Voting Shares
which, if fully converted or exchanged, would result in the
issuance of not less than 100 Subordinate Voting Shares;
(c) "Business Day" means a day other than a Saturday, Sunday or any
other day that is a statutory or civic holiday in the place
where the Corporation's registered office is located and, if any
day on which any dividend on the Series 1 Shares is payable or
by which any other action is required or permitted to be taken
pursuant to these provisions is not a Business Day, such
dividend shall be payable or such other action shall be required
or permitted to be taken on the next succeeding day that is a
Business Day;
(d) "Coit Termination Amount" means the amount which Cleanol
Services Inc. (formerly 875551 Ontario Limited) would be
required to pay to Coit Drapery Cleaners Inc. at the time in
question if Cleanol Services Inc. then elected to exercise the
option granted to it in Section 8.04 of a franchise agreement
entered into effective as of the 1st day of March, 1990 (the
"Coit Franchise Agreement") between Coit Drapery Cleaners Inc.
and 875551 Ontario Limited;
(e) "Conversion Notice" has the meaning given thereto in subsection
1.03(e) hereof;
(f) "Conversion Price" means the applicable conversion price per
Subordinate Voting Share for which Subordinate Voting Shares may
be issued upon the
<PAGE>
4(L)
conversion of Series 1 Shares, such conversion price to be
determined as follows:
(i) if at the time in question the Corporation has gone
public, an amount equal to the lesser of:
(A) $8.50; and
(B) the greater of:
(1) 75% of the Public Offering Price; and
(2) $5.50;
and
(ii) if the Corporation has not gone public prior to the
Redemption Date, an amount equal to the greater of:
(A) an amount equal to the quotient obtained when an
amount equal to 800% of Normalized After Tax
Earnings for the then most recently completed
fiscal year of the Corporation (provided that if
such fiscal year is less than 365 days in duration,
the Normalized After Tax Earnings of the
Corporation for the period of 365 days ending on
the last day of such fiscal year shall be used) is
decreased by an amount equal to:
(1) the Coit Termination Amount if the Coit
Franchise Agreement has not then been
terminated; or
(2) zero if the Coit Franchise Agreement has
then been terminated
and the remainder so obtained is divided by the
aggregate number of Multiple Voting Shares and
Subordinate Voting Shares outstanding on the day
immediately prior to the Redemption Date calculated
on a fully diluted basis in accordance with GAAP;
and
(B) $6.50 or such other dollar amount per Subordinate
Voting Share for which Subordinate Voting Shares
shall be issued upon the conversion of Series 1
Shares in accordance with Section 1.04 hereof;
<PAGE>
4(M)
(g) "Current Market Price" of the Subordinate Voting Shares as at
any date (the "Reference Date") means:
(i) if the Subordinate Voting Shares are then listed on one
or more stock exchanges, the weighted average of the
closing prices per share for bona fide arm's length Board
Lot sales of Subordinate Voting Shares for the 20 trading
days as on which such shares were traded immediately
prior to the Reference Date on such stock exchange as on
which the highest volume of Subordinate Voting Shares was
traded during such 20 days;
(ii) if the Subordinate Voting Shares are not then listed on
any stock exchange but are traded on an over-the-counter
market, the weighted average of the closing prices per
share for bona fide arm's length Board Lot sales of
Subordinate Voting Shares for the 20 trading days as on
which such shares were traded immediately prior to the
Reference Date on such over-the-counter market as on
which the highest volume of Subordinate Voting Shares was
traded during such 20 days; or
(iii) if the Subordinate Voting Shares are not then listed on
any stock exchange or traded on any over-the-counter
market, the greater of the amounts referred to in
paragraphs l.0l(f)(ii)(A) and 1.01(f)(ii)(B) subject to
any adjustments which may be required to be made to such
amounts pursuant to the applicable provisions hereof;
(h) "Dividend Payment Date" means March 31, June 30, September 30 and
December 31 in each calendar year;
(i) "Dividend Payment Period" means the period of three consecutive
months ending on a Dividend Payment Date;
(j) "Fixed Amounts" means, collectively, the amounts specified in
paragraphs l.0l(f)(i)(A), l.0l(f)(i)(B)(2) and l.0l(f)(ii)(B)
and "Fixed Amount" means any one of such aforesaid amounts;
(k) "going public" means, when used in relation to the Corporation,
that the board of directors of the Corporation has authorized
the Corporation to engage in a Public Offering;
(l) "gone public" means, when used in relation to the Corporation,
that the Corporation has fully completed a Public Offering in
accordance with all applicable laws;
<PAGE>
4(N)
(m) "GAAP" means generally accepted accounting principles as
promulgated or interpreted, as the case may be, from time to
time by the Canadian Institute of Chartered Accountants or, if
it should cease to exist, the entity which is the successor
thereto;
(n) "Normalized After Tax Earnings" means, for any fiscal year of
the Corporation, the aggregate of the following:
(i) the consolidated after tax earnings (before all
extraordinary losses (as so designated by the
Corporation's auditors) incurred by the Corporation and
its subsidiaries in such fiscal year) and before minority
interest in such earnings of the Corporation for such
fiscal year;
(ii) the after tax cost to Greenspace Services Ltd. of all
amortization charges incurred in such fiscal year by the
Corporation and its subsidiaries to the extent that such
charges are referrable to the amount paid for those items
referred to in subsections 2.01(1) and (m) of a certain
asset purchase agreement made effective as of the 27th
day of October, 1991 among Ecolab Ltd., Greenspace
Services Ltd. and the Corporation;
(iii) the after tax cost to Cleanol Services Inc. of all
franchise fees and other like payments made to or accrued
in favour of Coit Drapery Cleaners Inc. in such fiscal
year pursuant to the Coit Franchise Agreement;
(iv) the provision made in such fiscal year for income taxes
payable by the Corporation and its subsidiaries which are
categorized by the Corporation's auditors as "Income
Taxes Payable - Other Deferred", being those taxes that
will not be paid as a result of operating losses incurred
subsequent to such fiscal year end by reason of the
seasonal nature of the expenses giving rise to such
operating losses; and
(v) the after tax effect to the Corporation and its
subsidiaries of all unusual and/or non-recurring gains
and losses which are considered material to the financial
position or results from operations in such fiscal year
(i.e., asset dispositions);
and all of the foregoing shall be determined on a consolidated
basis in accordance with GAAP, consistently applied;
<PAGE>
4(O)
(o) "Public Offering" means an offering to the public at any time
subsequent to the date of issuance of the Series 1 Shares
involving the issuance by the Corporation of at least one Board
Lot of its Subordinate Voting Shares (or securities exchangeable
or convertible into its Subordinate Voting Shares) (which
Subordinate Voting Shares or securities convertible or
exchangeable into the Subordinate Voting Shares forming the
subject matter of such offering, are listed at, prior or within
30 days following the date of the completion of such offering on
any one or more of The Toronto Stock Exchange, the Montreal
Exchange, the Vancouver Stock Exchange or a major U.S. stock
exchange) to not less than 200 subscribers pursuant to a (final)
prospectus (or other similar public offering document which, in
the case of any such offering to be conducted in the United
States of America, includes a registration statement filed with
and accepted by the Securities and Exchange Commission) in
respect of which a receipt or other like approval has been
received from all securities regulatory authorities in Canada
and/or the United States of America having jurisdiction with
respect to such offering;
(p) "Public Offering Price" means:
(i) if the Corporation is offering Subordinate Voting Shares
for sale pursuant to a Public Offering, an amount equal
to the per share price at which such Subordinate Voting
Shares are being offered;
(ii) if the Corporation is offering securities convertible
into or exchangeable for Subordinate Voting Shares for
sale pursuant to a Public Offering, an amount equal to
the per share conversion or exchange price of such
securities; or
(iii) if the Corporation is offering securities in units
comprised in part of Subordinate Voting Shares for sale
pursuant to a Public Offering an amount equal to the
portion of the purchase price of such units which is
allocable, on a per share basis, to the Subordinate
Voting Shares forming a part thereof;
(q) "Redemption Amount" means, with respect to any Series 1 Share,
the amount specified in subsection 1.05(b); and
(r) "Redemption Date" means the earlier of:
(i) the first date following the date of issuance of the
Series 1 Shares as on which the Corporation has gone
public; and
<PAGE>
4(P)
(ii) December 31, 1994, provided that the Corporation may,
without the necessity of obtaining the consent or
approval of the holders of the Series 1 Shares thereto,
extend such date to such later date (the "Extended
Redemption Date") not later than December 31, 1995, as it
may in its sole discretion determine in which event the
Corporation shall pay on the Extended Redemption Date to
each holder of Series 1 Shares in respect of each Series
1 Share then held by it an additional amount equal to the
quotient obtained when the sum of $193,000 is divided by
the aggregate number of Series 1 Shares then outstanding
and the quotient so obtained is multiplied by a fraction,
the numerator of which is the number of days during the
period commencing January 1, 1995 and ending on the
Extended Redemption Date and the denominator of which is
365.
7.02 DIVIDENDS. The holders of the Series 1 Shares shall be entitled
to receive, out of any profits or surplus available for dividends, fixed,
cumulative, preferential cash dividends at the rate of $50 per annum per
Series 1 Share, such dividends to be paid in equal quarterly instalments on
each Dividend Payment Date. Such dividends shall accrue on a daily basis from
the respective dates of issue of the Series 1 Shares. If in any Dividend
Payment Period the Corporation shall not have paid in full such quarterly
dividend instalment for such Dividend Payment Period on all of the Series 1
Shares then outstanding, such quarterly dividend instalment, or the unpaid
portion thereof; shall be paid in a subsequent Dividend Payment Period or
Dividend Payment Periods in priority to dividends on any class of shares
ranking junior to the Series 1 Shares. No dividend shall be declared, paid
or set apart for payment on any class of shares ranking junior to the Series
1 Shares as regards the payment of dividends unless all accrued cumulative
preferential cash dividends on the Series 1 Shares then outstanding shall
have been paid in full or sufficient funds therefor set aside for payment at
the time of such declaration, payment or setting apart. The holders of the
Series 1 Shares shall not be entitled to any dividends other than or in
excess of the cash dividends provided for in this Section 1.02.
The amount of the accrued dividend on any Series 1 Share
required to be paid in respect of any period which is less than a full
Dividend Payment Period shall be an amount (rounded to the nearest cent)
equal to the result obtained when $12.50 is multiplied by a fraction, the
numerator of which is the number of days in such period that such Series 1
Share has been outstanding and the denominator of which is the total number
of days in such Dividend Payment Period.
Payment of such dividends to those persons entitled thereto
shall be made by way of cheques of the Corporation drawn on a Canadian
chartered bank and payable at par at any branch in Canada of such bank. The
mailing of such cheques shall satisfy and discharge all liability of the
Corporation for the payment of such dividends to the extent of the amount
represented thereby plus any tax required to be withheld
<PAGE>
4(Q)
therefrom) unless such cheques are dishonoured on due presentation. Any
monies to be paid in cash pursuant to this Section 1.02 represented by a
cheque which has not been presented for payment within 6 years after it was
issued or that otherwise remains unclaimed for a period of 6 years from the
date on which it was declared to be payable and set apart for payment shall
be forfeited to the Corporation.
7.03 CONVERSION AT THE OPTION OF THE HOLDER:
(a) Each holder of Series 1 Shares may at any time from time to time on
or prior to August 31, 1994 send to the Corporation a Conversion
Notice in respect of all or any part of the Series 1 Shares then
owned by it and in respect of which a Conversion Notice had not
previously been sent and any Conversion Notice so sent shall be
irrevocable from and after such time as it shall have been received
by the Corporation. Notwithstanding the foregoing, if the
Corporation elects to extend the Redemption Date as contemplated in
subsection 1.01(q) hereof, the date of expiry of the conversion
rights of the holders of the Series 1 Shares shall be extended to
the Extended Redemption Date. The Corporation shall send a notice in
writing to each of the holders of the Series 1 Shares not earlier
than June 1, 1994 and not later than June 30, 1994 advising them of
their conversion rights under this subsection 1.03(a).
(b) If at any time and from time to time while any of the Series 1
Shares are outstanding the Corporation should decide that it wishes
to engage in a Public Offering and such decision has been approved
by a decision of the board of directors of the Corporation, the
Corporation shall, within 21 days following the making of such
decision by the Board of Directors of the Corporation, send to each
registered holder of Series 1 Shares a notice in writing (the
"Offering Notice") at the address of such holder maintained in the
share registers of the Corporation advising that the Corporation
proposes to engage in a Public Offering. Such Offering Notice shall,
to the extent that the same has been determined, set out a summary
of the material particulars of any such proposed Public Offering.
Each holder of Series 1 Shares shall have a period of 60 days
following its receipt of an Offering Notice in which to send to the
Corporation a Conversion Notice in respect of all or any part of
those Series 1 Shares then held by it in respect of which a
Conversion Notice had not previously been sent and a holder who so
sends a Conversion Notice shall not have any right to withdraw the
same. If the Corporation has not gone public prior to the expiry of
a period of 150 days following its sending of an Offering Notice,
all Conversion Notices submitted to the Corporation in response to
such Offering Notice shall be deemed to have been withdrawn and the
Corporation shall forthwith return all share certificate(s)
evidencing the Series 1 Shares deposited pursuant to all Conversion
Notices so deemed to
<PAGE>
4(R)
have been withdrawn. Any holder of Series 1 Shares shall be provided
with a copy of the preliminary prospectus, final prospectus or other
similar disclosure document prepared in connection with any such
proposed Public Offering.
(c) The conversion rights attaching to the Series 1 Shares as provided
for in this Section 1.03 shall forever cease and be null and void in
respect of all those Series 1 Shares as in respect of which the
Corporation shall not have received a valid Conversion Notice prior
to the expiration of the time periods hereinbefore specified during
which any such Conversion Notice in respect thereof may be given and
all Series 1 Shares in respect of which a Conversion Notice has not
been so received by the Corporation shall be redeemed on the
Redemption Date in accordance with the provisions of Section 1.05
hereof.
(d) Subject to the provisions contained in this Section 1.03, a holder of
Series 1 Shares shall receive in respect of each Series 1 Share
elected to be converted into Subordinate Voting Shares that number
of fully paid and non-assessable Subordinate Voting shares as is
equal to the result obtained when the sum of $1,000 is divided by
the Conversion Price.
(e) Any holder of Series 1 Shares electing to exercise the conversion
right provided for in this Section 1.03 shall send a written notice
(a "Conversion Notice") to the Corporation and such Conversion
Notice shall be signed by such holder and shall specify (i) the
number of Series 1 Shares which such holder desires to have
converted, (ii) whether such notice is being furnished as a result
of the Corporation having sent an Offering Notice to such holder and
(iii) the name(s) in which the Subordinate Voting Shares resulting
from such conversion are to be registered failing which such
Subordinate Voting Shares shall be registered in the name of such
holder. Such Conversion Notice shall be accompanied by share
certificate(s) evidencing at least that number of Series 1 Shares as
are elected to be converted as specified in such Conversion Notice.
Any Conversion Notice not accompanied by the required share
certificate(s) (or, alternatively, a declaration of loss and
indemnity bond in form acceptable to the Corporation) or which does
not contain all of the hereinbefore specified information which it
is required to contain or which has not been signed as aforesaid
shall be invalid and of no effect whatsoever. If less than all of
the Series 1 Shares represented by the certificate(s) accompanying
such Conversion Notice are to be converted, the person in whose name
such certificate(s) are registered shall be entitled to receive, upon
its request therefor, a new certificate without charge representing
those Series 1 Shares comprised in the certificate(s) delivered as
aforesaid which are not to be converted.
<PAGE>
4(S)
(f) Upon the conversion of any Series 1 Shares there shall be no payment
or adjustment by the Corporation or by any holder of Series 1 Shares
on account of any dividends either on the Series 1 Shares so
converted or on the Subordinate Voting Shares into which the Series
1 Shares are converted other than as provided for in Section 1.02
hereof and any dividends accrued but unpaid on the Series 1 Shares
being converted shall be paid by the Corporation in full at the time
of conversion. Unless otherwise specified in the Conversion Notice,
on any conversion of Series 1 Shares the share certificates
representing the Subordinate Voting Shares resulting therefrom shall
be issued in the name of the registered holder of the Series 1
Shares converted or, subject to payment by the registered holder of
any stock transfer or other applicable taxes, in such name or names
as such registered holder may direct in writing (either in the
applicable Conversion Notice or otherwise).
(g) The right of a registered holder of Series 1 Shares to convert into
Subordinate Voting Shares those Series 1 Shares as in respect of
which a Conversion Notice has been validly submitted shall be deemed
to have been exercised, and the registered holder of the Series 1
Shares to be converted (or any person or persons in whose name or
names such registered holder of Series 1 Shares shall have directed
the shares to be issued) shall be deemed to have become a holder of
record of the Subordinate Voting Shares to be issued upon such
conversion for all purposes of the Redemption Date, notwithstanding
any delay in the delivery of the certificates representing the
Subordinate Voting Shares into which such Series 1 Shares have been
converted.
(h) Notwithstanding anything herein contained, the Corporation shall in
no case be required to issue fractional Subordinate Voting Shares
upon the conversion of any Series 1 Shares. If more than one Series
1 Share shall be surrendered for conversion at one time by the same
holder, the number of Subordinate Voting Shares issuable upon the
conversion thereof shall be computed on the basis of the aggregate
stated value of all such Series 1 Shares so surrendered by such
holder for conversion. If any fractional interest in a Subordinate
Voting Share would, except for the provisions of this Section, be
deliverable upon the conversion of any Series 1 Shares, the
Corporation shall, in lieu of delivering a certificate for such
fractional interest, satisfy such fractional interest by paying to
the holder of such surrendered Series 1 Shares an amount in cash
equal (to the nearest cent) to the result obtained when the
Conversion Price is multiplied by the percentage that such
fractional interest is of one whole Subordinate Voting Share.
<PAGE>
4(T)
(i) In the event that any conversion of the Series 1 Preference Shares
is made pursuant to subsection 1.03(a) hereof and, in connection
therewith, the Conversion Price was determined by reference to the
unaudited consolidated financial statements of the Corporation and
its subsidiaries (the Conversion Price so determined being called in
this paragraph 1.03(i) the "Unaudited Conversion Price"), then if
following the completion of the audit of such financial statements
the Conversion Price determined by reference to such audited
financial statements is determined to be an amount which is greater
or less than the Unaudited Conversion Price (the Conversion Price so
determined by reference to such audited financial statements being
herein called in this paragraph 1.30(i) the "Audited Conversion
Price"), the Corporation and the holders of the Series 1 Preference
Shares involved in the aforesaid conversion shall, within 10 days
following the finalization of such audited financial statements,
determine the number of Subordinate Voting Shares which would have
been issued to each such holder on the aforesaid conversion had the
Audited Conversion Price been then used and immediately thereafter:
(A) if the Audited Conversion Price is an amount which is less than
the Unaudited Conversion Price, the Corporation shall issue to
each of the holders of the Series 1 Preference Shares so
converted that number of Subordinate Voting Shares as is equal
to the difference between the number of Subordinate Voting
Shares which it would have received had the Audited Conversion
Price been used at the time of the aforesaid conversion and the
number of Subordinate Voting Shares which it was previously
issued upon the aforesaid conversion and, in addition, the
Corporation shall pay to each such holder an amount equal to
all dividends which it would have been entitled to receive in
respect of such additional Subordinate Voting Shares so issued
to it had it been the holder of such shares since the date of
the aforesaid conversion; or
(B) if the Audited Conversion Price is an amount which is greater
than the Unaudited Conversion Price, each of the holders of the
Series 1 Preference Shares so converted shall return to the
Corporation that number of Subordinate Voting Shares as is
equal to the difference between the number of Subordinate
Voting Shares which it would have received had the Audited
Conversion Price been used and the number of Subordinate Voting
Shares which it was previously issued upon the aforesaid
conversion and, in addition, each such holder shall pay to the
Corporation an amount equal to the total amount of the
dividends paid to it by the Corporation on the Subordinate
Voting Shares so returned.
<PAGE>
4(U)
7.04 ADJUSTMENT OF THE CONVERSION PRICE CALCULATION FORMULA IN CERTAIN
EVENTS
(a) If the Corporation shall:
(i) subdivide or change its outstanding Subordinate Voting Shares
into a greater number of Subordinate Voting Shares or Multiple
Voting Shares, as the case may be;
(ii) reduce, combine or consolidate its outstanding Subordinate
Voting Shares or Multiple Voting Shares into a lesser number of
Subordinate Voting Shares or Multiple Voting Shares, as the
case may be; or
(iii) declare a dividend or make any distribution to the holders of
all or substantially all of the outstanding Subordinate
Voting Shares or the Multiple Voting Shares payable in
Subordinate Voting Shares or Multiple Voting Shares or
securities convertible into Subordinate Voting Shares or
Multiple Voting Shares (other than an issue of Subordinate
Voting Shares or Multiple Voting Shares or securities
convertible into Subordinate Voting Shares or Multiple Voting
Shares by way of a stock dividend or dividend reinvestment plan
to shareholders pursuant to their exercise of options to
receive dividends in the form of shares in lieu of cash
dividends declared payable on the Subordinate Voting Shares);
(any of such events being hereinafter referred to as a "Share
Reorganization"), each of the Fixed Amounts in effect on the
record date for such Share Reorganization shall be adjusted
effective immediately after such record date by multiplying
such amount by a fraction, the numerator of which is the
aggregate number of Subordinate Voting Shares and Multiple
Voting Shares outstanding on such record date before giving
effect to such Share Reorganization and the denominator of
which is the aggregate number of Subordinate Voting Shares or
Multiple Voting Shares outstanding immediately after such
record date after giving effect to such Share Reorganization.
(b) If the Corporation shall fix a record date for the issuance of
options, rights, or warrants to any of the holders of its
Subordinate Voting Shares or Multiple Voting Shares entitling them
to subscribe for or purchase Subordinate Voting Shares or Multiple
Voting Shares (or securities convertible into or exchangeable for
Subordinate Voting Shares or Multiple Voting Shares) for a period
of more than 45 days following such record date at a price per
Subordinate Voting Share or Multiple Voting Share (or having a
conversion or exchange price per Subordinate Voting Share or
<PAGE>
4(V)
Multiple Voting Share), as the case may be, of less than 95% of the
Current Market Price of one Subordinate Voting Share or Multiple
Voting Share, as the case may be, on such record date (any such event
being herein referred to as a "Rights Offering"), each of the
Fixed Amounts in effect on the record date for such Rights Offering
shall be adjusted effective immediately after such record date by
multiplying such amount by a fraction, the numerator of which is
the total number of Subordinate Voting Shares or Multiple Voting
Shares outstanding on such record date plus a number of Subordinate
Voting Shares or Multiple Voting Shares, as the case may be, equal
to the number determined by dividing the aggregate price of the
total number of additional Subordinate Voting Shares or Multiple
Voting Shares, as the case may be, offered for subscription or
purchase under the Rights Offering (or the aggregate conversion
price of the convertible or exchangeable securities so offered) by
the Current Market Price of one Subordinate Voting Shares or
Multiple Voting Share, as the case may be, on such record date and
the denominator of which is the total number of Subordinate Voting
Shares or Multiple Voting Shares outstanding on such record date
plus the total number of additional Subordinate Voting Shares or
Multiple Voting Shares, as the case may be, offered for subscription
or purchase under the Rights Offering (or the total number of
Subordinate Voting Shares or Multiple Voting Shares, as the case may
be, into which the convertible or exchangeable securities so offered
are convertible or exchangeable). Subordinate Voting Shares or
Multiple Voting Shares beneficially owned by or held for the account
of the Corporation shall be deemed not to be outstanding for the
purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed. If the rights,
options or warrants subject to the Rights Offering are not so issued
or if, at the date of expiry of the rights, options or warrants
issued pursuant to such Rights Offering, less than all of the
rights, options or warrants subject to such Rights Offering have
been exercised, each of the Fixed Amounts shall be readjusted
effectively immediately after the date of expiry to an amount equal
to the amount which would have been in effect if such record date
had not been fixed or to an amount which would then be in effect on
such date of expiry of the Rights Offering if the only rights,
options or warrants issued pursuant thereto have been those that
were exercised, as the case may be.
(c) If the Corporation shall fix a record date for the issue or the
distribution to any of the holders of its Subordinate Voting Shares
or Multiple Voting Shares of:
(i) securities in the capital of the Corporation (including
rights, warrants or options to purchase any securities in the
capital of the Corporation);
<PAGE>
4(W)
(ii) evidences of the Corporation's indebtedness; or
(iii) any property or other assets and, to the extent that such
issuance or distribution does not constitute a distribution
referred to in paragraph 1.04(a)(iii), a Share Reorganization
or a Rights Offering (any of such non-excluded events being
herein called a "Special Distribution"),
each of the Fixed Amounts in effect on the record date for such
Special Distribution shall be adjusted effective immediately after
such record date by multiplying such amount by a fraction, the
numerator of which is equal to the remainder obtained when:
(iv) the product obtained by multiplying the aggregate number of
Subordinate Voting Shares or Multiple Voting Shares outstanding
on such record date is multiplied by the current Market Price
of one Subordinate Voting Share on such record date
is reduced by:
(v) the fair market value, as determined by the auditors of the
Corporation acting reasonably (whose determination shall be
conclusive) of such securities, evidences of indebtedness or
property or other assets, as the case may be, so issued or
distributed in the Special Distribution and which shall be
net of any consideration paid therefor by the holders of the
Subordinate Voting Shares or Multiple Voting Shares, as the
case may be,
and the denominator of which is the total number of Subordinate
Voting Shares or Multiple Voting Shares outstanding on such record
date multiplied by such Current Market Price of a Subordinate Voting
Share. Subordinate Voting Shares or Multiple Voting Shares
beneficially owned by or held for the account of the Corporation
shall be deemed not to be outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever
such a record date is fixed. To the extent that such Special
Distribution is not so made or is altered, each of the Fixed Amounts
shall be readjusted to the amount which would then be in effect
based upon the said securities, evidences of indebtedness, property
or assets, if any, actually distributed prior to the most recent
record date.
(d) (i) No adjustments to the Fixed Amounts shall be made pursuant to
subsections 1.04(a) or (c) hereof if the holders of the
Series 1 Shares are permitted to participate in such Share
Reorganization or Special Distribution, as though and to the
same effect as if they had
<PAGE>
4(X)
converted their Series 1 Shares into Subordinate Voting
Shares immediately prior to the record date for such Share
Reorganization or Special Distribution.
(ii) No adjustments to the Fixed Amounts shall be made pursuant to
subsection 1.04(b) if:
(A) the Subordinate Voting Shares or Multiple Voting Shares
(or securities convertible into or exchangeable for
Subordinate Voting Shares or Multiple Voting Shares)
forming the subject matter of the Rights Offering
therein referred to are offered at a price equal to or
greater than 65% of the greater of the amounts referred
to in paragraphs 1.01(f)(ii)(A) and 1.01(f)(ii)(B)
hereof; or
(B) the holders of the Series 1 Shares are permitted to
participate and do in fact participate in the Rights
Offering therein referred to as if they had converted
their Series 1 Shares into Subordinate Voting Shares
immediately prior to the Record Date for such Rights
Offering.
(e) If and whenever at any time prior to the Redemption Date there shall
be:
(i) a reclassification of the Subordinate Voting Shares or
Multiple Voting Shares outstanding at such time or a change
of the Subordinate Voting Shares or Multiple Voting Shares
into other shares or into other securities (other than
pursuant to a Share Reorganization); or
(ii) a consolidation, amalgamation, arrangement or merger of the
Corporation with or into any other corporation or other
entity (other than a consolidation, amalgamation, arrangement
or merger which does not result in any reclassification of
the outstanding Subordinate Voting Shares or Multiple Voting
Shares or change of the Subordinate Voting Shares or Multiple
Voting Shares into other shares);
(any of such events enumerated in (i) and (ii) above) being herein
called a "Capital Reorganization"), any holder of Series 1
Preference Shares who exercises his right to subscribe for and
purchase Subordinate Voting Shares pursuant to the exercise of his
Conversion Rights then held at any time after the effective date of
such Capital Reorganization shall be entitled to receive, and shall
accept for the same aggregate consideration in lieu of the number of
Subordinate Voting Shares to which such holder was
<PAGE>
4(Y)
theretofore entitled upon such exercise, the aggregate number of
shares, other securities or other property which such holder would
have been entitled to receive as a result of such Capital
Reorganization if, on the effective date thereof, the holder of the
Series 1 Preference Shares had been the registered holder of the
number of Subordinate Voting Shares to which such holder was
theretofore entitled to subscribe for and purchase upon the
conversion of the Series 1 Preference Shares;
(f) In any case in which this Section 1.04 shall require that an
adjustment shall become effective immediately after a record date
for an event referred to herein, the Corporation may, until the
occurrence of such event, defer issuing to the holder of any Series
1 Shares converted after such record date and before the occurrence
of such event the additional Subordinate Voting Shares or Multiple
Voting Shares, as the case may be, issuable upon such conversion by
reason of the adjustment required by such event in addition to the
Subordinate Voting Shares or Multiple Voting Shares, as the case may
be, issuable upon such conversion before giving effect to such
adjustment; provided, however, that the Corporation shall deliver to
such holder an appropriate instrument evidencing such holder's
rights to receive such additional Subordinate Voting Shares or
Multiple Voting Shares, as the case may be, upon the occurrence of
the event requiring such adjustment.
(g) In the case of any reclassification of, or other change in, the
outstanding Subordinate Voting Shares or Multiple Voting Shares not
otherwise mentioned herein, each of the Fixed Amounts shall be
adjusted in such manner as the auditors of the Corporation
determines to be appropriate on a basis consistent with this Section
1.04.
(h) If any question shall at any time arise with respect to adjustments
to the Fixed Amounts or with respect to the amount of any cash
payment made in lieu of issuing a fractional share, such question
shall be determined by the auditors of the Corporation and thereupon
shall become conclusive.
(i) Forthwith after the occurrence of any adjustment in any of the Fixed
Amounts pursuant to this Section 1.04, the Corporation shall forward
to the holders of the Series 1 Shares a certificate certifying as to
the amount of such adjustment and, in reasonable detail, the event
requiring and the manner of computing such adjustment.
(j) Notwithstanding any other provision contained herein, no adjustment
to any of the Fixed Amounts shall be required in respect of the
issue of Subordinate Voting Shares or securities convertible into
Subordinate Voting Shares pursuant to any stock option, purchase
plan or exchange right of, for
<PAGE>
4(Z)
or held by any directors, officers or employees of the Corporation or
any of its subsidiaries, save and except that this subsection
1.01(j) shall have no application in the case of the issue to Jay S.
Hennick of Subordinate Voting Shares or securities convertible into
Subordinate Voting Shares pursuant to any such stock option,
purchase plan or exchange right extended to directors, officers or
employees of the Corporation or any of its subsidiaries.
(k) Notwithstanding any other provision contained herein, no adjustment
to any of the Fixed Amounts shall be required unless such adjustment
would require an increase or decrease of at least 2% in such Fixed
Amounts; provided, however, that any adjustments which by reason of
this subsection 1.04(k) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment.
7.05 REDEMPTION BY THE CORPORATION:
(a) Subject to the provisions of applicable law, the Corporation shall
redeem on the Redemption Date all Series 1 Shares then outstanding
and in respect of which a Conversion Notice sent in accordance with
the applicable provisions hereof has not been received.
(b) The price at which each such Series 1 Share is to be redeemed shall
be the aggregate of the following amounts:
(i) the sum of $1,000;
(ii) all dividends accrued (but unpaid) on such Series 1 Share up
to the date fixed for redemption; and
(iii) any amount payable by the Corporation in respect of such
Series 1 Shares pursuant to paragraph 1.01(q)(ii) hereof.
(c) (i) Notice of redemption of Series 1 Shares shall be given by the
Corporation not less than 10 days prior to the Redemption Date
to each then registered holder of Series 1 Shares. Accidental
failure or omission to give such notice to one or more of such
holders shall not affect the validity of such redemption.
Such notice shall set out the Redemption Amount, the
Redemption Date, the place or places of redemption and the
number of Series 1 Shares to be redeemed.
(ii) On the Redemption Date, the Corporation shall pay the
Redemption Amount to the holder of the Series 1 Shares
redeemed and, if the Corporation has not at such time already
gone public, the Corporation shall, concurrently therewith,
deliver an agreement (the
<PAGE>
4(AA)
"Participation Agreement") executed by it in favour of the
holders of Series 1 Shares so redeemed to the effect that if
the Corporation goes public within 6 months following the
Redemption Date, a holder of Series 1 Shares which have been
redeemed shall have the right, upon paying to the Corporation
the Redemption Amount together with interest thereon at the
rate of 10% per annum from and after the Redemption Date to
the date of payment, to receive that number of Subordinate
Voting Shares as such holder would have received had it
converted its Series 1 Shares into Subordinate Voting Shares
in accordance with Section 1.03 on the Redemption Date, on
presentation and surrender at the place or one of the places
of redemption of the respective certificates representing
such shares, and the holders of the Series 1 Shares called
for redemption shall cease to be entitled to dividends or to
exercise any of the rights of holders in respect thereof
unless payment of the Redemption Amount shall not be made in
accordance with the foregoing provisions, in which case the
rights of the holders shall remain unimpaired.
(iii) The Corporation shall have the right at any time after giving
notice of redemption to deposit the Redemption Amount of the
Series 1 Shares thereby called for redemption, or such part
thereof as at the time of deposit has not been claimed by the
shareholders entitled thereto (together with executed copies
of the Participation Agreement, if applicable) with any
Canadian chartered bank or trust company in Canada specified
in the notice of redemption or in a subsequent notice to the
holders of the shares in respect of which the deposit is
made, in a special account for the holders of such shares,
and upon such deposit and delivery being made or upon the
Redemption Date, whichever is the later, the Series 1 Shares
in respect of which such deposit (together with delivery of an
executed copy of the Participation Agreement, if applicable)
shall have been made shall be deemed to be redeemed and the
rights of each holder thereof shall be limited to receiving,
without interest, his proportionate part of the Redemption
Amount so deposited (and delivery of the Participation
Agreement, if applicable) upon presentation and surrender of
the certificates representing his shares so redeemed.
7.06 CANCELLATION OF SERIES 1 SHARES:
Series 1 Shares purchased, redeemed or otherwise acquired by the
Corporation shall be cancelled.
<PAGE>
7.07 DISSOLUTION:
On the liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, or other distribution of assets of the
Corporation among its shareholders for the purpose of winding up its affairs,
the holders of the Series 1 Shares shall be entitled to receive in lawful
money of Canada an amount equal to the Redemption Amount per share. The
Series 1 Preference Shares shall be entitled to preference over all other
series of Preference Shares and all other classes of shares in the capital of
the Corporation with respect to priority in payment of dividends and in 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.
7.08 NOTICES:
All notices or other communications by the terms hereof required
or permitted to be given by a holder of Series 1 Shares to the Corporation or
by the Corporation to a holder of Series 1 Shares shall be given in writing
by personal delivery (which personal delivery may be affected by depositing
the notice or other communication in question with a responsible courier
service for delivery (courier charges fully prepaid) to the addressee
thereof) or by registered mail (postage fully prepaid) mailed from anywhere
within Canada or the continental United States of America, addressed, in the
case of the Corporation, to the President of the Corporation at the
Corporation's registered office and, in the case of a holder of Series 1
Shares, to that holder at its most recent address appearing in the
Corporation's share register. Any such notices or other communications shall
be deemed to have been received, in the case of sending by personal delivery,
upon delivery, or, in the case of sending by registered mail, 72 hours after
12:01 a.m. on the day following the day of the mailing thereof; provided that
if any such notice, request, demand or other communication shall have been
mailed and if regular mail service shall be interrupted by strikes or other
irregularities, such notice, request, demand or other communication shall be
deemed to have been received 72 hours after 12:01 a.m. on the day following
the resumption of normal mail service.
7.09 CURRENCY:
All dollar amounts expressed herein are expressed in Canadian
dollars and all payments contemplated by the provisions hereof shall be made
in Canadian funds.
7.10 MODIFICATION:
In addition to any other approval or authorization required by
applicable law the rights, conditions, restrictions and prohibitions
attaching to the Series 1 Shares may not be deleted, varied, altered or
amended without the prior approval of at least 66-2/3% of the votes cast at a
meeting of the holders of the Series 1 Shares or by a
<PAGE>
resolution in writing by those persons holding not less than 66-2/3% of all
of the Series 1 Shares then being outstanding.
7.11 APPROVAL BY HOLDERS OF SERIES 1 SHARES:
The approval of the holders of the Series 1 Shares with respect to
any and all matters referred to herein or any other matter requiring the
consent of such holders may, subject to applicable law, be given in writing
by the holders of 50% (or, if required by Section 1.10, 66-2/3%) of the
Series 1 Shares for the time being outstanding or by resolution duly passed
and carried by not less than 50% (or, if required by Section 1.10, 66-2/3%)
of the votes cast on a ballot at a meeting of the holders of the Series 1
Shares duly called and held for the purpose of considering the subject matter
of such resolution and at which meeting holders of not less than 10% of the
Series 1 Shares then outstanding are present in person or represented by
proxy; provided, however, that if at any such meeting, when originally held,
the holders of at least 10% of the Series 1 Shares then outstanding are not
present in person or represented by proxy within 30 minutes after the time
fixed for the meeting, the meeting shall be adjourned to such date, being not
less than 15 days later, and at such time and place as may be fixed by the
Chairman of such meeting and at such adjourned meeting the holders of the
Series 1 Shares present in person or represented by proxy, whether or not
they hold 10% of the Series 1 Shares then outstanding, may transact the
business for which the meeting was originally called, and the resolution duly
passed and carried by not less than 50% (or, if required by Section 1.10,
66-2/3%) of the votes cast on a ballot at such adjourned meeting shall
constitute the approval of the holders of the Series 1 Shares hereinbefore
mentioned. Notice of any such original meeting of the holders of the Series 1
Shares shall be given not less than 10 days nor more than 50 days prior to
the date fixed for such meeting and shall specify in general terms the
purpose for which the meeting is called. No notice of any such adjourned
meeting need be given unless such meeting is adjourned by one or more
adjournments for an aggregate of 30 days or more from the date of such
original meeting, in which later case notice of the adjourned meeting shall
be given in the manner prescribed for the original meeting as aforesaid. The
formalities to be observed with respect to the giving of notice of any such
original or adjourned meeting and the conduct thereof shall be those from
time to time prescribed in the constating documents of the Corporation with
respect to meetings of shareholders.
7.12 VOTING RIGHTS:
The holders of the Series 1 Shares shall not be entitled as such,
except as required by law, to vote at any meeting of the shareholders of the
Corporation but such holders shall be entitled to receive notice of and
attend at all meetings of shareholders of the Corporation.
<PAGE>
<TABLE>
<S> <C>
9. The issue, transfer or ownership of shares is/is not L'EMISSION, LE TRANSFERT OU LA PROPRIETE D'ACTIONS
restricted and the restrictions (if any) are as follows: EST/N'EST PAS RESTREINT. LES RESTRICTIONS, S'IL Y A LIEU,
SONT LES SUIVANTES:
Not restricted
10. Other provisions, if any, are: AUTRES DISPOSITIONS, S'IL Y A LIEU :
</TABLE>
Without in any way limiting the powers conferred upon the Corporation and its
directors by the Act, or any successor statute, the board of directors may
from time to time, in such amounts and on such terms as they deem expedient:
(a) borrow money on the credit of the Corporation;
(b) issue, sell or pledge debt obligations (including bonds,
debentures, notes or other similar obligations, secured or
unsecured) of the Corporation;
(c) charge, mortgage, hypothecate or pledge all or any of the
currently owned or subsequently acquired real or personal, movable
or immovable, property of the Corporation, including book debts,
rights, powers, franchises and undertaking, to secure any debt
obligations or money borrowed, or other debt or liability of the
Corporation.
Subject to the Act, the board of directors may from time to time delegate to
such one or more of the directors and officers of the Corporation as may be
designated by the board all or any of the powers conferred on the board above
to such extent and in such manner as the board shall determine with respect
to each such delegation.
<TABLE>
<S> <C>
11. The statements required by subsection 178(2) of the LES DECLARATIONS EXIGEES AUX TERMES DU PARAGRAPHE
Business Corporations Act are attached as Schedule 178(2) DE LA LOI SUR LES SOCIETES PAR ACTIONS
"A". CONSTITUENT L'ANNEXE "A".
12. A copy of the amalgamation agreement or directors UNE COPIE DE LA CONVENTION DE FUSION OU LES
resolutions (as the case may be) is/are attached as RESOLUTIONS DES ADMINISTRATEURS (SELON LE CAS)
Schedule "B". CONSTITUTE(NT) L'ANNEXE "B".
</TABLE>
<PAGE>
<TABLE>
<S> <C>
These articles are signed in duplicate. LES PRESENTS STATUTS SONT SIGNES EN DOUBLE
EXEMPLAIRE.
_____________________________________________________________________________________________________________
Names of the amalgamating corporations and DENOMINATION SOCIALE DES SOCIETES QUI FUSIONNENT,
signatures and descriptions of office of their SIGNATURE ET FONCTION DE LEURS DIRIGEANTS REGULIEREMENT
proper officers. DESIGNES.
</TABLE>
1140 BAY STREET LIMITED
Per: _____________________________
JAY S. HENNICK
Director & President
FIRSTSERVICE CORPORATION
Per: _____________________________
JAY S. HENNICK
Director & President
<PAGE>
SCHEDULE "A"
STATEMENT OF DIRECTOR OR OFFICER OF
-----------------------------------
FIRSTSERVICE CORPORATION
(THE "Corporation")
PURSUANT TO SUBSECTION 178(2) OF THE BUSINESS
CORPORATIONS ACT (ONTARIO) (THE "ACT")
-----------------------------------
WHEREAS the Corporation and 1140 Bay Street Limited wish to
amalgamate and continue as one corporation (the "Amalgamated Corporation")
pursuant to Section 177(1) of the Act;
AND WHEREAS the undersigned is required to make the following
statements in connection with the said amalgamation:
1. The undersigned is President and a director of the Corporation.
2. There are reasonable grounds for believing that:
(a) the Corporation is and the Amalgamated Corporation will be able to
pay its liabilities as they become due;
(b) the realizable value of the assets of the Amalgamated Corporation
will not be less than the aggregate of its liabilities and stated
capital of all classes; and
(c) no creditor of the Corporation will be prejudiced by the
amalgamation.
DATED as of the March 30, 1999.
/s/ Jay S. Hennick
-------------------------------
Jay S. Hennick
<PAGE>
STATEMENT OF DIRECTOR OR OFFICER OF
1140 BAY STREET LIMITED
(THE "Corporation")
PURSUANT TO SUBSECTION 178(2) OF THE BUSINESS
CORPORATIONS ACT (ONTARIO) (the "Act")
------------------------------------------
WHEREAS the Corporation and FirstService Corporation wish to
amalgamate and continue as one corporation (the "Amalgamated Corporation")
pursuant to Section 177(1) of the Act;
AND WHEREAS the undersigned is required to make the following
statements in connection with the said amalgamation:
1. The undersigned is President of the Corporation.
2. There are reasonable grounds for believing that:
(a) the Corporation is and the Amalgamated Corporation will be able to
pay its liabilities as they become due;
(b) the realizable value of the assets of the Amalgamated Corporation
will not be less than the aggregate of its liabilities and stated
capital of all classes; and
(c) no creditor of the Corporation will be prejudiced by the
amalgamation.
DATED as of the March 30, 1999.
/s/ Jay S. Hennick
---------------------------------
Jay S. Hennick
<PAGE>
SCHEDULE "B"
RESOLUTION OF THE DIRECTORS OF
FIRSTSERVICE CORPORATION
(THE "CORPORATION")
"WHEREAS the Corporation holds directly or indirectly all the issued and
outstanding shares of 1140 Bay Street Limited and has agreed to amalgamate
with 1140 Bay Street Limited pursuant to subsection (1) of section 177 of the
BUSINESS CORPORATIONS ACT;
RESOLVED that:
1. The amalgamation of the Corporation with 1140 Bay Street Limited under
the BUSINESS CORPORATIONS ACT, pursuant to subsection (1) of section 177
thereof, be and the same is hereby authorized and approved;
2. The name of the amalgamated corporation shall be "FirstService
Corporation";
3. Effective upon issuance of a Certificate of Amalgamation pursuant to
section 178 of the BUSINESS CORPORATIONS ACT, and without affecting the
validity of the incorporation and existence of the Corporation under its
articles of incorporation and of any act done thereunder, all shares of the
authorized capital of 1140 Bay Street Limited including all such shares which
have been issued and are outstanding at the date hereof, shall be cancelled
without any repayment of capital in respect thereof;
4. Except as may be prescribed, the articles of amalgamation of the
amalgamated corporation shall be the same as the articles of FirstService
Corporation;
5. No securities shall be issued and no assets shall be distributed by the
amalgamated corporation in connection with the amalgamation;
6. The by-laws of the amalgamated corporation shall be the same as the
by-laws of the Corporation, the amalgamating holding corporation; and
7. The proper officers of the Corporation be and they are hereby authorized
to do all things and execute all instruments and documents necessary or
desirable to carry out and give effect to the foregoing.
8. This resolution may be executed (by original or facsimile signature) in
several counterparts, each of which so executed shall be deemed to be an
original and such counterparts together shall constitute one and the same
resolution and notwithstanding their date of execution,
<PAGE>
shall be deemed to have been executed as of the date hereof."
__________________________________________________________________________
Certified to be a true and correct copy of a resolution duly passed by
the directors of FirstService Corporation as of the 30th day of March,
1999 and that the said resolution is now in full force and effect.
DATED this 30th day of March, 1999.
/s/ Jay S. Hennick
---------------------------------
Jay S. Hennick, President
<PAGE>
RESOLUTION OF THE SOLE DIRECTOR OF
1140 BAY STREET LIMITED
(THE "CORPORATION")
"WHEREAS the Corporation is a wholly-owned subsidiary of FirstService
Corporation and has agreed to amalgamate with FirstService Corporation
pursuant to subsection (1) of section 177 of the BUSINESS CORPORATIONS ACT;
RESOLVED that:
1. The amalgamation of the Corporation with FirstService Corporation under
the BUSINESS CORPORATIONS ACT, pursuant to subsection (1) of section 177
thereof, be and the same is hereby authorized and approved;
2. The name of the amalgamated corporation shall be "FirstService
Corporation";
3. Effective upon issuance of a Certificate of Amalgamation pursuant to
section 178 of the BUSINESS CORPORATIONS ACT, and without affecting the
validity of the incorporation and existence of the Corporation under its
articles of incorporation and of any act done thereunder, all shares of the
authorized capital of the Corporation including all such shares which have
been issued and are outstanding at the date hereof, shall be cancelled
without any repayment of capital in respect thereof;
4. Except as may be prescribed, the articles of amalgamation of the
amalgamated corporation shall be the same as the articles of FirstService
Corporation;
5. No securities shall be issued and no assets shall be distributed by the
amalgamated corporation in connection with the amalgamation;
6. The by-laws of the amalgamated corporation shall be the same as the
by-laws of FirstService Corporation, amalgamating holding corporation; and
7. The proper officers of the Corporation be and they are hereby authorized
to do all things and execute all instruments and documents necessary or
desirable to carry out and give effect to the foregoing.
8. This resolution may be executed (by original or facsimile signature) in
several counterparts, each of which so executed shall be deemed to be an
original and such counterparts together shall constitute one and the same
resolution and notwithstanding their date of execution,
<PAGE>
shall be deemed to have been executed as of the date hereof."
__________________________________________________________________________
Certified to be a true and correct copy of a resolution duly passed by
the directors of 1140 Bay Street Limited as of the 30th day of March,
1999 and that the said resolution is now in full force and effect.
DATED this 30th day of March, 1999.
/s/ Jay S. Hennick
---------------------------------
Jay S. Hennick, President
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
[LOGO] Ministry of Ministere de ONTARIO CORPORATION NUMBER
Consumer and la Consommation NUMERO DE LA COMPAGNIE EN ONTARIO
Commercial et du Commerce 1 788412 1
Relations
CERTIFICATE CERTIFICAT
This is to certify that these Ceci certifie que les presents
articles are effective on statuts entrent en vigueur le
DECEMBER 17 DECEMBRE, 1991
- ----------------------------------------------------------------------------------------------------------------------
[illegible]
Director/Directeur TRANS
Business Corporations Act / Loi de sur les compagnies CODE
| C |
18
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
ARTICLES OF AMENDMENT
Form 3 STATUTS DE MODIFICATION
Business
Corporations
Act,
1982
<TABLE>
<CAPTION>
<S> <C>
1. The present name of the corporation is: DENOMINATION SOCIALE ACTUELLE DE LA COMPAGNIE:
------------------------------------------------------------------------------------------------------
F I R S T S E R V I C E C O R P O R A T I O N
------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
</TABLE>
FORMULE
NUMERO 3
LOI DE 1982
SUR LES
COMPAGNIES
<TABLE>
<CAPTION>
<S> <C>
2. The name of the corporation is changed to NOUVELLE DENOMINATION SOCIALE DE LA COMPAGNIE
(if applicable): (S'IL Y A LIEU):
------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
3. Date of incorporation/amalgamation: DATE DE LA CONSTITUTION OU DE LA FUSION:
31 JULY 1988
-------------------------------------------------------------------------------------------------------
(Day, Month, Year)
(JOUR, MOIS, ANNEE)
4. The articles of the corporation are amended as LES STATUS DE LA COMPAGNIE SONT MODIFIES
follows: DE LA FACON SUIVANTE:
SEE SCHEDULE "A" ATTACHED HERETO.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
5. The amendment has been duly authorized as LA MODIFICATION A ETE DUMENT AUTORISEE CONFORMEMENT
required by Sections 167 and 169 (as applicable) of A L'ARTICLE 167 ET, S'IL Y A LIEU, A L'ARTICLE 169 DE LA
the Business Corporations Act. LOI SUR LES COMPAGNIES.
6. The resolution authorizing the amendment was LES ACTIONNAIRES OU LES ADMINISTRATEURS (LE CAS ECHEANT)
approved by the [illegible]/directors (as DE LA COMPANGIE ONT APPROUVE LA RESOLUTION AUTORISANT
applicable) of the corporation on LA MODIFICATION
17 DECEMBER 1991
----------------------------------------------------------------------------------------------------------------
(Day, Month, Year)
(JOUR, MOIS, ANNEE)
These articles are signed in duplicate. LES PRESENTS STATUTS SONT SIGNES EN DOUBLE
EXEMPLAIRE.
</TABLE>
FIRSTSERVICE CORPORATION
--------------------------------------
(Name of Corporation)
(DENOMINATION SOCIALE DE LA COMPAGNIE)
[ILLEGIBLE]
JAY S. HENNICK - President
By/PAR: --------------------------------------
(Signature) (Description of Office)
(SIGNATURE) (FONCTION)
<PAGE>
SCHEDULE "A"
SERIES 1 PREFERENCE SHARES
The first series of the Preference Shares of the Corporation shall
consist of an aggregate of 2,500 shares, all designated as "Series 1
Preference Shares" (collectively, the "Series 1 Shares"), with each such
share having a stated value of $1,000. In addition to the rights, conditions,
restrictions and prohibitions attaching to the Preference Shares of the
Corporation as a class, the Series 1 Shares shall have attached thereto the
following rights, conditions, restrictions and prohibitions:
1.01 DEFINITIONS: As used herein, the following words and phrases shall have
the following meanings, respectively:
(a) "arm's length" has the meaning given thereto in the Income Tax Act
(Canada), as amended from time to time;
(b) "Board Lot" means a lot of not less than 100 Subordinate Voting
Shares or a lot consisting of at least that number of securities
convertible into or exchangeable for Subordinate Voting Shares which,
if fully converted or exchanged, would result in the issuance of not
less than 100 Subordinate Voting Shares;
(c) "Business Day" means a day other than a Saturday, Sunday or any
other day that is a statutory or civic holiday in the place where the
Corporation's registered office is located and, if any day on which
any dividend on the Series 1 Shares is payable or by which any other
action is required or permitted to be taken pursuant to these
provisions is not a Business Day, such dividend shall be payable or
such other aciton shall be required or permitted to be taken on the
next succeeding day that is a Business Day;
(d) "Coit Termination Amount" means the amount which Cleanol Services
Inc. (formerly 875551 Ontario Limited) would be required to pay to
Coit Drapery Cleaners Inc. at the time in question if Cleanol
Services Inc. then elected to exercise the option granted to it in
Section 8.04 of a franchise agreement entered into effective as of
the 1st day of March, 1990 (the "Coit Franchise Agreement") between
Coit Drapery Cleaners Inc. and 875551 Ontario Limited;
(e) "Conversion Notice" has the meaning given thereto in subsection
1.03(e) hereof;
(f) "Conversion Price" means the applicable conversion price per
Subordinate Voting Shares for which Subordinate Voting Shreas may be
issued upon the
<PAGE>
- 2 -
conversion of Series 1 Shares, such conversion price to be
determined as follows:
(i) if at the time in question the Corporation has gone public, an
amount equal to the lesser of:
(A) $8.50; and
(B) the greater of:
(1) 75% of the Public Offering Price; and
(2) $5.50;
and
(ii) if the Corporation has not gone public prior to the Redemption
Date, an amount equal to the greater of:
(A) an amount equal to the quotient obtained when an amount
equal to 800% of Normalized After Tax Earnings for the
then most recently completed fiscal year of the
Corporation (provided that if such fiscal year is less
than 365 days in duration, the Normalized After Tax
Earnings of the Corporation for the period of 365 days
ending on the last day of such fiscal year shall be used)
is decreased by an amount equal to:
(1) the Coit Termination Amount if the Coit Franchise
Agreement has not then been terminated; or
(2) zero if the coit Franchise Agreement has then been
terminated
and the remainder so obtained is divided by the aggregate
number of Multiple Voting Shares and Subordinate Voting
Shares outstanding on the day immediately prior to the
Redemption Date calculated on a fully diluted basis in
accordance with GAAP; and
(B) $6.50 or such other dollar amount per Subordinate Voting
Share for which Subordinate Voting Shartes shall be
issued upon the conversion of Series 1 Shares in
accordance with Section 1.04 hereof;
<PAGE>
- 3 -
(g) "Current Market Price" of the Subordinate Voting Shares as at any
date (the "Reference Date") means:
(i) if the Subordinate Voting Shares are then listed on one or
more stock exchanges, the weighted average of the closing
prices per share for bona fide arm's length Board Lot sales of
Subordinate Voting Shares for the 20 trading days as on which
such shares were traded immediately prior to the Reference
Date on such stock exchange as on which the highest volume of
Subordinate Voting Shares was traded during such 20 days;
(ii) if the Subordinate Voting Shares are not then listed on any
stock exchange but are traded on an over-the-counter market,
the weighted average of the closing prices per share for
bona fide arm's length Board Lot sales of Subordinate Voting
Shares for the 20 trading days as on which such shares were
traded immediately prior to the Reference Date on such
over-the-counter market as on which the highest volume of
Subordinate Voting Shares was traded during such 20 days; or
(iii) if the Subordinate Voting Shares are not then listed on any
stock exchange or traded on any over-the-counter market, the
greater of the amounts refered to in paragraphs
1.01(f)(ii)(A) and 1.01(f)(ii)(B) subject to any adjustments
which may be required to be made to such amounts pursuant to
the applicable provisions hereof;
(h) "Dividend Payment Date" means March 31, June 30, September 30 and
December 31 in each calendar year;
(i) "Dividend Payment Period" means the period of three consecutive
months ending on a Dividend Payment Date;
(j) "Fixed Amounts" means, collectively, the amounts specified in
paragraphs 1.01(f)(i)(A), 1.01(f)(i)(B)(2) and 1.01(f)(ii)(B) and
"Fixed Amount" means any one of such aforesaid amounts;
(k) "going public" means when used in relation to the Corporation, that
the board of directors of the Corporation has authorized the
Corporation to engage in a Public Offering;
(l) "gone public" means, when used in relation to the Corporation, that
the Corporation has fully completed a Public Offering in
accordance with all applicable laws;
<PAGE>
- 4 -
(m) "GAAP" means generally accepted accounting principles as promulgated
or interpreted, as the case may be, from time to time by the Canadian
Institute of Chartered Accountants or, if it should cease to exist,
the entity which is the successor thereto;
(n) "Normalized After Tax Earnings" means, for any fiscal year of the
Corporation, the aggregate of the following:
(i) the consolidated after tax earnings (before all extraordinary
losses (as so designated by the Corporation's auditors)
incurred by the Corporation and its subsidiaries in such fiscal
year) and before minority interest in such earnings of the
Corporation for such fiscal year;
(ii) the after tax cost to Greenspace Services Ltd. of all
amortization charges incurred in such fiscal year by the
Corporation and its subsidiaries to the extent that such
charges are referrable to the amount paid for those items
referred to in subsections 2.01(1) and (m) of a certain asset
purchase agreement made effective as of the 27th day of
October, 1991 among Ecolab Ltd., Greenspace Services Ltd. and
the Corporation;
(iii) the after tax cost to Cleanol Services Inc. of all franchise
fees and other like payments made to or accrued in favour of
Coit Drapery Cleaners Inc. in such fiscal year pursuant to the
Coit Franchise Agreement;
(iv) the provision made in such fiscal year for income taxes payable
by the Corporation and its subsidiaries which are categorized
by the Corporation's auditors as "Income Taxes Payable - Other
Deferred", being those taxes that will not be paid as a result
of operating losses incurred subsequent to such fiscal year end
by reason of the seasonal nature of the expenses giving rise to
such operating losses; and
(v) the after tax effect to the Corporation and its subsidiaries of
all unusual and/or non-recurring gains and losses which are
considered material to the financial position or results from
operations in such fiscal year (i.e., asset dispositions);
and all of the foregoing shall be determined on a consolidated basis
in accordance with GAAP, consistently applied;
<PAGE>
- 5 -
(o) "Public Offering" means an offering to the public at any time
subsequent to the date of issuance of the Series 1 Shares involving
the issuance by the Corporation of at least one Board Lot of its
Subordinate Voting Shares (or securities exchangeable or convertible
into its Subordinate Voting Shares) (which Subordinate Voting Shares
or securities convertible or exchangeable into the Subordinate Voting
Shares forming the subject matter of such offering, are listed at,
prior or within 30 days following the date of the completion of such
offering on any one or more of The Toronto Stock Exchange, the
Montreal Exchange, the Vancouver Stock Exchange or a major U.S. stock
exchange) to not less than 200 subscribers pursuant to a (final)
prospectus (or other similar public offering document which, in the
case of any such offering to be conducted in the United States of
America, includes a registration statement filed with and accepted by
the Securities and Exchange Commission) in respect of which a receipt
or other like approval has been received from all securities
regulatory authorities in Canada and/or the United States of America
having jurisdiction with respect to such offering;
(p) "Public Offering Price" means:
(i) if the Corporation is offering Subordinate Voting Shares for
sale pursuant to a Public Offering, an amount equal to the per
share price at which such Subordinate Voting Shares are being
offered;
(ii) if the Corporation is offering securities convertible into or
exchangeable for Subordinate Voting Shares for sale pursuant
to a Public Offering, an amount equal to the per share
conversion or exchange price of such securities; or
(iii) if the Corporation is offering securities in units comprised in
part of Subordinate Voting Shares for sale pursuant to a Public
Offering, an amount equal to the portion of the purchase price
of such units which is allocable, on a per share basis, to the
Subordinate Voting Shares forming a part thereof;
(q) "Redemption Amount" means, with respect to any Series 1 Share, the
amount specified in subsection 1.05(b); and
(r) "Redemption Date" means the earlier of:
(i) the first date following the date of issuance of the Series 1
Shares as on which the Corporation has gone public; and
<PAGE>
- 6 -
(ii) December 31, 1994, provided that the Corporation may, without
the necessity of obtaining the consent or approval of the
holders of the Series 1 Shares thereto, extend such date to
such later date (the "Extended Redemption Date") not later
than December 31, 1995, as it may in its sole discretion
determine in which event the Corporation shall pay on the
Extended Redemption Date to each holder of Series 1 Shares in
respect of each Series 1 Share then held by it an additional
amount equal to the quotient obtained when the sum of $193,000
is divided by the aggregate number of Series 1 Shares then
outstanding and the quotient so obtained is multiplied by a
fraction, the numerator of which is the number of days during
the period commencing January 1, 1995 and ending on the
Extended Redemption Date and the denominator of which is 365.
1.02 DIVIDENDS. The holders of the Series 1 Shares shall be entitled to
receive, out of any profits or surplus available for dividends, fixed,
cumulative, preferential cash dividends at the rate of $50 per annum per
Series 1 Share, such dividends to be paid in equal quarterly instalments on
each Dividend Payment Date. Such dividends shall accrue on a daily basis from
the respective dates of issue of the Series 1 Shares. If in any Dividend
Payment Period the Corporation shall not have paid in full such quarterly
dividend instalment for such Dividend Payment Period on all of the Series 1
Shares then outstanding, such quarterly dividend instalment, or the unpaid
portion thereof, shall be paid in a subsequent Dividend Payment Period or
Dividend Payment Periods in priority to dividends on any class of shares
ranking junior to the Series 1 Shares. No dividend shall be declared, paid or
set apart for payment on any class of shares ranking junior to the Series 1
Shares as regards the payment of dividends unless all accrued cumulative
preferential cash dividends on the Series 1 Shares then outstanding shall
have been paid in full or sufficient funds therefor set aside for payment at
the time of such declaration, payment or setting apart. The holders of the
Series 1 Shares shall not be entitled to any dividends other than or in
excess of the cash dividends provided for in this Section 1.02.
The amount of the accrued dividend on any Series 1 Share required to
be paid in respect of any period which is less than a full Dividend Payment
Period shall be an amount (rounded to the nearest cent) equal to the result
obtained when $12.50 is multiplied by a fraction, the numerator of which is
the number of days in such period that such Series 1 Share has been
outstanding and the denominator of which is the total number of days in such
Dividend Payment Period.
Payment of such dividends to those persons entitled thereto shall be
made by way of cheques of the Corporation drawn on a Canadian chartered bank
and payable at par at any branch in Canada of such bank. The mailing of such
cheques shall satisfy and discharge all liability of the Corporation for the
payment of such dividends to the extent of the amount represented thereby
(plus any tax required to be withheld
<PAGE>
- 7 -
therefrom) unless such cheques are dishonoured on due presentation. Any
monies to be paid in cash pursuant to this Section 1.02 represented by a
cheque which has not been presented for payment within 6 years after it was
issued or that otherwise remains unclaimed for a period of 6 years from the
date on which it was declared to be payable and set apart for payment shall
be forfeited to the Corporation.
1.03 CONVERSION AT THE OPTION OF THE HOLDER.
(a) Each holder of Series 1 Shares may at any time and from time to
time on or prior to August 31, 1994 send to the Corporation a
Conversion Notice in respect of all or any part of the Series 1
Shares then owned by it and in respect of which a Conversion
Notice had not previously been sent and any Conversion Notice
so sent shall be irrevocable from and after such time as it
shall have been received by the Corporation. Notwithstanding
the foregoing, if the Corporation elects to extend the
Redemption Date as contemplated in subsection 1.01(q) hereof,
the date of expiry of the conversion rights of the holders of
the Series 1 Shares shall be extended to the Extended
Redemption Date. The Corporation shall send a notice in writing
to each of the holders of the Series 1 Shares not earlier than
June 1, 1994 and not later than June 30, 1994 advising them of
their conversion rights under this subsection 1.03(a).
(b) If at any time and from time to time while any of the Series 1
Shares are outstanding the Corporation should decide that it
wishes to engage in a Public Offering and such decision has
been approved by a decision of the board of directors of the
Corporation, the Corporation shall, within 21 days following
the making of such decision by the Board of Directors of the
Corporation, send to each registered holder of Series 1 Shares
a notice in writing (the "Offering Notice") at the address of
such holder maintained in the share registers of the
Corporation advising that the Corporation proposes to engage in
a Public Offering. Such Offering Notice shall, to the extent
that the same has been determined, set out a summary of the
material particulars of any such proposed Public Offering. Each
holder of Series 1 Shares shall have a period of 60 days
following its receipt of an Offering Notice in which to send to
the Corporation a Conversion Notice in respect of all or any
part of those Series 1 Shares then held by it in respect of
which a Conversion Notice had not previously been sent and a
holder who so sends a Conversion Notice shall not have any
right to withdraw the same. If the Corporation has not gone
public prior to the expiry of a period of 150 days following
its sending of an Offering Notice, all Conversion Notices
submitted to the Corporation in response to such Offering
Notice shall be deemed to have been withdrawn and the
Corporation shall forthwith return all share certificate(s)
evidencing the Series 1 Shares deposited pursuant to all
Conversion Notices so deemed to
<PAGE>
- 8 -
have been withdrawn. Any holder of Series 1 Shares shall be
provided with a copy of the preliminary prospectus, final
prospectus or other similar disclosure document prepared in
connection with any such proposed Public Offering.
(c) The conversion rights attaching to the Series 1 Shares as
provided for in this Section 1.03 shall forever cease and be
null and void in respect of all those Series 1 Shares as in
respect of which the Corporation shall not have received a
valid Conversion Notice prior to the expiration of the time
periods hereinbefore specified during which any such Conversion
Notice in respect thereof may be given and all Series 1 Shares
in respect of which a Conversion Notice has not been so
received by the Corporation shall be redeemed on the Redemption
Date in accordance with the provisions of Section 1.05 hereof.
(d) Subject to the provisions contained in this Section 1.03, a
holder of Series 1 Shares shall receive in respect of each
Series 1 Share elected to be converted into Subordinate Voting
Shares that number of fully paid and non-assessable Subordinate
Voting Shares as is equal to the result obtained when the sum
of $1,000 is divided by the Conversion Price.
(e) Any holder of Series 1 Shares electing to exercise the
conversion right provided for in this Section 1.03 shall send a
written notice (a "Conversion Notice") to the Corporation and
such Conversion Notice shall be signed by such holder and shall
specify (i) the number of Series 1 Shares which such holder
desires to have converted, (ii) whether such notice is being
furnished as a result of the Corporation having sent an
Offering Notice to such holder and (iii) the name(s) in which
the Subordinate Voting Shares resulting from such conversion
are to be registered failing which such Subordinate Voting
Shares shall be registered in the name of such holder. Such
Conversion Notice shall be accompanied by share certificate(s)
evidencing at least that number of Series 1 Shares as are
elected to be converted as specified in such Conversion Notice.
Any Conversion Notice not accompanied by the required share
certificate(s) (or, alternatively, a declaration of loss and
indemnity bond in form acceptable to the Corporation) or which
does not contain all of the hereinbefore specified information
which it is required to contain or which has not been signed as
aforesaid shall be invalid and of no effect whatsoever. If less
than all of the Series 1 Shares represented by the
certificate(s) accompanying such Conversion Notice are to be
converted, the person in whose name such certificate(s) are
registered shall be entitled to receive, upon its request
therefor, a new certificate without charge representing those
Series 1 Shares comprised in the certificate(s) delivered as
aforesaid which are not to be converted.
<PAGE>
- 9 -
(f) Upon the conversion of any Series 1 Shares there shall be no payment or
adjustment by the Corporation or by any holder of Series 1 Shares on
account of any dividends either on the Series 1 Shares so converted or
on the Subordinate Voting Shares into which the Series 1 Shares are
converted other than as provided for in Section 1.02 hereof and any
dividends accrued but unpaid on the Series 1 Shares being converted
shall be paid by the Corporation in full at the time of conversion.
Unless otherwise specified in the Conversion Notice, on any conversion
of Series 1 Shares the share certificates representing the Subordinate
Voting Shares resulting therefrom shall be issued in the name of the
registered holder of the Series 1 Shares converted or, subject to
payment by the registered holder of any stock transfer or other
applicable taxes, in such name or names as such registered holder may
direct in writing (either in the applicable Conversion Notice or
otherwise).
(g) The right of a registered holder of Series 1 Shares to convert into
Subordinate Voting Shares those Series 1 Shares as in respect of which a
Conversion Notice has been validly submitted shall be deemed to have
been exercised, and the registered holder of the Series 1 Shares to be
converted (or any person or persons in whose name or names such
registered holder of Series 1 Shares shall have directed the shares to
be issued) shall be deemed to have become a holder of record of the
Subordinate Voting Shares to be issued upon such conversion for all
purposes on the Redemption Date, notwithstanding any delay in the
delivery of the certificates representing the Subordinate Voting Shares
into which such Series 1 Shares have been converted.
(h) Notwithstanding anything herein contained, the Corporation shall in no
case be required to issue fractional Subordinate Voting Shares upon the
conversion of any Series 1 Shares. If more than one Series 1 Share shall
be surrendered for conversion at one time by the same holder, the number
of Subordinate Voting Shares issuable upon the conversion thereof shall
be computed on the basis of the aggregate stated value of all such
Series 1 Shares so surrendered by such holder for conversion. If any
fractional interest in a Subordinate Voting Share would, except for the
provisions of this Section, be deliverable upon the conversion of any
Series 1 Shares, the Corporation shall, in lieu of delivering a
certificate for such fractional interest, satisfy such fractional
interest by paying to the holder of such surrendered Series 1 Shares an
amount in cash equal (to the nearest cent) to the result obtained when
the Conversion Price is multiplied by the percentage that such
fractional interest is of one whole Subordinate Voting Share.
<PAGE>
- 10 -
(i) In the event that any conversion of the Series 1 Preference Shares is
made pursuant to subsection 1.03(a) hereof and, in connection therewith,
the Conversion Price was determined by reference to the unaudited
consolidated financial statements of the Corporation and its
subsidiaries (the Conversion Price so determined being called in this
paragraph 1.03(i) the "Unaudited Conversion Price"), then if following
the completion of the audit of such financial statements the Conversion
Price determined by reference to such audited financial statements is
determined to be an amount which is greater or less than the Unaudited
Conversion Price (the Conversion Price so determined by reference to
such audited financial statements being herein called in this paragraph
1.03(i) the "Audited Conversion Price"), the Corporation and the holders
of the Series 1 Preferred Shares involved in the aforesaid conversion
shall, within 10 days following the finalization of such audited
financial statements, determine the number of Subordinate Voting Shares
which would have been issued to each such holder on the aforesaid
conversion had the Audited Conversion Price been then used and
immediately thereafter:
(A) if the Audited Conversion Price is an amount which is less than the
Unaudited Conversion Price, the Corporation shall issue to each of
the holders of the Series 1 Preference Shares so converted that
number of Subordinate Voting Shares as is equal to the difference
between the number of Subordinate Voting Shares which it would have
received had the Audited Conversion Price been used at the time of
the aforesaid conversion and the number of Subordinate Voting
Shares which it was previously issued upon the aforesaid conversion
and, in addition, the Corporation shall pay to each such holder an
amount equal to all dividends which it would have been entitled to
receive in respect of such additional Subordinate Voting Shares so
issued to it had it been the holder of such shares since the date
of the aforesaid conversion; or
(B) if the Audited Conversion Price is an amount which is greater than
the Unaudited Conversion Price, each of the holders of the Series 1
Preference Shares so converted shall return to the Corporation that
number of Subordinate Voting Shares as is equal to the difference
between the number of Subordinate Voting Shares which it would have
received had the Audited Conversion Price been used and the number
of Subordinate Voting Shares which it was previously issued upon
the aforesaid conversion and, in addition, each such holder shall
pay to the Corporation an amount equal to the total amount of the
dividends paid to it by the Corporation on the Subordinate Voting
Shares so returned.
<PAGE>
- 11 -
1.04 ADJUSTMENT OF THE CONVERSION PRICE CALCULATION FORMULA IN CERTAIN
EVENTS
(a) If the Corporation shall:
(i) subdivide or change its outstanding Subordinate Voting Shares
into a greater number of Subordinate Voting Shares or
Multiple Voting Shares, as the case may be;
(ii) reduce, combine or consolidate its outstanding Subordinate
Voting Shares or Multiple Voting Shares into a lesser number
of Subordinate Voting Shares or Multiple Voting Shares, as
the case may be; or
(iii) declare a dividend or make any distribution to the holders of
all or substantially all of the outstanding Subordinate
Voting Shares or the Multiple Voting Shares payable in
Subordinate Voting Shares or Multiple Voting Shares or
securities convertible into Subordinate Voting Shares or
Multiple Voting Shares (other than an issue of Subordinate
Voting Shares or Multiple Voting Shares or securities
convertible into Subordinate Voting Shares or Multiple Voting
Shares by way of a stock dividend or dividend reinvestment
plan to shareholders pursuant to their exercise of options to
receive dividends in the form of shares in lieu of cash
dividends declared payable on the Subordinate Voting Shares);
(any of such events being hereinafter referred to as a "Share
Reorganization"), each of the Fixed Amounts in effect on the record
date for such Share Reorganization shall be adjusted effective
immediately after such record date by multiplying such amount by a
fraction, the numerator of which is the aggregate number of
Subordinate Voting Shares and Multiple Voting Shares outstanding on
such record date before giving effect to such Share Reorganization
and the denominator of which is the aggregate number of Subordinate
Voting Shares or Multiple Voting Shares outstanding immediately
after such record date after giving effect to such Share
Reorganization.
(b) If the Corporation shall fix a record date for the issuance of
options, rights or warrants to any of the holders of its
Subordinate Voting Shares or Multiple Voting Shares entitling them
to subscribe for or purchase Subordinate Voting Shares or Multiple
Voting Shares (or securities convertible into or exchangeable for
Subordinate Voting Shares or Multiple Voting Shares) for a period
of more than 45 days following such record date at a price per
Subordinate Voting Share or Multiple Voting Share (or having a
conversion or exchange price per Subordinate Voting Share or
<PAGE>
- 12 -
Multiple Voting Share), as the case may be, of less than 95% of the
Current Market Price of one Subordinate Voting Share or Multiple
Voting Share, as the case may be, on such record date (any such
event being herein referred to as a "Rights Offering"), each of the
Fixed Amounts in effect on the record date for such Rights Offering
shall be adjusted effective immediately after such record date by
multiplying such amount by a fraction, the numerator of which is
the total number of Subordinate Voting Shares and Multiple Voting
Shares outstanding on such record date plus a number of Subordinate
Voting Shares or Multiple Voting Shares, as the case may be, equal
to the number determined by dividing the aggregate price of the
total number of additional Subordinate Voting Shares or Multiple
Voting Shares, as the case may be, offered for subscription or
purchase under the Rights Offering (or the aggregate conversion
price of the convertible or exchangeable securities so offered) by
the Current Market Price of one Subordinate Voting Share or
Multiple Voting Share, as the case may be, on such record date and
the denominator of which is the total number of Subordinate Voting
Shares and Multiple Voting Shares outstanding on such record date
plus the total number of additional Subordinate Voting Shares or
Multiple Voting Shares, as the case may be, offered for
subscription or purchase under the Rights Offering (or the total
number of Subordinate Voting Shares or Multiple Voting Shares, as
the case may be, into which the convertible or exchangeable
securities so offered are convertible or exchangeable). Subordinate
Voting Shares or Multiple Voting Shares beneficially owned by or
held for the account of the Corporation shall be deemed not to be
outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date
is fixed. If the rights, options or warrants subject to the Rights
Offering are not so issued or if, at the date of expiry of the
rights, options or warrants issued pursuant to such Rights
Offering, less than all of the rights, options or warrants subject
to such Rights Offering have been exercised, each of the Fixed
Amounts shall be readjusted effectively immediately after the date
of expiry to an amount equal to the amount which would have been in
effect if such record date had not been fixed or to an amount which
would then be in effect on such date of expiry of the Rights
Offering if the only rights, options or warrants issued pursuant
thereto have been those that were exercised, as the case may be.
(c) If the Corporation shall fix a record date for the issue or the
distribution to any of the holders of its Subordinate Voting Shares
or Multiple Voting Shares of:
(i) securities in the capital of the Corporation (including
rights, warrants or options to purchase any securities in the
capital of the Corporation);
<PAGE>
- 13 -
(ii) evidences of the Corporation's indebtedness; or
(iii) any property or other assets and, to the extent that such
issuance or distribution does not constitute a distribution
referred to in paragraph 1.04(a)(iii), a Share Reorganization
or a Rights Offering (any of such non-excluded events being
herein called a "Special Distribution"),
each of the Fixed Amounts in effect on the record date for such
Special Distribution shall be adjusted effective immediately after
such record date by multiplying such amount by a fraction, the
numerator of which is equal to the remainder obtained when:
(iv) the product obtained by multiplying the aggregate number of
Subordinate Voting Shares and Multiple Voting Shares
outstanding on such record date is multiplied by the Current
Market Price of one Subordinate Voting Share on such record
date
is reduced by:
(v) the fair market value, as determined by the auditors of the
Corporation acting reasonably (whose determination shall be
conclusive) of such securities, evidences of indebtedness or
property or other assets, as the case may be, so issued or
distributed in the Special Distribution and which shall be
net of any consideration paid therefor by the holders of the
Subordinate Voting Shares or the Multiple Voting Shares, as
the case may be,
and the denominator of which is the total number of Subordinate
Voting Shares and Multiple Voting Shares outstanding on such record
date multiplied by such Current Market Price of a Subordinate
Voting Share. Subordinate Voting Shares and Multiple Voting Shares
beneficially owned by or held for the account of the Corporation
shall be deemed not to be outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever
such a record date is fixed. To the extent that such Special
Distribution is not so made or is altered, each of the Fixed
Amounts shall be readjusted to the amount which would then be in
effect based upon the said securities, evidences of indebtedness,
property or assets, if any, actually distributed prior to the most
recent record date.
(d) (i) No adjustments to the Fixed Amounts shall be made pursuant to
subsections 1.04(a) or (c) hereof if the holders of the
Series 1 Shares are permitted to participate in such Share
Reorganization or Special Distribution, as though and to the
same effect as if they had
<PAGE>
- 14 -
converted their Series 1 Shares
into Subordinate Voting Shares immediately prior to the
record date for such Share Reorganization or Special
Distribution
(ii) No adjustments to the Fixed Amounts shall be made pursuant to
subsection 1.04(b) if:
(A) the Subordinate Voting Shares or Multiple Voting Shares
(or securities convertible into or exchangeable for
Subordinate Voting Shares or Multiple Voting Shares)
forming the subject matter of the Rights Offering therein
referred to are offered at a price equal to or greater
than 65% of the greater of the amounts referred to in
paragraphs 1.01(f)(ii)(A) and 1.01(f)(ii)(B) hereof; or
(B) the holders of the Series 1 Shares are permitted to
participate and do in fact participate in the Rights
Offering therein referred to as if they had converted
their Series 1 Shares into Subordinate Voting Shares
immediately prior to the Record Date for such Rights
Offering.
(e) If and whenever at any time prior to the Redemption Date there
shall be:
(i) a reclassification of the Subordinate Voting Shares or
Multiple Voting Shares outstanding at such time or a change
of the Subordinate Voting Shares or Multiple Voting Shares
into other shares or into other securities (other than
pursuant to a Share Reorganization); or
(ii) a consolidation, amalgamation, arrangement or merger of the
Corporation with or into any other corporation or other
entity (other than a consolidation, amalgamation, arrangement
or merger which does not result in any reclassification of
the outstanding Subordinate Voting Shares or Multiple Voting
Shares or change of the Subordinate Voting Shares or Multiple
Voting Shares into other shares);
(any of such event enumerated in (i) and (ii), above) being herein
called a "Capital Reorganization"), any holder of Series 1
Preference Shares who exercises his right to subscribe for and
purchase Subordinate Voting Shares pursuant to the exercise of his
Conversion Rights then held at any time after the effective date of
such Capital Reorganization shall be entitled to receive, and shall
accept for the same aggregate consideration in lieu of the number
of Subordinate Voting Shares to which such holder was
<PAGE>
- 15 -
theretofore entitled upon such exercise, the aggregate number of
shares, other securities or other property which such holder would
have been entitled to receive as a result of such Capital
Reorganization if, on the effective date thereof, the holder of the
Series 1 Preference Shares had been the registered holder of the
number of Subordinate Voting Shares to which such holder was
theretofore entitled to subscribe for and purchase upon the
conversion of the Series 1 Preference Shares;
(f) In any case in which this Section 1.04 shall require that an
adjustment shall become effective immediately after a record date
for an event referred to herein, the Corporation may, until the
occurrence of such event, defer issuing to the holder of any Series
1 Shares converted after such record date and before the occurrence
of such event the additional Subordinate Voting Shares or Multiple
Voting Shares, as the case may be, issuable upon such conversion by
reason of the adjustment required by such event in addition to the
Subordinate Voting Shares or Multiple Voting Shares, as the case
may be, issuable upon such conversion before giving effect to
such adjustment; provided, however, that the Corporation shall
deliver to such holder an appropriate instrument evidencing such
holder's rights to receive such additional Subordinate Voting Shares
or Multiple Voting Shares, as the case may be, upon the occurrence
of the event requiring such adjustment.
(g) In the case of any reclassification of, or other change in, the
outstanding Subordinate Voting Shares or the Multiple Voting Shares
not otherwise mentioned herein, each of the Fixed Amounts shall be
adjusted in such manner as the auditors of the Corporation
determines to be appropriate on a basis consistent with this
Section 1.04.
(h) If any question shall at any time arise with respect to adjustments
to the Fixed Amounts or with respect to the amount of any cash
payment made in lieu of issuing a fractional share, such question
shall be determined by the auditors of the Corporation and
thereupon shall become conclusive.
(i) Forthwith after the occurrence of any adjustment in any of the
Fixed Amounts pursuant to this Section 1.04, the Corporation shall
forward to the holders of the Series 1 Shares a certificate
certifying as to the amount of such adjustment and, in reasonable
detail, the event requiring and the manner of computing such
adjustment.
(j) Notwithstanding any other provision contained herein, no adjustment
to any of the Fixed Amounts shall be required in respect of the
issue of Subordinate Voting Shares or securities convertible into
Subordinate Voting Shares pursuant to any stock option, purchase
plan or exchange right of, for
<PAGE>
- 16 -
or held by any directors, officers or employees of the Corporation
or any of its subsidiaries, save and except that this subsection
1.01(j) shall have no application in the case of the issue to Jay
S. Hennick of Subordinate Voting Shares or securities convertible
into Subordinate Voting Shares pursuant to any such stock option,
purchase plan or exchange right extended to directors, officers or
employees of the Corporation or any of its subsidiaries.
(k) Notwithstanding any other provision contained herein, no adjustment
to any of the Fixed Amounts shall be required unless such
adjustment would require an increase or decrease of at least 2% in
such Fixed Amounts; provided, however, that any adjustments which
by reason of this subsection 1.04(k) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment.
1.05 REDEMPTION BY THE CORPORATION:
(a) Subject to the provisions of applicable law, the Corporation shall
redeem on the Redemption Date all Series 1 Shares then outstanding
and in respect of which a Conversion Notice sent in accordance with
the applicable provisions hereof has not been received.
(b) The price at which each such Series 1 Share is to be redeemed shall
be the aggregate of the following amounts:
(i) the sum of $1,000;
(ii) all dividends accrued (but unpaid) on such Series 1 Share up
to the date fixed for redemption; and
(iii) any amount payable by the Corporation in respect of such
Series 1 Shares pursuant to paragraph 1.01(q)(ii) hereof.
(c) (i) Notice of redemption of Series 1 Shares shall be given by
the Corporation not less than 10 days prior to the
Redemption Date to each then registered holder of Series 1
Shares. Accidental failure or omission to give such notice
to one or nor of such holders shall not affect the validity
of such redemption. Such notice shall set out the Redemption
Amount, the Redemption Date, the place or places of
redemption and the number of Series 1 Shares to be redeemed.
(ii) On the Redemption Date, the Corporation shall pay the
Redemption Amount to the holders of the Series 1 Shares
redeemed and, if the Corporation has not at such time already
gone public, the Corporation shall, concurrently therewith,
deliver an agreement (the
<PAGE>
- 17 -
"Participation Agreement") executed by it in favour of the
holders of Series 1 Shares so redeemed to the effect that if
the Corporation goes public within 6 months following the
Redemption Date, a holder of Series 1 Shares which have been
redeemed shall have the right, upon paying to the
Corporation the Redemption Amount together with interest
thereon at the rate of 10% per annum from and after the
Redemption Date to the date of payment, to receive that
number of Subordinate Voting Shares as such holder would
have received had it converted its Series 1 Shares into
Subordinate Voting Shares in accordance with Section 1.03 on
the Redemption Date, on presentation and surrender at the
place or one of the places of redemption of the respective
certificates representing such shares, and the holders of
the Series 1 Shares called for redemption shall cease to be
entitled to dividends or to exercise any of the rights of
holders in respect thereof unless payment of the Redemption
Amount shall not be made in accordance with the foregoing
provisions, in which case the rights of the holders shall
remain unimpaired.
(iii) The Corporation shall have the right at any time after giving
notice of redemption to deposit the Redemption Amount of the
Series 1 Shares thereby called for redemption, or such part
thereof as at the time of deposit has not been claimed by
the shareholders entitled thereto (together with executed
copies of the Participation Agreement, if applicable) with
any Canadian chartered bank or trust company in Canada
specified in the notice of redemption or in a subsequent
notice to the holders of the shares in respect of which the
deposit is made, in a special account for the holders of
such shares and upon such deposit and delivery being made or
upon the Redemption Date, whichever is the later, the Series
1 Shares in respect of which such deposit (together with
delivery of an executed copy of the Participation Agreement,
if applicable) shall have been made shall be deemed to be
redeemed and the rights of each holder thereof shall be
limited to receiving, without interest, his proportionate
part of the Redemption Amount so deposited (and delivery of
the Participation Agreement, if applicable) upon
presentation and surrender of the certificates representing
his shares so redeemed.
1.06 CANCELLATION OF SERIES 1 SHARES:
Series 1 Shares purchase4d, redeemed or otherwise acquired by the
Corporation shall be cancelled.
<PAGE>
- 18 -
1.07 DISSOLUTION:
On the liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, or other distribution of assets of the
Corporation among its shareholders for the purpose of winding up its affairs,
the holders of the Series 1 Shares shall be entitled to receive in lawful
money of Canada an amount equal to the Redemption Amount per share. The
Series 1 Preference Shares shall be entitled to preference over all other
series of Preference Shares and all other classes of shares in the capital of
the Corporation with respect to priority in payment of dividends and in 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.
1.08 NOTICES:
All notices or other communications by the terms hereof required or
permitted to be given by a holder of Series 1 Shares to the Corporation or by
the Corporation to a holder of Series 1 Shares shall be given in writing by
personal delivery (which personal delivery may be effected by depositing the
notice or other communication in question with a responsible courier service
for delivery (courier charges fully prepaid) to the addressee thereof) or by
registered mail (postage fully prepaid) mailed from anywhere within Canada or
the continental United States of America, addressed, in the case of the
Corporation, to the President of the Corporation at the Corporation's
registered office and, in the case of a holder of Series 1 Shares, to that
holder at its most recent address appearing in the Corporation's share
register. Any such notices or other communications shall be deemed to have
been received, in the case of sending by personal delivery, upon delivery,
or, in the case of sending by registered mail, 72 hours after 12:01 a.m. on
the day following the day of the mailing thereof; provided that if any such
notice, request, demand or other communication shall have been mailed and if
regular mail service shall be interrupted by strikes or other irregularities,
such notice, request, demand or other communication shall be deemed to have
been received 72 hours after 12:01 a.m. on the day following the resumption
of normal mail service.
1.09 CURRENCY
All dollar amounts expressed herein are expressed in Canadian dollars
and all payments contemplated by the provisions hereof shall be made in
Canadian funds.
1.10 MODIFICATION:
In addition to any other approval or authorization required by
applicable law the rights, conditions, restrictions and prohibitions
attaching to the Series 1 Shares may not be deleted, varied, altered or
amended without the prior approval of at least 66-2/3% of the votes cast
at a meeting of the holders of the Series 1 Shares or by a
<PAGE>
- 19 -
resolution in writing by those persons holding not less than 66-2/3% of
all the Series 1 Shares then being outstanding.
1.11 APPROVAL BY HOLDERS OF SERIES 1 SHARES:
The approval of the holders of the Series 1 Shares with respect to any
and all matters referred to herein or any other matter requiring the consent
of such holders may, subject to applicable law, be given in writing by the
holders of 50% (or, if required by Section 1.10, 66-2/3%) of the Series 1
Shares for the time being outstanding or by resolution duly passed and
carried by not less than 50% (or, if required by Section 1.10, 66-2/3%)
of the votes cast on a ballot at a meeting of the holders of the Series 1
Shares duly called and held for the purpose of considering the subject matter
of such resolution and at which meeting holders of not less than 10% of the
Series 1 Shares then outstanding are present in person or represented by
proxy; provided, however, that if at any such meeting, when originally held,
the holders of at least 10% of the Series 1 Shares then outstanding are not
present in person or represented by proxy within 30 minutes after the time
fixed for the meeting, the meeting shall be adjourned to such date, being not
less than 15 days later, and at such time and place as may be fixed by the
Chairman of such meeting and at such adjourned meeting the holders of the
Series 1 Shares present in person or represented by proxy, whether or not
they hold 10% of the Series 1 Shares then outstanding, may transact the
business for which the meeting was originally called, and the resolution duly
passed and carried by not less than 50% (or, if required by Section 1.10,
66-2/3%) of the votes cast on a ballot at such adjourned meeting shall
constitute the approval of the holders of the Series 1 Shares hereinbefore
mentioned. Notice of any such original meeting of the holders of the Series 1
Shares shall be given not less than 10 days nor more than 50 days prior to
the date fixed for such meeting and shall specify in general terms the
purpose for which the meeting is called. No notice of any such adjourned
meeting need be given unless such meeting is adjourned by one or more
adjournments for an aggregate of 30 days or more from the date of such
original meeting, in which later case notice of the adjourned meeting shall
be given in the manner prescribed fr the original meeting as aforesaid. The
formalities to be observed with respect to the giving of notice of any such
original or adjourned meeting and the conduct thereof shall be those from
time to time prescribed in the constating documents of the Corporation with
respect to meetings of shareholders.
1.12 VOTING RIGHTS:
The holders of the Series 1 Shares shall not be entitled as such, except
as required by law, to vote at any meeting of the shareholders of the
Corporation but such holders shall be entitled to receive notice of and
attend at all meetings of shareholders of the Corporation.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
[LOGO] Ministry of Ministere de ONTARIO CORPORATION NUMBER
Consumer and la Consommation NUMERO DE LA SOCIETE EN ONTARIO
Commercial et du Commerce 788412
Relations
CERTIFICATE CERTIFICAT
This is to certify that these Ceci certifie que les presents
articles are effective on statuts entrent en vigueur le
APRIL 2 AVRIL, 1990
- --------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
[illegible]
Director/Directeur TRANS
Business Corporations Act / Loi sur les societes par actions CODE
C
- ------------------------------------------------------------------------------ 8
</TABLE>
ARTICLES OF AMENDMENT
Form 3 STATUTS DE MODIFICATION
Business
Corporations
Act
1982
<TABLE>
<CAPTION>
<S> <C>
1. The present name of the corporation is: DENOMINATION SOCIALE DE LA SOCIETE ISSUE DE LA COMPAGNIE:
--------------------------------------------------------------------------------------------------------
F I R S T S E R V I C E C O R P O R A T I O N
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
</TABLE>
FORMULE
NUMERO 3
LOI DE 1982
SUR LES
COMPAGNIES
<TABLE>
<CAPTION>
<S> <C>
2. The name of the corporation is changed to NOUVELLE DENOMINATION SOCIALE DE LA COMPAGNIE
(if applicable): (S'IL Y A LIEU):
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
3. Date of incorporation/amalgamation: DATE DE LA CONSTITUTION OU DE LA FUSION:
31 JULY 1988
--------------------------------------------------------------------------------------------------------
(Day, Month, Year)
(JOUR, MOIS, ANNEE)
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
4. The articles of the corporation are LES STATUTS DE LA COMPAGNIE SONT MODIFIES DE LA FACON
amended as follows: SUIVANTE:
See Schedule "A" attached hereto
</TABLE>
<PAGE>
SCHEDULE "A"
1. The articles (as defined in the Business Corporations Act, 1982 (Ontario)
(the "OBCA")) of the Corporation be amended to:
(a) consolidate each of the issued and unissued Class A subordinate
voting shares (the "Class A Subordinate Voting Shares") of the
Corporation, on the basis that each thirty (30) Class A Subordinate
Voting Shares shall become one (1) new class A subordinate voting
share (the "New Class A Subordinate Voting Shares"); provided,
however, that any person who, on the date the articles of amendment
referred to in paragraph 2 hereof become effective is the registered
holder of a number of Class A Subordinate Voting Shares not evenly
divisible by thirty (30), shall not be entitled to become a
registered holder of a fraction of a New Class A Subordinate Voting
Share or to receive a certificate therefor, but in lieu thereof any
such person shall be entitled to receive in respect of the fraction
of New Class A Subordinate Voting Shares to which such person is
otherwise entitled on the surrender of a certificate or certificates
representing issued and outstanding Class A Subordinate Voting
Shares in the capital of the Corporation, an amount in cash (rounded
to the nearest cent) equal to $1.50 multiplied by the fraction of
New Class A Subordinate Voting Shares to which such person is
otherwise entitled;
(b) consolidate each of the issued and unissued Class B shares (the
"Class B Shares") of the Corporation, on the basis that each thirty
(30) Class B Shares shall become one (1) new class B share (the "New
Class B Shares"); provided, however, that any person who, on the
date the articles of amendment referred to in paragraph 2 hereof
become effective is the registered holder of a number of Class B
Shares not evenly divisible by thirty (30), shall not be entitled to
become a registered holder of a fraction of a New Class B Share or
to receive a certificate therefor, but in lieu thereof any such
person shall be entitled to receive in respect of the fraction of
New Class B Shares to which such person is otherwise entitled on the
surrender of a certificate or certificates representing issued and
outstanding Class B Shares in the capital of the Corporation, an
amount in cash (rounded to the nearest cent) equal to $1.50
multiplied by the fraction of New Class B Shares to which such
person is otherwise entitled;
<PAGE>
- 2 -
(c) change the designation of the issued and unissued New Class A
Subordinate Voting Shares, by redesignating such shares as
subordinate voting shares (the "Subordinate Voting Shares") and, in
connection therewith, by deleting the words "Class A Subordinate
Voting Shares" wherever they appear in the articles of the
Corporation and substituting therefor the words "Subordinate Voting
Shares"; and
(d) change the designation of each of the issued and unissued New Class
B Shares, by redesignating such shares as multiple voting shares
(the "Multiple Voting Shares") and, in connection therewith, by
deleting the words "Class B Shares" wherever they appear in the
articles of the Corporation and substituting therefor the words
"Multiple Voting Shares".
first-mi.rjs
March 26, 1990
<PAGE>
<TABLE>
<S> <C>
5. The amendment has been duly authorized as LA MODIFICATION A ETE DUMENT AUTORISEE
required by Sections 167 and 169 (as CONFORMEMENT A L'ARTICLE 167 ET, S'IL Y A LIEU,
applicable) of the Business Corporations Act A L'ARTICLE 169 DE LA LOI SUR LES COMPAGNIES
6. The resolution authorizing the amendment was LES ACTIONNAIRES OU LES ADMINISTRATEURS (LE CAS ECHEANT)
approved by the shareholders/directors (as DE LA COMPAGNIE ONT APPROUVE LA RESOLUTION AUTORISANT
applicable) of the corporation on LA MODIFICATION
</TABLE>
30 MARCH 1990
---------------------------------------------------------
(Day Month Year)
(JOUR MOIS ANNEE)
<TABLE>
<S> <C>
These articles are signed in duplicate. LES PRESENTS STATUTS SONT SIGNES EN DOUBLE EXEMPLAIRE.
</TABLE>
FIRSTSERVICE CORPORATION
-------------------------------------------------
(Name of Corporation)
(DENOMINATION SOCIALE DE LA COMPAGNIE)
By/Par: /s/ Ken Pearce
-------------------------------------------------
(Signature) Kenneth (Description of Office)
(SIGNATURE) Pearce (FONCTION) Secretary
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
[LOGO] Ministry of Ministere de ONTARIO CORPORATION NUMBER
Consumer and la Consommation NUMERO DE LA SOCIETE EN ONTARIO
Commercial et du Commerce 788412
Relations
CERTIFICATE CERTIFICAT
This is to certify that these Ceci certifie que les presents
articles are effective on statuts entrent en vigueur le
JULY 31 JUILLET, 1988
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
[illegible]
Trans Line Comp Method
Code No. Staf Type repro Share
/ A / / O / / O / / A / / 3 / / S /
18 20 28 29 30 31
Director Le Directeur
Companies Branch Direction des Compagnies
Notice
Req'd urisdiction
/ N / / ONTARIO / / A /
32 37 47 57
_______________________________________________________________________________________________________
</TABLE>
ARTICLES OF AMALGAMATION
STATUTS DE FUSION
Form 4
Business
Corporations
Act
1982
<TABLE>
<CAPTION>
<S> <C>
1. The name of the amalgamated corporation is: DENOMINATION SOCIALE DE LA COMPAGNIE ISSUE DE LA FUSION:
F I R S T S E R V I C E C O R P O R A T I O N
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
FORMULE
NUMERO 4
LOI DE 1982
SUR LES
COMPAGNIES
<TABLE>
<CAPTION>
<S> <C>
2. The address of the registered office is: ADRESSE DU SIEGE SOCIAL:
150 York Street, Suite 1400,
-------------------------------------------------------------------------------------------------------
(Street & Number or R.R. Number & if Multi-Office Building give Room No.)
(RUE ET NUMERO, OU NUMERO DE LA R.R. ET, S'IL S'AGIT D'UN EDIFICE A BUREAUX, NUMERO DU BUREAU)
Toronto, Ontario M 5 H 3 T 1
-------------------------------------------------------------------------------------------------------
(Name of Municipality or Post Office) (Postal Code)
(NOM DE LA MUNICIPALITE OU DU BUREAU DE POSTE) (CODE POSTAL)
City of Toronto Municipality of Metropolitan Toronto
--------------------------------------------- in the --------------------------------------------
(Name of Municipality, DANS LE/LA (County, District, Regional
Geographical Township) Municipality)
(NOM DE LA MUNICIPALITE, (COMTE, DISTRICT, MUNICIPALITE
DU CANTON) REGIONALE)
3. NUMBER (OR MINIMUM AND MAXIMUM NUMBER) OF NOMBRE (OU NOMBRES MINIMAL ET MAXIMAL)
DIRECTORS IS: D'ADMINISTRATEURS:
Minimum of Three (3) and a maximum of Twenty (20)
</TABLE>
<TABLE>
<CAPTION>
4. The director(s) is/are: ADMINISTRATEUR(S):
<S> <C> <C>
First name, initials and surname Resident address, giving Street & No. or R.R. No., Resident
PRENOM, INITIALES ET NOM DE FAMILLE Municipality and Postal Code. Canadian
ADRESSE PERSONNELLE, Y COMPRIS LA RUE ET State
LE NUMERO, LE NUMERO DE LA R.R., OU LE NOM DE LA Yes or No
MUNICIPALITE ET LE CODE POSTAL RESIDENT
CANADIEN
OUI/NON
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See attached page 1A
<PAGE>
1A
<TABLE>
<CAPTION>
First name, initials Residence address Resident
and surname Street No., Postal Code Canadian
- -------------------- ----------------------- --------
<S> <C> <C>
Jay S. Hennick 74 Spring Gate Blvd. Yes
Thornhill, Ontario
L4J 3L7
Dr. Brian H. Price 250 Warren Road Yes
Toronto, Ontario
M4V 2S8
Miles Nadal The Lonsdale Yes
619 Avenue Road, #603
Toronto, Ontario
M4V 2K6
Edward Sonshine 86 Forest Heights Blvd. Yes
Willowdale, Ontario
M2L 2K8
C. Robert Burgess 24 Brockshire Circle Yes
Thornhill, Ontario
L3T 7A9
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
8. Rights, privileges, restrictions and conditions (if DROITS, PRIVILEGES, RESTRICTIONS ET CONDITIONS (S'IL Y A
any) attaching to each class of shares and LIEU) RATTACHES A CHAQUE CATEGORIE D'ACTIONS ET POUVOIRS
directors authority with respect to any class of DES ADMINISTRATEURS RELATIFS A CHAQUE CATEGORIE D'ACTIONS
shares which is to be issued in series. QUI PEUT ETRE EMISE EN SERIE.
The Preference Shares, the Class A Shares and the Class B Shares of the Corporation shall have attached
thereto the rights, privileges, restrictions and conditions set out in Schedule "1" to the Amalgamation
Agreement annexed hereto.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
9. The issue, transfer or ownership of shares is not L'EMISSION DE TRANSFERT OU LA PROPRIETE D'ACTIONS
restricted and the restrictions (if any) are as EST/N'EST PAS RESTREINTE. LES RESTRICTIONS, S'IL
follows: Y A LIEU, SONT LES SUIVANTES:
No restrictions
10. Other provisions, (if any): AUTRES DISPOSITIONS, S'IL Y A LIEU.
(a) Without in any way limiting the powers conferred upon the Corporation and its directors by the Act, or
any successor statute, the board of directors may from time to time, in such amounts and on such terms
as it deems expedient:
(i) borrow money on the credit of the Corporation;
(ii) issue, sell or pledge debt obligations (including bonds, debentures, notes or other similar
obligations, secured or unsecured) of the Corporation; and
(iii) charge, mortgage, hypothecate or pledge all or any of the currently owned or subsequently acquired
real or personal, movable or immovable, property of the Corporation, including book debts, rights,
powers, franchises and undertaking, to secure any debt obligations or any money borrowed, or other
debt or liability of the Corporation.
(b) Subject to the Act, the board of directors may from time to time delegate to such one or more of the
directors and officers of the Corporation as may be designated by the board all or any of the powers
conferred on the board above to such extent and in such manner as the board shall determine at the time
of such delegation.
11. The statements required by subsection 177(2) of LES DECLARATIONS EXIGEES AUX TERMES DU PARAGRAPHE 177(2)
the Business Corporations Act are attached as DE LA LOI SUR LES COMPAGNIES CONSTITUENT L'ANNEXE "A".
Schedule "A".
12. A copy of the amalgamation agreement or directors UNE COPIE DE LA CONVENTION DE FUSION OU LES RESOLUTIONS
resolutions (as the case may be) is/are DES ADMINISTRATEURS (SELON LE CAS) CONSTITUTE(NT)
attached as Schedule "B". L'ANNEXE "B".
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
These articles are signed in duplicate. LES PRESENTS STATUTS SONT SIGNES EN DOUBLE EXEMPLAIRE
--------------------------------------------------------------------------------------------------
Names of the amalgamating corporations and DENOMINATION SOCIALE DES COMPAGNIES QUI
signatures and descriptions of office of FUSIONNENT, SIGNATURE ET FONCTION DE LEURS
their proper officers. DIRIGEANTS REGULIEREMENT DESIGNES.
--------------------------------------------------------------------------------------------------
COLOMA RESOURCES LIMITED FIRSTSERVICE CORPORATION
Per: /s/ Jay S. Hennick Per: /s/ Jay S. Hennick
-------------------------------------- ---------------------------------------
President - Jay S. Hennick President - Jay S. Hennick
Per: /s/ Ken Pearce Per: /s/ Ken Pearce
-------------------------------------- ---------------------------------------
Secretary - Ken Pearce Secretary - Ken Pearce
</TABLE>
<PAGE>
SCHEDULE A-1
The undersigned, Jay S Hennick, being the President of COLOMA RESOURCES
LIMITED, hereby states that:
1. There are reasonable grounds for believing that:
(a) each of COLOMA RESOURCES LIMITED and FIRSTSERVICE CORPORATION is
and FIRSTSERVICE CORPORATION the corporation continuing from the
amalgamation of COLOMA RESOURCES LIMITED and FIRSTSERVICE
CORPORATION (the "Amalgamated Corporation") will be able to pay its
liabilities as the become due;
(b) the realizable value of the Amalgamated Corporation's assets will
not be less than the aggregate of its liabilities and stated
capital of all classes;
(c) no creditor will be prejudiced by the amalgamation; and
2. No creditor has notified COLOMA RESOURCES LIMITED that such
creditor objects to the amalgamation.
DATED this 29th day of July, 1998.
/s/ Jay S. Hennick
-----------------------------------------
Jay S. Hennick - President
<PAGE>
SCHEDULE A-2
The undersigned, Jay S. Hennick, being the President of FIRSTSERVICE
CORPORATION, hereby states that:
1. There are reasonable grounds for believing that:
(a) each of FIRSTSERVICE CORPORATION and COLOMA RESOURCES LIMITED is
and FIRSTSERVICE CORPORATION the corporation continuing from the
amalgamation of COLOMA RESOURCES LIMITED and FIRSTSERVICE
CORPORATION (the "Amalgamated Corporation") will be able to pay its
liabilities as they become due;
(b) the realizable value of the Amalgamated Corporation's assets will
not be less than the aggregate of its liabilities and stated
capital of all classes;
(c) no creditor will be prejudiced by the amalgamation; and
2. No creditor has notified FIRSTSERVICE CORPORATION that such creditor
objects to the amalgamation.
DATED this 29th day of July, 1998.
/s/ Jay S. Hennick
-----------------------------------------
Jay S. Hennick - President
<PAGE>
SCHEDULE "B"
THIS AMALGAMATION AGREEMENT made as of the 31st day of July, 1998.
B E T W E E N:
COLOMA RESOURCES LIMITED, a corporation incorporated under the
laws of the Province of Ontario
(hereinafter called "Coloma")
OF THE FIRST PART;
- and -
FIRSTSERVICE CORPORATION, a corporation incorporated under
the laws of the Province of Ontario
(hereinafter called "FirstService")
OF THE SECOND PART.
WHEREAS each of Coloma and FirstService are corporations to which the
Business Corporations Act, 1982 (Ontario) applies;
AND WHEREAS Coloma is authorized to issue an unlimited common shares
without par value and 2,000,000 special shares, of which 1,577,507 common
shares are presently issued and outstanding;
AND WHEREAS FirstService is authorized to issue an unlimited number of
common shares of which 1,234,251 common shares are issued and outstanding;
AND WHEREAS the parties hereto, acting under the authority contained in
the Business Corporations Act, 1982 (ontario) have agreed to amalgamate upon
the terms and conditions set out hereunder;
AND WHEREAS Coloma has reserved up to a maximum of 10% of its outstanding
common shares for issuance pursuant to its share option plan (the "Share
Option Plan");
AND WHEREAS FirstService has outstanding an option permitting the
optionee to purchase 60,000 common shares of FirstService at an exercise
price of $1.00 per share expiring May 31, 1993 (the "Option");
<PAGE>
- 2 -
NOW THEREFORE THIS AGREEMENT WITNESSETH as follows:
1. DEFINITION
In this agreement:
(a) "Amalgamating Corporations" means Coloma and FirstService;
(b) "Amalgamation Agreement" or "Agreement" means this amalgamation
agreement;
(c) "Act" means the Business Corporations Act, 1982 (Ontario);
(d) "Corporation" means the corporation continuing from the
amalgamation of the Amalgamating Corporations; and
(e) "Effective Date" means the date set out on the certificate endorsed
by the Director appointed under the Act on the Articles of
Amalgamation giving effect to the amalgamation herein provided for.
2. AGREEMENT TO AMALGAMATE
The Amalgamating Corporations hereby agree to amalgamate as of the
Effective Date under the provisions of the Act and to continue as one
corporation upon the terms and conditions herein set out.
3. NAME OF CORPORATION
The name of the Corporation shall be FIRSTSERVICE CORPORATION.
4. REGISTERED OFFICE
The registered office of the Corporation shall be in the City of
Toronto, Municipality of Metropolitan Toronto, in the Province of Ontario.
The address of the registered office of the Corporation shall be 150 York
Street, Suite 1400, Toronto, Ontario M5H 3T1.
5. RESTRICTIONS
There shall be no restrictions on the business that the Corporation
may carry on or on the powers that the Corporation may exercise.
6. AUTHORIZED CAPITAL
The classes and any maximum number of shares that the Corporation
is authorized to issue are as follows:
<PAGE>
- 3 -
(a) an unlimited number of preference shares issuable in series (the
"Preference Shares");
(b) an unlimited number of Class A subordinate voting shares (the
"Class A Shares"); and
(c) an unlimited number of Class B shares (the "Class B Shares").
7. RIGHTS ATTACHING TO SHARES
The Preference Shares, the Class A Shares and the Class B Shares of
the Corporation shall have attached thereto the rights, privileges,
restrictions and conditions set out in Schedule "1" annexed hereto.
8. DIRECTORS
The board of directors of the Corporation shall consist of a
minimum of three (3) directors and a maximum of twenty (20) directors
provided that the directors shall be entitled, subject to the provisions of
the Act, to determine the number of directors of the Corporation and the
number of directors to be elected at the annual meeting of the shareholders
of the Corporation from time to time by resolution of the board provided that
such number of directors is not greater than twenty (20) nor less than three
(3) directors. Until changed by resolution of the directors, the board of
directors of the Corporation shall be fixed at five (5) directors and the
first directors of the Corporation are as follows;
<TABLE>
<CAPTION>
Resident
Name & Municipality of Residence Canadian
- -------------------------------- --------
<S> <C>
Dr. Brian H. Price Yes
Toronto, Ontario
Jay S. Hennick Yes
Thornhill, Ontario
Miles S. Nadal Yes
Toronto, Ontario
Edward Sonshine, Q.C. Yes
North York, Ontario
C. Robert Burgess Yes
Thornhill, Ontario
</TABLE>
<PAGE>
- 4 -
The said first directors shall hold office until the first annual meeting of
the Corporation or until their successors are elected or appointed, subject
to the Corporation's by-laws.
9. BY-LAWS
The by-laws of the Corporation shall be the by-laws of
FirstService. A copy of such by-laws may be examined at the offices of
Fogler, Rubinoff, Suite 1400, 150 York Street, Toronto, Ontario, M5H 3T1 at
any time during regular business hours.
10. CONVERSION OF SHARES
The authorized but unissued shares and the issued shares in the
capital of each of the Amalgamating Corporations shall be respectively
cancelled and/or converted on the Effective Date into issued and outstanding
Class A Shares and Class B Shares of the Corporation as follows:
(a) the 1,577,507 issued and outstanding common shares of Coloma shall
be converted into 1,577,507 Class A Shares of the Corporation on
the basis of one common share of Coloma for each Class A Share of
the Corporation;
(b) the 1,234,251 issued and outstanding common shares of FirstService
shall be converted into 15,428,137 Class B Shares of the
Corporation on the basis of one common share of FirstService for
each 12.5 Class B Shares of the Corporation; and
(c) the authorized but unissued special shares of Coloma shall be
cancelled.
After filing Articles of Amalgamation in respect of this Agreement
and the issue of a Certificate of Amalgamation in respect thereof, the
shareholders of Coloma when requested by the Corporation shall surrender the
certificates representing the shares held by them in Coloma and, subject to
the provisions of the Act, in return shall be entitled to receive
certificates for Class A Shares of the Corporation on the basis aforesaid.
The common shares of Coloma reserved for issuance pursuant to the
Share Option Plan approved by the directors and shareholders of Coloma shall
be reserved for issuance pro rata and mutatis mutandis of the Class A Shares
and the Class B Shares of the Corporation.
The Option of FirstService for 60,000 common shares of FirstService
with an exercise price of $1.00 per share expiring May 31, 1993 will be
assumed by the Corporation on the basis of 12.5 Class A Shares of the
Corporation for each common share of
<PAGE>
- 5 -
FirstService to which such option applied, resulting in an option to purchase
750,000 Class A Shares of the Corporation with an exercise price of $0.08 per
share expiring May 31, 1993.
11. STATED CAPITAL
The stated capital of the shares of the Corporation issued on the
conversion of the shares of the Corporation pursuant to paragraph 10 hereof
as at May 31, 1988 shall be as follows:
<TABLE>
<CAPTION>
Shares of the Corporation Stated Capital
- ------------------------- --------------
<S> <C>
1,577,507 Class A Shares issued on conversion of
1,577,507 common shares of Coloma $ 148,984
1,428,137 Class B Shares issued on conversion of
1,234,251 common shares of FirstService 1,234,251
----------
Total $1,383,235
</TABLE>
12. TRANSFER OF SHARES
There shall be no restrictions on the right to transfer shares of
the Corporation.
13. SPECIAL PROVISIONS
(a) Without in any way limiting the powers conferred upon the
Corporation and its directors by the Act, or any successor statute,
the board of directors may from time to time, in such amounts and
on such terms as it deems expedient:
(i) borrow money on the credit of the Corporation;
(ii) issue, sell or pledge debt obligations (including bonds,
debentures, notes or other similar obligations, secured or
unsecured) of the Corporation; and
(iii) charge, mortgage, hypothecate or pledge all or any of the
currently owned or subsequently acquired real or personal,
movable or immovable, property of the Corporation, including
book debts, rights, powers, franchises and undertaking, to
secure any debt obligations or any money borrowed, or other
debt or liability of the Corporation.
<PAGE>
- 6 -
(b) Subject to the Act, the board of directors may from time to time
delegate to one or more of the directors and officers of the
Corporation as may be designated by the board all or any of the
powers conferred on the board above to such extent and in such
manner as the board shall determine at the time of such delegation.
14. DELIVERY OF ARTICLES
Upon the shareholders of the Amalgamating Corporations respectively
adopting this Agreement in accordance with the requirements of the Act and
subject to paragraph 16 hereof, Articles of Amalgamation in the prescribed
form shall be filed with the Director appointed under the Act.
15. AMALGAMATION
Upon the Effective Date:
(a) the Amalgamating Corporations are amalgamated and continued as one
corporation under the terms and conditions prescribed in the
Amalgamation Agreement;
(b) the property of each of the Amalgamating Corporations continues to
be the property of the Corporation;
(c) the Corporation continues to be liable for the obligations of each
of the Amalgamating Corporations;
(d) any existing cause of action, claim or liability to prosecution is
unaffected;
(e) a civil, criminal or administrative action or proceeding pending by
or against any of the Amalgamating Corporations may be continued to
be prosecuted by or against the Corporation;
(f) a conviction against, or ruling, order or judgment in favour of or
against, any of the Amalgamating Corporations may be enforced by or
against the Corporation; and
(g) the Articles of Amalgamation are deemed to be the Articles of
Incorporation of the Corporation and the Certificate of
Amalgamation is deemed to be the Certificate of Incorporation of
the Corporation.
<PAGE>
- 7 -
16. TERMINATION
At any time before the Effective Date, this Amalgamation Agreement
may be terminated by the directors of any of the Amalgamating Corporations,
notwithstanding the approval of this Amalgamation Agreement by the
shareholders of any of the Amalgamating Corporations.
IN WITNESS WHEREOF this Agreement has been executed by the parties
hereto as of the date and year first above written.
COLOMA RESOURCES LIMITED FIRSTSERVICE CORPORATION
Per: /s/ Jay S. Hennick Per: /s/ Jay S. Hennick
---------------------------- ----------------------------
President - Jay S. Hennick President - Jay S. Hennick
c/s c/s
Per: /s/ Ken Pearce Per: /s/ Ken Pearce
---------------------------- ----------------------------
Secretary - Ken Pearce Secretary - Ken Pearce
<PAGE>
Schedule "1"
1.00 THE PREFERENCE SHARES
1.01 The Preference Shares may at any time or from time to time be
issued in one or more series, each series to consist of such number of shares
as may, before the issue thereof, be determined by the board of directors of
the Corporation. The directors shall by resolution fix, from time to time,
before the issue of any series of Preference Shares, the designation,
preferences, rights, restrictions, conditions, limitations, priorities as to
payment of dividends and/or distribution on liquidation, dissolution or
winding-up, or prohibitions attaching thereto including, without limiting the
generality of the foregoing, the provision of a purchase fund, the right of
the Corporation to purchase such shares for cancellation, the rate of
preferential dividends, the dates of payment thereof, the date or dates from
which any such preferential dividends shall accrue, redemption rights
including purchase or redemption price, terms and conditions of redemption,
conversion rights and any sinking fund or other provisions, and authorize the
issuance thereof.
1.02 The directors before the issue of any Preference Shares of a series
shall file with the Director appointed under the Business Corporations Act,
1982 (Ontario) or any successor statute of the Province of Ontario which is
from time to time in force (the "Act"), Articles of Amendment designating
such series and specifying the number, designation, preferences, rights,
restrictions, conditions, limitations, priorities as to payment of dividends
and/or distribution on liquidation, dissolution or winding-up, and
prohibitions attached thereto, and shall obtain a certificate from the
Director with respect thereto.
1.03 The Preference Shares of each series shall be entitled to
preference over the Class A Shares, the Class B Shares and any other shares
ranking junior to the Preference Shares with respect to priority in payment
of dividends and in 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, and may also be
given such other preferences over the Class A Shares, the Class B Shares and
any other shares ranking junior to the Preference Shares as may be determined
with respect to the respective series authorized to be issued.
1.04 The holders of the Preference Shares shall not be entitled as such,
except as required by law, to receive notice of or to attend any meeting of
the shareholders of the Corporation or to vote at any such meeting, but shall
be entitled to receive notice of meetings of shareholders of the Corporation
called for the purpose of authorizing the dissolution of the Corporation or
the sale of its undertaking or a substantial part thereof.
<PAGE>
- 2 -
2.00 CLASS A SHARES
2.01 The holders of the Class A Shares shall be entitled to receive notice
of, to attend and speak at and to vote at, any meeting of the shareholders of
the Corporation, other than a meeting of the holders of another class as such
or the holders of a series of shares of another class as such, and at such
meeting shall have one (1) vote for each Class A Share held.
2.02 Subject to any provisions of the Act and to applicable securities
laws and the by-laws, regulations or policies of any stock exchange upon
which the Class A Shares may then be listed, all or any part of the Class A
Shares which are then outstanding shall be purchasable for cancellation by
the Corporation at any time, in the open market, by private contract or
otherwise, at the lowest price at which, in the opinion of the directors,
such shares are obtainable.
2.03 The Class A Shares shall not be redeemable by the Corporation.
2.04 If the Act would in effect require in the absence of this clause 2.04
that an amendment to the Articles of the Corporation to delete or vary any
preference, right, condition, restriction, limitation or prohibition attaching
to any of the Class A Shares, or to create special shares ranking in priority
to or on a parity with the Class A Shares, be confirmed in writing by the
holders of 100% or any lesser percentage of the then outstanding Class A
Shares, then in lieu of such confirmation in writing such confirmation may be
given by at least two-thirds of the votes cast at a meeting of the holders of
the Class A Shares duly called for that purpose, and at such meeting each
holder of Class A Shares shall be entitled to one vote for each Class A Share
held.
2.05 The holders of the Class A Shares shall not have any right to vote
separately upon any proposal to amend the Articles of the Corporation to:
(a) increase any maximum number of authorized shares of any class or
series having rights or privileges equal or superior to the Class A
Shares; or
(b) create a new class of shares equal or superior to the Class A
Shares.
<PAGE>
- 3 -
2.06
(1) For the purposes of this clause 2.06:
(a) "affiliate" has the meaning assigned by the Securities Act (Ontario)
as amended from time to time;
(b) "associate" has the meaning assigned by the Securities Act (Ontario)
as amended from time to time;
(c) "Conversion Period" means the period of time commencing on the
eighth day after the Offer Date and terminating on the Expiry Date;
(d) "Converted Shares" means Class B Shares resulting from the
conversion of Class A Subordinate Voting Shares into Class B Shares
pursuant to paragraph (2) of this clause 2.06;
(e) "Exclusionary Offer" means an offer to purchase Class B Shares that:
(i) must, by reason of applicable securities legislation or the
requirements of a stock exchange on which the Class B Shares
are listed, be made to all or substantially all holders of
Class B Shares who are in a province of Canada to which the
requirement applies; and
(ii) is not made concurrently with an offer to purchase Class A
Subordinate Voting Shares that is identical to the offer to
purchase Class B Shares in terms of price per share and
percentage of outstanding shares to be taken up exclusive of
shares owned immediately prior to the offer by the Offeror,
and in all other material respects, and that has no condition
attached other than the right not to take up and pay for shares
tendered if no shares are tendered pursuant to the offer for
Class B Shares,
and for the purposes of this definition, if an offer to purchase
Class B Shares is not an Exclusionary Offer as defined above but
would be an Exclusionary Offer if it were not for sub-clause (ii),
the varying of any term of such offer shall be deemed to constitute
the making of a new offer unless an identical variation concurrently
is made to the corresponding offer to purchase Class A Subordinate
Voting Shares;
(f) "Expiry Date" means the last date upon which holders of Class B
Shares may accept an Exclusionary Offer;
<PAGE>
- 4 -
(g) "Offer Date" means the date on which an Exclusionary Offer is made;
(h) "Offeror" means a person or company that makes an offer to purchase
Class B Shares (the "bidder"), and includes any associate or
affiliate of the bidder or any person or company that is disclosed
in the offering document to be acting jointly or in concert with the
bidder; and
(i) "transfer agent" means the transfer agent for the time being of the
Class B Shares.
(2) Subject to subparagraph (5) of this clause 2.06, if an Exclusionary Offer
is made, each outstanding Class A Share shall be convertible into one
Class B Share at the option of the holder during the Conversion Period.
The conversion right may be exercised by notice in writing given to the
transfer agent accompanied by the share certificate or certificates
representing the Class A Subordinate Voting Shares which the holder
desires to convert, and such notice shall be executed by such holder, or
by his attorney duly authorized in writing, and shall specify the number
of Class A Subordinate Voting Shares which the holder desires to have
converted. The holder shall pay any governmental or other tax imposed on
or in respect of such conversion. Upon receipt by the transfer agent of
such notice and share certificate or certificates, the Corporation shall
issue a share certificate representing fully-paid Class B Shares as above
prescribed and in accordance with paragraph (4) of this clause 2.06. If
less than all of the Class A Subordinate Voting Shares represented by any
share certificate are to be converted, the holder shall be entitled to
receive a new share certificate representing in the aggregate the number
of Class A Subordinate Voting Shares represented by the original share
certificate which are not to be converted.
(3) An election by a holder of Class A Subordinate Voting Shares to exercise
the conversion right provided for in paragraph (2) of this clause 2.06
shall be deemed to also constitute an irrevocable election by such holder
to deposit the Converted Shares pursuant to the Exclusionary Offer
(subject to such holder's right to subsequently withdraw the shares from
the offer) and to exercise the right to convert into Class A Subordinate
Voting Shares all Converted Shares in respect of which such holder
exercises his right of withdrawal from the Exclusionary Offer or which
are not otherwise ultimately taken up under the Exclusionary Offer. Any
conversion into Class A Subordinate Voting Shares, pursuant to such
deemed election, of Converted Shares in respect of which the holder
exercises his right of withdrawal from the Exclusionary Offer
<PAGE>
- 5 -
shall become effect at the time such right of withdrawal is exercised.
If the right of withdrawal is not exercised, any conversion into Class
A Subordinate Voting Shares pursuant to such deemed election shall
become effective,
(a) in respect of an Exclusionary Offer which is completed, immediately
following the time by which the Offeror is required by applicable
securities legislation to take up and pay for all shares to be
acquired by the Offeror under the Exclusionary Offer; and
(b) in respect of an Exclusionary Offer which is abandoned or withdrawn,
at the time at which the Exclusionary Offer is abandoned or
withdrawn.
(4) No share certificates representing Converted Shares shall be delivered to
the holders of the shares before such shares are deposited pursuant to
the Exclusionary Offer; the transfer agent, on behalf of the holders of
the Converted Shares, shall deposit pursuant to the Exclusionary Offer a
certificate or certificates representing the Converted Shares. Upon
completion of the offer, the transfer agent shall deliver to the holders
entitled thereto all consideration paid by the offeror pursuant to the
offer. If Converted Shares are converted into Class A Subordinate Voting
Shares pursuant to paragraph (3) of this clause 2.06, the transfer agent
shall deliver to the holders entitled thereto share certificates
representing the Class A Subordinate Voting Shares resulting from the
conversion. The Corporation shall make all arrangements with the
transfer agent necessary or desirable to give effect to this
sub-paragraph.
(5) Subject to paragraph (6) of this clause 2.06, the conversion right
provided for sub-paragraph (2) of this clause 2.06 shall not come into
effect if:
(a) prior to the time at which the Exclusionary Offer is made there is
delivered to the transfer agent and to the Secretary of the
Corporation a certificate or certificates signed by or on behalf of
one or more shareholders of the Corporation owning in the aggregate,
as at the time the Exclusionary Offer is made, more than 50% of the
then outstanding Class B Shares, exclusive of shares owned
immediately prior to the Exclusionary Offer by the Offeror, which
certificate or certificates shall confirm, in the case of each
such shareholder, that such shareholder shall not:
(i) accept any Exclusionary Offer without giving the transfer
agent and the Secretary of the Corporation
<PAGE>
- 6 -
written notice of such acceptance or intended acceptance at
least seven days prior to the Expiry Date;
(ii) make any Exclusionary Offer;
(iii) act jointly or in concert with any person or company that
makes any Exclusionary Offer; or
(iv) transfer any Class B Shares, directly or indirectly, during
the time at which any Exclusionary Offer is outstanding
without giving the transfer agent and the Secretary of the
Corporation written notice of such transfer or intended
transfer at least seven days prior to the Expiry Date, which
notice shall state, if known to the transferor, the names of
the transferees and the number of Class B Shares transferred
or to be transferred to each transferee; or
(b) within seven days after the Offer Date there is delivered to the
transfer agent and to the Secretary of the Corporation a certificate
or certificates signed by or on behalf of one or more shareholders
of the Corporation owning in the aggregate more than 50% of the then
outstanding Class B Shares, exclusive of shares owned immediately
prior to the Exclusionary Offer by the Offeror, which certificate or
certificates shall confirm, in the case of each such shareholder:
(i) the number of Class B Shares owned by the shareholder;
(ii) that such shareholder is not making the offer and is not an
associate or affiliate of, or acting jointly or in concert
with, the person or company making the offer;
(iii) that such shareholder shall not accept the offer, including
any varied form of the offer, without giving the transfer
agent and the Secretary of the Corporation written notice of
such acceptance or intended acceptance at least seven days
prior to the Expiry Date; and
(iv) that such shareholder shall not transfer any Class B Shares,
directly or indirectly, prior to the Expiry Date without
giving the transfer agent and the Secretary of the
Corporation written notice of such transfer or intended
transfer at least seven days prior to the Expiry Date, which
notice shall
<PAGE>
- 7 -
state, if known to the transferor, the names of the
transferees and the number of Class B Shares transferred
or to be transferred to each transferee if this information
is known to the transferor.
(6) If a notice referred to in sub-clause 5(a)(i), 5(a)(iv), 5(b)(iii) or
5(b)(iv) of this clause 2.06 is given and the conversion right provided
for in paragraph (2) of this clause 2.06 has not come into effect, the
transfer agent shall either forthwith upon receipt of the notice or
forthwith after the seventh day following the Offer Date, whichever is
later, make a determination as to whether there are subsisting
certifications that comply with either sub-clause 5(a) or 5(b) of this
clause 2.06 from shareholders of the Corporation who own in the
aggregate more than 50% of the then outstanding Class B Shares,
exclusive of shares owned immediately prior to the offer by the Offeror.
For the purposes of this determination the transaction that is the
subject of such notice shall be deemed to have taken place at the time
of the determination, and the shares that are the subject of such notice
shall be deemed to have been transferred to a person or company from
whom the transfer agent has not received such a certification unless the
transfer agent is otherwise advised either by such notice or by the
transferee in writing. If the transfer agent determines that there are
not such subsisting certifications, paragraph (5) of this clause 2.06
shall cease to apply and the conversion right provided for in paragraph
(2) of this clause 2.06 shall be in effect for the remainder of the
Conversion Period.
(7) As soon as reasonably possible after the seventh day after the Offer
Date, the Corporation shall send to each holder of Class A Subordinate
Voting Shares a notice advising the holders as to whether they are
entitled to convert their Class A Subordinate Voting Shares into Class B
Shares and the reasons therefor. If such notice discloses that they are
not so entitled but is subsequently determined that they are so entitled
by virtue of paragraph (6) of this clause 2.06 or otherwise, the
Corporation shall forthwith send another notice to them advising them of
that fact and the reasons therefor.
(8) If a notice referred to in paragraph (7) of this clause 2.06 discloses
that the conversion right has come into effect, the notice shall:
(a) include a description of the procedure to be followed to effect the
conversion and to have the Converted Shares tendered under the
offer;
<PAGE>
- 8 -
(b) include the information set out in paragraph (3) of this clause
2.06; and
(c) be accompanied by a copy of the offer and all other material sent
to holders of Class B Shares in respect of the offer, and as soon
as reasonably possible after any additional material, including a
notice of variation, is sent to the holders of Class B Shares in
respect of the offer, the Corporation shall send a copy of such
additional material to each holder of Class A Subordinate Voting
Shares.
(9) Prior to or forthwith after sending any notice referred to in paragraph
(7) of this clause 2.06, the Corporation shall cause a press release to
be issued to a Canadian national news ticker service, describing the
contents of the notice.
3.00 CLASS B SHARES
3.01 The holders of the Class B Shares shall be entitled to receive
notice of, and to attend and speak at and vote at, any meeting of the
shareholders of the Corporation, other than a meeting of the holders of
shares of another class as such or of the holders of a series of shares of
another class as such, and at such meeting shall have twenty (20) votes for
each Class B Share held.
3.02 Subject to any provisions of the Act and to applicable securities
laws and the by-laws, regulations or policies of any stock exchange upon
which the Class B Shares may then be listed, all or any part of the Class B
Shares which are then outstanding shall be purchasable for cancellation by
the Corporation at any time, in the open market, by private contract or
otherwise, at the lowest price at which, in the opinion of the directors,
such shares are obtainable.
3.03 The Class B Shares shall not be redeemable by the Corporation.
3.04 If the Act would in effect require in the absence of this
clause 3.04 that an amendment to the Articles of the Corporation to delete or
vary any preference, right, condition, restriction, limitation or prohibition
attaching to any of the Class B Shares, or to create special shares ranking
in priority to or on a parity with the Class B Shares, be confirmed in
writing by the holders of 100% or any lesser percentage of the then
outstanding Class B Shares, then in lieu of such confirmation in writing such
confirmation may be given by at least two-thirds of the votes cast at a
meeting of the holders of the Class B Shares
<PAGE>
- 9 -
duly called for that purpose, and at such meeting each holder of Class B
Shares shall be entitled to one vote for each Class B Share held.
3.05 The holders of the Class B Shares shall not have any right to vote
separately upon any proposal to amend the Articles of the Corporation to:
(a) increase any maximum number of authorized shares of a class or
series having rights or privileges equal or superior to the Class B Shares; or
(b) create a new class of shares equal or superior to the Class B
Shares.
3.06 Each Class B Share shall be convertible at any time, at the option
of the holder thereof, into a Class A Share, on the basis of one Class A
Share for each Class B Share so converted. The holder of Class B Shares
desiring to convert such Class B Shares into Class A Shares on the basis
aforesaid shall deliver to the transfer agent for the time being of the Class
A Shares the share certificate or share certificates representing the Class B
Shares which the holder desires to so convert accompanied by a written notice
duly executed by such holder or his attorney duly authorized in writing,
which notice shall state that such holder elects to convert the Class B
Shares represented by such share certificate or shares certificates into
Class A Shares in accordance with the provisions hereof and which notice
shall further state the name or names (with addresses) in which the share
certificate or certificates for Class A Shares issuable on such conversion
shall be issued, and if any of the Class A Shares into which such Class B
Shares are to be converted are to be issued to a person or persons other than
the holder of such Class B Shares, there shall be paid to such transfer
agent, for the account of the Corporation, any transfer taxes which may
properly be payable. If any share certificate or share certificates
representing any of the Class A Shares issuable on conversion are directed to
be issued to any person other than the holder of such Class B Shares, the
signature of such holder shall be guaranteed by a Canadian chartered bank or
such other financial institution as such transfer agent may require. Such
holder shall, in addition, comply with such other reasonable requirements as
such transfer agent may prescribe. As promptly as practicable after the
receipt of such notice of election to convert, the payment of such transfer
tax (if any), the delivery of such share certificate or share certificates
and compliance with all reasonable requirements of the transfer agent as
aforesaid, the Corporation shall cause the transfer agent for the Class A
Shares to issue and deliver in accordance with such notice of election to
convert a share certificate or share certificates representing the number of
Class A Shares into which such Class B Shares have been converted
<PAGE>
- 10 -
in accordance with the provisions of this clause 3.06. Such conversion shall
be deemed to have been made immediately prior to the close of business on the
date on which all conditions precedent to the conversion of such Class B
Shares have been fulfilled and the person or persons in whose name or names
any share certificate or share certificates for Class A Shares shall be
issuable shall be deemed to have become on the said date the holder or
holders of record of the Class A Shares represented thereby; provided,
however, that if the transfer books of the Corporation for Class A Shares
shall be closed on the said date, the Corporation shall not be required to
issue Class A Shares upon such conversion until the date on which such
transfer books shall be re-opened and such person or persons shall not be
deemed to have become the holder or holders of record of such Class A Shares
until the said date on which such transfer books shall be re-opened. There
shall be no payment or adjustment on account of any unpaid dividends on the
Class B Shares converted or on account of any dividends on the Class A Shares
resulting from such conversion. In the event that part only of the Class B
Shares represented by any share certificate shall be converted, a share
certificate for the remainder of the Class B Shares represented by the said
share certificate shall be delivered to the holder converting without charge.
4.00 DIVIDENDS AND DISTRIBUTION RIGHTS
OF THE CLASS A AND CLASS B SHARES
4.01 (a) All dividends which are declared in any year in the discretion of
the directors on all of the Class A Shares shall be declared and paid in an
equal or, in the discretion of the directors, a greater amount per share than
on all of the Class B Shares at the time outstanding. All dividends which are
declared in any year, in the discretion of the directors, on all of the Class
B Shares shall be declared and paid in an equal or, in the discretion of the
directors, a lesser amount per share than on all of the Class A Shares
outstanding. If any stock dividend is declared on Class A Shares, such
dividend may be paid in Class A Shares or in Class B Shares, or partly in one
class and partly in the other, if stock dividends in equal or, in the
discretion of the directors, lesser amounts per share are declared at the
same time on the Class B Shares and are payable in either Class A Shares or
in Class B Shares, or partly in one class and partly in the other, regardless
of which class the stock dividend was paid on Class A Shares. If any stock
dividend is declared on Class B Shares, such dividend may be paid in Class A
Shares or in Class B Shares, or partly in one class and partly in the other,
if stock dividends in equal or, in the discretion of the directors, greater
amounts per share are paid at the same time on the Class A Shares and are
payable in either Class A Shares or in Class B Shares, or
<PAGE>
- 11 -
partly in one class and partly in the other, regardless of which class the
stock dividend was paid on Class B Shares.
(b) All distributions other than dividends (including, but without
limiting the generality of the foregoing, any distribution of rights,
warrants or options to purchase securities of the Corporation), and all such
distributions which may at the time or from time to time be authorized or
made:
(i) in respect of the Class A Shares, shall be authorized and made
in equal, or in the discretion of the directors, greater
quantities or amounts per share than on all Class B Shares
then outstanding without preference or distinction; and
(ii) in respect of the Class B Shares, shall be authorized and made
in equal, or in the discretion of the directors, greater
quantities or amounts per share than on all Class A Shares
then outstanding without preference or distinction.
5.00 SUBDIVISIONS, CONSOLIDATIONS, RECLASSIFICATIONS,
WINDING-UP AND LIQUIDATION, ETC.
5.01 No subdivision, consolidation, reclassification or other change of
the Class A Shares or the Class B Shares shall be made unless at the time an
equivalent or comparable subdivision, consolidation, reclassification or
change is made with respect to all of the Class B Shares and Class A Shares,
respectively, which are then outstanding.
5.02 In any case where a fraction of a Class A Share or a Class B Share
would otherwise be issuable on a subdivision, consolidation, reclassification
or change of one or more Class A Shares or Class B Shares, the Corporation
shall in lieu thereof adjust such fractional interest by the payment by
cheque (to the nearest cent) of an amount related or equivalent to the then
current market value of such fractional interest computed on the basis of the
last board lot sale price (or the last bid price, if there has been no board
lot sale) for the Class A Shares on The Toronto Stock Exchange (or if the
Class A Shares are not listed on The Toronto Stock Exchange, on such stock
exchange in Canada on which the Class A Shares are listed or traded as may be
selected for such purpose by the Directors of Corporation) on the business
day on which such stock exchange was open next preceding the date of such
subdivision, consolidation, reclassification or change or if the Class A
Shares are not then listed on any stock exchange, then the current market
price in any public market in which the Class A Shares are traded and
otherwise in the discretion of the board of directors.
<PAGE>
- 12 -
5.03 In the event of the liquidation, dissolution or winding-up of the
Corporation or other distribution of the assets of the Corporation amongst
its shareholders for the purposes of winding-up its affairs, all of the
property and assets of the Corporation available for distribution to the
shareholders of the Corporation shall, after providing for preferential
payment of the amounts required to be paid under and in respect of any
Preference Shares or series thereof ranking in priority, shall be paid or
distributed in equal amounts per share on all Class A Shares and Class B
Shares at the time outstanding without preference or distinction and the
holders thereof shall as such participate in a share-for-share basis equally
therein.
6.00 PROVISIONS RELATING TO CLASS A
SHARES AND CLASS B SHARES
6.01 Notwithstanding any of the provisions of this Schedule, the
Articles of the Corporation hereby provide that, for the purposes of the
take-over bid and issuer bid provisions of the Securities Act (Ontario) and
the regulations thereunder, both as amended from time to time, (a) the Class
A Shares and the Class B Shares shall be treated as, and are hereby deemed to
constitute, one class of voting securities, and (b) the published market for
such one class of voting securities shall be deemed to be the published
market of the Class A Shares. For greater certainty, the provisions of this
Section 6.01 shall have no application in the event of a purchase of Class B
Shares at a price per share not in excess of the aggregate of (i) the "market
price" per share (at the time of such purchase) determined in accordance with
the provisions of the Securities Act (Ontario) and the regulations
thereunder, (both as amended or replaced from time to time) together with any
permitted premium, plus (ii) reasonable brokerage fees or other commissions
calculated on a per share basis. For greater certainty, "market price" as at
the date of these articles is defined in Section 164 of the Regulation to the
Securities Act (Ontario).
<PAGE>
-----
5. A) The amalgamation agreement X A) LES ACTIONNAIRES DE CHAQUE
has been duly adopted by ----- COMPAGNIE QUI FUSIONNE ONT DUMENT
the shareholders of each of ADOPTE LA CONVENTION DE FUSION
the amalgamating corporations CONFORMEMENT AU PARAGRAPHE 175(4)
as required by subsection DE LA LOI SUR LES COMPAGNIES A LA
175(4) of the Business DATE MENTIONNEE CI-DESSOUS.
Corporations Act on the date
set out below.
--------------------------
Check COCHER
A or B A OU B
--------------------------
-----
B) The amalgamation has been B) LES ADMINISTRATEURS DE CHAQUE
approved by the directors ----- COMPAGNIE QUI FUSIONNE ONT
of each amalgamating APPROUVE LA FUSION PAR VOIE DE
corporation by a resolution RESOLUTION CONFORMEMENT A
as required by section 176 L'ARTICLE 176 DE LA LOI SUR LES
of the Business Corporations COMPAGNIES A LA DATE MENTIONNEE
Act on the date set out CI-DESSOUS. LES STATUTS DE
below. FUSION REPRENNENT ESSENTIELLEMENT
The articles of amalgamation LES DISPOSITIONS DES STATUTS
in substance contain the CONSTITUTIFS DE
provisions of the articles of
incorporation of
- ----------------------------------------------------------------------------
and are more particularly set ET SONT ENONCES TEXTUELLEMENT
out in these articles. AUX PRESENTS STATUTS.
<TABLE>
<CAPTION>
Names of amalgamating Ontario Corporation Number Date of Adoption/
corporations NUMERO DE LA COMPAGNIE EN Approval
DENOMINATION SOCIALE ONTARIO DATE D'ADOPTION OU
DES COMPAGNIES QUI D'APPROBATION
FUSIONNENT
- ----------------------------------------------------------------------------
<S> <C> <C>
COLOMA RESOURCES 47215 July 29, 1988
LIMITED
FIRSTSERVICE 761840 July 1, 1988
CORPORATION
</TABLE>
<PAGE>
BY-LAW NUMBER 1
A by-law relating generally to the transaction
of the business and affairs of
FIRSTSERVICE CORPORATION
<TABLE>
<CAPTION>
Section Contents
- ------- --------
<S> <C>
One Interpretation
Two Execution of Documents
Three Directors
Four Committees
Five Officers
Six Protection of Directors, Officers and Others
Seven Shares
Eight Dividends
Nine Meetings of Shareholders
Ten Notices
Eleven Officers of Divisions
Twelve Corporate Seal
</TABLE>
BE IT ENACTED as a by-law of the Corporation as follows:
SECTION ONE
Interpretation
1.01 DEFINITIONS in this by-law, unless the context otherwise requires:
"Act" means the Business Corporations Act, 1982 and the regulations thereto,
as amended from time to time, or any successor Act or regulations thereto, as
the case may be;
"articles" means the articles (as that term is defined in the Act) of the
Corporation as from time to time amended or restated;
"board" means the board of directors of the Corporation;
"Corporation" means FirstService Corporation; and
"special meeting of shareholders" includes a meeting of any class of
shareholders.
Save as aforesaid, words and expressions defined in the Act have the same
meanings when used herein; and words importing the singular number include
the plural and vice versa; words importing gender include the masculine,
feminine and neuter genders; and words importing persons include individuals,
corporations, partnerships, trusts and unincorporated organizations.
<PAGE>
- 2 -
SECTION TWO
Execution of Documents
2.01 EXECUTION OF INSTRUMENTS Deeds, transfers, assignments, contracts,
obligations, certificates and other instruments may be signed on behalf of
the Corporation by any one director or officer of the Corporation.
Notwithstanding any provision to the contrary contained in the by-laws of the
Corporation, the board may at any time or times direct the manner in which
and the person or persons by whom any particular instrument or class of
instruments may or shall be signed. Any signing officer may affix the
corporate seal to any instrument requiring the same.
2.02 BANKING ARRANGEMENTS All funds of the Corporation shall be deposited
in its name in such account or accounts as are designated by the board.
Withdrawals from such account or accounts or the making, signing, drawing,
accepting, endorsing, negotiating, lodging, depositing or transferring of any
cheques, promissory notes, drafts, acceptances, bills of exchange and orders
for the payment of money with the institution maintaining such account or
accounts shall be made by such person or persons as the board may from time
to time determine.
2.03 VOTING RIGHTS IN OTHER BODIES CORPORATE Any two of the directors or
officers of the Corporation, as well as any person so empowered by the board,
may execute and deliver instruments of proxy appointing such persons as
respectively are named therein the proxy of the Corporation to exercise the
voting rights attaching to any securities held by the Corporation.
SECTION THREE
Directors
3.01 QUORUM Subject to the Articles and Section 3.03, a quorum for the
transaction of business at any meeting of the board shall be two-fifths of
the number of directors then holding office.
3.02 CALLING OF MEETINGS
(a) The board, a quorum of the directors, the chairman of the board, any
vice-president, the chief operating officer or the secretary may at any time
call a meeting of the board to be held at the time and place determined by
the board or by the person calling the meeting. Meetings of the board may be
held in any place within or outside Canada. In any financial year, a
<PAGE>
- 3 -
majority of the meetings of the board need not be held within Canada.
(b) If a quorum of directors is present, each newly elected board may,
without notice, hold its first meeting for the purpose of its organization
and the election or appointment of officers, immediately following the
meeting of shareholders at which such board was elected.
3.03 NOTICE OF MEETING Notice of the time and place of each meeting of
the board shall be given in the manner provided in Section 10.01 to each
director not less that 48 hours before the time when the meeting is to be
held. A notice of a meeting of directors need not specify the purpose of or
the business to be transacted at the meeting except where the Act requires
such purpose or business to be specified.
A director may in any manner and at any time waive notice of a meeting of
directors and attendance of a director at a meeting of directors is a waiver
of notice of the meeting, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business on the
grounds that the meeting was not lawfully called.
3.04 REGULAR MEETINGS The board may appoint a day or days in any month or
months for regular meetings of the board at a place and hour to be named. A
copy of any resolution of the board fixing the place and time of such regular
meetings shall be sent to each director forthwith after being passed, but no
other notice shall be required for any such regular meeting except where the
Act requires the purpose thereof or the business to be transacted thereat to
be specified.
3.05 CHAIRMAN The chairman of any meeting of the board shall be the first
mentioned of such of the following officers as have been appointed and who is
a director and is present at the meeting: chairman of the board,
vice-chairman of the board, chief executive officer, president, chief
operating officer or a vice-president. If no such officer is present, the
directors present shall choose one of their number to be chairman.
3.06 VOTES TO GOVERN At all meetings of the board every question shall be
decided by a majority of the votes cast on the question. In case of any
equality of votes the chairman of the meeting shall not be entitled to a
second or casting vote.
3.07 REMUNERATION AND EXPENSES The directors shall be paid such
remuneration for their services as the board may from time to time determine.
The directors shall also be entitled to be reimbursed for travelling and
other expenses properly incurred
<PAGE>
- 4 -
by them in attending meetings of the board or any committee thereof. Nothing
herein contained shall preclude any director from serving the Corporation in
any other capacity and receiving remuneration therefor.
SECTION FOUR
Committees
4.01 COMMITTEE OF DIRECTORS The Board may appoint committees of directors
and delegate to any such committee any of the powers of the board except
those which, under the Act, cannot be so delegated.
4.02 TRANSACTION OF BUSINESS The powers of a committee of directors may
be exercised by a meeting at which a quorum is present or by resolution in
writing signed by all the members of such committee who would have been
entitled to vote on that resolution at a meeting of the committee. Meetings
of such committee may be held at any place in or outside Canada.
4.03 PROCEDURE Unless otherwise determined by the board, each committee
shall have the power to fix its quorum at not less than a majority of its
members, to elect its chairman and to regulate its procedure.
SECTION FIVE
Officers
5.01 APPOINTMENT The board may from time to time designate the offices of
the Corporation, including but without limitation chairman of the board,
vice-chairman of the board, chief executive officer, chief financial officer,
president, one or more vice-presidents (to which title may be added words
indicating seniority or function), chief operating officer and secretary, and
may specify the duties attaching to such officers, appoint officers, and
subject to the provisions of the Act, delegate to such officers powers to
manage the business and affairs of the Corporation in any particular.
5.02 TERMS OF EMPLOYMENT AND REMUNERATION The terms of employment of the
officers shall be settled by the board. In the absence of written agreement
to the contrary, each officer holds office until he resigns, his successor is
appointed or he is removed by the board at its pleasure.
<PAGE>
- 5 -
5.03 AGENTS AND ATTORNEYS The board shall have power from time to time to
appoint agents or attorneys of the Corporation in or outside Canada with such
powers of management or otherwise (including the power to sub-delegate) as
may be thought fit.
5.04 FIDELITY BONDS The board may at any time require any officer,
employee or agent of the Corporation as the board deems advisable to furnish
a bond for the faithful discharge of his powers and duties in such form and
with such surety as the board may from time to time determine.
SECTION SIX
Protection of Directors, Officers and Others
6.01 LIMITATION OF LIABILITY No director or officer shall be liable for
the acts, receipts, neglects or defaults of any other director or officer or
employee or for joining in any receipt or other act for conformity, or for
any loss, damage or expense happening to the Corporation through the
insufficiency or deficiency of any security in or upon which any of the monies
of the Corporation shall be invested, or for any loss or damage arising from
the bankruptcy, insolvency or tortious acts of any person with whom any of
the monies, securities or effects of the Corporation shall be deposited, or
for any loss occasioned by any error of judgment or oversight on his part, or
for any other loss, damage or misfortune whatever which shall happen in the
execution of the duties of his office or in relation thereto; provided that
nothing herein shall relieve any director or officer from the duty to act in
accordance with the Act and the regulations thereunder or from liability for
any breach thereof.
6.02 INDEMNITY Subject to the Act, the Corporation shall indemnify a
director or officer, a former director or officer, or a person who acts or
acted at the Corporation's request as a director or officer of a body
corporate of which the Corporation is or was a shareholder or creditor (or a
person who undertakes or has undertaken any liability on behalf of the
Corporation or any such body corporate), and his heirs and legal
representatives, against all costs, charges and expenses, including an amount
paid to settle an action or satisfy a judgment, reasonably incurred by him in
respect of any civil, criminal or administrative action or proceeding to
which he is made a party by reason of being or having been a director or
officer of the Corporation or such body corporate, if
(a) he acted honestly and in good faith with a view to the best interests
of the Corporation; and
<PAGE>
- 6 -
(b) in the case of a criminal or administrative action or proceeding that
is enforced by a monetary penalty, he had reasonable grounds for
believing that his conduct was lawful.
SECTION SEVEN
Shares
7.01 ALLOTMENT The board may from time to time allot, or grant options to
purchase, any of the authorized and unissued shares of the Corporation at
such time and to such persons and for such consideration as the board shall
determine, provided that no share shall be issued until it is fully paid as
provided by the Act.
7.02 COMMISSIONS The board may from time to time authorize the
Corporation to pay a commission to any person in consideration of his
purchasing or agreeing to purchase shares of the Corporation, whether from
the Corporation or from any other person, or procuring or agreeing to procure
purchasers for any such shares.
7.03 REGISTRATION OF TRANSFER Subject to the provisions of the Act, no
transfer of shares shall be registered in a securities register except upon
presentation of the certificate representing such shares with a transfer
endorsed thereon or delivered therewith duly executed by the registered
holder or by his attorney or successor duly appointed, together with such
reasonable assurance or evidence of signature, identification and authority
to transfer as the board may from time to time prescribe, upon payment of all
applicable taxes and any fees prescribed by the board.
7.04 TRANSFER AGENTS AND REGISTRARS The board may from time to time
appoint a registrar to maintain the securities register and a transfer agent
to maintain the register of transfers and may also appoint one or more branch
registrars to maintain branch securities registers and one or more branch
transfer agents to maintain branch registers of transfers, but one person may
be appointed both registrar and transfer agent. The board may at any time
terminate any such appointment.
7.05 NON-RECOGNITION OF TRUSTS Subject to the provisions of the Act, the
Corporation shall treat as absolute owner of any share the person in whose
name the share is registered in the securities register as if that person had
full legal capacity and authority to exercise all rights of ownership,
<PAGE>
- 7 -
irrespective of any indication to the contrary through knowledge or notice of
description in the Corporation's records or on the share certificate.
7.06 SHARE CERTIFICATES Every holder of one or more shares of the
Corporation shall be entitled, at his option, to a share certificate, or to a
non-transferable written acknowledgement of his right to obtain a share
certificate, stating the number and class or series of shares held by him as
shown on the register thereof. Subject to the Act, share certificates and
acknowledgements of a shareholder's right to obtain a share certificate shall
be in such respective forms as the board shall from time to time approve. Any
share certificate shall be signed in accordance with Section 2.01 and need
not be under the corporate seal; provided that, unless the board otherwise
determines, certificates representing shares in respect of which a transfer
agent and/or registrar has been appointed shall not be valid unless
countersigned by or on behalf of such transfer agent and/or registrar. A
share certificate shall be manually signed by at least one director or
officer of the Corporation or by or on behalf of a registrar, transfer agent,
branch transfer agent or other authenticating agent of the Corporation.
Notwithstanding the foregoing a share certificate may be executed and
delivered by the Corporation if the signatures therein are printed, engraved,
lithographed or otherwise are mechanically reproduced in facsimile. A share
certificate executed as aforesaid shall be valid notwithstanding that one or
both of the officers whose facsimile signature appears thereon no longer
holds office at the date of issue of the certificate.
7.07 REPLACEMENT OF SHARE CERTIFICATES Where the registered holder of a
share certificate claims that the share certificate has been lost, apparently
destroyed or wrongfully taken, the Corporation shall issue a new share
certificate in place of the original share certificate if the owner:
(a) so requests before the Corporation has notice that the share
certificate has been acquired by a bona fide purchaser;
(b) files with the Corporation an indemnity bond sufficient in the
Corporation's opinion to protect the Corporation and any transfer
agent, registrar or other agent of the Corporation from any loss that
any of them may suffer by complying with the request to issue a new
share certificate; and
(c) satisfies any other reasonable requirements imposed by the
Corporation.
<PAGE>
- 8 -
7.08 JOINT SHAREHOLDERS If two or more persons are registered as joint
holders of any share, the Corporation shall not be bound to issue more than
one certificate in respect thereof, and delivery of such certificate to one
of such persons shall be sufficient delivery to all of them. Any one of such
persons may give effectual receipts for the certificate issued in respect
thereof or for any dividend, bonus, return of capital or other money payable
or warrant issuable in respect of such share.
7.09 DECEASED SHAREHOLDERS In the event of the death of a holder, or of
one of the joint holders, of any share, the Corporation shall not be required
to make any entry in the securities register in respect thereof or to make
payment of any dividends thereon except upon production of all such documents
as may be required by law and upon compliance with the reasonable
requirements of the Corporation and its transfer agents.
SECTION EIGHT
Dividends
8.01 DIVIDEND CHEQUES A dividend payable in cash shall be paid by cheque
to the order of each registered holder of shares of the class or series in
respect of which it has been declared and mailed by prepaid ordinary mail to
such registered holder at his recorded address, unless such holder otherwise
directs. In the case of joint holders, the cheque shall, unless such joint
holders otherwise direct, be made payable to the order of all of such joint
holders and mailed to them at their recorded address and if more than one
address appears on the register, at the first such recorded address. The
mailing of such cheque as aforesaid, unless the same is not paid on due
presentation, shall satisfy and discharge the liability for the dividend to
the extent of the sum represented thereby plus the amount of any tax which
the Corporation is required to and does withhold.
8.02 NON-RECEIPT OF CHEQUES In the event of non-receipt of any dividend
cheque by the person to whom it is sent as aforesaid, the Corporation shall
issue to such person a replacement cheque for a like amount on such terms as
to indemnity, reimbursement of expenses and evidence of non-receipt and to
title as the board may from time to time prescribe, whether generally or in
any particular case.
8.03 UNCLAIMED DIVIDENDS Any dividend unclaimed after a period of six
years from the date on which the same has been declared to be payable shall
be forfeited and shall revert to the Corporation.
<PAGE>
- 9 -
SECTION NINE
Meeting of Shareholders
9.01 ANNUAL MEETINGS The annual meeting of shareholders shall be held at
such time in each year and, subject to Section 9.03, at such place as the
board may from time to time determine, for the purpose of there being placed
before the meeting the financial statements and reports required by the Act to
be placed before the annual meeting, electing directors, appointing auditors
and for the transaction of such other business as may properly be brought
before the meeting.
9.02 SPECIAL MEETINGS Subject to the Act, the board shall have power to
call a special meeting of shareholders at any time.
9.03 PLACE OF MEETINGS Subject to the articles, a meeting of shareholders
of the Corporation shall be held at such place in or outside Ontario as the
board may determine or, in the absence of such determination, at the place
where the registered office of the Corporation is located.
9.04 NOTICE OF MEETINGS Notice of the time and place of each meeting of
shareholders shall be given in the manner provided in Section 10.01 not less
than 21 days nor more than 50 days before the date of the meeting to each
director, to the auditor and to each shareholder who at the close of business
on the record date for notice, if any, is entered in the securities register
as the holder of one or more shares carrying the right to vote at or entitled
to notice of the meeting. Notice of a meeting of shareholders called for any
purpose other than consideration of the financial statements and auditor's
report, election of directors and reappointment of the incumbent auditor
shall state the nature of such business in sufficient detail to permit the
shareholder to form a reasoned judgment thereon and shall state the text of
any special resolution to be submitted to the meeting. A shareholder may in
any manner waive notice of or otherwise consent to a meeting of shareholders.
9.05 LIST OF SHAREHOLDERS ENTITLED TO NOTICE For every meeting of
shareholders, the Corporation shall prepare a list of shareholders entitled
to receive notice of the meeting, arranged in alphabetical order and showing
the number of share entitled to vote at the meeting held by each shareholder.
If a record date for the meeting is fixed pursuant to Section 9.06, the
shareholders listed shall be those registered at the close of business on
such record date. If no record date is fixed, the shareholders listed shall
be those registered at the close of
<PAGE>
- 10 -
business on the day immediately preceding the day on which notice of the
meeting is given, or where no such notice is given, the day on which the
meeting is held. The list shall be available for examination by any
shareholder during usual business hours at the registered office or the
Corporation or at the place where the securities register is kept and at the
place where the meeting is held.
9.06 RECORD DATE FOR NOTICE The board may fix in advance a date preceding
the date of any meeting of shareholders by not more than 50 days and not less
than 21 days, as a record date for the determination of the shareholders
entitled to notice of the meeting and notice of any such record date shall be
given not less than 14 days before such record date by newspaper
advertisement in the manner provided in the Act. If no record date is so
fixed, the record date for the determination of the shareholders entitled to
notice of the meeting shall be the close of business on the day immediately
preceding the day on which the notice is given.
9.07 CHAIRMAN, SECRETARY AND SCRUTINEERS The chairman of any meeting of
shareholders shall be the first mentioned of such of the following officers
as have been appointed and who is present at the meeting: chairman of the
board, vice-chairman of the board, chief executive officer, chief operating
officer, president or a vice-president who is a shareholder. If no such
officer is present within 15 minutes from the time fixed for the holding of
the meeting, the persons present and entitled to vote shall choose one of
their number to be chairman. If the secretary of the Corporation is absent,
the chairman shall appoint some person, who need not be a shareholder, to act
as secretary of the meeting. If desired, one or more scrutineers, who need
not be shareholders, may be appointed by a resolution or by the chairman with
the consent of the meeting.
9.08 PERSONS ENTITLED TO BE PRESENT The only persons entitled to be
present at a meeting of shareholders shall be those entitled to vote thereat,
the directors and auditors of the Corporation and others who, although not
entitled to vote, are entitled or required under any provision of the Act or
the articles or by-laws to be present at the meeting. Any other person may be
admitted only on the invitation of the chairman of the meeting or with the
consent of the meeting.
9.09 QUORUM Any two shareholders entitled to vote at a meeting of
shareholders, whether present in person or represented by proxy, constitute a
quorum. If a quorum is present at the opening of a meeting of shareholders,
the shareholders present may proceed with the business of the meeting
notwithstanding that a quorum is not present throughout the meeting.
<PAGE>
- 11 -
9.10 PROXIES Every shareholder entitled to vote at a meeting of
shareholders may appoint a proxyholder, or one or more alternate
proxyholders, who need not be shareholders, to attend and act at the meeting
in the manner and to the extent authorized and with the authority conferred
by the proxy. A proxy shall be in writing executed by the shareholder or his
attorney authorized in writing and shall conform with the requirements of the
Act.
9.11 REPRESENTATIVE If a body corporate or association is a shareholder
of the Corporation, the Corporation shall recognize any individual authorized
by a resolution of the board of directors or governing body of the body
corporate or association to represent it at meetings of shareholders of the
Corporation. An individual so authorized may exercise on behalf of the body
corporate or association he represents all the powers it could exercise if it
were an individual shareholder.
9.12 JOINT SHAREHOLDERS If two or more persons hold shares jointly, any
one of them present in person or represented by proxy at a meeting of
shareholders may, in the absence of the other or others, vote the shares; but
if two or more of those persons are present in person or represented by proxy
and vote, they shall vote as one on the share jointly held by them.
9.13 VOTES TO GOVERN At any meeting of shareholders every question shall,
unless otherwise required by the articles or by-laws or by law, be determined
by the majority of the votes cast on the question. In case of an equality of
votes either upon a show of hands or upon a poll, the chairman of the meeting
shall not be entitled to a second or casting vote.
9.14 VOTING
(a) Voting at a meeting of shareholders shall be by show of hands except
where a ballot is demanded by a shareholder or proxyholder entitled to vote at
the meeting. A shareholder or proxyholder may demand a ballot either before
or after any vote by show of hands. Upon a show of hands every person present
and entitled to vote has one vote. Whenever a vote by show of hands has been
taken upon a motion, unless a ballot thereon is demanded, a declaration by
the chairman of the meeting that the vote upon the motion has been carried or
carried by a particular majority or not carried and an entry to that effect
in the minutes of the meeting is prima facie evidence of the fact without
proof of the number or proportion of the votes recorded in favour of or
against the motion, and the result of the votes so taken is a decision of the
shareholders of the Corporation upon the motion. A demand for a ballot may be
withdrawn at any time prior to the taking of the ballot.
<PAGE>
- 12 -
(b) Upon a ballot each shareholder who is present or represented by proxy
is entitled, in respect of the shares which he is entitled to vote at the
meeting upon the motion, to that number of shares provided by the Act or the
articles in respect of those shares and the result of the ballot is the
decision of the shareholders of the Corporation upon the motion.
9.15 ADJOURNMENT If a meeting of shareholders is adjourned for less than
30 days, it shall not be necessary to give notice of the adjourned meeting,
other than by announcement of the adjournment at the meeting which has been
adjourned. If a meeting of shareholders is adjourned by one or more
adjournments for an aggregate of 30 days or more, notice of the adjourned
meeting shall be given as for an original meeting.
SECTION TEN
Notices
10.01 METHOD OF GIVING NOTICES Any notice (which term includes any
communication or document) to be given (which term includes sent, delivered
or served) pursuant to the Act, the articles, the by-laws or otherwise to a
shareholder, director, officer, auditor or member of a committee of the board
shall be sufficiently given if delivered personally to the person to whom it
is to be given or if delivered to his recorded address or if mailed to him at
his recorded address by prepaid ordinary or air mail or if sent to him at his
recorded address by means of prepaid transmitted or recorded communication. A
notice so delivered shall be deemed to have been given when delivered or when
deposited in a post office or public letter box; and a notice so sent by any
means of transmitted or recorded communication shall be deemed to have been
given when dispatched or delivered to the appropriate communications company
or agency or its representative for dispatch. The secretary may change or
cause to be changed the recorded address of any shareholder, director,
officer, auditor or member of a committee of the board in accordance with any
information believed to him to be reliable.
10.02 NOTICE TO JOINT SHAREHOLDERS If two or more persons are registered
as joint holders of any share, any notice shall be addressed to all of such
joint holders but notice to one of such persons shall be sufficient notice to
all of them.
10.03 COMPUTATION OF TIME Unless otherwise provided for in the Act, in
computing the date when notice must be given under any provision requiring a
specified number of days' notice of any meeting or other event, the date of
giving the notice shall be
<PAGE>
- 13 -
excluded and the date of the meeting or other event shall be included.
10.04 UNDELIVERED NOTICES If any notice given to a shareholder pursuant to
Section 10.01 is returned on three consecutive occasions because he cannot be
found, the Corporation shall not be required to give any further notices to
such shareholder until he informs the Corporation in writing of his new
address.
10.05 OMISSIONS AND ERRORS The accidental omission to give any notice to
any shareholder, director, officer, auditor or member of a committee of the
board or the non-receipt of any notice by any such person or any error in any
notice not affecting the substance thereof shall not invalidate any action
taken at any meeting held pursuant to such notice or otherwise founded
thereon.
10.06 PERSONS ENTITLED BY DEATH OR OPERATION OF LAW Every person who, by
operation of law, transfer, death of a shareholder or any other means
whatsoever, shall become entitled to any share, shall be bound by every
notice in respect of any share which shall have been duly given to the
shareholder from whom he derives his title to such share prior to his name
and address being entered on the securities register (whether such notice was
given before or after the happening of the event upon which he became so
entitled) and prior to his furnishing to the Corporation the proof of
authority or evidence of his entitlement prescribed by the Act.
10.07 WAIVER OF NOTICE Any shareholder (or his duly appointed
proxyholder), director, officer, auditor or member of a committee of the
board may at any time waive notice, or waive or abridge the time for any
notice, required to be given to him under any provision of the Act, the
articles, the by-laws or otherwise and such waiver or abridgement shall cure
any default in the giving or in the time of such notice, as the case may be.
Any such waiver or abridgement shall be in writing except a waiver of notice
of a meeting of shareholders or of the board or of a committee of the board,
which may be given in any manner.
10.08 SIGNATURE OF NOTICE The signature of any notice to be given by the
Corporation may be written or printed or partly written and partly printed.
<PAGE>
- 14 -
SECTION ELEVEN
Officers of Divisions
11.01 OFFICERS OF DIVISIONS From time to time the board or any officer of
the Corporation duly authorized may appoint one or more officers for any
division of the business or of any branch office of the Corporation,
prescribe their powers and duties and settle their terms of employment and
remuneration. The board or any such officer may remove at its or his pleasure
any officer so appointed, without prejudice to such officer's rights under
any employment contract. Officers of such divisions or branch offices shall
not, as such, be officers of the Corporation.
SECTION TWELVE
Corporate Seal
12.01 CORPORATE SEAL Any person authorized to sign any document may affix
the corporate seal of the Corporation thereto, if the Corporation has a
corporate seal.
ENACTED by the board of directors as of the 25th day of February,
1988.
WITNESS the corporate seal of the Corporation.
/s/ [ILLEGIBLE]
-----------------------
President
/s/ [ILLEGIBLE]
-----------------------
Secretary
by-law.lh
(wordpro,
sgordon)
June 20, 1988
<PAGE>
- 15 -
BY-LAW NO. 2
A by-law relating to the borrowing of money and the issuing of
securities by FIRSTSERVICE CORPORATION (the "Corporation").
BE IT ENACTED as a by-law of the Corporation as follows:
1. Without limiting the borrowing powers of the Corporation as set forth
in the Business Corporations Act, 1982 (the "Act") the directors of the
Corporation may, from time to time without authorization of the shareholders:
(a) borrow money upon the credit of the Corporation;
(b) issue, re-issue, sell or pledge debt obligations of the Corporation;
(c) subject to section 20 of the Act, give a guarantee on behalf of the
Corporation to secure performance of any obligation of any person; and
(d) mortgage, hypothecate, pledge or otherwise create a security interest
in all or any property of the Corporation, owned or subsequently
acquired, to secure any obligation of the Corporation.
2. The Directors may, from time to time, by resolution delegate any or
all of the powers referred to in paragraph 1 of this by-law to a director, a
committee of directors or one or more officers of the Corporation.
MADE as of the 25th day of February, 1988.
/s/ Jay S. Hennick /s/ Jay S. Hennick
- -------------------------- --------------------------
President - Jay S. Hennick Secretary - Jay S. Hennick
COL-BYL2.KSP
<PAGE>
[LOGO] BORROWING BY-LAW
FIRSTSERVICE CORPORATION
---------------------------------------------------
Name of Corporation
BY-LAW NO. 3 x
-----
RESPECTING THE BORROWING OF MONEY BY THE CORPORATION RESOLVED:
WHEREAS it is necessary for the purposes of the Corporation to borrow
money or obtain other financial assistance on the credit of the Corporation
from time to time from one of the chartered banks of Canada:
THEREFORE BE IT ENACTED by the Directors of FirstService Corporation,
as a By-law thereof:
1. That the Directors of the Corporation be and they are hereby
authorized to borrow moneys or obtain other financial assistance from time to
time from the Bank of Montreal (the "Bank") (including without limitation
through the issuance of bills of exchange drawn by the Corporation and
accepted by the Bank) upon the credit of the Corporation in such amounts as
they deem proper and by way of overdraft or otherwise.
2. That any promissory notes, bills of exchange or other negotiable
paper (including renewals thereof in whole or in part) signed on behalf of
the Corporation by the officer or officers of the Corporation authorized from
time to time to sign negotiable instruments on its behalf and granted to or
accepted by the Bank for moneys borrowed and interest thereon as may be
agreed upon or other financial assistance obtained from the Bank shall be
binding upon the Corporation.
3. That the Directors may from time to time, if they see fit to do
so, grant securities by way of mortgage, hypothecation, pledge or otherwise
covering all or any of the property and assets of the Corporation present and
future as security for all or any moneys borrowed by the Corporation from the
Bank or any other liability of the Corporation to the Bank, and any such
mortgage, hypothecation, pledge or other security shall be valid and binding
upon the Corporation if signed by any of the officers authorized to sign
negotiable instruments on the Corporation's behalf.
4. All contracts, deeds, grants, assurances and documents reasonably
required by the Bank or its Counsel for all or any of the purposes aforesaid
shall be executed and carried into effect by the proper officers of the
Corporation* (and when necessary the seal of the Corporation shall be affixed
thereto).
*Delete the bracketed words if not appropriate
5. This By-law when sanctioned by the Shareholders shall be
irrevocable until a by-law repealing this By-law shall have been confirmed or
sanctioned by the Shareholders and a copy thereof duly certified* (under the
seal of the Corporation) delivered to the Bank, and meanwhile all the powers
and authorities hereby conferred shall continue in force.
I CERTIFY that the foregoing is true copy of By-Law No. 3 of**
FirstService Corporation duly enacted by the Directors of the said
Corporation and duly confirmed or sanctioned by the Shareholders thereof as
required by law.
**Insert Corporation Name
AS WITNESS* (the corporate seal of the Corporation) this 7th day of
June, 1988.
/s/ [ILLEGIBLE]
---------------
Secretary
X MEMO AFFIX
SEAL
<PAGE>
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
DATED AS OF APRIL 1, 1999
FIRSTSERVICE CORPORATION
AS CANADIAN BORROWER
AND
FIRSTSERVICE (USA), INC. AND
FIRSTSERVICE DELAWARE, LP
AS U.S. BORROWERS
AND
THE WHOLLY-OWNED SUBSIDIARIES
NAMED ON THE EXECUTION PAGES HEREOF
AS UNLIMITED GUARANTORS
AND
DRESDNER BANK CANADA
AS LEAD ARRANGER
AND
FIRST CHICAGO NBD BANK, CANADA,
SOCIETE GENERALE (CANADA) AND
THE TORONTO-DOMINION BANK
AS CO-ARRANGERS
AND
ROYAL BANK OF CANADA,
CANADIAN IMPERIAL BANK OF COMMERCE AND
THE BANK OF NOVA SCOTIA
AS MANAGERS
AND
THE BANKS NAMED ON THE EXECUTION PAGES HEREOF
AS LENDERS
AND
DRESDNER BANK CANADA
AS COLLATERAL AGENT
AND
DRESDNER BANK CANADA
<PAGE>
AS CANADIAN ADMINISTRATIVE AGENT
AND
DRESDNER BANK CANADA
AS U.S. ADMINISTRATIVE AGENT
MEIGHEN DEMERS FOGLER RUBINOFF
LENDERS' COUNSEL BORROWERS' CANADIAN COUNSEL
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ARTICLE I
DEFINITIONS..............................................................................4
1.1 DEFINITIONS.....................................................................4
1.2 REFERENCES.....................................................................25
1.3 INTERPRETATION.................................................................25
1.4 HEADINGS AND TABLE OF CONTENTS.................................................26
1.5 ACCOUNTING TERMS...............................................................26
1.6 RECITALS.......................................................................26
1.7 PRECEDENCE.....................................................................26
ARTICLE II
FACILITIES..............................................................................27
2.1 FACILITIES.....................................................................27
2.2 NOTICE AND REVOLVING NATURE OF CERTAIN BORROWINGS..............................27
2.3 CONVERSION.....................................................................28
2.4 MAKING BORROWINGS..............................................................29
2.5 PARTICIPATION OF EACH LENDER...................................................30
2.6 BANKERS' ACCEPTANCES...........................................................30
2.7 ACCEPTANCE DATE PROCEDURE......................................................31
2.8 PURCHASE OF BANKERS' ACCEPTANCES...............................................32
2.9 PAYMENT OF BANKERS' ACCEPTANCES................................................33
2.10 SET-OFF AND NETTING............................................................33
2.11 LETTERS OF CREDIT..............................................................34
ARTICLE III
REPAYMENT AND ACCOUNTS..................................................................38
3.1 REPAYMENT......................................................................38
3.2 ACCOUNTS KEPT BY THE CANADIAN ADMINISTRATIVE AGENT.............................38
3.3 ACCOUNTS KEPT BY THE U.S. ADMINISTRATIVE AGENT.................................38
3.4 ACCOUNTS KEPT BY EACH CANADIAN LENDER..........................................39
3.5 ACCOUNTS KEPT BY U.S. LENDERS..................................................39
3.5A PROMISSORY NOTES...............................................................39
3.6 EXCESS RESULTING FROM EXCHANGE RATE CHANGE.....................................40
3.7 CURRENCY.......................................................................40
3.8 EXTENSION OF FINAL MATURITY DATE...............................................40
ARTICLE IV
INTEREST AND ACCEPTANCE FEE.............................................................43
4.1 INTEREST ON LIBOR LOANS........................................................43
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
4.2 INTEREST ON COF LOANS..........................................................44
4.3 INTEREST ON PRIME LOANS........................................................44
4.4 INTEREST ON ALTERNATE BASE RATE LOANS..........................................45
4.5 LIBOR INTEREST PERIODS OR COF INTEREST PERIODS.................................46
4.6 INTEREST ON OVERDUE AMOUNTS....................................................46
4.7 ACCEPTANCE FEE.................................................................47
4.8 PRICING PERIODS................................................................47
ARTICLE V
CONDITIONS PRECEDENT....................................................................47
5.1 CONDITIONS PRECEDENT...........................................................47
5.2 CONDITIONS PRECEDENT TO BORROWINGS UNDER THE ACQUISITION FACILITIES............50
5.3 WAIVER.........................................................................52
5.4 HOSTILE TAKEOVER...............................................................52
ARTICLE VI
PREPAYMENT, CANCELLATION, MANDATORY
APPLICATION OF CASH PROCEEDS............................................................52
6.1 PREPAYMENT AND CANCELLATION....................................................52
6.2 NOTICE.........................................................................53
6.3 STATUS OF LENDER...............................................................53
6.4 FEES...........................................................................54
6.5 MANDATORY APPLICATION OF CASH PROCEEDS.........................................54
ARTICLE VII
SPECIAL LIBOR, COF AND INCREASED COST PROVISIONS........................................54
7.1 SUBSTITUTE RATE OF BORROWING...................................................54
7.2 INCREASED COST.................................................................55
7.3 ILLEGALITY.....................................................................56
7.4 INDEMNITY......................................................................57
7.5 OTHER INCREASED COSTS OR REDUCTIONS IN RETURN..................................57
7.6 ADDITIONAL COST IN RESPECT OF TAX..............................................59
7.7 CLAIMS UNDER SECTION 7.6.......................................................60
7.8 TAX RECEIPTS...................................................................60
7.9 INTERNAL REVENUE SERVICE FORMS.................................................61
ARTICLE VIII
REPRESENTATIONS, WARRANTIES & COVENANTS.................................................62
8.1 REPRESENTATIONS AND WARRANTIES.................................................62
8.2 COVENANTS......................................................................66
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ARTICLE IX
EVENTS OF DEFAULT.......................................................................76
9.1 EVENTS OF DEFAULT..............................................................76
9.2 SECURITY.......................................................................80
9.3 REMEDIES NOT EXCLUSIVE.........................................................80
9.4 SET-OFF........................................................................80
ARTICLE X
PAYMENTS................................................................................81
10.1 PAYMENTS TO AGENTS.............................................................81
10.2 PAYMENTS BY LENDERS TO AGENTS..................................................81
10.3 PAYMENTS BY AGENTS TO BORROWERS................................................82
10.4 DISTRIBUTION TO LENDERS AND APPLICATION OF PAYMENTS............................82
10.5 NO SET-OFF OR COUNTERCLAIM.....................................................82
10.6 NON-RECEIPT BY AGENTS..........................................................82
10.7 WHEN DUE DATE NOT SPECIFIED....................................................83
10.8 AGENTS' AUTHORITY TO DEBIT.....................................................83
ARTICLE XI
EXPENSES................................................................................83
11.1 PAYMENT OF EXPENSES............................................................83
11.2 SURVIVAL.......................................................................84
11.3 ENVIRONMENTAL INDEMNITY........................................................84
ARTICLE XII
FEES....................................................................................86
12.1 COMMITMENT FEES................................................................86
ARTICLE XIII
THE AGENTS AND THE LEAD ARRANGER........................................................87
13.1 AGENTS.........................................................................87
13.2 AGENTS' RESPONSIBILITY.........................................................88
13.3 AGENTS' DUTIES.................................................................89
13.4 PROTECTION OF AGENTS, LEAD ARRANGER, CO-ARRANGERS AND MANAGERS.................90
13.5 INDEMNIFICATION OF AGENTS......................................................91
13.6 TERMINATION OR RESIGNATION OF AGENT............................................91
13.7 RIGHTS OF AN AGENT AS LENDER...................................................92
13.8 AUTHORIZED WAIVERS, VARIATIONS AND OMISSIONS...................................92
13.9 FINANCIAL INFORMATION CONCERNING THE BORROWERS OR GUARANTORS...................93
13.10 KNOWLEDGE OF FINANCIAL SITUATION OF BORROWERS..................................93
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
13.11 LEGAL PROCEEDINGS..............................................................93
13.12 CAPACITY AS AGENT..............................................................93
13.13 CAPACITY AS ARRANGERS..........................................................94
13.14 DEPOSITS OR LOANS RESPECTING THE BORROWERS.....................................94
ARTICLE XIV
ASSIGNMENTS AND TRANSFERS...............................................................94
14.1 BENEFIT OF AGREEMENT...........................................................94
14.2 ASSIGNMENTS AND TRANSFERS BY A BORROWER OR AN UNLIMITED GUARANTOR..............94
14.3 ASSIGNMENTS AND TRANSFERS BY A LENDER..........................................94
14.4 TRANSFER CERTIFICATE...........................................................95
14.5 NOTICE.........................................................................96
14.6 SUB-PARTICIPATIONS.............................................................96
14.7 DISCLOSURE.....................................................................97
14.8 ASSIGNMENT TO FEDERAL RESERVE BANK.............................................97
ARTICLE XV
GOVERNING LAW, COURTS AND JUDGMENT CURRENCY.............................................97
15.1 GOVERNING LAW..................................................................97
15.2 COURTS.........................................................................97
15.3 JUDGMENT CURRENCY..............................................................98
ARTICLE XVI
GUARANTORS' OBLIGATIONS.................................................................99
16.1 GUARANTEE......................................................................99
ARTICLE XVII
MISCELLANEOUS..........................................................................101
17.1 EQUAL RANKING OF LENDERS......................................................101
17.2 SHARING OF INFORMATION........................................................101
17.3 SEVERABILITY..................................................................101
17.4 REMEDIES AND WAIVERS..........................................................102
17.5 DIRECT OBLIGATION.............................................................102
17.6 NOTICES.......................................................................102
17.7 COUNTERPARTS..................................................................103
17.8 LIMIT ON RATE OF INTEREST.....................................................103
</TABLE>
<PAGE>
SCHEDULES
"A" Call Price Formulae
"B" Net Proceeds of Bankers' Acceptances
"C" Security
"D" Shareholders' Agreements
"E" Transfer Certificate
"F" Form of Undertaking
"G" Form of Conversion Notice
"H" Form of Bankers' Acceptance
"I" Details of Issue
"J" Form of Officer's Certificate
"K" Intentionally Deleted
"L" Intentionally Deleted
"M" Intentionally Deleted
"N" Form of Officer's Certificate Re: Acquisition Facility
"O" Calculations - Available Acquisition Amount
"P" Permitted Encumbrances Re: Real Property
"Q" Form of Promissory Note
<PAGE>
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF APRIL 1, 1999
AMONG:
FIRSTSERVICE CORPORATION, a corporation duly
organized and existing under the laws of Ontario,
AND:
FIRSTSERVICE (USA), INC., a corporation duly organized and
existing under the laws of the State of Delaware and
FIRSTSERVICE DELAWARE, LP, a limited partnership duly
organized and existing under the laws of the State of
Delaware,
AND:
THE WHOLLY-OWNED SUBSIDIARIES NAMED ON THE
EXECUTION PAGES HEREOF
AND:
DRESDNER BANK CANADA, as the lead arranger,
AND:
FIRST CHICAGO NBD BANK, CANADA, SOCIETE GENERALE
(CANADA) AND THE TORONTO-DOMINION BANK, as co-arrangers
AND:
ROYAL BANK OF CANADA, CANADIAN IMPERIAL BANK
OF COMMERCE AND THE BANK OF NOVA SCOTIA, as
managers
AND:
THE BANKS NAMED ON THE EXECUTION PAGES
HEREOF, as lenders
<PAGE>
- 2 -
AND:
DRESDNER BANK CANADA, as collateral agent,
AND:
DRESDNER BANK CANADA, as Canadian administrative
agent
AND:
DRESDNER BANK CANADA, as U.S. administrative agent
WHEREAS, the Canadian Borrower, the Unlimited Guarantors,
Dresdner Bank Canada, The Toronto-Dominion Bank, First Chicago NBD Bank Canada,
the Lead Arranger and Dresdner Bank Canada as Agent entered into a Credit
Agreement dated as of December 16, 1996 (the "Original Credit Agreement");
AND WHEREAS, the Original Credit Agreement was amended as of
August 7, 1997, September 30, 1997, January 8, 1998, January 12, 1998 and May
13, 1998;
AND WHEREAS the Original Credit Agreement so amended was
amended and restated by way of an amended and restated credit agreement dated as
of June 1, 1998 (the "First Amended and Restated Credit Agreement");
AND WHEREAS, the parties hereto desire to amend and restate
the terms of the First Amended and Restated Credit Agreement;
WHEREAS the Borrowers have requested that the Lead Arranger,
the Co- Arrangers and the Managers arrange for the Lenders to grant:
(a) a revolving senior secured credit facility (including the Cdn.
Overdraft Facility as hereinafter defined) in an aggregate
amount not exceeding Cdn. $7,000,000 or the Equivalent Amount
thereof in U.S. Dollars to be made available to the Canadian
Borrower by the Canadian Lenders (the "Canadian Revolving
Facility") to finance working capital needs and capital
expenditures of the Canadian Borrower and its Subsidiaries;
<PAGE>
- 3 -
(b) a revolving senior secured credit facility (including the U.S.
Overdraft Facility as hereinafter defined) in an aggregate
amount not exceeding U.S. $19,000,000 to be made available to
the U.S. Borrowers by the U.S. Lenders (the "U.S. Revolving
Facility") to finance working capital needs and capital
expenditures of Subsidiaries of the Canadian Borrower located
in the United States.
(c) a revolving senior secured acquisition credit facility in an
aggregate amount not exceeding Cdn. $50,000,000 less amounts
outstanding under the Canadian Revolving Facility or the
Equivalent Amount thereof in U.S. Dollars to be made available
to the Canadian Borrower by the Canadian Lenders (the
"Canadian Acquisition Facility") to refinance existing debt
under the Acquisition Facility (as defined in the First
Amended and Restated Credit Agreement) and finance future
acquisitions by the Canadian Borrower and its Subsidiaries;
and
(d) a revolving senior secured acquisition credit facility in an
aggregate amount not exceeding U.S. $130,000,000 less amounts
outstanding under the U.S. Revolving Facility to be made
available to the U.S. Borrowers by the U.S. Lenders to finance
the purchase by the U.S. Borrowers of certain loans made by
the Canadian Borrower to its Subsidiaries and to finance loans
to be made by the U.S. Borrowers to Subsidiaries of the
Canadian Borrower to finance acquisitions by such Subsidiaries
(the "U.S. Acquisition Facility");
(the Canadian Revolving Facility and the U.S. Revolving Facility, referred to
herein collectively as the Revolving Facilities, the Canadian Acquisition
Facility and the U.S. Acquisition Facility referred to herein collectively as
the "Acquisition Facilities", the Cdn. Overdraft Facility and the U.S. Overdraft
Facility referred to herein collectively as the "Overdraft Facilities" and the
Revolving Facilities, Overdraft Facilities and the Acquisition Facilities
referred to herein collectively as the "Facilities");
AND WHEREAS the Lead Arranger, the Co-Arrangers and the
Managers have made such arrangements and the Lenders are willing to grant such
Facilities upon and subject to the following terms and conditions;
NOW THEREFORE in consideration of the respective covenants of
the parties contained herein and other good and valuable consideration (the
receipt and sufficiency of which is hereby acknowledged) the parties amend and
restate with effect as and from the Effective Date the terms of the First
Amended and Restated Credit Agreement and the parties agree as follows:
<PAGE>
- 4 -
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS
In this Agreement, unless the context otherwise requires, the terms
defined in the introduction of the parties and the recitals shall have, as
herein used, the same meanings and:
"30 DAY BA REFERENCE RATE" means, in respect of a Prime Loan, the rate
calculated from time to time by the Canadian Administrative Agent as
the Reference Bankers' Acceptance Discount Rate applicable for bankers'
acceptances having 30 day terms and a face value equal to or in excess
of Cdn. $300,000 during the Quarter preceding an Interest Date.
"ACCEPTANCE DATE" means any Business Day on which a Bankers' Acceptance
is or is requested to be issued hereunder.
"ACCEPTANCE FEE" means in respect of any Bankers' Acceptance
outstanding at any time:
(a) prior to June 1, 2000, at any time during:
(i) a Low Pricing Period or a Mid Pricing Period: 1.25%
per annum; and
(ii) a Higher Pricing Period: 1.50% per annum; and
(b) on or after June 1, 2000, at any time during:
(i) a Low Pricing Period: 1.00% per annum;
(ii) a Mid-Pricing Period: 1.25% per annum; and
(iii) a Higher Pricing Period: 1.50% per annum.
"ACCOMMODATION" has the meaning attributed thereto in Section 7.5 (a).
"ACCOUNT BANK" means (a) in respect of the Canadian Borrower and its
Subsidiaries which carry on business in Canada, a Schedule I Canadian
chartered bank acceptable to the Lenders, and (b) in respect of each of
the U.S. Borrowers and any Subsidiaries of the Canadian Borrower which
carry on business in the United States of America, a United States
financial institution acceptable to the Lenders, and (c) any other bank
or other financial institution appointed in replacement thereof under
Section 13.3 (c), in any case,
<PAGE>
- 5 -
at which a Borrower has established one or more accounts which shall be
debited by the Agents in accordance with Section 10.8.
"ACCOUNTS" means the accounts kept by the Canadian Administrative Agent
or the U.S. Administrative Agent, as the case may be, pursuant to
Section 3.2 and 3.3 to record the Borrowers' liabilities to the Agents
and each Lender under this Agreement.
"ACQUISITION ENTITY" means an Eligible Business acquired by the
Canadian Borrower or a Subsidiary thereof as permitted under this
Agreement.
"ACQUISITION FACILITIES" has the meaning attributed thereto in the
recitals.
"ADDITIONAL COMPENSATION" has the meaning attributed thereto in Section
7.2.
"ADDITIONAL OTHER COMPENSATION" has the meaning attributed thereto in
Section 7.5.
"ADJUSTED EBITDA" means, in respect of any 12 month period, EBITDA of
the Canadian Borrower on a consolidated basis for such period adjusted
to include the EBITDA of all applicable Acquisition Entities for such
period as demonstrated by the Canadian Borrower to the satisfaction of
the Majority Lenders, including pro forma trailing EBITDA for a period
of 12 consecutive calendar months for each such Acquisition Entity and
a full year impact of the cost savings readily identifiable and which
can be immediately implemented such as elimination of salaries for
redundant employees and elimination of various administrative functions
which will, in the reasonable opinion of the Canadian Borrower,
satisfactory to the Majority Lenders, become unnecessary or otherwise
more cost effectively performed.
"ADVANCE" means an advance of money under the Facilities.
"AFFECTED SUBSIDIARY" means any Subsidiary other than the Wholly-Owned
Subsidiaries, Nutrilawn International Inc., F.C.L.S. Inc. or Sidea
Corporation (unless the Majority Lenders shall at any time advise the
Borrowers in writing that F.C.L.S. Inc. or Sidea Corporation is not to
be excluded).
"AFFILIATE" means, in respect of any Person (the "first Person"), any
Person which, directly or indirectly, controls or is controlled by or
is under common control with the first Person; and for the purpose of
this definition, "control" (including, with correlative meanings, the
terms "controlled by" and "under common control with") means the power
to direct, or cause to be directed, the management and policies of a
Person whether through the ownership of voting shares or by contract or
otherwise.
<PAGE>
- 6 -
"AGENTS" means collectively the Canadian Administrative Agent, the
Collateral Agent and the U.S. Administrative Agent and "Agent" means
any one of the Canadian Administrative Agent, the Collateral Agent or
the U.S. Administrative Agent.
"AGREEMENT" means this Second Amended and Restated Credit Agreement
dated as of April 1, 1999 and any future amendments or supplements to
it.
"ALTERNATE BASE RATE" means for any day and with respect to all
Alternate Base Rate Loans, a fluctuating interest rate per annum equal
to the greater of the base rate most recently announced by the
Alternate Base Rate Reference Bank as its reference rate or the Federal
Funds Rate plus 1/2% per annum. The Alternate Base Rate is not
necessarily the lowest rate of interest offered by the Alternate Base
Rate Reference Bank for extensions of credit.
"ALTERNATE BASE RATE LOANS" mean Loans, or any portion thereof, made
available by the Canadian Lenders to the Canadian Borrower or by the
U.S. Lenders to the U.S. Borrowers outstanding from time to time which
are drawndown in U.S. Dollars and in respect of which interest is
payable in accordance with Section 4.4.
"ALTERNATE BASE RATE MARGIN" means, in respect of an Alternate Base
Rate Loan, or portion thereof outstanding:
(a) prior to June 1, 2000, at any time during:
(i) a Low Pricing Period or a Mid-Pricing Period: 1.25%
per annum, and
(ii) a Higher Pricing Period: 1.50% per annum; and
(b) on or after June 1, 2000, at any time during:
(i) a Low Pricing Period: 1.00% per annum,
(ii) a Mid-Pricing Period: 1.25% per annum, and
(iii) a Higher Pricing Period: 1.50% per annum.
"ALTERNATE BASE RATE REFERENCE BANK" means the U.S. Administrative
Agent with respect to determination of the Alternate Base Rate under
U.S. Facilities other than the U.S. Overdraft Facility, the Canadian
Administrative Agent with respect to the determination of the Alternate
Base Rate under the Canadian Facilities other than the Canadian
Overdraft Facility, FNBC with respect to the determination of the
Alternate Base Rate under the U.S. Overdraft Facility and TD with
respect to the determination of the Alternate Base Rate for the Cdn.
Overdraft Facility or such other Canadian Lender
<PAGE>
- 7 -
or U.S. Lender, as the case may be, appointed in replacement thereof
under Section 13.3(c).
"AMOUNT" has the meaning attributed thereto in Section 9.1.
"AUTHORIZED SIGNATORY" in relation to a Borrower and any communication
to be made or document to be executed or certified by it, means at any
time a Person who is at such time duly appointed as such by such
Borrower in a manner acceptable to the Canadian Administrative Agent or
the U.S. Administrative Agent, as the case may be, acting reasonably.
"AVAILABLE PROCEEDS" has the meaning ascribed to it in Section
2.7(b)(iv).
"B/A MATURITY DATE", in respect of a Bankers' Acceptance, means the
date on which such Bankers' Acceptance matures.
"BANKERS' ACCEPTANCE" means a bill of exchange or a depository note,
duly completed and accepted by a Canadian Lender under either the
Canadian Revolving Facility or the Canadian Acquisition Facility
pursuant to this Agreement.
"BORROWERS" means the Canadian Borrower and the U.S. Borrowers and
"Borrower" means either the Canadian Borrower or either of the U.S.
Borrowers.
"BORROWERS' CANADIAN COUNSEL" means Fogler, Rubinoff or any other firm
of solicitors selected by the Borrowers and acceptable to the Canadian
Administrative Agent, acting reasonably.
"BORROWERS' U.S. COUNSEL" means Ferrante & Associates or any other firm
of attorneys selected by the Borrowers and acceptable to the U.S.
Administrative Agent, acting reasonably.
"BORROWING" means a utilization of a Facility by way of Loans, by the
issue of Bankers' Acceptances or by the issue of Letters of Credit.
"BUSINESS DAY" means
(a) in respect of Borrowings available to a Borrower by way of
Libor Loans and payments in connection therewith, a day (other
than Saturday or Sunday) which is a day for trading by and
between banks in U.S. Dollar deposits in the London interbank
market which is also a day on which banks are generally open
for business in New York City and Toronto;
<PAGE>
- 8 -
(b) in respect of Borrowings available to a Borrower by way of
Alternate Base Rate Loans or Letters of Credit denominated in
U.S.$, a day (other than Saturday or Sunday) on which banks
are generally open for business in New York City and Toronto;
and
(c) for all other purposes of this Agreement, a day (other than
Saturday or Sunday) on which banks are generally open for
business in Toronto.
"BUSINESS VALUE" means, in respect of any period, (i) the product
obtained by multiplying (a) Adjusted EBITDA for such period by (b) 4.5
less (ii) the Cash Amount.
"BUSINESS VALUE/TOTAL DEBT RATIO" means, in respect of any period, the
quotient obtained by dividing (a) Business Value for such period (as
numerator) by (b) Total Debt for such period (as denominator).
"CALL OPTION TRIGGERING EVENT" means, in respect of any Affected
Subsidiary:
(a) the 61st day following the commencement of any actions or
proceedings against such Subsidiary or against any of the
property thereof before any court, governmental agency or
arbitrator which, if determined adversely, may have a material
adverse effect on the financial condition or operations of
such Subsidiary unless the Canadian Borrower shall have
satisfied the Majority Lenders that such Subsidiary shall not
be materially and adversely affected by such action or
proceeding or the consequences arising therefrom; or
(b) the 31st day following the receipt by such Subsidiary of any
Violation Notice which, if same were enforced, may have a
material adverse effect on the financial condition or
operations of such Subsidiary, unless the Canadian Borrower
shall have satisfied the Majority Lenders that such Subsidiary
shall not be materially and adversely affected by such
Violation Notice or the consequences arising therefrom; or
(c) the EBITDA of such Subsidiary for any period of 4 consecutive
Quarters ended (the "Relevant 4 Quarter Period") is at least
50% less than such Subsidiary's EBITDA for the period of 4
consecutive Quarters ending immediately prior to the
commencement of the Relevant 4 Quarter Period.
"CALL OPTION TRIGGERING EVENT NOTICE" means a written notice from the
Collateral Agent to the Canadian Borrower requiring the Canadian
Borrower to cause an Affected Subsidiary in respect of which a Call
Option Triggering Event shall have occurred to become a Direct
Guarantor.
"CALL PRICE FORMULAE" means the call price formulae described on
Schedule "A".
<PAGE>
- 9 -
"CANADIAN ACQUISITION FACILITY" has the meaning ascribed thereto in the
recitals.
"CANADIAN ADMINISTRATIVE AGENT" means Dresdner Bank Canada and its
successors and assigns duly appointed in accordance with Section 13.6.
"CANADIAN ASSIGNEE" has the meaning ascribed to it in Section 14.3(a).
"CANADIAN BORROWER" means FirstService Corporation.
"CANADIAN DOLLARS" means the lawful money of Canada and "CDN $" has a
corresponding meaning.
"CANADIAN FACILITIES" means, collectively, the Canadian Revolving
Facility and the Canadian Acquisition Facility.
"CANADIAN LENDERS" means the Lenders identified as Canadian Lenders on
the execution pages hereof having a Commitment to lend or when such
Commitment shall have terminated, having Borrowings outstanding to the
Canadian Borrower under the Canadian Facilities.
"CANADIAN REVOLVING FACILITY" has the meaning ascribed thereto in the
recitals.
"CAPITALIZATION" means, at any time, the sum of (a) Total Debt and (b)
Total Shareholders' Equity at such time.
"CASH AMOUNT" means, for the purposes of Schedule "O" referred to in
Subsection 5.2(i)(D) hereof, that portion of the consideration payable
in cash in respect of any purchase of shares by the Canadian Borrower
in the capital stock of any Subsidiary pursuant to the exercise of any
call option right in favour of such Borrower under the terms of any
Shareholders Agreement in respect of such Subsidiary.
"COF INTEREST PERIOD" means, with respect to each COF Loan, the period
selected by the Canadian Borrower hereunder and being 30, 60, 90 or 180
days (as selected by the Canadian Borrower and notified to the Canadian
Administrative Agent pursuant to Section 4.5 and subject to
availability) commencing on the applicable Drawdown Date.
"COF LOAN" means a Loan denominated in Cdn.$ made by the Canadian
Lenders to the Canadian Borrower outstanding from time to time and on
which interest is to be paid in accordance with Section 4.1(b).
"COF MARGIN" means in respect of a COF Loan or portion thereof
outstanding:
(a) prior to June 1, 2000, at any time during:
<PAGE>
- 10 -
(i) a Low Pricing Period or a Mid Pricing Period: 1.25%
per annum, and
(ii) a Higher Pricing Period: 1.50% per annum; and
(b) on or after June 1, 2000, at any time during:
(i) a Low Pricing Period: 1.00% per annum,
(ii) a Mid-Pricing Period: 1.25% per annum, and
(iii) a Higher Pricing Period: 1.50% per annum.
"COF RATE" means, for the COF Interest Period of each COF Loan, the
rate of interest per annum equal to the annual rate of interest quoted
on the Business Day prior to the first day of such Interest Period in
the case of COF Loans in Cdn $, by the Canadian Administrative Agent as
being its rate of interest for cost of funds loans in Cdn.$ for a face
amount similar to the amount of the applicable COF Loan and for a term
equivalent to the applicable COF Interest Period.
"COF RATE DETERMINATION DATE" means any date when the Canadian
Administrative Agent determines the COF Rate for a COF Interest Period.
"CDN. GAAP" means generally accepted accounting principles applied in
Canada.
"CDN. OVERDRAFT FACILITY" means that portion of the Canadian Revolving
Facility in an aggregate amount not to exceed the lesser of the unused
amount of the Canadian Revolving Facility and Cdn.$4,000,000 or the
Equivalent Amount in U.S. Dollars made available to the Canadian
Borrower in accordance with Section 2.12.
"CO-ARRANGERS" means First Chicago NBD Bank, Canada, Societe Generale
(Canada) and The Toronto-Dominion Bank and their successors and
assigns.
"CODE" means the Internal Revenue Code (U.S.) of 1986, as amended or
any successor statute.
"COLLATERAL AGENT" means Dresdner Bank Canada and its successors and
assigns acting in the capacity of Collateral Agent with respect to the
Security.
"COMMITMENT" (a) in relation to a Canadian Lender means, except as
otherwise provided herein, the amount set opposite its name on the
execution pages hereof as its Commitment to the Canadian Facilities,
and (b) in relation to a U.S. Lender, except as otherwise provided
herein, the amount set opposite its name on the execution pages hereof
as its Commitment to the U.S. Facilities.
<PAGE>
- 11 -
"CONVERSION" means the conversion of a Borrowing or any portion thereof
in accordance with Section 2.3.
"CONVERSION DATE" means the date a Borrower has notified the Canadian
Administrative Agent or the U.S. Administrative Agent, as the case may
be, to be the date on which it has elected to convert a Borrowing or a
portion thereof pursuant to Section 2.3.
"CURRENT ASSETS" has the meaning attributed thereto under Cdn. GAAP.
"CURRENT LIABILITIES" has the meaning attributed thereto under Cdn.
GAAP.
"DIRECT GUARANTOR" means (a) the Unlimited Guarantor, Prime Management
Group Inc., Prime Management Inc., Prime Pest Control Inc., Prime
Realty Associates Inc. and Prime Services Inc.; and (b) each other
Subsidiary of the Canadian Borrower, of which the Canadian Borrower
shall at any time directly or indirectly own and control 100% of the
issued and outstanding shares, equity or other ownership interests
which shall have executed and delivered to the Collateral Agent the
Direct Security.
"DIRECT SECURITY" means the Security designated as Direct Security in
Schedule "C".
"DRAWDOWN" means a drawdown of a Borrowing by a Borrower.
"DRAWDOWN DATE" means any Business Day when a Borrower makes a Drawdown
or a Conversion Date with respect to any Borrowing or portion thereof.
"EBITDA" means, in respect of any period, earnings before interest,
taxes, depreciation and amortization.
"EFFECTIVE DATE" means April 15, 1999.
"ELIGIBLE BUSINESS" means, in respect of any business to be acquired by
the Canadian Borrower or its Subsidiaries, a business which:
(a) is substantially similar to the "core" businesses currently
conducted by the Canadian Borrower and its Subsidiaries, taken
as a whole, in the reasonable opinion of the Canadian
Borrower; which "core" businesses of the Canadian Borrower and
its Subsidiaries are as follows:
(i) the security business,
(ii) the property management business,
(iii) the property maintenance business,
<PAGE>
- 12 -
(iv) the service franchise business,
(v) landscape, lawn-care and lawn maintenance business,
(vi) the interior or exterior pest control businesses,
(vii) business out-sourcing, and
(viii) residential and commercial cleaning and/or
maintenance business;
(b) does not include (i) manufacturing, fabrication or similar
processes or (ii) retail business;
(c) does not include any business that carries on a material part
of its business outside of Canada or the United States of
America;
(d) if such business is out-sourcing, then it shall have easily
recognizable features or characteristics which complement or
otherwise add value to the businesses of such nature currently
conducted by the Canadian Borrower and its Subsidiaries, taken
as a whole, in the reasonable opinion of the Canadian
Borrower, satisfactory to the Majority Lenders;
(e) if such business is a security services business, then at all
times after completion of such acquisition, the proportion of
sales and consolidated EBITDA derived from all the security
businesses of the Canadian Borrower and its Subsidiaries,
taken as a whole, of the total sales and consolidated EBITDA
of the Canadian Borrower and its Subsidiaries taken as a
whole, shall not exceed either (i) 40% of the total sales or
(ii) 33% of consolidated EBITDA of the Canadian Borrower and
its Subsidiaries, taken as whole.
"ENVIRONMENTAL LAWS" means all laws, statutes, codes, ordinances,
orders, decrees, rules, regulations, guidelines, standards, judgements,
or instruments, in each case having the force of law, of any authority
having jurisdiction relating in whole or in part to the environment or
its protection.
"EQUIVALENT AMOUNT" means on any date, as the case may be, the amount
of Cdn. Dollars into which an amount of U.S. Dollars may be converted
or the amount of U.S. Dollars into which an amount of Cdn. Dollars may
be converted at the Canadian Administrative Agent's spot buying rate in
Toronto as at approximately 12:00 noon, on such date.
"ERISA" has the meaning ascribed to it in Section 8.1(n).
<PAGE>
- 13 -
"EVENT" has the meaning attributed thereto in Section 7.5(b).
"EVENT OF DEFAULT" has the meaning ascribed to it in Section 9.1.
"EXTENSION DATE" has the meaning ascribed to it in Section 3.8(a).
"EXTENSION REQUEST" has the meaning ascribed to it in Section 3.8(a).
"FACILITIES" has the meaning ascribed to such term in the recitals and
"FACILITY" means any one of the Facilities.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to (a) the weighted
average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds
brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or (b) if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by the applicable Alternate Base Rate Reference
Bank from three federal funds brokers of recognized standing selected
by it.
"FINAL MATURITY DATE" means June 1, 2004 unless extended in accordance
with the terms hereof.
"FINANCIAL CONTRACT OBLIGATIONS" means all obligations, present and
future, direct or indirect, contingent or absolute, of a Borrower
and/or its Subsidiaries in respect of:
(a) a currency or interest rate swap agreement;
(b) a swap, future, forward or other foreign exchange agreement;
(c) a forward rate agreement;
(d) any derivative, combination or option in respect of, or
agreement similar to, an agreement or contract referred to in
paragraphs (a) to (c);
(e) any master agreement in respect of any agreement or contract
referred to in paragraphs (a) to (c); or
(f) a guarantee of the liabilities under an agreement or contract
referred to in paragraphs (a) to (c).
<PAGE>
- 14 -
"FIRST AMENDED AND RESTATED CREDIT AGREEMENT" has the meaning
attributed thereto in the recitals.
"FISCAL YEAR" means a fiscal year of the Canadian Borrower; currently
the Fiscal Year ends on March 31.
"FIXED CHARGE COVERAGE RATIO" means, in respect of any period, the
quotient obtained by dividing (a) the amount (as numerator) obtained by
subtracting (i) capital expenditures (other than acquisition
expenditures) for such period from (ii) Adjusted EBITDA for such
period, by (b) the sum (as denominator) of (i) interest expense on
Total Debt for such period, (ii) scheduled principal repayments and
capital lease payments for such period, (iii) scheduled payments
required to be made as of the date of this Agreement with respect to
any purchase price balance or the refinancing of any purchase price
balances of any assets, and (iv) payments required to be made with
respect to any purchase price balance or the refinancing of any
purchase price balances of any assets in connection with acquisitions
made after the date hereof which exceed availability under the
Acquisition Facilities. In calculating such interest expense, there
shall be included a 12 month interest burden, so as to reflect the
incremental debt drawn down to effect a Permitted Acquisition,
calculated at the average rate of interest incurred by the Canadian
Borrower on its Total Debt during such period.
"FNBC" means The First National Bank of Chicago.
"FS (USA)" means FirstService (USA), Inc.
"FSLLC" means FirstService Delaware, LLC.
"FSLP" means FirstService Delaware, LP.
"GAAP" means Cdn. GAAP until such time as the Canadian Borrower
notifies the Canadian Administrative Agent in writing that it has
converted to U.S. GAAP and thereafter all references to GAAP shall mean
U.S. GAAP.
"GUARANTOR" means any Person, including an Unlimited Guarantor and a
Direct Guarantor, which shall have provided a guarantee of a Borrower's
obligations hereunder in favour of the Collateral Agent and/or the
Lenders.
"GUARANTEED OBLIGATIONS" means the Canadian Borrower's Guaranteed
Obligations, (as such term is defined in Section 16.1(a)) and/or the
Unlimited Guarantor's Guaranteed Obligations (as such term is defined
in Section 16.1(b)).
"HAZARDOUS MATERIAL" means any substance, waste, solid, liquid, or
gaseous matter, petroleum or petroleum derived substance,
micro-organism, sound, vibration, ray, heat,
<PAGE>
- 15 -
odour, radiation, energy vector, plasma, organic or inorganic matter,
whether animate or inanimate, transient reaction intermediate or any
combination of the foregoing deemed hazardous, hazardous waste, solid
waste, or pollutant, a deleterious substance, or a contaminant under
any Environmental Law.
"HEDGING AGREEMENTS" means one or more interest rate and/or currency
hedge agreements entered into between the Canadian Borrower and a
Canadian Lender from time to time to a maximum aggregate notional
amount of Cdn. $50,000,000 for all Canadian Lenders and between a U.S.
Borrower and a U.S. Lender from time to time to a maximum aggregate
notional amount of U.S. $130,000,000 for all U.S. Lenders.
"HIGHER PRICING PERIOD" means a Quarter next following a Quarter when
the Canadian Borrower is maintaining:
(a) a Total Debt/Adjusted EBITDA Ratio equal to or greater than 3
to 1; or
(b) an Interest Coverage Ratio of less than 3.5 to 1.
"INITIAL ADVANCE" means, in respect of a Facility, the Borrowing, or
where more than one Borrowing may be made thereunder, the first
Borrowing, contemplated to be made thereunder pursuant to this
Agreement.
"INTEREST COVERAGE RATIO" means, in respect of any period, the quotient
obtained by dividing (a) the amount (as numerator) obtained by
subtracting (i) capital expenditures (other than acquisition
expenditures) for such period from (ii) Adjusted EBITDA for such period
by (b) the sum of interest expense on Total Debt for such period. In
calculating such interest expense, there shall be included a 12 month
interest burden, so as to reflect the incremental debt drawn down to
effect a Permitted Acquisition, calculated at the current rate of
interest incurred by the Canadian Borrower on its Total Debt for such
period.
"INTEREST DATE" means (a) in respect of a Prime Loan or an Alternate
Base Rate Loan and Article XII, the 1st Business Day of each Quarter
and (b) in respect of a COF Loan or a Libor Loan, the last day of the
applicable Interest Period and, where any Interest Period is longer
than 90 days or 3 months, as the case may be, the 90th day or, as the
case may be, the last Business Day of such Interest Period.
"INTEREST PERIOD" means a COF Interest Period or a Libor Interest
Period, as applicable.
"ISSUING BANK" means, in the case of Letters of Credit issued under the
Canadian Facilities, a Canadian Lender which is a designated Schedule I
Canadian chartered bank as may be agreed to by the Canadian Lenders
and, in the case of Letters of Credit issued under the U.S. Facilities,
a U.S. Lender so designated by the U.S. Lenders, in any case,
<PAGE>
- 16 -
which issues Letters of Credit hereunder. As of the Effective Date the
Issuing Bank for Letters of Credit issued under the Canadian Revolving
Facility is TD and the Issuing Bank for Letters of Credit issued under
the U.S. Revolving Facility is FNBC.
"LEAD ARRANGER" means Dresdner Bank Canada and its successors and
assigns.
"LENDERS" means the Canadian Lenders and the U.S. Lenders and their
respective successors and assigns. "Lender" means any Canadian Lender
or U.S. Lender, as the case may be.
"LENDERS' COUNSEL" means Meighen Demers or any other firm of solicitors
selected by the Majority Lenders.
"LETTER OF CREDIT" means a Standby Letter of Credit or a Trade Letter
of Credit issued by an Issuing Bank at the request of a Borrower in an
amount not to exceed the unused portion of the applicable Revolving
Facility.
"LETTER OF CREDIT FEE" means a monthly fee equivalent to the following
annual returns on each Lender's Participation in the average daily
balance of the face amount of Letters of Credit outstanding:
(a) prior to June 1, 2000, at any time during:
(i) a Low Pricing Period or a Mid-Pricing Period, 1.25%
per annum, and
(ii) a Higher Pricing Period, 1.50% per annum;
(b) on or after June 1, 2000, at any time, during:
(i) a Low Pricing Period: 1.00% per annum,
(ii) a Mid-Pricing Period: 1.25% per annum; and
(iii) a Higher Pricing Period: 1.50% per annum.
"LIBOR" means, with respect to any Libor Interest Period, the rate of
interest per annum, rounded upwards, if necessary, to the nearest whole
multiple of 1/16%, established by the Canadian Administrative Agent or
the U.S. Administrative Agent, as the case may be, to be the average of
the rates at which the Libor Reference Bank, in accordance with their
normal practice, would be prepared to offer deposits in U.S. Dollars to
leading banks in the London Interbank Market, for delivery on the first
day of the relevant Libor Interest Period, as determined at or about
11:00 a.m. (London time) 2 Business Days before the first day of such
Libor Interest Period for a period equal to
<PAGE>
- 17 -
such Libor Interest Period in an amount substantially equal to the
amount of such Libor Loan.
"LIBOR DETERMINATION DATE" means any date on which the Canadian
Administrative Agent or the U.S. Administrative Agent, as the case may
be, determines LIBOR for a Libor Interest Period.
"LIBOR INTEREST PERIOD" means with respect to any Borrowing by way of a
Libor Loan, the period of 1, 2, 3 or 6 months (as selected by the
Canadian Borrower and notified to the Canadian Administrative Agent or
selected by a U.S. Borrower and notified to the U.S. Administrative
Agent, as the case may be, pursuant to Section 4.5 and subject to
availability) commencing with the applicable Drawdown Date.
"LIBOR LOAN" means a Loan made available by the U.S. Lenders to a U.S.
Borrower or by the Canadian Lenders to the Canadian Borrower, as the
case may be, outstanding from time to time and denominated in U.S.
Dollars and on which interest is to be paid in accordance with Section
4.1.
"LIBOR MARGIN" means in respect of a Libor Loan or portion thereof
outstanding:
(a) prior to June 1, 2000, at any time during:
(i) a Low Pricing Period or a Mid-Pricing Period: 1.25%
per annum, and
(ii) a Higher Pricing Period: 1.50% per annum; and
(b) on or after June 1, 2000, at any time during:
(i) a Low Pricing Period: 1.00% per annum,
(ii) a Mid-Pricing Period: 1.25% per annum, and
(iii) a Higher Pricing Period: 1.50% per annum.
"LIBOR REFERENCE BANK" means the Canadian Administrative Agent with
respect to Libor Loans made to the Canadian Borrower and the U.S.
Administrative Agent with respect to Libor Loans made to a U.S.
Borrower and or any other Lender or Affiliate thereof appointed as such
in replacement thereof under Section 13.3 (c).
"LIEN" means with respect to the property or assets of any Person, a
mortgage, pledge, hypothecation, encumbrance, lien (statutory or
other), charge or other security interest of any kind in or with
respect to such property or assets (including, without limitation, any
conditional sale or other title retention agreement, and any financing
lease under
<PAGE>
- 18 -
which such Person is lessee having substantially the same economic
effect as any of the foregoing).
"LOANS" means collectively, that portion of any Borrowing outstanding
from time to time by way of Libor Loans, COF Loans, Prime Loans,
Alternate Base Rate Loans or, as the context may require, all Loans
outstanding at any time. "Loan" means, at any time, any Libor Loan, COF
Loan, Prime Loan, or Alternate Base Rate Loan, as the case may be.
"LOW PRICING PERIOD" means a Quarter next following a Quarter when the
Canadian Borrower is maintaining:
(a) a Total Debt/Adjusted EBITDA Ratio of less than 2.5 to 1; and
(b) an Interest Coverage Ratio of equal to or greater than 4 to 1.
"MAJORITY LENDERS" means 2 or more Lenders having at least 66-2/3% of
the Total Commitments or, if the Commitments have terminated, of total
Borrowings outstanding at such time. For purposes of this definition
each U.S. Lender and its related Canadian Lender (which may be the same
institution in certain cases) shall be considered one Lender and the
Commitments (or Borrowings) of each such related U.S. and Canadian
Lender shall be aggregated for purposes of determining the requisite
percentage.
"MANAGERS" means Royal Bank of Canada, Canadian Imperial Bank of
Commerce and The Bank of Nova Scotia and their successors and assigns.
"MATERIAL CONTINGENT OBLIGATION" means, in respect of the Canadian
Borrower or its Subsidiaries, a contingent obligation or liability of
Cdn.$1,000,000 (or the Equivalent Amount thereof in U.S.$) or more or
which is otherwise required to be disclosed to securities regulators or
exchanges or the public.
"MAXIMUM ACQUISITION TOTAL DEBT/ADJUSTED EBITDA RATIO" means, in
respect of any proposed acquisition of a Target Acquisition Entity, the
Total Debt/Adjusted EBITDA Ratio calculated as at the time of
completion of such acquisition, on the basis that Adjusted EBITDA shall
be adjusted to include pro forma trailing EBITDA for a period of 12
consecutive calendar months for the Target Acquisition Entity including
a full year impact of the cost savings readily identifiable and which
can be immediately implemented such as elimination of salaries for
redundant employees and elimination of various administrative functions
which will, in the reasonable opinion of the Canadian Borrower,
satisfactory to the Majority Lenders, become unnecessary or otherwise
more cost effectively performed.
<PAGE>
- 19 -
"MAXIMUM TOTAL DEBT/ADJUSTED EBITDA RATIO" means for each period of 4
consecutive Quarters or 12 consecutive calendar months, a Total
Debt/Adjusted EBITDA Ratio of:
(a) not more than: 3.5 to 1; or
(b) if the Interest Coverage Ratio is less than 3.0 to 1 after
April 1, 2000, not more than: 3.25 to 1; or
(c) if the Interest Coverage Ratio is less than 3.0 to 1 after
April 1, 2001, not more than: 3.0 to 1;
for the purposes of calculating a Total Debt/Adjusted EBITDA Ratio,
Total Debt is measured as at the date of calculation.
"MAXIMUM TOTAL DEBT/CAPITALIZATION RATIO" means, at any time, a Total
Debt/Capitalization Ratio of not more than .75 to 1.
"MID-PRICING PERIOD" means a Quarter next following a Quarter when the
Canadian Borrower is maintaining:
(a) a Total Debt/Adjusted EBITDA Ratio of less than 3 to 1 and
greater than or equal to 2.5 to 1; and
(b) an Interest Coverage Ratio equal to or greater than 3.5 to 1
and less than 4 to 1.
"MINIMUM BUSINESS VALUE/TOTAL DEBT RATIO" means a Business Value/Total
Debt Ratio of at least 1.25 to 1.
"MINIMUM FIXED CHARGE COVERAGE RATIO" means a Fixed Charge Coverage
Ratio of at least 1.5 to 1.
"MINIMUM INTEREST COVERAGE RATIO" means an Interest Coverage Ratio of
at least 2.5:1.
"MINIMUM WORKING CAPITAL RATIO" means a Working Capital Ratio of at
least 1.1 to 1.
"NET PROCEEDS", in respect of any Bankers' Acceptance, means the amount
obtained by applying the Reference Bankers' Acceptance Discount Rate to
the Principal Amount of such Bankers' Acceptance in accordance with the
formula set out in Schedule "B".
"NON-CONSENTING LENDER" has the meaning ascribed to it in Section
3.8(e).
<PAGE>
- 20 -
"NON-EXTENDING LENDERS CONVERSION DATE" has the meaning ascribed to it
in Section 3.8(e).
"NON-EXTENSION CONVERSION DATE" has the meaning ascribed to it in
Section 3.8(d).
"NSULC" means FirstService Nova Scotia Corp.
"ORIGINAL CREDIT AGREEMENT" has the meaning attributed thereto in the
recitals.
"OWNERSHIP AND CONTROL" has the meaning attributed thereto in Section
8.1(k).
"PARTICIPATION" of a Lender means the percentage of the Commitment
indicated opposite its name on the execution pages hereof in relation
to, in the case of a U.S. Lender, the Total U.S. Commitments and in the
case of a Canadian Lender, the Total Cdn. Commitments or, at such time
as the Commitments have terminated, the percentage of Advances made by
such U.S. Lender or Canadian Lender of all Advances then outstanding
under the U.S. Facilities or the Canadian Facilities, respectively.
"PERMITTED ENCUMBRANCES" has the meaning ascribed to it in Section
8.2(n).
"PERMITTED LOANS" has the meaning ascribed to it in Section 8.2(k)(ii).
"PERMITTED VTBS" has the meaning ascribed to it in Section 8.2(n).
"PERSON" means any individual, firm, company, corporation, entity,
joint venture, joint-stock company, trust, unincorporated organization,
government or state entity or any association or a partnership (whether
or not having separate legal personality) of two or more of the
foregoing.
"PREPAID BANKERS' ACCEPTANCES" has the meaning attributed thereto in
Section 7.5 (c).
"PRICING PERIOD" means a Low Pricing Period, a Mid-Pricing Period or a
Higher Pricing Period.
"PRIME LOANS" means the Loans, or portion of them, made available by
the Canadian Lenders to the Canadian Borrower outstanding from time to
time which are drawn down in Canadian Dollars and in respect of which
interest is payable in accordance with Section 4.3.
<PAGE>
- 21 -
"PRIME MARGIN" means in respect of a Prime Loan or portion thereof
outstanding:
(a) prior to June 1, 2000 at any time during:
(i) a Low Pricing Period or a Mid-Pricing Period, .50%
per annum; and
(ii) a Higher Pricing Period, .75% per annum; and
(b) on or after June 1, 2000, at any time during:
(i) a Low Pricing Period, .25% per annum;
(ii) a Mid-Pricing Period, .50%; and
(iii) a Higher Pricing Period, .75% per annum.
"PRIME RATE" means, at any time, the greater of (a) the floating annual
rate of interest calculated from time to time by the Canadian
Administrative Agent as the base rate, calculated on the basis of a
year of 365 or 366 days, as the case may be, which the Prime Reference
Bank uses to determine rates of interest on Canadian Dollar loans to
customers in Canada and designates as its prime rate and (b) the rate
expressed as an annual percentage equal to the sum of (x) .75% per
annum and (y) the 30 Day BA Reference Rate.
"PRIME REFERENCE BANK" means the Canadian Administrative Agent or any
other Canadian Lender appointed as such in replacement thereof in
accordance with the provisions of Section 13.3(c).
"PRINCIPAL AMOUNT" means (a) for a Bankers' Acceptance or a Letter of
Credit, the face amount thereof and (b) for a Loan, the principal
amount thereof.
"QUARTER" means a fiscal quarter of any Fiscal Year.
"REFERENCE BANK" means the Libor Reference Bank, the Prime Reference
Bank, the Alternate Base Rate Reference Bank or the Reference Bank for
Bankers' Acceptances, as the context requires.
"REFERENCE BANKERS' ACCEPTANCE DISCOUNT RATE" means the rate,
calculated on the basis of a year of 365 days, determined from time to
time by the Canadian Administrative Agent as the discount rate for
Bankers' Acceptances, based on the discount rate reported to the
Canadian Administrative Agent by the Reference Bank for Bankers'
Acceptances, established in accordance with its normal practices at or
about 9:30 a.m. on the Acceptance Date, for bankers' acceptances
accepted by such Reference Bank having a
<PAGE>
- 22 -
face value equal to or in excess of Cdn. $300,000 and an identical term
to that of the proposed Bankers' Acceptances to be purchased on such
day.
"REFERENCE BANK FOR BANKERS' ACCEPTANCES" means the Canadian
Administrative Agent or any other Canadian Lender appointed as such in
replacement thereof under Section 13.3 (c).
"REPAYMENT DATE" means a day, other than the Final Maturity Date, on
which a Borrower repays all or part of a Loan pursuant to Section 2.2.
"REVOLVING FACILITIES" has the meaning attributed thereto in the
recitals.
"SECURITY" means the security described in Schedule "C".
"SHAREHOLDERS' AGREEMENTS" means the shareholders' agreements described
in Schedule "D".
"STANDBY LETTER OF CREDIT" means a standby letter of credit issued by
any Issuing Bank pursuant to Section 2.11 or a letter of guarantee
issued by an Issuing Bank which is a Canadian Lender.
"SUBSIDIARY" of any Person means any corporation or other entity of
which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or of others
performing similar functions are directly or indirectly owned or
controlled by such Person.
"TD" means The Toronto-Dominion Bank.
"TARGET ACQUISITION ENTITY" means an Eligible Business to be acquired
by the Canadian Borrower or a Subsidiary thereof as permitted under
this Agreement.
"TAX" includes all present and future taxes, levies, imposts, stamp
taxes, duties, withholdings and all penalty, interest and other
payments on or in respect thereof.
"TOTAL CDN. COMMITMENTS" means the aggregate of the Canadian Lenders'
Commitments for the Canadian Facilities from time to time.
"TOTAL COMMITMENTS" means the aggregate for all Facilities from time to
time of the Lenders' Commitments from time to time.
"TOTAL U.S. COMMITMENTS" means the aggregate of the U.S. Lenders'
Commitments for the U.S. Facilities from time to time.
<PAGE>
- 23 -
"TOTAL DEBT" shall include the obligations under this Agreement,
Financial Contract Obligations, guaranteed obligations, capital leases,
vendor-take-back financing and subordinated debt of the Canadian
Borrower on a consolidated basis and shall be determined in accordance
with Cdn. GAAP after deduction of cash-on-hand.
"TOTAL DEBT/ADJUSTED EBITDA RATIO" means, at any time, the quotient
obtained by dividing (a) Total Debt at such time (as numerator) by (b)
Adjusted EBITDA for the period of the 4 consecutive Quarters or, in the
case of the calculation of the Maximum Acquisition Total Debt/Adjusted
EBITDA Ratio, 12 consecutive calendar months, most recently ended (as
denominator).
"TOTAL DEBT/CAPITALIZATION RATIO" means, at any time, the quotient
obtained by dividing (a) Total Debt (as numerator) by (b)
Capitalization (as denominator).
"TOTAL SHAREHOLDERS' EQUITY" has the meaning attributed thereto under
Cdn. GAAP.
"TRADE LETTER OF CREDIT" means a trade letter of credit or letter of
guarantee acceptable to the Majority Lenders, acting reasonably, issued
by an Issuing Bank pursuant to Section 2.11.
"TRANSFER CERTIFICATE" means a certificate substantially in the form
set out in Schedule "E" signed by a Lender and a Transferee.
"TRANSFEREE" means a bank or other financial institution to which a
Lender seeks to assign or transfer all or part of such Lender's rights
and obligations hereunder in accordance with Article XIV.
"TYPE" means, with respect to any Loan, a Prime Loan, a COF Loan, an
Alternate Base Rate Loan or a LIBOR Loan and otherwise , with respect
to any Borrowing or portion thereof, Bankers' Acceptances or Letters of
Credit.
"U.S. ACQUISITION FACILITY" has the meaning ascribed thereto in the
recitals.
"U.S. ADMINISTRATIVE AGENT" means Dresdner Bank Canada and its
successors and assigns duly appointed in accordance with Section 13.6.
"U.S. ASSIGNEE" has the meaning ascribed to it in Section 14.3(a).
"U.S. BORROWERS" means, collectively, FS (USA) and FSLP and each of
such U.S. Borrowers being a "U.S. Borrower".
"U.S. DOLLARS" means the lawful money of the United States of America
and "U.S. $" has a corresponding meaning.
<PAGE>
- 24 -
"U.S. FACILITIES" means, collectively, the U.S. Revolving Facility
(including the U.S. Overdraft Facility) and the U.S. Acquisition
Facility.
"U.S. GAAP" means generally accepted accounting principles applied in
the United States.
"U.S. LENDERS" means the Lenders identified as U.S. Lenders on the
execution pages hereof having a Commitment to lend or when such
Commitment shall have terminated, having Borrowings outstanding to the
U.S. Borrower under the U.S. Facilities.
"U.S. OVERDRAFT FACILITY" means that portion of the U.S. Revolving
Facility in an aggregate amount not to exceed the lesser of the unused
amount of the U.S. Revolving Facility and U.S. $4,000,000 made
available to the U.S. Borrowers in accordance with Section 2.13.
"U.S. REVOLVING FACILITY" has the meaning ascribed thereto in the
recitals.
"UNDERTAKING TO SECURE" means the Undertaking to be provided by
Subsidiaries of the Canadian Borrower, other than Subsidiaries that are
Wholly-Owned Subsidiaries as of the date of this Agreement,
substantially in the form set out in Schedule "F".
"UNLIMITED GUARANTOR" means FirstService GP Inc.
"VIOLATION NOTICE" means any notice received by a Borrower or any of
its Subsidiaries from any governmental or regulatory body or agency
under any Environmental Law that such Borrower or any of its
Subsidiaries is in non-compliance with the requirements of any
Environmental Law.
"WHOLLY-OWNED SUBSIDIARY" means any corporation or other entity of
which 100% of the securities or other ownership interests are owned
directly or indirectly by a Borrower.
"WORKING CAPITAL RATIO" means at any time the quotient obtained by
dividing (a) Current Assets of the Canadian Borrower at such time (as
numerator) by (b) Current Liabilities of the Canadian Borrower at such
time (as denominator).
"YEAR 2000 PROBLEM" means the risk that principal computer applications
used in connection with a Borrower's business or the business of any
Subsidiary of a Borrower may be unable to recognize and perform
properly date sensitive functions involving certain dates prior to or
any date after December 31, 1999.
<PAGE>
- 25 -
1.2 REFERENCES
Any reference made in this Agreement to:
(a) Any of the "Canadian Administrative Agent", the "U.S.
Administrative Agent", the "Collateral Agent", the "Lenders"
or a "Lender" shall so be construed as to include its or their
respective successors and permitted assigns.
(b) A time of day is, unless otherwise stated, a reference to
Toronto time.
(c) Sections, Articles or Schedules is, unless otherwise
indicated, to Sections and Articles of this Agreement and to
Schedules to this Agreement, as the case may be. The
provisions of each Schedule shall constitute provisions of
this Agreement as though repeated at length herein.
(d) A "month" is a reference to a period starting on one day in a
calendar month to but excluding the numerically corresponding
day in the next calendar month except that, where any such
period would otherwise end on a day other than a Business Day,
it shall end on the next Business Day, unless that day falls
in the calendar month succeeding that in which it would
otherwise have ended, in which case it shall end on the next
preceding Business Day in a calendar month or if there is no
numerically corresponding day in the month in which that
period ends, that period shall end on the last Business Day in
that later month (and references to "months" (other than
"calendar months") shall be construed accordingly).
1.3 INTERPRETATION
In this Agreement:
(a) the singular includes the plural and vice-versa;
(b) "in writing" or "written" includes printing, typewriting, or
any electronic means of communication capable of being visibly
reproduced at the point of reception, including telex,
telecopy and telegraph and, as between an Agent and the
Lenders (but only when so directed by an Agent), Reuters
screen or equivalent means of communication;
(c) a document, notice, note, bill of exchange or other instrument
shall be considered to have been validly signed or executed,
if it has been signed by either an original signature or a
facsimile signature or stamp affixed by an Authorized
Signatory, provided that this Agreement, all collateral
documents contemplated hereby, any promissory notes required
by a Lender and the bills of exchange or depository notes to
be deposited pursuant to Section 2.6 shall be considered to be
validly
<PAGE>
- 26 -
signed or executed only if signed by an original signature of
an Authorized Signatory; and
(d) all calculations of interest under this Agreement are to be
made on the basis of the stated rates set out herein and not
on the basis of the effective yearly rates determined on any
basis which gives effect to the principle of deemed
reinvestment.
1.4 HEADINGS AND TABLE OF CONTENTS
The headings, the table of contents, the Articles and the Sections are
inserted for convenience only and are to be ignored in construing this
Agreement.
1.5 ACCOUNTING TERMS
All accounting terms not defined in this Agreement shall be interpreted
in accordance with GAAP unless otherwise expressly indicated. Unless otherwise
indicated, references to accounting terms, ratios or financial tests applicable
to the Canadian Borrower hereunder shall be references to such terms, ratios or
tests, calculated and determined on a consolidated basis.
1.6 RECITALS
The recitals to this Agreement form part hereof.
1.7 PRECEDENCE
In the event that any provisions of the Security contradict or are
otherwise incapable of being construed in conjunction with the provisions of
this Agreement, the provisions of this Agreement shall take precedence over
those contained in the Security and, in particular, if any act of a Borrower or
a Guarantor is expressly permitted under this Agreement but is prohibited under
the Security, any such act shall be permitted under this Agreement and shall be
deemed to be permitted under the Security.
<PAGE>
- 27 -
ARTICLE II
FACILITIES
2.1 FACILITIES
(a) Subject to the terms of this Agreement, (i) the Canadian
Lenders shall extend credit to the Canadian Borrower by way of
(A) the Canadian Revolving Facility and (B) the Canadian
Acquisition Facility; and (ii) the U.S. Lenders shall extend
credit to the U.S. Borrowers by way of the (A) the U.S.
Revolving Facility and (B) the U.S. Acquisition Facility.
(b) The proceeds of Borrowings shall be used by the Borrowers,
subject to the terms and conditions of this Agreement, for the
purposes set out in the recitals.
2.2 NOTICE AND REVOLVING NATURE OF CERTAIN BORROWINGS
(a) The Canadian Borrower may, subject to the terms of this
Agreement, upon giving the Canadian Administrative Agent prior
written notice:
(i) by not later than 10:00 a.m. on the 3rd Business Day
prior to the Drawdown Date for each Advance which is
a Libor Loan;
(ii) by not later than 10:00 a.m. on the 2nd Business Day
prior to the Drawdown Date or Repayment Date or
Acceptance Date, as the case may be, for any
Borrowing or Conversion under the Canadian Revolving
Facility or the Canadian Acquisition Facility (other
than a Libor Loan);
borrow, repay and/or reborrow or convert in accordance with
Section 2.3 under the Canadian Revolving Facility or the
Canadian Acquisition Facility, (A) in respect of Prime Loans,
COF Loans denominated in Cdn.$ or Bankers' Acceptances issued
by it, in initial minimum tranches of Cdn. $300,000 and
thereafter in multiples of Cdn. $100,000 and (B) in respect of
Alternate Base Rate Loans or Libor Loans in initial minimum
tranches of U.S.$300,000 and thereafter in multiples of U.S.
$100,000, provided further, however, that repayment of COF
Loans and Libor Loans shall be made on the last day of the
applicable Interest Period.
(b) Notwithstanding the provisions of Section 2.2(a), the Canadian
Administrative Agent shall use its best efforts to make
Advances by way of Prime Loans under the Canadian Revolving
Facility available to the Canadian Borrower on the Business
Day following the receipt by the Canadian Administrative Agent
of a Drawdown Notice for a Prime Loan.
<PAGE>
- 28 -
(c) The U.S. Borrowers may, subject to the terms of this
Agreement, upon giving the U.S. Administrative Agent prior
written notice:
(i) by not later than 10:00 a.m. on the 3rd Business Day
prior to the Drawdown Date for each Advance which is
a Libor Loan;
(ii) by not later than 10:00 a.m. on the 2nd Business Day
prior to the Drawdown Date or Repayment Date, as the
case may be, for any Borrowing or Conversion under
the U.S. Revolving Facility or the U.S. Acquisition
Facility (other than a Libor Loan);
borrow, repay and/or reborrow or convert in accordance with
Section 2.3, under the U.S. Revolving Facility or the U.S.
Acquisition Facility, (A) in respect of Alternate Base Rate
Loans in initial minimum tranches of U.S. $300,000 and
thereafter in multiples of U.S. $100,000 and (B) in respect of
Libor Loans in initial minimum tranches of U.S. $1,000,000 and
thereafter in multiples of U.S. $100,000, provided further,
however, that repayment of Libor Loans shall be made on the
last day of the applicable Interest Period.
2.3 CONVERSION
A Borrower may, upon giving prior written notice to the Canadian
Administrative Agent and/or the U.S. Administrative Agent, as the case may be,
in accordance with Section 2.2 containing the information set out in Schedule
"G" effective on any Business Day during the term of this Agreement (a
"Conversion"), convert on the Conversion Date Advances outstanding from one Type
to another Type to the extent such Type is available hereunder, provided that:
(a) a Libor Loan or a COF Loan may be converted to another Type
only on the last day of the Interest Period applicable to that
Libor Loan or COF Loan, as the case may be;
(b) Borrowings or any portion thereof comprising Bankers'
Acceptances may be converted to another Type only on the
applicable B/A Maturity Date; and
(c) the conditions precedent set out in Section 5.1 have been
fulfilled.
The Conversion of any Advances shall not reduce any amount available under the
Total Commitments.
<PAGE>
- 29 -
2.4 MAKING BORROWINGS
(a) If the Canadian Borrower gives prior written notice to the
Canadian Administrative Agent of its intention to draw down a
Borrowing, including Bankers' Acceptances, a COF Loan, a Prime
Loan, an Alternate Base Rate Loan or Libor Loan or a
Conversion in accordance with Section 2.2 or 2.3, the Canadian
Administrative Agent shall on the same day it receives the
notice notify each Canadian Lender by telephone or in writing
of the amount of the COF Loan, Prime Loan, Alternate Base Rate
Loan, Libor Loan or Bankers' Acceptance and such Canadian
Lender's portion thereof, and
(i) each Canadian Lender shall, not later than 12:00
noon. on the Drawdown Date, make, or procure to be
made, its Participation in such Bankers' Acceptances,
COF Loan, Prime Loan, Libor Loan or Alternate Base
Rate Loan, as the case may be, available to the
Canadian Administrative Agent in accordance with
Article X; and
(ii) the Canadian Administrative Agent shall, not later
than 4:00 p.m. on the Drawdown Date, make such
Bankers' Acceptances, COF Loan, Prime Loan, Libor
Loan or Alternate Base Rate Loan, as the case may be,
available to the Canadian Borrower, in accordance
with Article X.
(b) If a U.S. Borrower gives prior written notice to the U.S.
Administrative Agent of its intention to draw down a
Borrowing, including an Alternate Base Rate Loan or a Libor
Loan, or a Conversion of an Alternate Base Rate Loan or a
Libor Loan in accordance with Section 2.2 or 2.3, the U.S.
Administrative Agent shall on the same day it receives the
notice notify each U.S. Lender by telephone or in writing of
the amount of the COF Loan or Libor Loan and such U.S.
Lender's portion thereof, and
(i) each U.S. Lender shall, not later than 12:00 noon. on
the Drawdown Date, make, or procure to be made, its
Participation in the Alternate Base Rate Loan or
Libor Loan, as the case may be, available to the U.S.
Administrative Agent in accordance with Article X;
and
(ii) the U.S. Administrative Agent shall, not later than
4:00 p.m. on the Drawdown Date, make such Alternate
Base Rate Loan or Libor Loan, as the case may be,
available to the U.S. Borrower, in accordance with
Article X.
<PAGE>
- 30 -
2.5 PARTICIPATION OF EACH LENDER
(a) The amount of the Participation of each Lender in any COF
Loan, Libor Loan, Prime Loan, or Alternate Base Rate Loan or
issue of Bankers' Acceptances shall be determined by the
Canadian Administrative Agent or the U.S. Administrative
Agent, as the case may be, by reference, subject to the
Canadian Administrative Agent's authority pursuant to
paragraph (b) of this Section 2.5, to each such Lender's
Participation.
(b) The Canadian Administrative Agent is authorized by the
Canadian Borrower and each Canadian Lender to allocate amongst
the Canadian Lenders the Bankers' Acceptances to be issued and
purchased in such manner and amounts as the Canadian
Administrative Agent may, in its sole and unfettered
discretion consider necessary and equitable, rounding up or
down, so as to ensure that no Canadian Lender is required to
accept and purchase a Bankers' Acceptance for a fraction of
Cdn. $100,000; provided however the Canadian Administrative
Agent shall seek to allocate such Bankers' Acceptances in such
amounts and for such terms, over time, as to maintain the
Participations of all such Canadian Lenders in substantially
the relative amounts and percentages set out on the execution
pages for such Lenders. To the extent, if any, necessary to
maintain each such Participation as the result of the
foregoing, the Canadian Administrative Agent shall allocate a
lesser or greater amount of other Advances to each Canadian
Lender.
(c) At the time of making any Loan, the Canadian Administrative
Agent or the U.S. Administrative Agent, as the case may be,
shall, if appropriate, re-allocate amounts made available to
the Borrowers under any of the Loans to give effect to the
Participation of each Lender, determined immediately prior to
the making of a Loan.
2.6 BANKERS' ACCEPTANCES
(a) Upon execution of this Agreement, the Canadian Borrower shall
deliver to the Canadian Lenders depository notes and/or bills
of exchange, in the form for Bankers' Acceptances of each
Canadian Lender, executed in blank by its Authorized
Signatories in sufficient quantity and thereafter shall, from
time to time upon request from the Canadian Administrative
Agent, deliver to such Canadian Lenders further quantities of
such bills of exchange and/or depository notes (on such
Canadian Lender's forms) so executed, and the Canadian Lenders
shall hold such bills of exchange and/or depository notes in
safekeeping. The form of Bankers' Acceptances shall be as set
out in Schedule "H".
<PAGE>
- 31 -
(b) The Canadian Borrower hereby agrees to indemnify each such
Canadian Lender against any cost, expense (including
reasonable counsel fees and disbursements) claim, demand,
action, loss or liability (except to the extent resulting from
the gross negligence or wilful misconduct of such Canadian
Lender) that such Lender may suffer or incur in connection
with the deposit, safekeeping or completion in accordance with
Section 2.8 of such bills of exchange and/or depository notes.
Each Canadian Lender is hereby appointed attorney-in-fact for
such completion and to execute any endorsement necessary in
connection with the transactions contemplated by this
Agreement with respect to Bankers' Acceptances. These
agreements shall survive the termination of this Agreement and
shall remain in full force and effect after termination of
this Agreement.
(c) With respect to any such bills of exchange and/or depository
notes deposited in accordance with this Section 2.6, the
Canadian Borrower shall furnish to each Canadian Lender
accepting such drafts, in form and substance satisfactory to
such Lender, (i) evidence of the authority of any officers or
other representatives authorized to sign and to act with
respect to such drafts, (ii) if such Lender shall so request,
a formal power of attorney authorizing it to take all actions
contemplated hereby with respect to Bankers' Acceptances as
provided herein, and (iii) such other documents as such
Canadian Lender or its counsel may reasonably request.
(d) When the Canadian Borrower wishes to make a Borrowing by way
of Bankers' Acceptances it shall give the Canadian
Administrative Agent the notice required pursuant to Section
2.2. Bankers' Acceptances shall have terms of at least 30 days
and not more than 180 days excluding days of grace (and which
shall, in no event, end on a date after the Final Maturity
Date).
(e) On the same day it receives such notice, the Canadian
Administrative Agent shall notify by telephone or in writing
all the Canadian Lenders of the details of the proposed issue,
specifying, for each Canadian Lender:
(i) the Principal Amount of the Bankers' Acceptances to
be accepted and purchased by such Canadian Lender;
and
(ii) the term of such Bankers' Acceptances.
2.7 ACCEPTANCE DATE PROCEDURE
On the Acceptance Date, the following provisions shall apply:
<PAGE>
- 32 -
(a) At or about 9:30 a.m. on the Acceptance Date, the Canadian
Administrative Agent shall promptly determine the Reference
Bankers' Acceptance Discount Rate.
(b) Forthwith, and in any event not later than 10:30 a.m. that
same day, the Canadian Administrative Agent shall indicate to
each Canadian Lender:
(i) the Reference Bankers' Acceptance Discount Rate;
(ii) the amount of the Acceptance Fee applicable to those
Bankers' Acceptances to be accepted by such Canadian
Lender on such Acceptance Date, such Canadian Lender
being authorized by the Canadian Borrower to collect
such Acceptance Fee out of the Net Proceeds of those
Bankers' Acceptances mentioned in subsection (iii);
(iii) the Net Proceeds of those Bankers' Acceptances to be
accepted and purchased by such Canadian Lender on
such Acceptance Date; and
(iv) the amount obtained (the "Available Proceeds") by
subtracting the Acceptance Fee mentioned in
subsection (ii) from the Net Proceeds mentioned in
subsection (iii).
(c) Not later than 12:00 noon that same day, each Canadian Lender
shall make available to the Canadian Administrative Agent its
Available Proceeds.
(d) Not later than 4:00 p.m. that same day, the Canadian
Administrative Agent shall transfer all such Available
Proceeds so made available to it to the Canadian Borrower in
accordance with Section 10.3 and shall notify the Canadian
Borrower on such day either by telex or telephone (to be
confirmed subsequently by letter) of the details of the issue,
substantially in the form set out in Schedule "I".
2.8 PURCHASE OF BANKERS' ACCEPTANCES
Before giving value to the Canadian Borrower, the Canadian Lenders
shall, on the Acceptance Date, accept the Bankers' Acceptances, by inserting the
appropriate Principal Amount, Acceptance Date and maturity date thereof in
accordance with the Canadian Borrower's notice relating thereto and affixing
their acceptance stamps thereto, and shall purchase same. The Principal Amount
so accepted and purchased by any such Canadian Lender shall not exceed such
Canadian Lender's unutilized Commitment.
<PAGE>
- 33 -
2.9 PAYMENT OF BANKERS' ACCEPTANCES
The Bankers' Acceptances shall be payable in accordance with the
following provisions:
(a) The Canadian Borrower shall pay to the Canadian Administrative
Agent for the account of the Canadian Lenders an amount equal
to the Principal Amount of the Bankers' Acceptances on their
respective B/A Maturity Dates.
(b) In the event the Canadian Borrower fails to notify the
Canadian Administrative Agent verbally (or at the discretion
of the Canadian Borrower, in writing), not later than 10:00
a.m. (such notice, if verbal, to be confirmed to the Canadian
Administrative Agent in writing later the same day, but not
necessarily by 10:00 a.m.), 2 Business Days prior to any B/A
Maturity Dates of a Bankers' Acceptance, that the Canadian
Borrower intends to pay with its own funds the Principal
Amount of the Bankers' Acceptances due on such B/A Maturity
Dates, the Canadian Borrower shall be deemed, for all
purposes, to have given the Canadian Administrative Agent
notice to convert the Principal Amount of such Bankers'
Acceptances into a COF Loan denominated in Cdn.$ having a COF
Interest Period of 30 days and the provisions of Section 2.3
shall apply mutatis mutandis save that:
(i) such B/A Maturity Date shall be considered to be the
Drawdown Date of such COF Loan;
(ii) the proceeds of such COF Loan shall be used to pay
the Principal Amount of the Bankers' Acceptances due
on such B/A Maturity Date; and
(iii) on such B/A Maturity Date, each Canadian Lender,
instead of making its Participation in such COF Loan
available to the Canadian Administrative Agent, shall
first directly apply its Participation in such COF
Loan in payment of its Participation in the Principal
Amount of the Bankers' Acceptances accepted,
purchased and issued by such Canadian Lender and due
on such B/A Maturity Date.
2.10 SET-OFF AND NETTING
On any Acceptance Date, Drawdown Date or Repayment Date, the Canadian
Administrative Agent or the U.S. Administrative Agent, as the case may be, shall
be entitled to set-off and net amounts payable on such date by the Canadian
Administrative Agent or the U.S. Administrative Agent, as the case may be, to a
Lender for the account of any Borrower against amounts payable on such date by
such Lender to the Canadian Administrative Agent or the U.S. Administrative
Agent, as the case may be, in connection with transactions conducted in the same
basis of borrowing, for the account of such Borrower. Similarly, on any
Acceptance Date,
<PAGE>
- 34 -
Drawdown Date or Repayment Date, each Lender shall be entitled to set-off and to
net amounts payable on such date by such Lender to a Borrower (by payment to the
Canadian Administrative Agent or the U.S. Administrative Agent, as the case may
be), against amounts payable on such date by such Borrower to such Lender, in
accordance with the Canadian Administrative Agent's or the U.S. Administrative
Agent's, as the case may be, calculations.
2.11 LETTERS OF CREDIT
(a) Subject to the notice provisions of Sections 2.2 and 2.3 and
upon the terms and subject to the conditions hereof the
applicable Issuing Bank shall, at the request of a Borrower,
issue under the applicable Revolving Facility one or more
irrevocable Letters of Credit in such Issuing Bank's usual
form (or such other form as may be required by such Borrower
and is acceptable to the Issuing Bank acting reasonably),
expiring no later than, in the case of Standby Letters of
Credit, 365 days from the date of issuance and, in the case of
Trade Letters of Credit, 270 days from the date of issuance
and in no case later than 3 Business Days before the Final
Maturity Date, provided that the maximum amount payable under
all Letters of Credit shall not, at the time of issue of each
Letter of Credit, exceed Cdn.$5,000,000 or the Equivalent
Amount thereof in U.S. Dollars.
(b) In the event that an Issuing Bank is called upon by a
beneficiary to honour a Letter of Credit, such Issuing Bank
shall forthwith give notice thereof to the applicable
Borrower. Unless such Borrower has made other arrangements
with the Issuing Bank with respect to payment to the Issuing
Bank of an amount sufficient to permit the Issuing Bank to
discharge its obligations under the Letter of Credit plus that
amount equal to any and all charges and expenses which the
Issuing Bank may pay or incur relative to such Letter of
Credit, any such payment so payable in Canadian Dollars with
respect to the Canadian Revolving Facility shall be deemed to
be a Drawdown of a Prime Loan under the Canadian Revolving
Facility and any amount so payable in U.S. Dollars with
respect to a Letter of Credit issued on behalf of the Canadian
Borrower shall be deemed to be a Drawdown by way of an
Alternate Base Rate Loan under the Canadian Revolving
Facility, and any such amount so payable with respect to a
Letter of Credit issued on behalf of a U.S. Borrower shall be
deemed to be a Drawdown by way of an Alternate Base Rate Loan
under the U.S. Revolving Facility provided that the provisions
of Section 2.2 regarding notices shall not apply to such
Loans.
(c) Any Issuing Bank shall notify the Canadian Administrative
Agent or the U.S. Administrative Agent, as the case may be, of
each issuance or amendment of any Letter of Credit on the day
upon which such issuance or amendment occurs and the Issuing
Bank shall provide the Canadian Administrative Agent or the
U.S. Administrative Agent, as the case may be, with monthly
reports setting out the face amount of Letters of Credit
outstanding on each day of the preceding month.
<PAGE>
- 35 -
Each of the Lenders, other than an Issuing Bank, shall be
deemed to have purchased from such Issuing Bank its
Participation of the face amount of each Letter of Credit
issued by such Issuing Bank. Each of the Canadian Lenders
agrees to indemnify the Issuing Bank issuing Letters of Credit
under the Canadian Facilities and each of the U.S. Lenders
agrees to indemnify the Issuing Bank issuing Letters of Credit
under the U.S. Facilities, in each case as to such Lender's
Participation of any amount paid by the Issuing Bank under any
Letter of Credit plus that amount equal to any and all
payments, losses, costs, charges and expenses which such
Issuing Bank may pay or incur relative to such Letter of
Credit.
(d) The Borrowers shall indemnify the Issuing Banks against any
and all actions, proceedings, costs, damages, expenses, taxes
(other than taxes on overall net income, assets or capital),
claims and demands which the Issuing Banks may incur or
sustain by reason of or arising in any way whatsoever in
connection with the opening, establishing or paying of the
amounts payable under Letters of Credit issued at the request
of a Borrower or arising in connection with any amounts
payable by any Issuing Bank thereunder.
(e) Each Borrower for which a Letter of Credit has been issued on
its behalf shall pay to the Canadian Administrative Agent or
U.S. Administrative Agent, as the case may be, for the account
of the Canadian Lenders or the U.S. Lenders, as the case may
be, each month that Letters of Credit issued on behalf of such
Borrower are outstanding, the applicable Letter of Credit Fee.
(f) Each Borrower for which a Letter of Credit has been issued on
its behalf shall pay to the Canadian Administrative Agent or
the U.S. Administrative Agent, as the case may be, for the
account of the applicable Issuing Bank, sundry charges and
out-of-pocket expenses payable in respect of Letters of Credit
which the Issuing Bank issues pursuant to a request of such
Borrower.
2.12 CDN. OVERDRAFT FACILITY
(a) In order to facilitate the Canadian Borrower's cash management
requirements, TD in its capacity as a Lender agrees to make
available to the Canadian Borrower the Cdn. Overdraft Facility
as part of its Participation under the Canadian Revolving
Facility in accordance with Section 2.1. The Cdn. Overdraft
Facility shall form part of the Canadian Revolving Facility
and shall be used by the Canadian Borrower to fund amounts
which would otherwise be drawn down by the Canadian Borrower
by way of Prime Loans or Alternate Base Rate Loans under the
Canadian Revolving Facility pursuant to Section 2.2 but for
such amounts not being, in the case of Prime Loans, in a
minimum principal amount of Cdn.$300,000 and multiples of
Cdn.$100,000 thereafter and in the case of
<PAGE>
- 36 -
Alternate Base Rate Loans in a minimum principal amount of
U.S.$300,000 and multiples of U.S.$100,000 thereafter.
Notwithstanding any other provision hereof, drawdowns under
the Cdn. Overdraft Facility are not subject to any minimum
amount. Any Borrowings under the Cdn. Overdraft Facility may
be drawn down by the Canadian Borrower without notice to TD by
way of presentment to TD of cheques and other bills of
exchange issued by the Canadian Borrower.
(b) TD shall provide the Canadian Administrative Agent with
monthly reports setting out the outstanding balance of the
Cdn. Overdraft Facility on each day of the preceding month.
(c) At any time and from time to time in its discretion, TD may
notify the Canadian Administrative Agent that TD wishes each
of the Canadian Lenders to provide its Participation in
Advances made under the Cdn. Overdraft Facility, in which case
the Canadian Administrative Agent shall forthwith notify each
of the Canadian Lenders of such Participation and each
Canadian Lender shall thereupon provide to the Canadian
Administrative Agent, for the account of TD, such Canadian
Lender's Participation under the Cdn. Overdraft Facility;
PROVIDED HOWEVER no such Participation shall cause any such
Canadian Lender to exceed its Commitment for the Canadian
Revolving Facility. The amounts so provided by the Canadian
Lenders in respect of the Cdn. Overdraft Facility shall be
deemed to be Prime Loans or Alternate Base Rate Loans
denominated in Cdn$ or U.S.$, as the case may be, under the
Canadian Revolving Facility in accordance with the provisions
of this Agreement (and for such purposes any notice provisions
or minimum amounts of such Loans otherwise required under this
Agreement shall be disregarded except for the proviso of this
Section 2.12(c)). The aggregate of the amounts paid by the
Canadian Lenders to the Canadian Administrative Agent in
respect of the Cdn. Overdraft Facility shall be paid by the
Canadian Administrative Agent to TD and applied by TD to
reduce the then outstanding Loans under the Cdn. Overdraft
Facility.
(d) (i) The Canadian Borrower shall pay interest payable on
Advances made under the Cdn. Overdraft Facility
directly to TD unless TD otherwise directs the
Canadian Borrower to make such payments to the
Canadian Administrative Agent; and
(ii) For purposes of determining the Prime Rate or the
Alternate Base Rate, as the case may be, for Advances
made under the Cdn. Overdraft Facility, TD shall be
the Alternate Base Rate Reference Bank or the Prime
Reference Bank, as the case may be.
<PAGE>
- 37 -
2.13 U.S. OVERDRAFT FACILITY
(a) In order to facilitate each U.S. Borrower's cash management
requirements, FNBC in its capacity as a U.S. Lender agrees to
make available to the U.S. Borrowers the U.S. Overdraft
Facility as part of its Participation under the U.S. Revolving
Facility in accordance with Section 2.1. The U.S. Overdraft
Facility shall form part of the U.S. Revolving Facility and
shall be used by the U.S. Borrowers to fund amounts which
would otherwise be drawn down by the U.S. Borrowers under the
U.S. Revolving Facility pursuant to Section 2.2 but for such
amounts not being, in a minimum principal amount of
U.S.$300,000 and multiples of U.S. $100,000 thereafter.
Notwithstanding any other provision hereof, Drawdowns under
the U.S. Overdraft Facility are not subject to any minimum
amount. Any Borrowings under the U.S. Overdraft Facility may
be drawn down by way of Alternate Base Rate Loans by the U.S.
Borrowers by providing notice to FNBC before 3:00 p.m. on the
date of the request for drawdown.
(b) FNBC shall provide the U.S. Administrative Agent with monthly
reports setting out the outstanding balance of the U.S.
Overdraft Facility on each day of the preceding month.
(c) At any time and from time to time in its discretion, FNBC may
notify the U.S. Administrative Agent that FNBC wishes each of
the U.S. Lenders to provide its Participation in Advances made
under the U.S. Overdraft Facility, in which case the U.S.
Administrative Agent shall forthwith notify each of the U.S.
Lenders of such Participation and each U.S. Lender shall
thereupon provide to the U.S. Administrative Agent, for the
account of FNBC, such U.S. Lender's Participation under the
U.S. Overdraft Facility; PROVIDED HOWEVER, no such
Participation shall cause any such U.S. Lender to exceed its
Commitment. The amounts so provided by the U.S. Lenders in
respect of the U.S. Overdraft Facility shall be deemed to be
Alternate Base Rate Loans denominated in U.S.$ under the U.S.
Revolving Facility in accordance with the provisions of this
Agreement (and for such purposes any notice provisions or
minimum amounts of such Loans otherwise required under this
Agreement shall be disregarded except for the proviso to this
Section 2.13(c)). The aggregate of the amounts paid by the
U.S. Lenders to the U.S. Administrative Agent in respect of
the U.S. Overdraft Facility shall be paid by the U.S.
Administrative Agent to FNBC and applied by FNBC to reduce the
then outstanding Loans under the U.S. Overdraft Facility.
(d) (i) The U.S. Borrowers shall pay interest on Advances
made under the U.S. Overdraft Facility directly to
FNBC unless FNBC otherwise directs the U.S.
Borrowers to make such payments to the U.S.
Administrative Agent; and
<PAGE>
- 38 -
(ii) For purposes of determining the Alternate Base Rate
for Advances made under the U.S. Overdraft Facility,
FNBC shall be the Alternate Base Rate Reference Bank.
ARTICLE III
REPAYMENT AND ACCOUNTS
3.1 REPAYMENT
The Principal Amount of all Borrowings outstanding under all of the
Facilities shall be repaid in full by the Borrowers on the Final Maturity Date
and the Commitments in respect of such Facilities shall terminate on such date.
3.2 ACCOUNTS KEPT BY THE CANADIAN ADMINISTRATIVE AGENT
The Canadian Administrative Agent shall keep in its books Accounts for
the Letters of Credit, the Prime Loans, Alternate Base Rate Loans, Libor Loans,
COF Loans, Bankers' Acceptances and other amounts payable by the Canadian
Borrower under this Agreement. The Canadian Administrative Agent shall make
appropriate entries showing, as debits, the amount of the indebtedness of the
Canadian Borrower in respect of the Letters of Credit, the Prime Loans,
Alternate Base Rate Loans, Libor Loans, COF Loans, and Bankers' Acceptances, as
the case may be, the amount of all accrued interest, and any other amount due to
the Canadian Lenders or the Agents pursuant hereto, according to the respective
Participation of each Lender, and showing, as credits, each payment or repayment
of principal and interest made in respect of such indebtedness, as well as any
other amount paid to the Canadian Lenders or the Agents pursuant hereto,
according to the respective Participation of each. Such Accounts shall
constitute (in the absence of manifest error) prima facie evidence of their
content against the Canadian Borrower and the Canadian Lenders. The Canadian
Administrative Agent shall supply any Canadian Lender and the Canadian Borrower,
upon request, with statements of such Accounts.
3.3 ACCOUNTS KEPT BY THE U.S. ADMINISTRATIVE AGENT
The U.S. Administrative Agent shall keep in its books Accounts for the
Letters of Credit, the Alternate Base Rate Loans and Libor Loans and other
amounts payable by the U.S. Borrowers under this Agreement. The U.S.
Administrative Agent shall make appropriate entries showing, as debits, the
amount of the indebtedness of the U.S. Borrowers in respect of the Alternate
Base Rate Loans and Libor Loans, as the case may be, the amount of all accrued
interest, and any other amount due to the U.S. Lenders or the Agents pursuant
hereto, according to the respective Participation of each Lender, and showing,
as credits, each payment or repayment of principal and interest made in respect
of such indebtedness, as well as any other
<PAGE>
- 39 -
amount paid to the U.S. Lenders or the Agents pursuant hereto, according to the
respective Participation of each. Such Accounts shall constitute (in the absence
of manifest error) prima facie evidence of their content against the U.S.
Borrowers and the U.S. Lenders. The U.S. Administrative Agent shall supply any
U.S. Lender and either U.S. Borrower, upon request, with statements of such
Accounts.
3.4 ACCOUNTS KEPT BY EACH CANADIAN LENDER
Each Canadian Lender shall keep in its books, in respect of its
Participation, accounts for the Letters of Credit, the Prime Loans, Alternate
Base Rate Loans, the COF Loans, Libor Loans, Bankers' Acceptances and other
amounts payable by the Canadian Borrower under this Agreement. Each Canadian
Lender shall make appropriate entries showing, as debits, the amount of the
indebtedness of the Canadian Borrower towards it in respect of the Letters of
Credit, the Prime Loans, Alternate Base Rate Loans, COF Loans, Libor Loans, and
Bankers' Acceptances, as the case may be, the amount of all accrued interest and
any other amount due to such Lender pursuant hereto and, as credits, each
payment or repayment of principal and interest made in respect of such
indebtedness as well as any other amount paid to such Lender pursuant hereto.
These accounts shall constitute (in the absence of manifest error or of
contradictory entries in the Accounts), prima facie evidence of their content
against the Canadian Borrower.
3.5 ACCOUNTS KEPT BY U.S. LENDERS
Each U.S. Lender shall keep in its books, in respect of its
Participation, accounts for the Letters of Credit, Alternate Base Rate Loans,
Libor Loans, and other amounts payable by the U.S. Borrowers under this
Agreement. Each U.S. Lender shall make appropriate entries showing, as debits,
the amount of the indebtedness of the U.S. Borrower towards it in respect of the
Letters of Credit, Alternate Base Rate Loans, Libor Loans, as the case may be,
the amount of all accrued interest and any other amount due to such Lender
pursuant hereto and, as credits, each payment or repayment of principal and
interest made in respect of such indebtedness as well as any other amount paid
to such Lender pursuant hereto. These accounts shall constitute (in the absence
of manifest error or of contradictory entries in the Accounts), prima facie
evidence of their content against the U.S. Borrowers.
3.5A PROMISSORY NOTES
At the request of any Lender, each Borrower under the Facilities
applicable to such Lender shall execute and deliver to such Lender a promissory
note substantially in the form attached hereto as Schedule "Q".
<PAGE>
- 40 -
3.6 EXCESS RESULTING FROM EXCHANGE RATE CHANGE
Any time that, following one or more fluctuations in the exchange rate
of the Cdn. Dollar against the U.S. Dollar, the sum of:
(a) the Borrowings in Cdn. Dollars under the Canadian Facilities;
and
(b) the Equivalent Amount in Canadian Dollars of the Borrowings in
U.S. Dollars under the Canadian Facilities;
exceeds the Total Commitments under the Canadian Facilities then in
effect, the Canadian Borrower shall, within 10 days thereafter, either:
(c) make the necessary payments or repayments to the Canadian
Administrative Agent to reduce such sum to an amount equal to
or less than the Total Commitments under the Canadian
Facilities then in effect; or
(d) maintain or cause to be maintained with the Canadian
Administrative Agent deposits of U.S. Dollars in an amount
equal to or greater than the amount by which such sum exceeds
the Total Commitments under the Canadian Facilities then in
effect, such deposits to be maintained in such form and upon
such terms as are acceptable to the Canadian Administrative
Agent. Until such time as such sum shall no longer exceed the
Total Commitments under the Canadian Facilities, the Canadian
Administrative Agent shall invest the deposits, in such manner
and form of investment as shall be mutually acceptable to the
Canadian Borrower and the Canadian Administrative Agent, and
income earned thereon shall be received by the Canadian
Administrative Agent for the Canadian Borrower's account and
paid to the Canadian Borrower. Without in any way limiting the
foregoing provisions, the Canadian Administrative Agent shall,
on each Acceptance Date, Drawdown Date, Interest Date and B/A
Maturity Date make the necessary exchange rate calculations to
determine whether any such excess exists on such date and, if
there is an excess, it shall so notify the Canadian Borrower.
3.7 CURRENCY
Borrowings and payments in respect thereof are payable in the currency
in which they are denominated.
3.8 EXTENSION OF FINAL MATURITY DATE
(a) June 1, 2000 or, if such date shall be extended as provided
herein, any subsequent June 1 following any extension provided
herein, shall be an "Extension Date". Subject to the terms of
this Agreement, not earlier than 90 days but not later than
<PAGE>
- 41 -
60 days prior to the next pending Extension Date, the
Borrowers collectively may request, in writing to the Canadian
Administrative Agent and the U.S. Administrative Agent, an
extension of the Final Maturity Date for all but not less than
all Facilities to a date which is one year after the Final
Maturity Date then in effect (an "Extension Request").
(b) Upon receipt of an Extension Request, the Canadian
Administrative Agent shall advise the Canadian Lenders and the
U.S. Administrative Agent shall advise the U.S. Lenders of
such Extension Request and each Lender shall advise their
respective Agent within 30 days of receipt thereof whether
such Lender consents to the Extension Request.
(c) Unless the Majority Lenders agree to any Extension Request the
Final Maturity Date shall not be extended by any Lender.
(d) In the event that either the Majority Lenders have not agreed
to an Extension Request or the Borrowers do not provide the
Canadian Administrative Agent and the U.S. Administrative
Agent with an Extension Request as provided in Section 3.8(a),
the next pending Extension Date shall become a "Non-Extension
Conversion Date" and the Lenders' Commitments under the
Acquisition Facilities will convert to four-year reducing
revolving facilities and the Acquisition Facilities and
Revolving Facilities shall be reduced and/or repaid, as
follows:
(i) on or before the first anniversary of the
Non-Extension Conversion Date, the amount necessary
to reduce (A) the Canadian Lenders' Commitments with
respect to the Canadian Acquisition Facility by Cdn
$5,000,000 and the Commitments of the Canadian
Lenders with respect to the Canadian Acquisition
Facility shall be reduced by Cdn $5,000,000; and (B)
the amount necessary to reduce the U.S. Lenders
Commitments with respect to the U.S. Acquisition
Facility by U.S. $13,000,000; and the Commitments of
the U.S. Lenders with respect to the U.S. Acquisition
Facility shall be reduced by U.S. $13,000,000.
(ii) on or before the second anniversary of the
Non-Extension Conversion Date, the amount necessary
to reduce (A) the Canadian Lenders' Commitments with
respect to the Canadian Acquisition Facility by Cdn
$12,500,000; and the Commitments of the Canadian
Lenders with respect to the Canadian Acquisition
Facility shall be reduced by Cdn $12,500,000; and
(B) the amount necessary to reduce the U.S. Lenders
Commitments with respect to the U.S. Acquisition
Facility by U.S. $32,500,000; and the Commitments of
the U.S. Lenders with respect to the U.S. Acquisition
Facility shall be reduced by U.S. $32,500,000.
<PAGE>
- 42 -
(iii) on or before the third anniversary of the
Non-Extension Conversion Date, the amount necessary
to reduce (A) the Canadian Lenders' Commitments with
respect to the Canadian Acquisition Facility by Cdn
$12,500,000; and the Commitments of the Canadian
Lenders with respect to the Canadian Acquisition
Facility shall be reduced by Cdn $12,500,000; and (B)
the amount necessary to reduce the U.S. Lenders
Commitments with respect to the U.S. Acquisition
Facility by U.S. $32,500,000; and the Commitments of
the U.S. Lenders with respect to the U.S. Acquisition
Facility shall be reduced by U.S. $32,500,000.;
(iv) on or before the fourth anniversary of the
Non-Extension Conversion Date, the amount necessary
to reduce the Lenders' Commitments under the
Acquisition Facilities and the Revolving Facilities
to zero; and the Commitments of the Lenders with
respect to the Acquisition Facilities and the
Revolving Facilities shall be cancelled.
(e) If the Majority Lenders have consented to an Extension Request
but one or more Lenders (each a "Non-Consenting Lender") do
not consent to the Extension Request, the Canadian
Administrative Agent shall so advise the Canadian Borrower and
the U.S. Administrative Agent shall so advise the U.S.
Borrowers and the Canadian Borrower, with respect to a
Non-Consenting Lender which is a Canadian Lender, or the U.S.
Borrowers with respect to a Non-Consenting Lender which is a
U.S. Lender, as the case may be, may (i) elect to have one or
more Lenders assume all or a ratable portion of the
Commitments of such Non-Consenting Lender, or (ii) prepay the
portion of Facilities outstanding to Non-Consenting Lenders
and accordingly the Commitments of such Non-Consenting Lenders
shall be cancelled or (iii) the Extension Date shall become a
"Non-Extending Lenders Conversion Date", and the
Non-Extending Lenders' Commitments under the Acquisition
Facilities shall convert to four-year reducing revolving
facilities and the Non-Extending Lenders' Commitments shall be
reduced and/or repaid as follows:
(A) on or before the first anniversary of the
Non-Extending Lenders Conversion Date, the amount
necessary to reduce the Non-Consenting Lenders'
Commitments to the extent of such Non-Consenting
Lenders' Participations in Cdn $5,000,000 in the case
of the Canadian Lenders and U.S. $13,000,000 in the
case of the U.S. Lenders of the Acquisition
Facilities (the "Year 1 Repayment"); and the
Commitments of such Non-Consenting Lenders with
respect to the Acquisition Facilities shall be
reduced by the Year 1 Repayment;
(B) on or before the second anniversary of the
Non-Extending Lenders Conversion Date, the amount
necessary to reduce the Non-Consenting
<PAGE>
- 43 -
Lenders' Commitments to the extent of such
Non-Consenting Lenders' Participations in Cdn
$12,500,000 in the case of the Canadian Lenders and
U.S. $32,500,000 in the case of the U.S. Lenders of
the Acquisition Facilities (the "Year 2 Repayment");
and the Commitments of such Non-Consenting Lenders
with respect to the Acquisition Facilities shall be
reduced by the Year 2 Repayment;
(C) on or before the third anniversary of the
Non-Extending Lenders Conversion Date, the amount
necessary to reduce the Non-Consenting Lenders'
Commitments with respect to such Non-Consenting
Lenders' Participations in Cdn $12,500,000 in the
case of the Canadian Lenders and U.S. $32,500,000 in
the case of the U.S. Lenders of the Acquisition
Facilities (the "Year 3 Repayment") and the
Commitments of such Non-Consenting Lenders with
respect to the Acquisition Facilities shall be
reduced by the Year 3 Repayment; and
(D) on or before the fourth anniversary of the
Non-Extending Lenders Conversion Date, the amount
necessary to reduce the Non-Consenting Lenders'
Commitments to zero and the Commitments of such
Non-Consenting Lenders with respect to the
Acquisition Facilities and the Revolving Facilities
shall be cancelled.
ARTICLE IV
INTEREST AND ACCEPTANCE FEE
4.1 INTEREST ON LIBOR LOANS
(a) The U.S. Borrowers shall pay, on each applicable Interest
Date, to the U.S. Administrative Agent for the account of the
U.S. Lenders interest on each Libor Loan in U.S. Dollars drawn
down by the U.S. Borrowers for each Libor Interest Period at
that rate per annum determined by the U.S. Administrative
Agent to be equal to the sum of the applicable Libor Margin
plus LIBOR. Each determination by the U.S. Administrative
Agent of the rate of interest applicable to a Libor Interest
Period shall, in the absence of manifest error, be final,
conclusive and binding upon the U.S. Borrowers and the U.S.
Lenders. Upon determination of the rate of interest applicable
on the Libor Determination Date, the U.S. Administrative Agent
shall notify the U.S. Borrowers and the U.S. Lenders of such
rate. Such interest shall be calculated daily on the basis of
the actual number of days elapsed divided by 360.
<PAGE>
- 44 -
(b) The Canadian Borrowers shall pay, on each applicable Interest
Date, to the Canadian Administrative Agent for the account of
the Canadian Lenders interest on each Libor Loan in U.S.
Dollars drawn down by the Canadian Borrowers for each Libor
Interest Period at that rate per annum determined by the
Canadian Administrative Agent to be equal to the sum of the
applicable Libor Margin plus LIBOR. Each determination by the
Canadian Administrative Agent of the rate of interest
applicable to a Libor Interest Period shall, in the absence of
manifest error, be final, conclusive and binding upon the
Canadian Borrowers and the Canadian Lenders. Upon
determination of the rate of interest applicable on the Libor
Determination Date, the Canadian Administrative Agent shall
notify the Canadian Borrowers and the Canadian Lenders of such
rate. Such interest shall be calculated daily on the basis of
the actual number of days elapsed divided by 360.
(c) The yearly rate of interest to which the rate determined in
accordance with the foregoing provisions of this Section 4.1
is equivalent, is the rate so determined multiplied by the
actual number of days in that year and divided by 360.
4.2 INTEREST ON COF LOANS
The Canadian Borrower shall pay, on each applicable Interest Date, to
the Canadian Administrative Agent for each COF Interest Period at that rate per
annum determined by Canadian Administrative Agent to be equal to the sum of the
COF Margin plus the COF Rate. Each determination by the Canadian Administrative
Agent of the rate of interest applicable to a COF Interest Period shall, in the
absence of manifest error, be final, conclusive and binding upon the Canadian
Borrower and the Canadian Lenders. Upon determination of the rate of interest
applicable on the applicable COF Rate Determination Date, the Canadian
Administrative Agent shall notify the Canadian Borrower and the Canadian Lenders
of such rate. Such interest shall be calculated daily on the basis of the actual
days elapsed divided by 365 or 366, as the case may be. The yearly rate of
interest to which the rate determined in accordance with the foregoing
provisions of this Section 4.2 applicable to COF Loans is the rate so determined
multiplied by the actual number of days in that year and divided by 365 or 366,
as the case may be.
4.3 INTEREST ON PRIME LOANS
(a) The Canadian Borrower shall pay the Canadian Administrative
Agent for the account of the Canadian Lenders in Canadian
Dollars interest on each Prime Loan as evidenced by the
Accounts at a rate per annum equal to the sum of (i) the Prime
Margin and (ii) the Prime Rate. Each change in the fluctuating
interest rate
<PAGE>
- 45 -
for a Prime Loan will take place simultaneously with the
corresponding change in the Prime Rate.
(b) This interest is payable quarterly in arrears on each Interest
Date for the period up to and including the last day of the
previous Quarter and shall be calculated daily on the basis of
the actual number of days elapsed in a year of 365 or 366
days, as the case may be.
4.4 INTEREST ON ALTERNATE BASE RATE LOANS
(a) The U.S. Borrowers shall pay to the U.S. Administrative Agent
for the account of the U.S. Lenders in U.S. Dollars, interest
on each Alternate Base Rate Loan as evidenced by the Accounts
at a rate per annum equal to the sum of:
(i) the Alternate Base Rate Margin; and
(ii) the Alternate Base Rate.
Each change in the fluctuating rate for an Alternate Base Rate
Loan will take place simultaneously with a corresponding
change in the Alternate Base Rate.
(b) The Canadian Borrower shall pay to the Canadian Administrative
Agent for the account of the Canadian Lenders in U.S. Dollars,
interest on each Alternate Base Rate Loan as evidenced by the
Accounts at a rate per annum equal to the sum of:
(i) the Alternate Base Rate Margin; and
(ii) the Alternate Base Rate.
Each change in the fluctuating rate for an Alternate Base Rate
Loan will take place simultaneously with a corresponding
change in the Alternate Base Rate.
(c) The yearly rate of interest to which the rate determined in
accordance with the foregoing provisions of this Section 4.4
is equivalent, is the rate so determined multiplied by the
actual number of days in that year and divided by 360.
(d) This interest is payable quarterly in arrears on each Interest
Date for the period up to and including the last day of the
previous Quarter and shall be calculated daily on the basis of
the number of days elapsed divided by 360.
<PAGE>
- 46 -
4.5 LIBOR INTEREST PERIODS OR COF INTEREST PERIODS
If a U.S. Borrower or the Canadian Borrower is borrowing by way of a
Libor Loan or the Canadian Borrower is borrowing by way of a COF Loan or if a
U.S. Borrower elects to convert into a Libor Loan pursuant to Section 2.3, the
applicable Borrower shall, prior to the expiration or beginning of each Libor
Interest Period or COF Interest Period, as applicable, select and notify the
Canadian Administrative Agent and/or the U.S. Administrative Agent, as the case
may be, at least 3 Business Days prior to:
(a) the last day of the current Libor Interest Period for such
Libor Loan;
(b) the last date of the current COF Interest Period for such COF
Loan; or
(c) the Conversion Date, as the case may be, of the next or new,
as the case may be, Libor Interest Period applicable to such
Libor Loan, or COF Interest Period applicable to such COF
Loan, which new Libor Interest Period or COF Interest Period,
as applicable, shall commence on and include the day following
the expiration of the prior Libor Interest Period or COF
Interest Period, as applicable. If a Borrower fails to select
and to notify the Canadian Administrative Agent or the U.S.
Administrative Agent, as the case may be, of the Libor
Interest Period applicable to a Libor Loan or COF Interest
Period applicable to such COF Loan, such Borrower shall be
deemed to have selected a Libor Interest Period, or a COF
Interest Period, of one month or 30 days, as the case may be.
In any event, no Libor Interest Period or COF Interest Period shall end on a
date falling after the Final Maturity Date. The Borrowers shall ensure, when
selecting an Interest Period, that no Libor Loan or COF Loan shall be required
to be prepaid in order for the Borrowers to perform their obligations under
Section 3.1.
4.6 INTEREST ON OVERDUE AMOUNTS
The Canadian Borrower shall pay to the Canadian Administrative Agent
for the account of the Canadian Lenders and the U.S. Borrowers shall pay to the
U.S. Administrative Agent for the account of the U.S. Lenders, on demand,
interest on all overdue payments in connection with this Agreement, at a rate
per annum which is equal to 2% per annum in excess of (a) the applicable rates
of interest (inclusive of Libor Margin or COF Margin) payable under Section 4.1
in the case of payments of principal or interest on Libor Loans or Section 4.2
in the case of payments of principal and interest on COF Loans or (b) the
applicable rates of interest (inclusive of Prime Margin or Alternate Base Rate
Margin) payable under Sections 4.3 or 4.4 in the case of any other payments in
Cdn.$ or U.S.$, as applicable.
<PAGE>
- 47 -
4.7 ACCEPTANCE FEE
An Acceptance Fee shall be:
(a) payable by the Canadian Borrower to the Canadian
Administrative Agent for distribution to the Canadian Lenders
on the Acceptance Date for each Bankers' Acceptance issued;
and
(b) calculated on the Principal Amount of each Bankers' Acceptance
for the number of days in the term of such Bankers' Acceptance
and based on a year of 365 days.
4.8 PRICING PERIODS
Notwithstanding any other provision of this Agreement, in the event
that a Pricing Period comes into effect which would require a downward
adjustment to the rates applicable to any Borrowings outstanding by way of
Bankers' Acceptances, Letters of Credit, COF Loans and/or LIBOR Loans such rates
shall not be adjusted downward prior to:
(a) in the case of Bankers' Acceptances, the applicable B/A
Maturity Date;
(b) in the case of Letters of Credit, the applicable expiry date;
(c) in the case of Libor Loans, the end of the applicable Libor
Interest Period; and
(d) in the case of COF Loans, the end of the applicable COF
Interest Period.
and in any event no rates shall be adjusted downward until such time as the
Canadian Borrower notifies the Canadian Administrative Agent and a U.S. Borrower
notifies the U.S. Administrative Agent in writing that a Pricing Period which
would require a downward adjustment to the applicable rates has come into
effect.
ARTICLE V
CONDITIONS PRECEDENT
5.1 CONDITIONS PRECEDENT
The Lenders' and Issuing Banks' obligations to make available any
Borrowings under the Facilities on any Drawdown Date or Acceptance Date (other
than in respect of a Conversion pursuant to Section 2.3) or date of issuance of
a Letter of Credit is subject to and conditional upon the satisfaction of each
of the following conditions:
<PAGE>
- 48 -
(a) The Canadian Administrative Agent and the U.S. Administrative
Agent, as the case may be, shall have received a notice of the
requested Borrowing or Conversion in accordance with Section
2.2 or 2.3, as applicable, and with respect to Letters of
Credit, the Issuing Bank shall have received an application
therefor and any other documents it may require, all in form
and substance satisfactory to such Issuing Bank.
(b) on each Drawdown Date or Acceptance Date or date of issuance
of a Letter of Credit:
(i) there shall exist no Event of Default and no
condition, event or act which, with the giving of
notice or lapse of time, or both, would constitute an
Event of Default and the Collateral Agent shall have
received a certificate (without personal liability)
from the applicable Borrower's president, chief
financial officer or treasurer to such effect,
substantially as in Schedule "J"; and
(ii) the representations and warranties set out in Section
8.1 would, if made on such date, be true and accurate
in all material respects on each such Drawdown Date
or Acceptance Date or date of issuance of a Letter of
Credit;
(c) the Collateral Agent has received, in sufficient quantities to
provide 1 copy to each Lender, on or prior to the first
Drawdown Date or Acceptance Date or date of issuance of a
Letter of Credit and in form and substance satisfactory to the
Collateral Agent and Lenders' Counsel and in the case of
clause (iv) of this paragraph (c), in form and substance
satisfactory to the U.S. Lender referred to therein:
(i) this Agreement duly executed by the Borrowers, the
Unlimited Guarantors, the Lead Arranger, the
Co-Arrangers, the Managers, the Lenders, the Canadian
Administrative Agent, the U.S. Administrative Agent
and the Collateral Agent;
(ii) certified copies of the articles and certificate of
incorporation of each of the Borrowers and the
Unlimited Guarantors, their respective borrowing
by-laws, if any, and resolutions of their respective
boards of directors authorizing the execution,
delivery and performance of this Agreement and the
Security by them respectively;
(iii) the certificate (without personal liability) of the
president, the chief financial officer or treasurer
of each of the Borrowers and the Unlimited Guarantor
confirming, in all material respects, the veracity of
the
<PAGE>
- 49 -
representations and warranties set out in Section
8.1, substantially as set out in Schedule "J"
supplemented by all such certificates as Lenders'
Counsel may require;
(iv) promissory note(s) requested by a U.S. Lender; and
(v) incumbency certificates setting forth the signatures
and titles of Authorized Signatories for each
Borrower, certifying their authority to sign this
Agreement and any documents contemplated hereby or
provided in connection herewith.
(d) the Collateral Agent shall have received, on or prior to the
first Drawdown Date or Acceptance Date or date of issuance of
a Letter of Credit, in form and substance acceptable to the
Collateral Agent and Lenders' Counsel, as security for
repayment of all Borrowings, payment of all interest and other
amounts due hereunder and the performance of all other
obligations of the Borrowers under this Agreement, all
Security required to be delivered as of the Effective Date;
(e) on or prior to the initial Drawdown Date or Acceptance Date or
date of issuance of a Letter of Credit:
(i) the Collateral Agent shall have received the opinions
in form and substance satisfactory to the Collateral
Agent, the Lenders and the Lenders' Counsel of each
of Borrowers' Canadian Counsel, Borrowers' U.S.
Counsel, and counsel to the Borrowers or its or their
applicable Subsidiaries in British Columbia, Alberta,
New York, Florida, Massachusetts, Illinois and
Pennsylvania, each addressed to the Canadian
Administrative Agent, the U.S. Administrative Agent,
the Collateral Agent, the Lenders and Lenders'
Counsel;
(ii) the Collateral Agent shall have received opinions of
Lenders' Counsel addressed to the Canadian
Administrative Agent, the U.S. Administrative Agent,
the Collateral Agent and Lenders in form and
substance satisfactory to the Collateral Agent, the
Lenders and Lenders' Counsel;
(iii) all registrations and filings in respect of the
Security shall have been made to the satisfaction of
Lenders' Counsel in such jurisdictions as Lenders'
Counsel shall determine to be necessary or
appropriate;
<PAGE>
- 50 -
(iv) there shall not have occurred any event, act or thing
which would have a material adverse effect on the
business, operations or properties of the Borrowers
or any Guarantor or the rights and Security of the
Lenders or on the ability of any Borrower or any
Guarantor to perform all its obligations under this
Agreement or any Security;
(v) the Collateral Agent shall have received and be
satisfied with the insurance policies of the
Borrowers and the Guarantors and the terms and extent
of coverage thereunder (such policies to include,
without limitation, the standard mortgagee clause);
(vi) the Lenders shall have received and be satisfied with
a list disclosing all of the Borrowers' Subsidiaries
in existence on the initial Acceptance Date or
Drawdown Date or date of issuance of a Letter of
Credit, and shall have completed and be satisfied
with the results of their due diligence review of the
Borrowers and the Guarantors including review of
audited and unaudited intercompany debt arrangements,
the Shareholders' Agreements, call options,
non-competition agreements with key management
personnel, compliance with environmental regulations,
leases and outstanding material litigation;
(vii) the Collateral Agent, the Canadian Administrative
Agent, the U.S. Administrative Agent, the Lead
Arranger, the Co-Arrangers, the Managers and Lenders'
Counsel shall have received payment of all fees or
other amounts then due and payable to them in
connection with this Agreement; and
(viii) the Collateral Agent shall have received a list
disclosing, in sufficient detail, all Material
Contingent Obligations of the Borrowers and any of
their Subsidiaries.
5.2 CONDITIONS PRECEDENT TO BORROWINGS UNDER THE ACQUISITION FACILITIES
The Lenders' obligations to make available any Borrowings under the
Acquisition Facilities on any Drawdown Date or Acceptance Date (other than in
respect of a Conversion pursuant to Section 2.3) are subject to and conditional
upon the satisfaction of each of the following conditions (in addition to the
conditions set out in Section 5.1):
(a) at least 10 Business Days' prior to such Drawdown Date or
Acceptance Date the Canadian Administrative Agent or the U.S.
Administrative Agent, as the case may be, shall have received:
<PAGE>
- 51 -
(i) a certificate from the Canadian Borrower's president,
chief financial officer or treasurer, substantially
as in Schedule "N", to the following effect:
(A) the proposed Borrowing shall be used to
assist a Borrower in financing the
acquisition of an Eligible Business;
(B) in the opinion of the Canadian Borrower or,
where the Canadian Borrower has identified
the existence of potentially Hazardous
Materials, a third party environmental
consultant engaged by the Canadian Borrower
of experience and reputation reasonably
satisfactory to such Agent certifying that
such Eligible Business has been and can
continue to be conducted in compliance with
any applicable Environmental Laws and that
no material adverse change in the earnings
of the applicable Acquisition Entity or the
Canadian Borrower shall result therefrom;
(C) that following completion of such
acquisition the Maximum Acquisition Total
Debt/Adjusted EBITDA Ratio of the Canadian
Borrower shall not exceed the Maximum Total
Debt/Adjusted EBITDA Ratio; and
(D) the proposed Borrowing is within the amount
available to be drawn down under the
Commitments in relation to the applicable
Acquisition Facility (the "Available
Acquisition Amount"), such Available
Acquisition Amount to be calculated in
accordance with Schedule "O"; and
(ii) (A) in the case where the Canadian Borrower has
engaged a third party environmental
consultant, a copy of such third party
consultant's environmental report and
opinion; and
(B) pro forma financial projections supporting
the statement in (i) (C) above; and
(C) a copy of Schedule "O" setting out the
calculation of the Available Acquisition
Amount; and
(b) in the case where the Maximum Acquisition Total Debt/Adjusted
EBITDA Ratio is equal to or greater than 3.25 to 1, the
Canadian Borrower and the Majority Lenders, acting reasonably,
shall be satisfied that there shall not then exist and shall
not occur, following completion of the acquisition, a material
adverse
<PAGE>
- 52 -
change in the financial condition of the Canadian Borrower and
its Subsidiaries, taken as a whole.
5.3 WAIVER
The terms and conditions of Sections 5.1 and 5.2 are inserted for the
sole benefit of the Lenders. The Lenders may, in writing only, waive the terms
and conditions of Section 5.1 and the Majority Lenders may, in writing only,
waive the terms and conditions of Section 5.2 (other than Section 5.2 (a)(i)(D)
which shall only be waived with the consent of all Lenders in writing) in each
case in whole or in part and with or without terms or conditions in respect of
any Borrowing, without prejudicing the Lenders' rights to assert them in whole
or in part in respect of any other Borrowing.
5.4 HOSTILE TAKEOVER
Notwithstanding any other provision of this Agreement, if any portion
of the Facilities are to be used to fund a hostile takeover, any Lender may
refuse to fund its Participation with respect to such hostile takeover if the
Lender reasonably determines, by providing such funding, that it may be placed
in a conflict of interest.
ARTICLE VI
PREPAYMENT, CANCELLATION, MANDATORY
APPLICATION OF CASH PROCEEDS
6.1 PREPAYMENT AND CANCELLATION
(a) The Borrowers may at any time prepay, in whole or in part,
Borrowings outstanding under the Facilities and thereby reduce
or cancel, as the case may be, corresponding Commitments by
the amount of such prepayment upon giving the Canadian
Administrative Agent and/or the U.S. Administrative Agent, as
the case may be, at least 3 Business Days' prior written
notice, in the case of the Canadian Facilities, in minimum
amounts of Cdn.$10,000,000 and multiples of Cdn. $1,000,000
thereafter (or the Equivalent Amount thereof in U.S.$) and in
the case of the U.S. Facilities, in minimum amounts of U.S.
$10,000,000 and multiples of U.S. $1,000,000 thereafter. Any
such prepayment of Borrowings outstanding under the Facilities
shall be applied against reductions of Commitments and related
repayment instalments required to be made under Section 3.8,
as applicable, in inverse order of maturity.
<PAGE>
- 53 -
For greater certainty repayments made under a Revolving Facility or an
Acquisition Facility pursuant to Section 2.2 and repayments made under an
Acquisition Facility under Section 6.5 do not constitute prepayments under this
Section 6.1.
(b) The Borrowers may, at any time, reduce or cancel any unused
portion of the Commitments, provided that to the extent any
such reduction shall cause any Borrowings outstanding to
exceed the Commitments so reduced or cancelled such Borrowers
shall prepay any such excess in accordance with paragraph (a)
above.
(c) Any prepayment and reduction or cancellation relating to
Bankers' Acceptances, COF Loans or Libor Loans shall be made
subject to the Borrowers' obligations under Section 7.4.
(d) Any such prepayment and reduction shall reduce the Commitments
of the Lenders pro rata according to their respective
Participations.
6.2 NOTICE
Each notice of prepayment and reduction or cancellation given pursuant
to this Article shall be irrevocable, and shall specify the date upon which such
prepayment and reduction or cancellation is to be made. A Borrower may not
thereafter give a notice of prepayment and reduction or cancellation of such
part of the Facilities for a date other than the date so specified in any
previous such notice.
6.3 STATUS OF LENDER
If, at any time:
(a) the Commitment of any Lender is, in accordance with the terms
of this Agreement, permanently reduced to zero;
(b) all indebtedness owed to such Lender by the Borrowers
hereunder or in connection herewith or under any Hedging
Agreements has been finally and indefeasibly satisfied in
full; and
(c) such Lender is under no further actual or contingent
obligation hereunder;
then such Lender shall cease to be a party hereto and a Lender for the purposes
hereof; provided however that all indemnities and provisions of this Agreement
for the benefit of such Lender shall survive termination for the benefit of such
Lender.
<PAGE>
- 54 -
6.4 FEES
Upon cancellation of the Facilities in accordance with this Article VI,
all accrued and unpaid fees for the Facilities as provided in Section 12.1
hereof shall be paid in full on and to such cancellation date.
6.5 MANDATORY APPLICATION OF CASH PROCEEDS
Each Borrower shall apply, in permanent reduction of availability under
the applicable Acquisition Facility, 100% of the net cash proceeds which are
derived from the sale or disposition of assets by it or any of its Subsidiaries,
other than in the ordinary course of business, towards repayment of the
Principal Amount of Borrowings outstanding from time to time under the
Acquisition Facilities, except to the extent that such net proceeds are
reinvested, within 12 months of receipt thereof, in the businesses of the
Borrowers and their Subsidiaries and except to the extent that such net proceeds
are less than Cdn.$5,000,000 in the aggregate.
ARTICLE VII
SPECIAL LIBOR, COF AND INCREASED COST PROVISIONS
7.1 SUBSTITUTE RATE OF BORROWING
If, on any Libor Determination Date or COF Rate Determination Date
during the term of this Agreement, any Reference Bank, reasonably determines
(which determination is final, conclusive and binding upon the Borrowers and the
Lenders) and advises the Canadian Administrative Agent or the U.S.
Administrative Agent, as the case may be, that:
(a) adequate and fair means do not exist for ascertaining the rate
of interest on a Libor Loan or a COF Loan,
(b) the making or the continuing of a loan bearing interest
substantially similar to a Libor Loan or a COF Loan by such
Reference Bank has become impracticable by reason of
circumstances which materially and adversely affect, in the
case of a Libor Loan, the London interbank market or, in the
case of a COF Loan, the Canadian or United States, as the case
may be, financial market, or
(c) deposits in U.S. Dollars are not available to such Reference
Bank, in the case of a Libor Loan, in the London interbank
market or, in the case of a COF Loan, the Canadian or United
States, as the case may be, financial market, in sufficient
amounts in the ordinary course of business for the applicable
Interest Period to make, fund or maintain a loan bearing
interest substantially similar to a Libor Loan or a COF Loan
during such Interest Period,
<PAGE>
- 55 -
then, the Canadian Administrative Agent or the U.S. Administrative Agent, as the
case may be, shall promptly notify the applicable Borrower in writing and such
Borrower shall (if so notified), promptly and, in any event, no later than by
close of business on the day it receives such notification, advise such Agent of
the Type into which the Borrower wishes to convert such Libor Loan or COF Loan,
as applicable. Should a Borrower fail to advise such Agent, the Borrower shall
be deemed to have given such Agent notice to convert (a) any such Libor Loan or
COF Loan to the Canadian Borrower denominated in U.S.$, into an Alternate Base
Rate Loan, and any such Libor Loan or COF Loan, as applicable, will be deemed to
be an Alternate Base Rate Loan for all purposes under this Agreement, (b) any
such Libor Loan to a U.S. Borrower, into an Alternate Base Rate Loan, and any
such Libor Loan will be deemed to be an Alternate Base Rate Loan for all
purposes under this Agreement and (c) any such COF Loan to the Canadian Borrower
denominated in Cdn.$, into a Prime Loan, and any such COF Loan will be deemed to
be a Prime Loan for all purposes under this Agreement.
With a view to returning to the normal operation of the Facilities, the
Canadian Administrative Agent or the U.S. Administrative Agent, as the case may
be, shall, after having consulted with the applicable Borrowers, the Lenders and
the Reference Banks, examine the situation at least weekly to determine if the
circumstances described in Section 7.1 (a), (b) or (c) still prevail.
7.2 INCREASED COST
If the introduction of, or any change in, applicable law, regulation,
treaty or official directive or regulatory requirement now or hereafter in
effect (whether or not having the force of law) or in the interpretation or
application thereof by any court or by any judicial or governmental authority
charged with the interpretation or administration thereof, or if compliance by a
Lender with any request from any central bank or other fiscal, monetary or other
regulatory authority (other than a change in the relative credit rating or
borrowing ability of a Lender) (whether or not having the force of law):
(a) subjects any Lender to any Tax, or changes the basis of
taxation of payments due to such Lender or increases any
existing Tax, on payments of principal, interest or other
amounts payable by a Borrower to such Lender under this
Agreement (in each case, except for Taxes on the net income or
capital of such Lender),
(b) imposes, modifies or deems applicable any reserve, special
deposit, regulatory, capital or similar requirement against
assets held by or deposits in or for the account of, or loans
bearing interest at a rate fixed on the basis of the London
interbank market rates by, or any other acquisition of funds
for loans bearing interest at a rate fixed on the basis of the
London interbank market rates or any commitments or
authorizations in respect thereof by any Lender or an office
of any Lender, or
<PAGE>
- 56 -
(c) imposes on any Lender any other condition with respect to this
Agreement (except for Taxes on the net income or capital of
such Lender),
and the result of Sections 7.2 (a), (b) or (c) is to increase the cost to any
Lender or to reduce the income receivable by such Lender in respect of a Libor
Loan or COF Loan by any amount, the applicable Borrower shall pay to the
Canadian Administrative Agent or the U.S. Administrative Agent, as the case may
be, for the account of any such Lender, that amount which compensates such
Lender for such additional cost or reduction in income ("Additional
Compensation") arising and calculated as and from a date which shall not be
earlier than the 30th day preceding the date the applicable Borrower receives
the notice referred to in the following sentence. Upon any Lender having
determined that it is entitled to Additional Compensation, it shall promptly
notify the Canadian Administrative Agent or the U.S. Administrative Agent, as
the case may be, and such Agent shall promptly notify the applicable Borrower. A
certificate by any manager of such Lender setting forth the amount of the
Additional Compensation and the basis for it shall be submitted by such Lender
to such Agent and forwarded by such Agent, to the applicable Borrower and,
absent manifest error, shall be prima facie evidence of the amount of the
Additional Compensation and the applicable Agent shall debit, from the
applicable Borrower's accounts, the amount stipulated as Additional Compensation
in such certificate in accordance with Section 10.8.
If an Agent notifies a Borrower pursuant to this Section 7.2, such
Borrower shall have the right, upon written irrevocable notice to that effect
delivered to such Agent at least 10 Business Days prior to the end of such
Interest Period, to repay or convert such Lender's Participation in any such
Libor Loan or COF Loan in full, together with payment of accrued interest and
the Additional Compensation to the date of payment, to COF Loans which do not
suffer the same defect or Alternate Base Rate Loans, as the case may be,
denominated in U.S.$.
7.3 ILLEGALITY
If the introduction of, or any change in, applicable law, regulation,
treaty or official directive, or regulatory requirement (whether or not having
the force of law) or in the interpretation or application thereof by any court
or by any governmental authority charged with the administration thereof, makes
it unlawful, or prohibited for any Lender to make, to fund or to maintain Libor
Loans, such Lender may, by written notice to the Canadian Administrative Agent
or the U.S. Administrative Agent, which notice shall be promptly communicated by
such Agent to the applicable Borrower terminate its obligations to make, to fund
or to maintain Libor Loans and the applicable Borrower shall prepay or convert
such Lender's Participation in the Libor Loans forthwith (or at the end of any
applicable Interest Period as such Lender in its discretion agrees) together
with payment of all additional amounts as may be applicable to the date of
payment, to COF Loans which do not suffer the same defect or Alternate Base Rate
Loans, as the case may be, denominated in U.S.$.
<PAGE>
- 57 -
7.4 INDEMNITY
If a Borrower prepays or converts, whether pursuant to Section 6.1,
7.2, 7.3 or 7.5 or otherwise repays pursuant to Section 6.5, a Libor Loan or a
COF Loan on a day other than the last day of an Interest Period, such Borrower
shall indemnify the Lenders for any loss, cost or expense (except that in the
case of prepayment or conversion pursuant to Section 7.3, such loss, cost or
expense shall be restricted to actual costs incurred by the Lenders) incurred in
maintaining or redeploying deposits obtained by the Lenders to fund such Libor
Loan or COF Loan, as applicable. The provisions of Section 11.1(d) shall apply
to such indemnification mutatis mutandis.
7.5 OTHER INCREASED COSTS OR REDUCTIONS IN RETURN
(a) If, with respect to any accommodation of any kind or nature
provided by the Lenders under this Agreement, whether by way
of Bankers' Acceptances or otherwise (each accommodation being
in this Section 7.5 referred to as an "Accommodation") and as
a result of the introduction of or any change in any law,
regulation, rule or order or in its interpretation or
administration or by reason of any compliance with any
guideline, request or requirement from any fiscal, monetary or
other authority (other than a change in the relative credit
rating or borrowing ability of a Lender with respect to such
Accommodation) (whether or not having the force of law) which
it is customary for a bank or other lending institutions to
comply with in respect of all its loans or facilities of
similar type in Canada or the U.S. as the case may be, in
relation to Facilities made available to the Borrowers:
(i) any Lender incurs a cost (which it would not
otherwise have incurred) or becomes liable to make a
payment (calculated with reference to the Borrowings
outstanding under an Accommodation) with respect to
continuing to provide or maintain an Accommodation
(other than Taxes imposed on the net income or
capital of such Lender);
(ii) any reserve, special deposit or similar requirement
is imposed or increased with respect to an
Accommodation increasing the cost thereof to any
Lender; or
(iii) any Lender suffers a reduction in its effective
return on the date hereof, on the transactions
contemplated under this Agreement (as determined by
such Lender after taking into account any reduction
in the rate of return (before Tax) on its overall
capital arising as a consequence of compliance with
any such guideline, request or requirement as
aforesaid);
<PAGE>
- 58 -
then the Borrowers shall, subject to the terms and conditions
hereof, pay to such Lender such amount (the "Additional Other
Compensation") as will compensate the Lender for and will
indemnify the Lender against such increase in costs or
reduction of rate of return with respect to the Facilities
(arising and calculated as and from a date which shall not be
earlier than the 30th day preceding the date a Borrower
receives notice from the Canadian Administrative Agent or the
U.S. Administrative Agent, as the case may be, pursuant to
Section 7.5 (b) below).
(b) The Lender shall, forthwith, after incurring a cost as set out
in Section 7.5 (a)(i), suffering an increase in cost as set
out in Section 7.5 (a) (ii) or suffering a reduction in its
effective return as set out in Section 7.5 (a) (iii) (each
being in this Section referred to as an "Event") entitling the
Lender to the payment of Additional Other Compensation and the
Lender determining to claim such Additional Other
Compensation, shall give notice to the Canadian Administrative
Agent or the U.S. Administrative Agent, as the case may be, of
the Additional Other Compensation claimed with details of the
Event giving rise thereto and the Agent shall promptly provide
a copy of such notice to the applicable Borrower. Such Lender
shall at that time or within 20 days thereafter provide to
such Agent a certificate setting out in reasonable detail a
compilation of the Additional Other Compensation claimed (and
where appropriate the Lender's reasonable allocation to a
Facility of Additional Other Compensation with respect to the
aggregate of such similar facilities granted by the Lender
affected by such Event) or, if the Lender is then unable to
determine the Additional Other Compensation or the method of
compilation thereof, an estimate of such Additional Other
Compensation and/or the method or the basis on which the
Lender estimates the calculation will be made which estimate
will be confirmed or adjusted by the aforesaid certificate.
The Agent shall promptly provide a copy of such certificate to
the applicable Borrower. The certificate of the Lender with
respect to the Additional Other Compensation shall , absent
manifest error, constitute prima facie evidence of the amount
payable. The Borrower shall, within 60 days of receipt of such
notice from the Lender, pay to such Agent, for the account of
the Lender, the Additional Other Compensation (or the
estimated Additional Other Compensation) claimed but if the
Additional Other Compensation claimed and paid is greater or
lesser than the Additional Other Compensation as finally
determined, the Lender or the Borrower, as the case may be,
shall pay to the other the amount required to adjust the
payment to the Additional Other Compensation required to be
paid. The obligation to pay such Additional Other Compensation
for subsequent periods will continue, subject as herein
provided, until the earlier of the termination of the
Accommodation affected by the Event referred to in the notice
given by the Lender to the Agent or the lapse or cessation of
the Event giving rise to the Additional Other Compensation.
<PAGE>
- 59 -
(c) Within 120 days of receipt of the above-mentioned notice from
the Agent, the Borrower may notify such Agent that it elects
to repay or cancel, as the case may be, an Accommodation with
respect to which Additional Other Compensation is claimed, or
such Lender's Participation therein, and, if such election to
repay or cancel is made, the Borrower shall 45 days after the
giving of the notice of election to repay or cancel to such
Agent (for distribution to the Lenders or to such Lender, as
the case may be) such Accommodation or Participation, as the
case may be, pay or cancel the same, together with payment of
accrued interest, if any, and the Additional Other
Compensation (or the estimated Additional Other Compensation)
applicable thereto calculated to the date of such repayment or
cancellation. If any such repayment constitutes a prepayment
of Bankers' Acceptances, the Canadian Borrower shall deposit
with the Canadian Administrative Agent (for the benefit of the
Canadian Lenders involved) an amount equal to the face amount
of all Bankers' Acceptances then outstanding which are to be
prepaid (the "Prepaid Bankers' Acceptances"). The Canadian
Administrative Agent shall, upon maturity of the Prepaid
Bankers' Acceptances, apply the sum so deposited against
payment of the Prepaid Bankers' Acceptances and remit to the
Canadian Borrower the interest earned on the sum deposited.
(d) For greater certainty, the costs referred to in Section 7.5(a)
which may be included in Additional Other Compensation shall
not include costs (i) which have already been factored into
the Prime Rate or the Alternate Base Rate, as the case may be
or (ii) which are attributable to staff time and related
administrative costs incurred in the preparation and
submission of compliance reports.
7.6 ADDITIONAL COST IN RESPECT OF TAX
(a) Each payment to be made by a Borrower or an Unlimited
Guarantor hereunder or in connection herewith to any other
party hereto shall be made free and clear of and without
deduction for or on account of Tax (except for Taxes on the
net income or capital of a Lender or Taxes resulting from such
Lender changing its residency for tax purposes) unless a
Borrower or such Unlimited Guarantor is required to make such
a payment subject to the deduction or withholding of Tax, in
which case the sum payable by such Borrower or such Unlimited
Guarantor in respect of which such deduction or withholding is
required to be made shall be increased to the extent necessary
to ensure that, after the making of such deduction or
withholding, such other party hereto receives and retains
(free from any liability in respect of any such deduction or
withholding) a net sum equal to the sum which it would have
received and so retained had no such deduction or withholding
been made or required to be made.
(b) If any Lender or any Agent, on behalf of such Lender or on its
own behalf, is required by law to make any payment on account
of Tax (except for Taxes on the
<PAGE>
- 60 -
overall net income or capital of such Lender or Agent or Taxes
resulting from such Lender or Agent changing its residency for
tax purposes) on or in relation to any sum received or
receivable hereunder by such Lender or such Agent, or any
liability in respect of any such payment is asserted, imposed,
levied or assessed against such Lender or such Agent, the
applicable Borrower and the Unlimited Guarantors, as
applicable will, upon demand of such Lender or Agent, promptly
indemnify such Lender or Agent (as the case may be) against
such payment or liability, together with any interest,
penalties and expenses payable or incurred in connection
therewith. If a Lender or Agent has paid over on account of
Tax (other than Taxes excepted above) an amount paid to such
Lender or Agent by a Borrower or an Unlimited Guarantor
pursuant to the foregoing indemnification and the amount so
paid over is subsequently refunded to such Lender or Agent, in
whole or in part, such Lender shall promptly remit such amount
refunded to such Borrower or Unlimited Guarantor, as the case
may be.
7.7 CLAIMS UNDER SECTION 7.6
A Lender or Agent intending to make a claim pursuant to Section 7.6
shall deliver to the Canadian Administrative Agent or the U.S. Administrative
Agent, as the case may be, reasonably promptly after becoming aware of the
circumstances giving rise to the claim, a certificate to that effect specifying
the event by reason of which it is entitled to make such claim and setting out
in reasonable detail the basis and computation of such claim. Such Agent shall
promptly deliver to the applicable Borrower a copy of such certificate.
7.8 TAX RECEIPTS
If at any time a Borrower is required by law to make any deduction or
withholding from any sum payable by it hereunder or in connection herewith (or
if thereafter there is any change in the rates at which or the manner in which
such deductions or withholdings are calculated) such Borrower shall promptly
notify the Canadian Administrative Agent or the U.S.
Administrative Agent, as the case may be, thereof.
If a Borrower makes any payment hereunder or in connection herewith in
respect of which it is required by law to make any deduction or withholding it
shall pay the full amount to be deducted or withheld to the relevant taxation or
other authority within the time allowed for such payment under applicable law
and shall deliver to such Agent within 30 days after it has made such payment to
the applicable authority:
(a) a receipt issued by such authority; or
(b) other evidence reasonably satisfactory to such Agent
evidencing the payment to such authority of all amounts so
required to be deducted or withheld from such payment.
<PAGE>
- 61 -
7.9 INTERNAL REVENUE SERVICE FORMS
(a) Each U.S. Lender and each of their respective successors and
assigns, shall provide each of the U.S. Borrowers (with copies
to the U.S. Administrative Agent), with (x) Internal Revenue
Service Form 1001, Form 4224 or Form W-9, as appropriate, or
any successor Forms prescribed by the Internal Revenue
Service, certifying that such Lender is entitled to benefits
under an income tax treaty to which the United States is a
party which exempts such Lender from United States withholding
tax or certifying that the income receivable by it pursuant to
this Agreement is effectively connected with the conduct of a
trade or business in the United States or certifying that such
Lender is a U.S. Person as defined by Section 7701(a)(30) of
the Code or (y) solely if such Lender is claiming exemption
from United States withholding tax under Section 871(h) or
881(c) of the Code with respect to payments of "portfolio
interest", a Form W-8, or any successor form prescribed by the
Internal Revenue Service, and a certificate representing that
such Lender is not a bank for purposes of Section 881(c) of
the Code, is not a 10-percent shareholder (within the meaning
of Section 871(h)(3)(B) of the Code) of the U.S. Borrower and
is not a controlled foreign corporation related to a U.S.
Borrower (within the meaning of Section 864(d)(4) of the
Code).
(b) For any period with respect to which a U.S. Lender has failed
to provide the U.S. Borrower or the U.S. Administrative Agent
with the appropriate form referred to in Section 7.9(a)
(unless such failure is due to a change in treaty, law or
regulation occurring after the date on which such form
originally was required to be provided), such Lender shall not
be entitled to indemnification under Section 7.6 with respect
to Taxes imposed by the United States; provided that if a
Lender, that is otherwise exempt from or subject to a reduced
rate of withholding tax, becomes subject to Taxes because of
its failure to deliver a form required hereunder, the
applicable Borrower shall take such steps as such Lender shall
reasonably request to assist such Lender to recover such
Taxes.
(c) If a Borrower is required to pay additional amounts to or for
the account of any Lender pursuant to this Section as a result
of a change in law or treaty occurring after such Lender first
became a party to this Agreement, then such Lender will, at
the Borrower's request, change the jurisdiction of its
applicable lending office if, in the judgment of such Lender,
such change (i) will eliminate or reduce any such additional
payment which may thereafter accrue and (ii) is not otherwise
disadvantageous to such Lender.
<PAGE>
- 62 -
ARTICLE VIII
REPRESENTATIONS, WARRANTIES & COVENANTS
8.1 REPRESENTATIONS AND WARRANTIES
Each Borrower and each Unlimited Guarantor represents and warrants to
each of the Agents and each of the Lenders as of the date of this Agreement, all
of which representations and warranties shall survive the execution and delivery
of this Agreement, that:
(a) each of the Borrowers and the Guarantors which is a
corporation is duly incorporated, validly existing and in good
standing in all material respects as a corporation under the
laws of its jurisdiction of incorporation and has full
corporate power, authority and capacity to own its properties
and conduct its business and each of the Borrowers and the
Guarantors which are corporations has the full corporate
power, authority and capacity to execute, deliver and perform
its obligations to be performed under, in the case of each
Borrower and each Unlimited Guarantor which are corporations,
this Agreement and under the Security provided or to be
provided by it, and, in the case of each of the other
Guarantors, its guarantee and the Security to be provided by
it;
(b) FSLP is a limited partnership, duly organized and existing
under the laws of the State of Delaware and has full power,
authority and capacity to execute, deliver and perform its
obligations to be performed under this Agreement and under the
Security provided or to be provided by it;
(c) all acts, conditions and things required to be done and
performed by each Borrower, or to have occurred prior to the
execution, delivery and performance, in the case of each
Borrower and each Unlimited Guarantor of this Agreement and
the Security provided or to be provided by it and, in the case
of each of the other Guarantors, its guarantee and the
Security provided or to be provided by it to constitute it a
binding obligation of such party enforceable against it in
accordance with its terms, have been done and performed, and
have occurred in due compliance with all applicable laws;
(d) the execution, delivery and performance, in the case of each
of the Borrowers and each Unlimited Guarantor of this
Agreement and the Security provided or to be provided by it
and, in the case of each of the other Guarantors, its
guarantee and the Security provided or to be provided by it
has been duly authorized by all necessary corporate and other
action and does not:
(i) violate any provision of law or any provision of the
articles of incorporation or other instrument of
formation of such party, or
<PAGE>
- 63 -
(ii) result in a breach of, a default under, or the
creation of any Lien (other than those in favour of
the Agents and the Lenders) on the properties and
assets of any Borrower or Guarantor, as the case may
be, under any material agreement or instrument to
which it is a party or by which its properties and
assets may be bound or affected;
(e) this Agreement in the case of the Borrowers and each Unlimited
Guarantor and the Security provided or to be provided by it
and, in the case of each of the other Guarantors, its
guarantee and the Security provided or to be provided by it
constitutes, when executed and delivered, binding, direct
obligations of such party, enforceable in accordance with its
terms, subject to:
(i) applicable bankruptcy, insolvency, moratorium,
reorganization and other similar laws affecting
creditors' rights generally and statutes limiting
creditors' rights, including the Personal Property
Security Act (Ontario);
(ii) the equitable and statutory powers of the courts of
appropriate jurisdiction to stay proceedings before
them, to stay the execution of judgments and to award
costs;
(iii) the discretion of such courts as to the granting of
the remedies of specific performance and injunction;
and
(iv) the restriction that Canadian courts can only render
judgments in Canadian currency;
(f) other than as disclosed to the Agents and the Lenders in
writing prior to the date hereof there is no litigation and
there are no legal proceedings pending, or to the best of its
knowledge, threatened against any of the Borrowers or any
Guarantor or any Affiliate of a Borrower or any Guarantor
before any court or administrative agency of any jurisdiction
which is likely to affect materially and adversely the
financial condition, assets or operations of a Borrower or any
Guarantor;
(g) no event has occurred which constitutes or which, with the
giving of notice, the lapse of time or both, would constitute
a default under or in respect of any material agreement,
undertaking or instrument to which any of the Borrowers or any
Guarantor is a party or to which any of their respective
properties or assets may be subject which is likely to affect
materially and adversely, the financial conditions, assets or
operations of a Borrower or any Guarantor;
(h) other than as disclosed to the Agents and the Lenders in
writing prior to the date hereof each of the Borrowers and the
Guarantors is not in violation in any
<PAGE>
- 64 -
material respect of any term of their respective incorporating
instruments or by-laws, and, to the best of each Borrower's
and each Unlimited Guarantor's knowledge, none of the
Borrowers and the Guarantors is in violation of any material
mortgage, franchise, license, judgment, decree, order,
statute, rule or regulation which is likely to affect
materially and adversely the financial condition, assets or
operations of a Borrower or any Guarantor;
(i) each Borrower and each Guarantor has filed all tax returns
which were required to be filed, paid all Taxes (including
interest and penalties) which are due and payable by such
Borrower or such Guarantor and provided adequate reserves for
payment of any Tax the payment of which is being contested;
(j) each of the Direct Guarantors is a Wholly-Owned Subsidiary of
the Canadian Borrower, FS (USA) is a Wholly-Owned Subsidiary
of the Canadian Borrower and each of the other Guarantors is a
Subsidiary of the Canadian Borrower or a shareholder of a
Subsidiary thereof;
(k) the Canadian Borrower's shares are owned and controlled as
follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
PRINCIPAL SHAREHOLDERS SHARES OF SHARES OF TOTAL SHARES VESTED PERCENT
MULTIPLE SUBORDINATED OPTIONS TO
VOTING VOTING JANUARY 31,
CAPITAL CAPITAL STOCK 1999
STOCK (1)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MANAGEMENT/DIRECTOR %
SHAREHOLDERS
- ----------------------------------------------------------------------------------------------
Jay S. Hennick 662,847 885,081 1,547,928 411,805 10.70
- ----------------------------------------------------------------------------------------------
D. Scott Patterson 0 203,600 203,600 178,500 1.41
- ----------------------------------------------------------------------------------------------
Douglas Cooke 0 22,500 22,500 23,500 0.15
- ----------------------------------------------------------------------------------------------
John Friedrichsen 0 30,000 30,000 9,000 0.21
- ----------------------------------------------------------------------------------------------
Timothy Greener 0 227,035 227,035 34,000 1.57
- ----------------------------------------------------------------------------------------------
Management Options 0 1,637,437 1,637,437 11.32
(55 persons, including
officers named above)
- ----------------------------------------------------------------------------------------------
Other 10,795,692 10,795,692 74.64
- ----------------------------------------------------------------------------------------------
TOTAL 662,847 13,801,345 14,464,192 100
---------- ---------- ---------- -----
---------- ---------- ---------- -----
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
</TABLE>
(1) Multiple Voting Capital Stock has 20 votes per share
("Ownership and Control");
<PAGE>
- 65 -
(l) there exists no Event of Default and no condition, event or
act which, with the giving of notice, lapse of time, or both,
would constitute an Event of Default;
(m) other than as provided under the applicable incorporating or
formation statute of any Borrower or any Guarantor, none of
the Borrowers nor any Guarantor is subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act or the Investment
Company Act of 1940 or to any U.S. or Canadian federal, state
or provincial statute or regulation limiting its ability to
incur indebtedness for money borrowed;
(n) none of the Borrowers nor any Guarantor is by itself, nor is
it by virtue of its being under "common control" with any
other Person within the meaning of Section 414 (b) or (c) of
the Internal Revenue Code of 1986 (the "Code"), an "employer"
within the meaning of Section 3 (5) of the Employee Retirement
Income Security Act of 1974 of the United States of America,
as amended from time to time ("ERISA"), in respect of any
employee pension benefit plan covered by Title IV of ERISA or
subject to the minimum funding standards under the Code;
(o) no part of the proceeds of the Borrowings will be used for any
purpose that violates the provisions of any of Regulation T, U
or X of the Board of Governors of the Federal Reserve System
or any other regulation of such Board of Governors; none of
the Borrowers nor any Guarantor is engaged in the business of
extending credit for the purpose of purchasing or carrying
margin stock within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System; none of the
Borrowers nor any Guarantor owns any such "margin stock";
(p) since September 30, 1998 to the best of its knowledge, there
has been no material adverse change in the business,
operations, properties, prospects or condition (financial or
otherwise) of the Canadian Borrower or its Subsidiaries;
(q) on the basis of a review and assessment undertaken by the
Borrowers of their computer applications, the Borrowers
reasonably believe that the Year 2000 Problem will not result
in a material adverse effect on the business, operations or
properties of the Canadian Borrower or its Subsidiaries.
(r) none of the Borrowers nor any Guarantor has received any
notice, or has any knowledge, that the operations of a
Borrower or any Guarantor are not in compliance in all
material respects with all applicable Environmental Laws; and
(s) each Borrower and all its Subsidiaries have valid title to
their respective assets and, without limitation, own or
possess or are licensed or otherwise have the right to use all
material licenses, permits and other governmental approvals
and
<PAGE>
- 66 -
authorizations, patents, trademarks, service marks, trade
names, copyrights, franchises, authorizations and other rights
that are reasonably necessary for the operations of their
respective businesses, without, to the best of the knowledge
of the Borrowers and the Unlimited Guarantors, conflict with
the rights of any other Person with respect thereto.
8.2 COVENANTS
Each Borrower covenants with each of the Agents and with each of the
Lenders that so long as there shall remain any Borrowings or any other
obligations of or affecting any party to this Agreement:
(a) it will pay duly and punctually all sums of money due by it
under this Agreement at the times and places and in the manner
provided for herein and will cause each Guarantor to do
likewise under its Guarantee;
(b) it will maintain, and cause each Guarantor to maintain, its
existence, corporate and otherwise, in good standing;
(c) it will, on a timely basis:
(i) take all necessary and appropriate steps to address
the Year 2000 Problem such that there does not occur
any material adverse effect on the business,
operations or properties of the Borrowers or their
Subsidiaries as a consequence thereof; and
(ii) provide the Canadian Administrative Agent or the U.S.
Administrative Agent, as the case may be, with
disclosure of its measures to deal with the Year 2000
Problem as well as any updates of such measures,
(d) it will not, without the Majority Lenders' prior written
consent (which consent shall not be unreasonably withheld),
sell, transfer or otherwise dispose of its control, direct or
indirect, of any of its Subsidiaries and it will not, nor will
it permit any of its Subsidiaries to, without the Majority
Lenders' prior written consent, sell, lease, assign, transfer,
convey or otherwise dispose of any of its properties or assets
whether now owned or hereafter acquired (including, without
limitation, receivables and leasehold interests, patents and
intellectual property rights) BUT EXCLUDING:
(i) inventory disposed of in the ordinary course of
business;
(ii) property no longer used or useful in its business
provided that the net book value of such property
sold, leased, assigned, transferred, conveyed or
<PAGE>
- 67 -
otherwise disposed of shall not exceed Cdn $100,000
per transaction and Cdn. $500,000 in the aggregate in
any Fiscal Year of the Canadian Borrower;
(iii) property which is, substantially contemporaneously
with the disposition thereof, replaced by property
(of substantially the same kind or nature) of at
least equivalent value; and
(iv) entering into sale/leaseback transactions with
respect to property having a net book value of not
more than Cdn. $100,000 per transaction and Cdn.
$500,000 in the aggregate in any Fiscal Year of the
Canadian Borrower; provided, however, that it or any
one or more of its Subsidiaries may, without such
consent, sell, lease, assign, transfer, convey or
otherwise dispose of such control, properties or
assets, so long as:
(A) the aggregate book value of the
Subsidiaries, assets and properties subject
to all such sales, leases, assignments,
transfers, conveyances or other dispositions
by the Borrowers and/or their Subsidiaries
made in any Fiscal Year (or at any time
during such Fiscal Year) without such
consent (other than as permitted under (i),
(ii) or (iii) above) do not exceed
Cdn.$5,000,000 or the Equivalent Amount
thereof in U.S.$ in any Fiscal Year of the
Canadian Borrower;
(B) it gives the Canadian Administrative Agent
or the U.S. Administrative Agent, as the
case may be, prior written notice of each
sale, lease, assignment, transfer,
conveyance or other disposition involving
one or more properties or assets having
either a realization value or a book value
of Cdn.$500,000 or the Equivalent Amount
thereof in U.S.$ or more, and
(C) no Event of Default or any event which, with
notice and/or lapse of time, or both, would
become an Event of Default shall exist after
giving effect to any such sale, lease,
assignment, transfer, conveyance or other
disposition and the application of the
proceeds thereof;
(e) it will carry on diligently and conduct its business in a
proper and efficient manner so as to preserve and protect its
properties, assets and income in a prudent manner consistent
with usual industry practice and the preservation of its
business and assets, and it will cause its Subsidiaries to do
the same in respect of their respective businesses and assets
and, in particular, without limiting the foregoing, it will
not alter its business plan so as to change materially the
nature
<PAGE>
- 68 -
or scope of business, operations or activities currently
carried on by it or its Subsidiaries or to shift or
transfer same from a Borrower or any such Subsidiaries to
other of its Subsidiaries, without obtaining the prior
written consent of the Majority Lenders (which consent
shall not be unreasonably withheld);
(f) it will maintain or cause to be maintained, with responsible
and reputable insurers, insurance with respect to its
properties, assets and business and the respective properties,
assets and businesses of its Subsidiaries against such
casualties and contingencies (including public liability) and
in such types and in such amounts and with such deductibles
and other provisions as are customarily maintained or caused
to be maintained by persons engaged in the same or similar
businesses in the same territories under similar conditions;
it will ensure that the Collateral Agent is an additional
named loss payee under all policies of insurance, as its
interest may appear, and that such policies are not
cancellable without at least 30 days' prior written notice
being given by the insurers to the Collateral Agent;
(g) it will do, execute, acknowledge and deliver or cause to be
done, executed, acknowledged or delivered all such other acts,
agreements, instruments and assurances in law as the
Collateral Agent or Lenders' Counsel shall reasonably require
for the better accomplishing and effectuating of the
intentions and provisions of this Agreement and the Security;
(h) it will do, observe and perform all material matters and
things necessary or expedient to be done, observed or
performed under any law of Canada, the United States of
America, any province or state or municipality thereof or of
any other jurisdiction for the purpose of carrying on and
conducting its business and owning and possessing its
properties and assets and, without limitation, it will
maintain at all times in full force and effect all material
certificates, permits, licenses and other approvals required
to operate its business and it will cause its Subsidiaries to
do the same in respect of their respective businesses,
properties and assets; for greater certainty and without in
any way limiting the generality of the foregoing:
(i) each Borrower and each Guarantor shall be at all
times in compliance in all material respects with all
applicable Environmental Laws; and
(ii) each Borrower shall ensure that each of the real
properties or premises owned, leased or occupied by
it or any of its Subsidiaries is free from
contamination by a release, discharge or emission of
any Hazardous Material;
(i) it will promptly pay or cause to be paid all Taxes levied,
assessed or imposed upon it and/or its Subsidiaries, and/or
its properties and assets or those of its
<PAGE>
- 69 -
Subsidiaries or any part thereof and/or upon its income and
profits or that of its Subsidiaries, as and when the same
shall become due and payable save when and so long as any
such Taxes are in good faith contested by it or those of
its Subsidiaries as may be affected thereby;
(j) it will furnish to the Canadian Administrative Agent and the
U.S. Administrative Agent, in sufficient quantities to provide
1 copy to each Lender and such Agent:
(i) as soon as available and in any event within 45 days
(or 60 days in the case of the last Quarter in each
Fiscal Year) after the end of each Quarter of each
Fiscal Year of the Canadian Borrower and each
Subsidiary (A) the unaudited consolidated (and
unconsolidated) financial statements of the Canadian
Borrower or Subsidiary, as the case may be, prepared
in substantially the same manner and containing
substantially comparable information to the financial
statements which were delivered to the Canadian
Administrative Agent prior to the date of this
Agreement, as of the end of such Quarter to be
prepared in accordance with GAAP, accompanied by a
confirmation (without personal liability) from the
president, the chief financial officer or treasurer
of the Canadian Borrower confirming that such
financial statements have not been prepared in a
manner, and do not contain any statement, which is
inconsistent with GAAP, certified (without personal
liability), subject to audit and year-end adjustment,
by the president, chief financial officer or
treasurer of the Canadian Borrower and containing
sufficient information to permit each Lender to
determine whether the financial covenants contained
in Section 8.2(p) are being maintained and, (B) such
officer's certificate to the effect that, as of the
last day of such Quarter, and, to the best knowledge
of such officer, as of the date of such certificate,
no event has occurred and is continuing which
constitutes an Event of Default or which would
constitute an Event of Default with the giving of
notice and/or the lapse of time or both;
(ii) as soon as practicable and in any event within 90
days after the end of each Fiscal Year of the
Canadian Borrower, (A) a copy of the consolidated
(and unconsolidated) financial statements of the
Canadian Borrower as of the end of such Fiscal Year,
such financial statements of the Canadian Borrower
and its Subsidiaries to be prepared in accordance
with GAAP, (a) the consolidated financial statements
of the Canadian Borrower to be accompanied by a
report thereon by independent auditors of recognized
standing confirming, without qualification, that such
financial statements of the Canadian Borrower have
been prepared in accordance with GAAP and (b) copies
of such auditors' recommendations, if any,
(following completion of their audit to be provided)
together with (B) a certificate
<PAGE>
- 70 -
(without personal liability) of the president,
chief financial officer or treasurer of the
Canadian Borrower containing sufficient
information to permit each Lender to determine
whether the financial covenants contained in
Section 8.2(p) are being maintained and the
information required to determine amounts to be
paid under Section 6.5 and to the effect that, as
of the last day of such Fiscal Year, and to the
best of the knowledge of such officer, as of the
date of such certificate, no event has occurred
and is continuing which constitutes an Event of
Default or which would constitute an Event of
Default with the giving of notice and/or the lapse
of time or both;
(iii) as soon as possible and in any event within 10
Business Days after any Borrower or any of its
Subsidiaries receives (A) notice of the commencement
thereof, notice of any actions or proceedings against
it or any of its Affiliates or against any of the
property of a Borrower or any of its Subsidiaries
before any court, governmental agency or arbitrator,
which, if determined adversely, would have a material
adverse effect on the financial condition or
operations of any Borrower or its Subsidiaries, taken
as a whole and (B) a copy of any Violation Notice
received by a Borrower or any of its Subsidiaries;
(iv) within 30 days of the beginning of each Fiscal Year
of the Canadian Borrower, the Canadian Borrower's
annual business plan and financial projections,
including projected capital expenditures for the
Fiscal Year then begun;
(v) promptly upon request, such other information
concerning the financial affairs or operations of any
Borrower or any of its Subsidiaries as the Canadian
Administrative Agent or the U.S. Administrative
Agent, as the case may be, may reasonably request
from time to time including for greater certainty
financial statements of the U.S. Borrowers, NSULC,
FSLLC and FSLP;
(k) it will not, nor will it permit any Subsidiary to, without the
Majority Lenders' prior written consent, make any advances to
or for the benefit of, or guarantee (other than under
Permitted VTBS) the indebtedness or liabilities of, or
otherwise become liable for, any Person or any business or
project of any Person save and except:
(i) the endorsement of cheques and other negotiable
instruments for deposit in the ordinary course of
business;
<PAGE>
- 71 -
(ii) advances and accounts between one or more of a
Borrower and any of its Subsidiaries which shall be
on commercially reasonable terms; provided that such
advances and accounts are secured by means of
security agreements in form and substance
satisfactory to the Collateral Agent, are assigned to
the Collateral Agent and form part of the Security
(hereinafter referred to as "Permitted Loans"); and
(iii) liabilities, indebtedness and obligations which would
otherwise constitute Permitted Encumbrances hereunder
but for the lack of a lien to secure such
liabilities, indebtedness and obligations.
(l) it will permit from time to time to the Canadian
Administrative Agent and the U.S. Administrative Agent or
their representatives or advisers access to its premises,
assets, records and meetings of directors and/or of
shareholders upon reasonable (both as to timing and advance
notice) request of such Agent;
(m) it will give to the Canadian Administrative Agent or the U.S.
Administrative Agent prompt notice of any Event of Default or
any event, of which it is aware, which, with the giving of
notice and/or the lapse of time or both, would constitute an
Event of Default;
(n) it will not, and it will not permit any of its Subsidiaries
to, without the Majority Lenders' prior written consent,
incur, create, assume or permit to exist any Lien on any of
its or any of its Subsidiaries' property or assets, whether
owned at the date hereof or hereafter acquired, except that
the following shall be permitted (the "Permitted
Encumbrances"):
(i) Liens incurred and pledges and deposits made in
connection with workers' compensation, unemployment
insurance, old-age pensions and similar legislation
(other than ERISA);
(ii) Liens securing the performance of bids, tenders,
leases, contracts (other than for the repayment of
borrowed money), and statutory obligations of like
nature, incurred as an incident to and in the
ordinary course of business;
(iii) statutory Liens of landlords, undetermined or
inchoate Liens and other Liens imposed by law, such
as carriers', warehousemens', mechanics',
construction and materialmen's Liens, incurred in
good faith in the ordinary course of business
provided that the aggregate amount of any carriers',
warehousemens', mechanics', construction or
materialmens' Liens shall at no time exceed an
aggregate amount of Cdn. $500,000 or
<PAGE>
- 72 -
the Equivalent Amount thereof in U.S.$ and the amount
thereof shall be paid when same shall become due;
(iv) Liens securing the payment of Taxes, assessments and
governmental charges or levies, either (i) not
delinquent or (ii) being contested in good faith by
appropriate proceedings;
(v) permits, right-of-way, zoning restrictions,
easements, licenses, reservations, restrictions on
the use of real property or minor irregularities or
minor title defects incidental thereto which do not
in the aggregate materially detract from the value of
the property or assets of a Borrower or any of its
Subsidiaries or materially impair the operation of
the business of a Borrower or any of its
Subsidiaries;
(vi) Liens arising out of the leasing of personal property
by it or any of its Subsidiaries in the ordinary
course of business up to an amount not exceeding in
the aggregate Cdn.$9,000,000 for all Borrowers and
their Subsidiaries or the Equivalent Amount thereof
in U.S. $;
(vii) Liens, subordinate in priority to the Liens created
under the Security, incurred in the ordinary course
of business for the purposes of securing the payment
of any purchase price balance or the refinancing of
any purchase price balances not greater than in the
aggregate Cdn.$15,000,000 or the Equivalent Amount in
U.S. $ of any assets (other than current assets)
acquired by a Borrower or any of its Subsidiaries
provided that any such Liens are restricted to the
assets so acquired ("Permitted VTBS");
(viii) reservations, conditions, limitations and exceptions
contained in or implied by statute in the original
disposition from the Crown and grants made by the
Crown of interests so reserved or accepted;
(ix) security given in the ordinary course of business by
a Borrower, or any of its Subsidiaries to a public
utility or any municipality or governmental or public
authority in connection with operations of a
Borrower, or any of its Subsidiaries, (other than in
connection with borrowed money) securing not more
than an aggregate amount equal to Cdn. $500,000 for
all Borrowers and their Subsidiaries or the
Equivalent Amount thereof in U.S.
$;
(x) liens in respect of Permitted Loans;
<PAGE>
- 73 -
(xi) the Security and any additional or further security
granted to the Collateral Agent and/or the Lenders by
a Borrower, a Guarantor or any future Subsidiary of a
Borrower; and
(xii) the encumbrances described on Schedule "P" with
respect to real property owned by Prime Management
Group Inc. and the Canadian Borrower.
(o) it will not, without the prior written consent of the Majority
Lenders:
(i) declare dividends, whether in cash or in specie, or
make payments thereof;
(ii) make or permit any distributions or returns of
capital (whether by retirement, redemption,
repurchase, cancellation or otherwise); or
(iii) make or permit any withdrawals or any other payments
of money or equivalents thereof whatsoever
(including, without limitation, royalties, management
fees, etc.) (which are not otherwise expressly
permitted by the terms of this Agreement) by or to
the shareholders of the Canadian Borrower, its
Affiliates or any creditors ranking junior to the
Lenders and it will cause its Subsidiaries to do
likewise save and except for:
(A) interest dividend payments, distributions
and/or returns of capital made, directly or
indirectly to any Borrower;
(B) normal course distributions to other
shareholders of such Subsidiaries as
contemplated in the Canadian Borrower's
annual business plan and within limits
approved by the Majority Lenders annually;
(C) normal course issuer bids of the Canadian
Borrower up to an aggregate amount not
exceeding Cdn. $2,000,000;
(D) payments upon exercise of the put options
under the Shareholders' Agreements;
(E) payments upon exercise of the call options
under the Shareholders' Agreements;
(F) payments on account of retirement,
termination, death or disability,
redemptions; and
(G) payments on account of Permitted VTBS;
<PAGE>
- 74 -
(p) the Canadian Borrower will, at all times, maintain on a
consolidated and rolling 4 Quarters basis:
(i) the Maximum Total Debt/Adjusted EBITDA Ratio;
(ii) the Maximum Total Debt/Capitalization Ratio;
(iii) the Minimum Fixed Charge Coverage Ratio;
(iv) the Minimum Working Capital Ratio;
(v) the Minimum Business Value/Total Debt Ratio; and
(vi) the Minimum Interest Coverage Ratio;
(q) it will not, nor will it permit any of its Subsidiaries to,
without the Majority Lenders' prior written consent (which
shall not be unreasonably withheld), enter into a merger or
consolidation or amalgamation, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution),
or, except as permitted under Section 8.2(d), convey, sell,
lease, transfer or otherwise dispose of, in one transaction or
a series of transactions, all or a substantial part of its or
such Subsidiary's business, properties or assets;
(r) it will not, nor will it permit any of its Subsidiaries to,
incur any other indebtedness (including senior and
subordinated debt), loans or financing of any kind or nature
whatsoever (whether in the form of capital leases or
sale-leaseback transactions or otherwise) or incur any
contingent obligations or liabilities (including guarantees)
other than trade payables incurred in the ordinary course of
business and indebtedness or contingent obligations or
liabilities secured by Permitted Encumbrances and Permitted
Liens, without obtaining the prior written consent of the
Majority Lenders;
(s) it will not, nor will it permit any of its Subsidiaries to:
(i) other than:
(A) in the ordinary course of business; or
(B) in connection with the acquisition of an
Eligible Business which satisfies the
conditions of Section 5.2 (whether or not
Borrowings are being requested under an
Acquisition Facility),
<PAGE>
- 75 -
make any acquisition of, or investment in, properties, assets,
businesses, shares, Persons or effectively related series of
such acquisitions or investments; or
(ii) establish, incorporate otherwise form, charter or
create any new Subsidiary other than in connection
with the acquisition of an Eligible Business which
satisfies the conditions of Section 5.2 (whether or
not Borrowings are being requested under an
Acquisition Facility), without obtaining the prior
written consent of the Majority Lenders;
(t) it will ensure that all Security granted to the Collateral
Agent, and/or the Lenders continues to be perfected and
preserve the first priority thereof;
(u) it will not make, or permit the making of, any change or
modification to the Shareholders' Agreements, without the
prior written consent of the Majority Lenders;
(v) it will cause any entity which after the date hereof shall
become a Subsidiary of a Borrower (such entity, a "New
Subsidiary") to execute and deliver in favour of the
Collateral Agent and the Lenders either (i) the Direct
Security or (ii) an Undertaking to Secure, together with
favourable supporting legal opinions, in either case, as soon
as reasonably practicable after becoming a Subsidiary and no
later than (A) in the case of an Acquisition Entity where the
acquisition has been financed, wholly or partially, by way of
Borrowings under an Acquisition Facility, on the date of
completion of the acquisition, or (B) in any other case within
10 Business Days following the date of completion of the
acquisition or creation of the New Subsidiary, as the case may
be; and
(w) it will not, without the prior written consent of the Majority
Lenders, terminate or replace Jay Hennick as Chairman and
Chief Executive Officer of the Canadian Borrower, and, in the
event that due to any other reason, Jay Hennick ceases to be
Chairman and Chief Executive Officer or to perform his duties
as such, it will not appoint a successor or new Chairman
and/or Chief Executive Officer unless such Person shall be
reasonably acceptable to the Majority Lenders.
For greater certainty, with respect to the covenants contained in this
Section 8.2, the ordinary courses of business of:
(a) FSLP is limited to holding the shares of NSULC;
(b) NSULC is limited to holding the units of FSLLC;
(c) FSLLC is limited to making loans to Subsidiaries of the
Canadian Borrower and taking security for such loans; and
<PAGE>
- 76 -
(d) FS USA is limited to making loans to Subsidiaries of the
Canadian Borrower and taking security for such loans.
ARTICLE IX
EVENTS OF DEFAULT
9.1 EVENTS OF DEFAULT
Upon the occurrence of any one or more of the following events (an
"Event of Default"):
(a) the non-payment by a Borrower when due, whether by
acceleration or otherwise, of any payment of principal due
under the Facilities, or otherwise hereunder;
(b) the non-payment by a Borrower when due (or within 3 Business
Days thereafter) whether by acceleration or otherwise, of any
payment (other than a payment of principal) due under the
Facilities or otherwise hereunder;
(c) the commencement of proceedings by or against a Borrower, any
Guarantor or any of their Subsidiaries for the dissolution,
merger, amalgamation, liquidation or winding-up of any of a
Borrower or any Guarantor or any of their Subsidiaries or for
the suspension of the operations of any of a Borrower or any
Guarantor or any of their Subsidiaries, unless, in the case of
proceedings against a Borrower, any Guarantor or any of their
Subsidiaries, such proceedings are being actively and
diligently contested by the Borrower, or Guarantor or such
Subsidiary, as the case may be, in good faith to the
satisfaction of the Majority Lenders;
(d) a Borrower or any Guarantor or any of their Subsidiaries is
adjudged or declared bankrupt or insolvent or makes an
assignment for the benefit of creditors, or petitions or
applies to any tribunal for the appointment of a receiver,
custodian or trustee for a Borrower, any Guarantor or any such
Subsidiary or for any substantial part of its property, or
commences any proceedings relating to it under any
reorganization, arrangement, readjustment of debt, dissolution
or liquidation law or statute of any jurisdiction whether now
or hereafter in effect relating to or governing debtors or
such proceedings are commenced against it (unless, in the case
of proceedings commenced against it, such proceedings are
being actively and diligently contested by such Borrower, such
Guarantor or such Subsidiary in good faith to the satisfaction
of the Majority Lenders), or by any act indicates its consent
to, approval of, or acquiescence in, any such proceeding for a
Borrower, any Guarantor or any such Subsidiary or for any
substantial part of its property, or suffers the appointment
of any receiver, custodian or trustee and any such appointment
continues undischarged and in effect for a period of 30 days;
<PAGE>
- 77 -
provided that during such 30 day period such appointment is
being actively and diligently contested by such Borrower or
Guarantor or Subsidiary in good faith to the satisfaction of
the Majority Lenders and in the case of a Borrower such
receiver, custodian or trustee shall not have taken possession
of or otherwise enforced its rights over the property in
respect of which it has been appointed;
(e) any material representation or warranty made in this Agreement
or any Security by a Borrower, the Unlimited Guarantor, or any
of their Subsidiaries or any information furnished in writing
to an Agent or Lender by a Borrower, any Guarantor or any such
Subsidiary proves to have been incorrect in any material
respect when made or furnished save that if any such
materially incorrect representation or warranty is capable of
being corrected and none of the Agents and the Lenders has
been prejudiced by such materially incorrect representation or
warranty, then the Borrowers shall have 30 days after written
notice to do so by the Collateral Agent to take such action to
make the representation or warranty true and correct at such
time, in which case such representation or warranty shall be
deemed to have been true and correct when originally made or
furnished;
(f) a writ, execution or attachment or similar process is issued
or levied against all or a substantial portion of the property
of a Borrower, any Guarantor or any of their Subsidiaries in
connection with any judgment against a Borrower, any Guarantor
or any of their Subsidiaries in any amount which materially
affects the assets of a Borrower, any Guarantor or its
Subsidiaries, and such writ, execution, attachment or similar
process is not released, bonded, satisfied, discharged,
vacated or stayed within 30 days after its entry, commencement
or levy; provided that during such 30 day period such process
if being actively and diligently contested by such Borrower or
Guarantor or Subsidiary in good faith to the satisfaction of
the Majority Lenders;
(g) the breach or failure of due performance by a Borrower or any
Guarantor of any covenant or provision of this Agreement,
other than those heretofore dealt with in this Section 9.1,
which is not remedied by such Borrower, or Guarantor within 30
days, after written notice to do so by the Collateral Agent or
any Lender; provided that such breach or failure is capable of
being remedied and during such 30 day period the Borrower or
Guarantor is proceeding actively and diligently in good faith
to remedy such breach or failure to the satisfaction of the
Majority Lenders;
(h) demand by any Person (including, without limitation, any
Lender) is made on a Borrower, any Guarantor or any of their
Subsidiaries in respect of indebtedness, in an aggregate
amount of:
<PAGE>
- 78 -
(i) Cdn. $3,000,000 (or the Equivalent Amount thereof in
U.S.$) but less than Cdn. $5,000,000 (or the
Equivalent Amount thereof in U.S. $) and such demand
is not withdrawn within 30 days; or
(ii) Cdn. $5,000,000 (or the Equivalent Amount thereof in
U.S.$) or more,
payable on demand by such Borrower, such Guarantor or such
Subsidiary and such Borrower, such Guarantor or such
Subsidiary has not, when due and payable, made payment of the
amount so demanded or contested the validity of such demand in
good faith or a Borrower, any Guarantor or any of their
Subsidiaries is in default under any term or provision of any
agreement, deed, indenture or instrument (other than this
Agreement) between such Borrower, such Guarantor or such
Subsidiary as the case may be, and any Person (including,
without limitation, any Lender) shall have accelerated or
shall have the right to accelerate any indebtedness (including
Financial Contract Obligations) in an aggregate amount of:
(iii) Cdn. $3,000,000 (or the Equivalent Amount thereof in
US$) but less than Cdn. $5,000,000 (or the Equivalent
Amount thereof in U.S.$) and such acceleration or
right to accelerate is not withdrawn within 30 days;
or
(iv) Cdn. $5,000,000 (or the Equivalent Amount thereof in
U.S.$) or more,
of a Borrower, such Guarantor or such Subsidiary, as the case
may be;
(i) a writ, execution or attachment or similar process is issued
or levied against all or a substantial portion of the property
of a Borrower, any Guarantor or any of their Subsidiaries in
connection with any judgment against a Borrower, any Guarantor
or any of their Subsidiaries in any amount which materially
affects the assets of a Borrower, any Guarantor or its
Subsidiaries, and such writ, execution, attachment or similar
process is not released, bonded, satisfied, discharged,
vacated or stayed within 30 days after its entry, commencement
or levy provided during such 30 day period such process if
being actively and diligently contested by such Borrower or
Guarantor or Subsidiary in good faith to the satisfaction of
the Majority Lenders;
(j) a Borrower, any Guarantor or any of their Subsidiaries ceases
or threatens to cease to carry on all or a substantial part
of the business currently carried on by such Borrower, such
Guarantor or such Subsidiary;
(k) there is any change in Ownership and Control which results in
Jay Hennick, his spouse, descendants and ascendants and any
entities controlled by any of them or trusts established by,
or for the benefit of, any of them, ceasing to own, directly
or indirectly, more voting shares of the Canadian Borrower
than any other
<PAGE>
- 79 -
shareholder or group of related or affiliated shareholders
without the prior written consent of the Majority Lenders; or
(l) a Borrower shall have failed within 30 days of the giving of a
Call Option Triggering Event Notice to have caused an Affected
Subsidiary to become a Direct Guarantor;
the Collateral Agent shall, if so instructed by the Majority Lenders, by written
notice to the Borrowers declare the Borrowings, including accrued interest
thereon, and all other indebtedness of the Borrowers to any of the Lenders
and/or the Agents in connection with this Agreement to be due and payable,
whereupon:
(i) any right of the Borrowers to any further utilization
of the Facilities terminates; and
(ii) all Borrowings and other indebtedness of the
Borrowers to any of the Lenders and/or to the Agents
in connection with this Agreement are,
notwithstanding anything in this Agreement to the
contrary, immediately due and payable without further
demand or other notice of any kind, all of which are
expressly waived by the Borrowers and Guarantors, and
the Borrowers shall immediately:
(A) pay to the Canadian Administrative Agent
and/or the U.S. Administrative Agent, as the
case may be, the amount so declared to be
due and payable (except for the Principal
Amount of the Bankers' Acceptances then
issued and outstanding);
(B) pay to the Canadian Administrative Agent, a
sum of money in Cdn. $ equal to such amount
which the Canadian Administrative Agent
shall establish as being the amount which if
invested in certificates of deposit or
similar money market instruments issued by
the Canadian Administrative Agent will,
together with the yield derived from such
investments (the sum of such amount and such
yield the "Amount"), equal the Principal
Amount of all Bankers' Acceptances then
issued and outstanding. The Canadian
Administrative Agent shall, promptly upon
receipt of the Amount distribute among the
Lenders the Amount or the applicable portion
thereof for such Bankers' Acceptances; and
(C) if so requested by the Canadian
Administrative Agent or the U.S.
Administrative Agent, as the case may be,
pay to such Agent an amount in immediately
available funds (which funds shall be held
as collateral pursuant to arrangements
satisfactory to such Agent)
<PAGE>
- 80 -
equal to the aggregate amount available for
drawing under all Letters of Credit then
outstanding.
9.2 SECURITY
(a) Upon the occurrence of an Event of Default, the Security held
by the Collateral Agent and/or any Lender shall become
immediately enforceable and the Majority Lenders may, in their
absolute discretion, instruct the Collateral Agent or, in
respect of any Security held by any Lender directly, such
Lender, to take any and all steps in order to enforce and
realize upon the Security, in whole or in part.
(b) The Borrowers' obligations and liabilities under this
Agreement are in no way affected or diminished in the event of
any such enforcement of or realization upon any Security by
the Collateral Agent or any such Lender.
9.3 REMEDIES NOT EXCLUSIVE
The Borrowers and the Guarantors expressly agree that the rights and
remedies of the Agents and the Lenders under this Agreement and the Security are
cumulative and in addition to, and not in substitution for, any rights or
remedies provided by law; any single or partial exercise by an Agent or any
Lender of any right or remedy for a default or breach of any term, covenant,
condition or agreement in this Agreement does not affect its or their rights and
does not waive, alter, affect, or prejudice any other right or remedy to which
an Agent or the Lenders may be lawfully entitled for the same default or breach.
Any waiver by an Agent or any of the Lenders of the strict observance of,
performance of or compliance with any term, covenant, condition or agreement of
this Agreement, and any indulgence by any Agent or any of the Lenders is not a
waiver of that or any subsequent default.
9.4 SET-OFF
In addition to any rights now or hereafter granted under applicable law
and not by way of limitation of any such rights, each of the Lenders is
authorized during an Event of Default which is continuing, without notice to the
Borrowers, any Guarantor or to any other Person, any such notice being expressly
waived by the Borrowers and each Guarantor, to set-off and to appropriate and to
apply any and all deposits, matured or unmatured, general or special and any
other indebtedness at any time held by or owing by each of the Lenders to or for
the credit of or the account of any of the Borrowers or any Guarantor against
and on account of the obligations and liabilities of the Borrowers and the
Guarantors due and payable to each of the Lenders under this Agreement,
including without limitation, all claims of any nature or description arising
out of or connected with this Agreement.
<PAGE>
- 81 -
ARTICLE X
PAYMENTS
10.1 PAYMENTS TO AGENTS
(a) All payments to be made by the Canadian Borrower in connection
with this Agreement shall be made in funds having same day
value to the Canadian Administrative Agent, for its own
account or for the account of the Canadian Lenders, at
Canadian Imperial Bank of Commerce, International, Toronto, in
favour of Dresdner Bank Canada, Toronto, Account No. 650-0811
for CDN$, at Dresdner Bank AG, New York, U1D 143039, in favour
of Dresdner Bank Canada for US$, or at any other office or
account designated by the Canadian Administrative Agent. Any
such payment shall be made on the date upon which such payment
is due, in accordance with the terms hereof, no later than
10:00 a.m. Any such payment shall be a good discharge to the
Canadian Borrower for such payment and, if any such payment is
for the account of the Lenders, the Canadian Administrative
Agent shall hold the amount so paid "in trust" for the Lenders
until distributed to them in accordance with this Agreement.
(b) All payments to be made by the U.S. Borrowers in connection
with this Agreement shall be made in funds having same day
value to the U.S. Administrative Agent, for the account of the
U.S. Lenders, at Dresdner Bank AG, New York, U1D 143039, or at
any other office or account designated by the U.S.
Administrative Agent. Any such payment shall be made on the
date upon which such payment is due, in accordance with the
terms hereof, no later than 10:00 a.m. Any such payment shall
be a good discharge to the U.S. Borrowers for such payment
and, if any such payment is for the account of the U.S.
Lenders, the U.S. Administrative Agent shall hold the amount
so paid "in trust" for the U.S. Lenders until distributed to
them in accordance with this Agreement.
(c) Whenever a payment is due on a day which is not a Business
Day, the day for payment is the following Business Day.
10.2 PAYMENTS BY LENDERS TO AGENTS
All payments to be made by any Lender to an Agent in connection with
Borrowings shall be made in funds having same day value to such Agent, for the
applicable Borrower's applicable Cdn. $ or U.S. $ account (unless otherwise
specified), at the branch, office or account mentioned in or designated under
Section 10.1 (a) or (b) and by the time designated therein.
<PAGE>
- 82 -
10.3 PAYMENTS BY AGENTS TO BORROWERS
Any payment received by an Agent for the account of a Borrower shall be
paid in funds having same day value to such Borrower by such Agent on the date
of receipt or, if such date is not a Business Day, on the next Business Day, to
the Canadian Borrower's Operating Accounts or each U.S. Borrower's Operating
Account, as the case may be, at the same branch, or to such other accounts as a
Borrower may designate.
10.4 DISTRIBUTION TO LENDERS AND APPLICATION OF PAYMENTS
(a) Except as otherwise indicated herein, all payments made to an
Agent by a Borrower for the account of the Lenders in
connection herewith shall be distributed the same day by such
Agent in funds having same day value among the Lenders to the
accounts last designated in writing by such Lenders
respectively to such Agent pro rata, in accordance with their
respective Participations with respect to the Loans, Bankers'
Acceptances or Letters of Credit in respect of which any such
payment is made.
(b) Any amounts so distributed shall be applied by the Lenders as
follows:
(i) to amounts due pursuant to Articles VII or XI;
(ii) to amounts due pursuant to Articles XII;
(iii) to amounts due pursuant to Article IV; and
(iv) to any other amounts due pursuant to this Agreement.
10.5 NO SET-OFF OR COUNTERCLAIM
All payments by a Borrower or any Guarantor shall be made free and
clear of and without any deduction for or on account of any set-off or
counterclaim.
10.6 NON-RECEIPT BY AGENTS
Where a sum is to be paid hereunder to an Agent for the account of
another party hereto, such Agent shall not be obliged to make the same available
to that other party hereto until it has been able to establish that it has
actually received such sum, but if it does pay out a sum and it proves to be the
case that it had not actually received the sum it paid out, then the party
hereto to whom such sum was so made available shall on request ensure that the
amount so made available is refunded to such Agent and shall on demand indemnify
such Agent against any cost or loss it may have suffered or incurred by reason
of its having paid out such sum prior to its having received such sum.
<PAGE>
- 83 -
10.7 WHEN DUE DATE NOT SPECIFIED
Whenever this Agreement does not provide a date when any
amount payable hereunder shall be due and payable such amount shall be due and
payable on the 5th Business Day following written notice or demand for payment
thereof by an Agent or any Lender save that nothing hereinbefore provided shall
in any way affect or alter the rights and remedies available to the Agents and
any Lender under Article IX.
10.8 AGENTS' AUTHORITY TO DEBIT
In respect of all amounts payable by a Borrower under this
Agreement, the Borrowers and each Unlimited Guarantor hereby authorize and
instruct the Agents, as applicable, to debit, from time to time when such
amounts are due and payable, the account or accounts designated pursuant to
Section 10.3 and all other accounts of the applicable Borrower or Unlimited
Guarantor, whether such accounts are maintained with an Agent, an Account Bank
or otherwise, for the purpose of satisfying payment thereof.
ARTICLE XI
EXPENSES
11.1 PAYMENT OF EXPENSES
Whether or not an Event of Default exists, the Borrowers
shall, jointly and severally:
(a) pay (i) all reasonable out-of-pocket expenses of the
Agents and the Lead Arranger incurred in the
preparation, negotiation, execution and delivery of
this Agreement, the Security and all other documents
relating hereto including, without limitation, legal
fees and out-of-pocket expenses of Lenders' Counsel
and their agents and (ii) all other reasonable
out-of- pocket expenses of the Agents, the Lead
Arranger, the Co-Arrangers and the Managers incurred
in connection with the establishment and maintenance
of the Facilities including, without limitation,
environmental and other consultants' fees and
expenses;
(b) pay all reasonable out-of-pocket expenses of the
Agents incurred in the amendment or modification of
this Agreement or documents (including waivers or
consents) relating thereto at a Borrower's request
(whether or not any such amendment or modification is
actually consummated) including without limitation,
legal fees and out-of-pocket expenses of Lenders'
Counsel and their agents;
<PAGE>
- 84 -
(c) pay all reasonable out-of-pocket expenses of the
Agents and the Lenders incurred in the enforcement
and preservation of any of their rights under this
Agreement or any Security, including, without
limitation, legal fees and out-of-pocket expenses of
Lenders' Counsel or other counsel and their agents;
and
(d) indemnify the Agents and the Lenders from all losses,
costs, damages, out-of-pocket expenses and
liabilities which any Agent or any Lender sustains or
incurs (including, without limitation, any loss of
profit or expenses any Lender incurs by reason of the
liquidation or redeployment of deposits or other
funds acquired by such Lender to maintain Borrowings
or any interest or other charges payable by such
Lender to other lenders of funds borrowed in order to
make, to fund or to maintain the Loans or to maintain
any amount in default) as a consequence of (I) any
prepayment (it being understood that the mandatory
repayments to be made pursuant to Section 3.1 do not
constitute prepayments), (II) any acceleration of the
payment of Borrowings pursuant to Section 9.1 or 17.8
or (III) any default by a Borrower under any of the
provisions of this Agreement including, without
limitation, a failure to borrow on a Drawdown Date or
to issue Bankers' Acceptances on an Acceptance Date,
a failure to pay interest on, or principal amounts
of, the Loans on the dates due, the failure to make a
payment on the specified date or the failure to make
a payment in accordance with this Agreement or any
misrepresentation by a Borrower contained in or
delivered in writing in connection with this
Agreement. The certificate of an officer or manager
of any Agent or any such Lender setting forth the
amount of any such losses, damages, expenses and
liabilities shall constitute, absent manifest error,
prima facie evidence of any such amount and any Agent
shall debit, from any Borrower's accounts, the amount
stipulated in the certificate in accordance with
Section 10.8. The affected Agent or Lender shall also
provide to the affected Borrower a statement setting
out the basis for the calculation of such amount.
11.2 SURVIVAL
Without prejudice to the survival or termination of any other
agreement of the Borrowers under this Agreement, the obligations of the
Borrowers under Section 11.1 survive the repayment of all the Borrowings and the
termination of the Commitments.
11.3 ENVIRONMENTAL INDEMNITY
(a) Subject to the limitations in this Section 11.3, the
Borrowers agree to and do hereby, jointly and
severally, indemnify and save harmless the Agents
<PAGE>
- 85 -
and the Lenders and their officers, directors,
employees, agents and shareholders in such capacities
(the "Indemnified Parties") from and against any and
all losses, damages, costs and expenses of any and
every nature and kind whatsoever which at any time or
from time to time may be paid by or incurred by them
(without duplication and net of Tax Recoveries by any
of the Indemnified Parties) for, with respect to, or
as a direct or indirect result of the disposal,
refining, generation, manufacture, production,
storage, handling, presence, treatment, transfer,
release, processing or transportation of any
Hazardous Material in, on or under any property of
whatsoever nature or kind of a Borrower, or any
Subsidiary thereof, or the discharge, emission, spill
or disposal from such property into or upon any land,
the atmosphere or any watercourse, body of water or
wetland of any Hazardous Material where it has been
proven that the source of the Hazardous Material is
the said property to the extent that such losses,
damages, costs and expenses arise out of the
relationship between the Indemnified Parties and a
Borrower reflected herein including,without
limitation:
(i) the cost of defending and/or counterclaiming
or claiming over against third parties in
respect of any action or matter referred to
above;
(ii) any cost, liability or damage arising out of
any settlement of any action referred to
above to which any Indemnified Party is a
party; and
(iii) costs of any cleanup in connection with any
matter referred to above.
(b) In the event that any claim, action, order, suit or
proceeding, including, without limiting the
generality of the foregoing, any inquiry or
investigation (whether formal or informal) is brought
or instituted against any Indemnified Party, the
Indemnified Party shall promptly notify the Borrowers
and the Borrowers shall promptly retain counsel who
shall be reasonably satisfactory to the Indemnified
Parties to represent the Indemnified Parties in such
claim, action, order, suit or proceeding and the
Borrowers shall pay all of the reasonable fees and
disbursements of such counsel relating to such claim,
action, order, suit or proceeding.
(c) In any such claim, action, order, suit or proceeding,
the Indemnified Parties shall have the rights to
retain other counsel to act on their behalf, provided
that the fees and disbursements of such other counsel
shall be paid by the Indemnified Parties unless: (i)
the Borrowers and the
<PAGE>
- 86 -
Indemnified Parties shall have mutually agreed to the
retention of such other counsel; or (ii) the named
parties to any such claim, action, order, suit or
proceeding (including any added, third or impleaded
parties) include the Borrowers and the Indemnified
Parties and representation of all such parties by the
same counsel would be inappropriate due to actual or
potential differing interests between them (such as
the availability of different defences).
(d) Notwithstanding anything contained in this Section
11.3, none of the Indemnified Parties shall agree to
any settlement of any such claim, action, order, suit
or proceeding unless the Borrowers shall have
consented in writing thereto, and the Borrowers shall
not be liable for any settlement of any such claim,
action, order, suit or proceeding unless they have
consented in writing thereto. The Borrowers shall be
entitled to settle any such claim, action, order,
suit or proceeding on any terms it deems appropriate.
(e) The provisions of this Section 11.3 shall survive the
Final Maturity Date and the repayment of all
Borrowings hereunder and the satisfaction by the
Borrowers of all other obligations hereunder.
(f) For the purposes of this Section 11.3, "Tax
Recoveries" of any Person in respect of a payment or
outlay made or incurred by such Person means the
Taxes that would be saved or recovered by such Person
and the creation or increase of a loss or credit for
Tax purposes which may be used to reduce Taxes
payable by such Person.
ARTICLE XII
FEES
12.1 COMMITMENT FEES
(a) From and including the date hereof to and including
the Final Maturity Date, the Canadian Borrower shall
pay to the Canadian Administrative Agent, for the
account of the Canadian Lenders to be allocated among
and paid to such Lenders pro rata in accordance with
such Lenders' respective Commitments, a commitment
fee equal to .375% per annum on the daily average
unutilized portion of the Commitments in respect of
the Canadian Acquisition Facility for each Quarter.
<PAGE>
- 87 -
(b) From and including the date hereof to and including
the Final Maturity Date, the U.S. Borrowers shall pay
to the U.S. Administrative Agent, for the account of
the U.S. Lenders to be allocated among and paid to
such Lenders pro rata in accordance with such
Lenders' respective Commitments, a commitment fee
equal to .375% per annum on the daily average
unutilized portion of the Commitments in respect of
the U.S. Acquisition Facility for each Quarter.
(c) Such fees referred to in Section 12.1(a) and (b)
shall be debited, in the case of the Canadian
Borrower by the Canadian Administrative Agent from
the Canadian Borrower's Cdn. $ account designated
under Section 10.3 on the first Business Day of each
Fiscal Quarter and in the case of the U.S. Borrowers
by the U.S. Administrative Agent from each such U.S.
Borrower's Operating Account designated under Section
10.3 on the first Business Day of each Fiscal
Quarter. The Canadian Administrative Agent or the
U.S. Administrative Agent, as the case may be, shall
furnish to the respective Borrowers written notice
thereof setting out the details of such calculation
on or before the 10th Business Day following the end
of each Quarter.
ARTICLE XIII
THE AGENTS AND THE LEAD ARRANGER
13.1 AGENTS
Each Lender hereby appoints each Agent to act as its agent, as
specified hereunder, in connection with this Agreement and any matter
contemplated hereunder and authorizes irrevocably each Agent for the duration of
such appointment to exercise such rights, powers and discretions as are
delegated to such Agent pursuant to this Agreement and the Security together
with all such rights, powers and discretions as are incidental hereto or
thereto. Each Agent shall have only those duties and responsibilities which are
expressly specified in this Agreement and the Security, and it may perform such
duties by or through its agents or employees. This Agreement and the Security
shall not place any Agent under any fiduciary duties in respect of any Lender.
Each Agent and any other Person to whom an Agent may delegate duties or
responsibilities as permitted under Section 13.2 (h) shall enjoy the same
benefits, rights and protections as those provided to the Agents under this
Article "mutatis mutandis".
<PAGE>
- 88 -
13.2 AGENTS' RESPONSIBILITY
Each Agent may:
(a) assume, until it is notified in writing or has actual notice
or actual knowledge to the contrary, that:
(i) any representation made by a Borrower or any of its
Subsidiaries in or in connection with any of this
Agreement, any notice or other document, instrument
or certificate is true;
(ii) no Event of Default has occurred; and
(iii) each Borrower or a Subsidiary of a Borrower is not in
breach of or in default under, its obligations under
any of this Agreement or the Security;
and each Agent may also:
(b) unless such Agent has actual knowledge or actual notice to the
contrary, assume that each Lender's address is that identified
with its signature below until it has received from such
Lender a notice designating some other office of such Lender
as its address and act upon any such notice until the same is
superseded by a further such notice;
(c) engage and pay for the advice or services of any lawyers,
accountants or other experts whose advice or services may to
it seem necessary, expedient or desirable and rely upon any
advice so obtained;
(d) unless such Agent has actual knowledge or actual notice to the
contrary, rely as to matters of fact which might reasonably be
expected to be within the knowledge of a Borrower or any
Subsidiary of a Borrower upon a statement signed by or on
behalf of a Borrower or any Subsidiary of a Borrower;
(e) unless such Agent has actual knowledge or actual notice to the
contrary, rely upon any communication or document believed by
it to be genuine;
(f) refrain from exercising any right, power or discretion vested
in it under this Agreement or any Security unless and until
instructed by the Majority Lenders as to whether or not such
right, power or discretion is to be exercised and, if it is to
be exercised, as to the manner in which it should be
exercised;
(g) refrain from exercising any right, power or discretion vested
in it which would or might in its opinion be contrary to any
law of any jurisdiction or any directive or
<PAGE>
- 89 -
otherwise render it liable to any Person, and may do anything
which is in its opinion necessary to comply with any such law
or directive;
(h) retain for its own benefit, and without liability to account
for, any fee or other sum receivable by it for its own
account;
(i) accept deposits from, lend money to, provide any advisory or
other services to or engage in any kind of banking or other
business with any party (including any Affiliate thereof) to
this Agreement; and
(j) refrain from acting in accordance with any instructions of the
Majority Lenders to begin any legal action or proceeding
arising out of or in connection with any of this Agreement or
any Bankers' Acceptance, or take any steps to enforce or
realize upon any Security, until it shall have received such
security as it may require (whether by way of payment in
advance or otherwise) against all costs, claims, expenses
(including legal fees) and liabilities which it will or may
expend or incur in complying with such instruction.
13.3 AGENTS' DUTIES
Each Agent shall:
(a) promptly upon receipt thereof, inform each Lender of the
contents of any notice, document, request or other information
received by it in its capacity as an Agent hereunder from a
Borrower or any Subsidiary of a Borrower;
(b) promptly notify each Lender of the occurrence of any Event of
Default or any default (of which a Borrower is aware which,
with the giving of notice or passage of time or both, would
constitute an Event of Default) by a Borrower or a Guarantor
in the due performance of its obligations under this
Agreement, any Security or any document incidental thereto to
which it is expressed to be a party and of which the Agent has
actual knowledge or actual notice;
(c) with the prior consent of the Borrowers (such consent not to
be unreasonably withheld or delayed) and the Majority Lenders,
(i) appoint a Lender or Affiliate of a Lender as a Reference
Bank in replacement of any Reference Bank which ceases to be a
Lender or an Affiliate of a Lender and (ii) with the prior
consent of the Borrowers (such consent not to be unreasonably
withheld or delayed) appoint a bank or financial institution
as an Account Bank in replacement of an existing Account Bank;
(d) each time the Borrowers request the prior written consent of
the Majority Lenders, use its best efforts to obtain and
communicate to the Borrowers the
<PAGE>
- 90 -
response of the Majority Lenders in a reasonable and timely
manner having due regard to the nature and circumstances of
the request;
(e) subject to the foregoing provisions of this Section 13.3, act
in accordance with any instructions given to it by the
Majority Lenders and, in particular, only take steps to
enforce or realize upon Security in accordance with the
instructions or delegated authority of the Majority Lenders;
and
(f) if so instructed by the Majority Lenders, refrain from
exercising any right, power or discretion vested in it under
this Agreement, the Security or any document incidental
thereto.
13.4 PROTECTION OF AGENTS, LEAD ARRANGER, CO-ARRANGERS AND MANAGERS
Notwithstanding anything to the contrary expressed or implied herein,
each of the Agents, the Lead Arranger, the Co-Arrangers and the Managers shall
not:
(a) be bound to enquire as to:
(i) whether any representation made by a Borrower, a
Guarantor or any of their Subsidiaries in or in
connection with this Agreement, the Security or any
document incidental thereto is true;
(ii) the occurrence or otherwise of any Event of Default;
(iii) the performance by a Borrower, a Guarantor or any of
their Subsidiaries of its obligations under any of
this Agreement, the Security or any document
incidental thereto;
(iv) any breach of or default by a Borrower, a Guarantor
or any of their Subsidiaries of or under its
obligations under this Agreement, the Security or any
document incidental thereto; or
(v) the use or application by a Borrower of any of the
proceeds of the Facilities;
(b) be bound to account to any Lender for any sum or the profit
element of any sum received by it for its own account;
(c) be bound to disclose to any Person any information relating to
a Borrower or a Guarantor if such disclosure would or might in
its opinion constitute a breach of any law or regulation or be
otherwise actionable at the suit of any Person; or
<PAGE>
- 91 -
(d) accept any responsibility for the accuracy and/or completeness
of any information supplied in connection herewith or for the
legality, validity, effectiveness, adequacy or enforceability
of this Agreement, any Bankers' Acceptance or any document
incidental hereto or thereto and no Agent shall be under any
liability to any Lender as a result of taking or omitting to
take any action in relation to this Agreement, any Bankers'
Acceptance, the Security or any document incidental hereto or
thereto save in the case of gross negligence or wilful
misconduct, and each of the Lenders agrees that it will not
assert or seek to assert against any director, officer,
employee or agent of any Agent or the Lead Arranger, any Co-
Arranger or any Manager any claim it might have against any of
them in respect of the matters referred to in this Section
13.4.
13.5 INDEMNIFICATION OF AGENTS
Each Lender shall, on demand by an Agent, indemnify such Agent pro rata
in accordance with such Lender's Participation at the time of such demand
against any and all costs, claims, reasonable expenses (including legal fees)
and liabilities which such Agent may incur (and which have not been reimbursed
by a Borrower), otherwise than by reason of its own gross negligence or wilful
misconduct, in acting in its capacity as an Agent under this Agreement, any
Bankers' Acceptance, the Security or any document incidental hereto or thereto.
13.6 TERMINATION OR RESIGNATION OF AGENT
(a) Notwithstanding the appointment of an Agent, the Majority
Lenders may (with the consent of the Canadian Borrower prior
to an Event of Default and without requiring such consent
after the occurrence of an Event of Default which is
continuing; such consent not to be unreasonably withheld or
delayed), upon giving an Agent 90 days prior written notice to
such effect, terminate an Agent's appointment hereunder.
(b) An Agent may resign its appointment hereunder at any time
without assigning any reason therefor by giving written notice
to such effect to each of the other parties hereto.
(c) In the event of any such termination or resignation, the
Majority Lenders shall appoint a successor Agent (with the
consent of the Canadian Borrower prior to an Event of Default
and without requiring such consent after the occurrence of an
Event of Default which is continuing, such consent not to be
unreasonably withheld or delayed). The Canadian Administrative
Agent or the U.S. Administrative Agent, as the case may be,
(if it is the Agent being replaced) shall deliver copies of
the Accounts to such successor and the retiring Agent shall be
discharged from any further obligation hereunder but shall
remain entitled to the benefit of the provisions of this
Article XIII and the Agent's successor and each
<PAGE>
- 92 -
of the other parties hereto shall have the same rights and
obligations among themselves as they would have had if such
successor originally had been a party hereto as an Agent.
13.7 RIGHTS OF AN AGENT AS LENDER
With respect to its Commitment and its Participation, and to Bankers'
Acceptances and Letters of Credit, an Agent shall have the same rights and
powers under this Agreement and any Bankers' Acceptances as any other Lender,
and it may exercise such rights and powers as though it were not performing the
duties and functions delegated to it as an Agent hereunder, and the term
"Lender" or any other similar term shall, unless the context otherwise requires,
include any Agent in its capacity as a Lender.
13.8 AUTHORIZED WAIVERS, VARIATIONS AND OMISSIONS
If so authorized in writing by the Majority Lenders, the Collateral
Agent may grant waivers, consents, vary the terms of this Agreement and do or
omit to do all acts and things in connection herewith or therewith. Except with
the prior written agreement of all the Lenders, nothing in this Section 13.8
shall authorize:
(a) any decrease in the Acceptance Fee, the COF Margin, the Libor
Margin, the Letter of Credit Fee, the Prime Margin, the
Alternate Base Rate Margin or the Commitment Fees;
(b) any extension of the date for, or alteration in the amount,
currency or mode of calculation or computation of any payment
of principal or interest or other amount;
(c) any increase in the Commitment of a Lender or subject any
Lender to any additional obligations hereunder;
(d) any amendments to Section 3.8;
(e) any change in the terms of Article IX;
(f) any change in the definition of Majority Lenders;
(g) the release or discharge of a Borrower or a Guarantor;
provided however and notwithstanding the foregoing, the
Collateral Agent may, without the consent of the Lenders,
grant partial releases and discharges of the Security in
connection with any sale, lease, transfer, assignment,
disposition or conveyance by the Canadian Borrower and/or any
of its Subsidiaries of properties or assets permitted under
Section 8.2(d) hereof; or
<PAGE>
- 93 -
(h) any amendments to this Section 13.8.
13.9 FINANCIAL INFORMATION CONCERNING THE BORROWERS OR GUARANTORS
Subject to Section 13.3 (a), no Agent nor the Lead Arranger shall have
any duty or responsibility either initially or on a continuing basis to provide
any Lender with any credit or other information with respect to the financial
condition and affairs of the Borrowers or Guarantors.
13.10 KNOWLEDGE OF FINANCIAL SITUATION OF BORROWERS
Each of the Lenders represents and warrants to the Agents, the Lead
Arranger, the Co- Arrangers and the Managers that it has made its own
independent investigation of the financial condition and affairs of the
Borrowers and each Guarantor in connection with the making and continuation of
its Participation in this Agreement and that it has not relied on any
information provided to it by any Agent, the Lead Arranger, any Co-Arranger or
any Manager in connection herewith or therewith, and each represents and
warrants to the Agents and the Lead Arranger, the Co-Arrangers and the Managers
that it shall continue to make its own appraisal of the creditworthiness of the
Borrowers and the Guarantors from time to time.
13.11 LEGAL PROCEEDINGS
No Agent shall be obligated to take any legal proceedings against a
Borrower or any other Person for the recovery of any amount due under this
Agreement or under any Bankers' Acceptances. No Lender shall bring legal
proceedings against a Borrower, any Guarantor or Subsidiary hereunder or in
connection herewith, or exercise any right arising hereunder or in connection
herewith over the property and assets of a Borrower, any Guarantor or any
Subsidiary, without the prior written consent of the Majority Lenders.
13.12 CAPACITY AS AGENT
In performing its functions and duties under this Agreement, each Agent
shall act solely as the agent of the Lenders and shall not assume, and shall not
be deemed to have assumed, any obligation as agent or trustee for a Borrower or
any other Person. No Agent shall be under any liability or responsibility of any
kind to the Borrowers, the Lenders or to any other Person arising out of or in
relation to any failure or delay in performance or breach by any Lender or
Lenders or, as the case may be, by the Borrowers, any Guarantor or any other
Person (other than such Agent in respect of its own gross negligence or wilful
misconduct) pursuant to or in any way in connection with this Agreement.
<PAGE>
- 94 -
13.13 CAPACITY AS ARRANGERS
The Borrowers, each Lender and each Agent hereby agree and confirm that
the Lead Arranger, the Co-Arrangers and the Managers have performed their
functions and duties in connection with the arrangement of the Facilities and
shall not be under any liability or responsibility of any kind from and after
the date hereof to the Borrowers, the Guarantors, the Lenders, the Agents or any
of them arising out of or in relation to the arrangement of the Facilities or
this Agreement.
13.14 DEPOSITS OR LOANS RESPECTING THE BORROWERS
Each Agent and each of the Lenders may accept deposits from, lend money
to and generally engage in any kind of banking or other business with the
Borrowers or the Guarantors without liability to account to any Agent or any
Lender.
ARTICLE XIV
ASSIGNMENTS AND TRANSFERS
14.1 BENEFIT OF AGREEMENT
This Agreement shall be binding upon and enure to the benefit of each
party hereto and its successors and permitted assigns.
14.2 ASSIGNMENTS AND TRANSFERS BY A BORROWER OR AN UNLIMITED GUARANTOR
No Borrower nor the Unlimited Guarantor shall be entitled to assign or
transfer all or any of its rights, benefits and obligations hereunder.
14.3 ASSIGNMENTS AND TRANSFERS BY A LENDER
(a) Subject to Section 14.4, any Lender may, at its cost, assign or
transfer, with:
(i) the consent of the Canadian Administrative Agent with
respect to a Canadian Lender and the U.S.
Administrative Agent with respect to a U.S. Lender
(which consents shall not be unreasonably withheld or
delayed); and
(ii) (unless there exists an Event of Default) the consent
of the Canadian Borrower (which shall not be
unreasonably withheld or delayed)
<PAGE>
- 95 -
and upon such terms and conditions as such Lender shall determine, all
or any portion of its rights, benefits and/or obligations hereunder in
relation to a portion of such Lender's Commitment of not less than,
with respect to the Canadian Facilities, Cdn.$1,000,000 and with
respect to the U.S. Facilities, U.S. $10,000,000, to an assignee or a
transferee which in the case of assignments by a Canadian Lender is a
recognized financial institution resident in Canada (a "Canadian
Assignee") and in the case of assignments by a U.S. Lender, is a Person
which can comply with the provisions of Section 7.9(a) of this
Agreement and provides evidence thereof satisfactory to the U.S.
Borrowers acting reasonably and is in the business of making loans (a
"U.S. Assignee"); provided that in the case of an assignment or
transfer by a Canadian Lender there is a corresponding assignment or
transfer by the related U.S. Lender (which may, in certain
circumstances be the same institution) to a U.S. Assignee related to
the Canadian Assignee (which may in certain circumstances be the same
institution) of an amount which bears the same proportion to the
related U.S. Lender's Commitment as the amount assigned or transferred
by the Canadian Lender bears to the Canadian Lender's Commitment, and
vice versa in the case of an assignment or transfer by a U.S. Lender.
(b) Where obligations of any Lender are so assigned or
transferred, the assignee or transferee shall confirm in
writing to the Borrowers and the Canadian Administrative Agent
and the U.S. Administrative Agent, as the case may be, prior
to such assignment or transfer taking effect, that it shall be
bound towards the Borrowers and the Agents by the terms hereof
relating to such obligations. On the assignment and transfer
being made and such written confirmation, as aforesaid, being
delivered to the Borrowers and such Agent, such Lender shall
be relieved of its obligations to the extent of such
assignment or transfer thereof and such assignee or transferee
shall become a Lender for all purposes of this Agreement and
the related documents and transactions provided herein or
contemplated thereby to the extent of such assigned or
transferred interest.
14.4 TRANSFER CERTIFICATE
If any Lender wishes to assign or transfer all or any of its rights,
benefits and obligations hereunder in accordance with Section 14.3, then such
assignment or transfer shall be effected by the delivery by such Lender to the
Canadian Administrative Agent and the U.S. Administrative Agent and the
Borrowers of a duly completed and executed Transfer Certificate whereupon, to
the extent that in such Transfer Certificate the Lenders party thereto seeks to
assign or transfer its rights and obligations hereunder:
(a) the applicable Borrower(s) and such Lender shall each be
released from further obligations to the other hereunder, and
their respective rights against each other shall be cancelled
(such rights and obligations being referred to in this Section
14.4 as "discharged rights and obligations");
<PAGE>
- 96 -
(b) the applicable Borrower(s) and the Transferee party thereto
shall each assume obligations towards and acquire rights in
respect of each other which differ from the discharged rights
and obligations only insofar as the obligations so assumed and
the rights so acquired by the Borrowers are owed to and
constituted by claims against such Transferee and not such
Lender, so that the Borrowers and the Transferee shall have
the same rights and obligations towards each other which they
would have acquired had the Transferee been an original party
hereto;
(c) the Agents, the Transferee and the other Lenders shall acquire
the same rights and assume the same obligations between
themselves as they would have acquired and assumed had the
Transferee been an original party hereto with the obligations
assumed and the rights acquired by it as a result of such
assignment or transfer.
(d) the amounts payable by any Borrower under this Agreement shall
not increase, whether in respect of withholding on account of
taxes or otherwise, as a result of any such assignment or
transfer to a Lender which is, or is deemed to be (i) in the
case of the Canadian Facilities, not resident in Canada for
the purposes of the Income Tax Act (Canada) with respect to
any such Transferee becoming a Canadian Lender or (ii) in the
case of the U.S. Facilities, is not a resident of the U.S. for
the purpose of the Code with respect to any such Transferee
becoming a U.S. Lender.
14.5 NOTICE
The Canadian Administrative Agent or the U.S. Administrative Agent, as
the case may be, shall notify promptly the appropriate parties hereto of the
receipt by it of any Transfer Certificate, and shall promptly deliver a copy of
such Transfer Certificate to the Borrowers.
14.6 SUB-PARTICIPATIONS
Any Lender may, at its own cost, grant one or more sub-participations
in all or any portion of its rights, benefits and/or obligations hereunder to
third parties, without the consent of the Borrowers, and upon such terms and
conditions as such Lender shall determine, provided that, notwithstanding any
such sub-participation, such Lender shall remain, in so far as the other parties
hereto are concerned, entitled to its rights and benefits hereunder and bound by
its obligations hereunder and the Borrowers, the other Lenders and the Agents
shall not be obliged to recognize any such third party as having the rights
against any of them which it would have if it had been a party hereto, and
provided further that in the case of any sub-participation by a Canadian Lender
to a Canadian participant (a "Canadian Participant"), there shall be a
corresponding sub-participation by the related U.S. Lender (which may in certain
circumstances be the same institution) to a U.S. participant (a "U.S.
Participant") related to the Canadian Participant of an amount which has the
same proportion to the related U.S. Lender's Commitment as the amount
sub-participated by the Canadian Lender has to the Canadian
<PAGE>
- 97 -
Lender's Commitment, and vice versa in the case of sub-participation by a U.S.
Lender. For greater certainty, the Borrowers shall not be obligated to pay, in
respect of any rights, benefits and/or obligations in which a Lender has granted
one or more such sub-participations, to such Lender or to any sub-participant
thereof any amount(s) pursuant to Article VII of this Agreement which is (are)
greater than the amount(s), if any, which the Borrowers would otherwise have
been obligated to pay in respect of such rights, benefits and/or obligations to
such Lender, had such sub-participation(s) not been granted.
14.7 DISCLOSURE
Each Lender is hereby authorized by the Borrowers and each Unlimited
Guarantor to disclose to any proposed assignee, Transferee or sub-participant
information in such Lender's possession relating to the Borrowers and each
Unlimited Guarantor provided that such proposed assignee, transferee or
sub-participant shall have executed and delivered to such Lender a written
undertaking to keep confidential any such information which is not publicly
available.
14.8 ASSIGNMENT TO FEDERAL RESERVE BANK
Notwithstanding anything to the contrary provided herein, without
seeking or obtaining the consent of any party, any U.S. Lender may at any time
assign and transfer all or any portion of its rights under this Agreement and
any promissory notes issued to such U.S. Lender hereunder to a Federal Reserve
Bank in the United States. No such assignment shall release such Lender from its
obligations hereunder.
ARTICLE XV
GOVERNING LAW, COURTS AND JUDGMENT CURRENCY
15.1 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario and the laws of Canada applicable therein.
15.2 COURTS
Any legal action or proceeding with respect to this Agreement or any
Security against a Borrower or the Unlimited Guarantor may be brought in the
courts of the Province of Ontario, which courts the parties hereto acknowledge
irrevocably to be a convenient forum for the resolution of any such legal action
or proceeding. Each Borrower and each Unlimited Guarantor hereby accepts, for
itself and in respect of its assets and revenues, generally and unconditionally
the non-exclusive jurisdiction of the aforesaid courts.
<PAGE>
- 98 -
Each Unlimited Guarantor and each of the U.S. Borrowers hereby
irrevocably designates and appoints the Canadian Borrower (the "Process Agent")
at its registered office from time to time and of which the Canadian
Administrative Agent shall have been notified, which office is currently located
at 1140 Bay Street, Suite 4000, Toronto, Ontario, M5S 2B4, as the authorized
agent of each of the U.S. Borrowers and each Unlimited Guarantor upon which
process may be served in any suit or proceeding arising out of or in connection
with this Agreement or any Security or other documents relating hereto or
thereto which may be instituted in the Province of Ontario and agrees that
service of process on the Process Agent together with written notice of such
service to such U.S. Borrower or such Unlimited Guarantor by the Person serving
the same shall, to the extent permitted by law, be deemed in every respect to be
effective service of process on such U.S. Borrower or such Unlimited Guarantor,
as the case may be. Notwithstanding the address noted on the execution pages
hereof, process may be served on a Borrower at its registered office. However,
nothing in this Section 15.2 shall affect the right of any Agent or Lender to
serve legal process in any other manner permitted by law or affect the right of
any Agent or Lender to bring any action or proceeding against a Borrower or the
Unlimited Guarantor or their properties in the courts of any other jurisdiction
including, without limitation the State of New York.
15.3 JUDGMENT CURRENCY
(a) If for the purpose of obtaining judgment in any court it is
necessary to convert an amount due hereunder in the currency
in which it is due (the "Original Currency") into another
currency (the "Second Currency"), the rate of exchange applied
shall be that at which, in accordance with normal banking
procedures, a Lender could purchase, in the Toronto foreign
exchange market, the Original Currency with the Second
Currency on the date 2 Business Days preceding that on which
judgment is given. Each Borrower and each Unlimited Guarantor
agrees that its obligation in respect of any Original Currency
due from it to any Lender hereunder shall, notwithstanding any
judgment or payment in such other currency, be discharged only
to the extent that, on the Business Day following the date
such Lender receives payment of any sum so adjudged to be due
hereunder in the Second Currency such Lender may, in
accordance with normal banking procedures, purchase, in the
Toronto foreign exchange market the Original Currency with the
amount of the Second Currency so paid; and if the amount of
the Original Currency so purchased or could have been so
purchased is less than the amount originally due in the
Original Currency, each Borrower and each Unlimited Guarantor
agrees as a separate obligation and notwithstanding any such
payment or judgment to indemnify such Lender against such
loss.
(b) The term "rate of exchange" in this Section 15.3 means the
spot rate at which the Lender in accordance with normal
practices is able on the relevant date to purchase the
Original Currency with the Second Currency and includes any
premium and costs of exchange payable in connection with such
purchase.
<PAGE>
- 99 -
ARTICLE XVI
GUARANTORS' OBLIGATIONS
16.1 GUARANTEE
(a) The Canadian Borrower, as primary obligor and not as a surety
merely, hereby unconditionally and irrevocably guarantees to
each of the Agents and each of the Lenders the punctual
payment when due in accordance with the terms hereof of all
obligations, of whatever kind and description, of the U.S.
Borrowers and each of them to the Agents and each of the
Lenders now or hereafter existing, whether direct or indirect,
absolute or contingent, matured or unmatured, secured or
unsecured joint, several or independent pursuant to or arising
out of or under this Agreement and the Security (all such
obligations so guaranteed are referred to herein as the
"Canadian Borrower's Guaranteed Obligations").
(b) The Unlimited Guarantor hereby:
(i) unconditionally and irrevocably guarantees; and
(ii) is jointly and severally liable and obligated with
the Canadian Borrower to each of the Agents and the
Lenders for;
(A) the due and punctual payment of amounts of
principal, interest or fees in respect of
all Borrowings and all other amounts payable
to the Agents or the Lenders by the Canadian
Borrower under this Agreement, or any
portion thereof; and
(B) all other obligations of the Canadian
Borrower to the Agents or the Lenders under
this Agreement
(collectively the "Unlimited Guarantor's Guaranteed Obligations").
(c) Without in any way limiting the foregoing, each of the
Canadian Borrower and the Unlimited Guarantor hereby
unconditionally and irrevocably agrees and covenants with the
Agents and the Lenders that:
(i) the Guaranteed Obligations shall be a guarantee of
payment and not merely of collection and shall be a
primary obligation of each of the Canadian Borrower
and the Unlimited Guarantor.
<PAGE>
- 100 -
(ii) it will pay duly and punctually all its Guaranteed
Obligations under the terms of this Agreement;
(iii) its Guaranteed Obligations shall not be affected by
any act, omission or circumstances which but for this
provision might operate to release or otherwise
exonerate it from such Guaranteed Obligations or
limit or reduce or otherwise affect such Guaranteed
Obligations including without limitation and whether
or not known to it or the Lenders, or an Agent or the
Lead Arranger:
(A) any time or indulgence granted to or
composition with any Borrower or any other
Person;
(B) the variation, extension, compromise,
renewal or release of, or refusal or neglect
to perfect or enforce, any terms of this
Agreement, the Borrowings, the Security or
any rights or remedies against, or security
granted by, any Borrower or any other
Person; or
(C) any irregularity or unenforceability of any
obligations of any Borrower or any other
Person under this Agreement, the Borrowings,
any Guaranteed Obligations or any present or
future law or order of any government or
authority (whether of right or in fact)
purporting to reduce or otherwise affect any
of such obligations, it being the intent
that its Guaranteed Obligations under this
Agreement shall remain in full force and
this Agreement shall be construed
accordingly as if there were no such
irregularity, unenforceability, law or
order;
(iv) it waives any right it may have of first requiring
any Agent or any Lender, before enforcing its rights
against it, to proceed against or claim payment from
a Borrower or any other Person or enforce any
Security; and
(v) if any claim is made by an Agent or any Lender
against it under this Agreement and is not entirely
and irrevocably paid and discharged, it shall not
have the right to rank as a creditor in competition
with any Agent or any Lender in the bankruptcy,
liquidation or dissolution of a Borrower and shall
not attempt to do so until payment in full of all
indebtedness and liabilities which may be owing by
such Borrower to any Agent or Lender under this
Agreement and all Borrowings.
(vi) The Guaranteed Obligations shall survive the
repayment thereof and shall be reinstated as to any
Guaranteed Obligations incurred prior to the
<PAGE>
- 101 -
termination hereof if any payment of any Guaranteed
Obligation is at any time rescinded or must otherwise
be returned as a result of the bankruptcy, insolvency
or reorganization of any of the U.S. Borrowers,
Canadian Borrower and/or the Unlimited Guarantor, all
as though such payment had not been made.
ARTICLE XVII
MISCELLANEOUS
17.1 EQUAL RANKING OF LENDERS
The Lenders, and to the extent necessary the Borrowers, agree that any
indebtedness of a Borrower towards any of the Agents and any of the Lenders:
(a) hereunder; and
(b) under Hedging Agreements,
shall be secured by the Security and shall be recoverable by the Agents
in accordance with the terms of this Agreement and the Security and all
such obligations shall rank equally without preference or distinction
with the indebtedness of a Borrower towards any Lender hereunder or
under any Hedging Agreements.
17.2 SHARING OF INFORMATION
Each Borrower and the Unlimited Guarantor agree that the Agents and the
Lenders may share amongst themselves any information which any of them may
possess concerning any Borrower or the Unlimited Guarantor, as the case may be,
in respect of a Borrower's or the Unlimited Guarantor's undertakings,
obligations or indebtedness towards any Lender pursuant to this Agreement as
well as any payment received from a Borrower or the Unlimited Guarantor by any
Lender pursuant to this Agreement.
17.3 SEVERABILITY
If any of the provisions of this Agreement, any Article, any Section or
any Bankers' Acceptance shall be unenforceable or invalid in any jurisdiction,
the validity and enforceability of such provisions in any other jurisdiction
shall not be impaired thereby nor shall the enforceability and validity of any
other provisions of this Agreement, any Article, any Section or any Bankers'
Acceptance be impaired thereby.
<PAGE>
- 102 -
17.4 REMEDIES AND WAIVERS
No failure to exercise, and no delay in exercising, on the part of the
Agents or the Lenders or any of them, any right or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right or remedy prevent any further or other exercise thereof or the exercise of
any other right or remedy. The rights and remedies herein provided are
cumulative and not exclusive of any rights or remedies provided by law.
17.5 DIRECT OBLIGATION
Notwithstanding any other provision hereof, the Borrowers shall be
obligated directly towards the Agents and each of the Lenders in respect of the
Participation of each of the Lenders which are made available to such Borrower
as well as any other amounts which may be payable by the Borrowers pursuant to
or in connection with this Agreement or any Borrowings. The obligations of each
of the Lenders are independent from one another, are not joint and several, and
may not be increased, reduced, extinguished or otherwise affected due to the
default of another Lender pursuant hereto. Any default of any party hereto in
the performance of its obligations shall not release any of the other parties
hereto from the performance of any of its respective obligations.
17.6 NOTICES
The following provisions shall govern in respect of notices or
communications contemplated hereunder:
(a) unless otherwise stated, each communication to be made
hereunder shall be made in writing;
(b) all communications or notices to be made to:
(i) any Borrower, shall be made to the Canadian Borrower,
as provided in Section 17.6 (c); and
(ii) an Unlimited Guarantor, shall be made to such
Unlimited Guarantor with a copy to the Canadian
Borrower, as provided in Section 17.6 (c);
(c) subject to Section 17.6 (b) and to an Agent's irrevocable
right to deliver communications or notices to the Canadian
Borrower's address specified in Section 15.2, any written
communication or document to be made or delivered by one party
to another pursuant to this Agreement shall (unless otherwise
specified herein or that other party has by notice to the
Agent specified another address or facsimile number) be made
or delivered to that other Person at the address or facsimile
number identified with its signature below and shall in any
event be
<PAGE>
- 103 -
deemed to have been made or delivered or (in the case of any
other form of written communication) when left at that address
or otherwise received or, as the case may be, 10 days after
being deposited in the post first class postage prepaid in an
envelope addressed to it at that address, provided that any
communication or document to be made or delivered to any Agent
shall be effective only when received by such Agent; it is
agreed that parties shall not send communications by mail or
postal service when there is an actual or likely pending
strike or similar disruption of mail or postal services;
(d) subject to Section 17.6 (b), where any provision of this
Agreement specifically contemplates telephone communication,
such communication shall (unless otherwise specified herein or
that other party has by written notice to the Agents specified
another telephone number) be made to that other party at the
telephone number identified with its signature below; each
such telephone communication shall be expressed to be for the
attention of the officer whose name has been identified with
its signature below; and
(e) each party hereto shall confirm promptly by writing any
telephone communication made by it to another party pursuant
to this Agreement, however the absence of such confirmation
shall not affect the validity of such communication.
17.7 COUNTERPARTS
This Agreement may be executed in any number of counterparts and all of
such counterparts taken together shall be deemed to constitute one and the same
instrument.
17.8 LIMIT ON RATE OF INTEREST
(a) Notwithstanding any provision contained in this Agreement, the
Borrowers shall not be obliged to make any payments of
interest or other amounts payable to a Lender hereunder in
excess of the amount or rate which would be prohibited by
applicable law or would result in the receipt by a Lender of
interest at a criminal rate (as such terms are construed under
the Criminal Code (Canada) or other applicable law).
(b) In the event that any such payments are limited or prohibited
as provided in Section 17.8 (a), the Lenders shall have no
further obligation to make any Borrowings available hereunder
and the entire amount of Borrowings then outstanding shall
become immediately due and payable.
<PAGE>
- 104 -
17.9 NO MERGER OR NOVATION
All guarantees and Security provided to an Agent and/or the Lenders
prior to the date hereof in connection with the Original Credit Agreement, the
First Amended and Restated Credit Agreement or the indebtedness of the Canadian
Borrower thereunder remain in full force and effect, there being no novation or
merger of the Original Credit Agreement, the First Amended and Restated Credit
Agreement, such guarantees or the Security.
AS WITNESS the hands of the duly authorized representatives of
the parties hereto on the execution pages hereof as of the day and year first
before written.
