<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
CANMAX INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
CANMAX INC.
150 WEST CARPENTER FREEWAY
IRVING, TX 75039
------------------------
NOTICE OF 1998 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MONDAY, APRIL 20, 1998
------------------------
To the Shareholders of Canmax Inc.:
Notice is hereby given that the 1998 Annual Meeting of Shareholders (the
"Meeting") of Canmax Inc. (the "Company") will be held at the Four Seasons
Resort and Club, 4150 North MacArthur Blvd., Irving, Texas 75038, on Monday,
April 20, 1998 at 2:00 p.m., Central Time, for the following purposes:
1. To elect 7 Directors to serve until the 1999 Annual Meeting of Shareholders
and until their successors are duly elected and qualified;
2. To approve the Merger of the Company into a Delaware subsidiary in order to
effect the change of the Company's state of incorporation from Wyoming to
Delaware.
3. To consider and act upon a proposal to ratify the selection of Ernst & Young
LLP, to serve as independent auditors for its current fiscal year; and
4. To transact such other business as may properly come before the Meeting or
any adjournments thereof.
The Board of Directors has fixed the close of business on March 12, 1998 as the
record date for the determination of Shareholders entitled to notice of and to
vote at the Meeting or any adjournments thereof.
A list of shareholders of the Company entitled to notice of and to vote at the
Meeting will be available for examination at the Meeting and during ordinary
business hours from March 19, 1998 to the date of the Meeting at the principal
offices of the Company at the address set forth above.
You are cordially invited to attend the Meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING REGARDLESS OF THE
NUMBER OF SHARES YOU HOLD. YOU ARE INVITED TO ATTEND THE MEETING IN PERSON, BUT
WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE COMPLETE, DATE, SIGN AND RETURN THE
ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE. IF YOU DO ATTEND THE MEETING, YOU
MAY, IF YOU PREFER, REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON.
By Order of the Board of Directors,
/s/ Debra L. Burgess
Debra L. Burgess
SECRETARY
February 27, 1998
<PAGE>
PROXY STATEMENT
---------------------
CANMAX INC.
150 WEST CARPENTER FREEWAY
IRVING, TEXAS 75039
------------------------
1998 ANNUAL MEETING OF SHAREHOLDERS
MONDAY, APRIL 20, 1998
------------------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Canmax Inc., a Wyoming
corporation (the "Company" or "Canmax"), for use at the 1998 Annual Meeting of
Shareholders (the "Meeting") to be held at the Four Seasons Resort and Club,
4150 North MacArthur Blvd., Irving, Texas 75038, Monday, April 20, 1998, at 2:00
p.m., Central Time, and at any adjournments thereof.
This Proxy Statement, the accompanying proxy card and the Annual Report of
the Company are first being mailed on or about April 1, 1998, to all
shareholders of the Company. Although the Annual Report and this Proxy Statement
are being mailed together, the Annual Report shall not be deemed a part of this
Proxy Statement.
The Board of Directors has fixed the close of business on March 12, 1998 as
the record date (the "Record Date") for the determination of Shareholders
entitled to notice of and to vote at the Meeting and at any adjournments
thereof. As of the Record Date, the Company had outstanding 8,111,005 shares of
Common Stock, no par value ("Common Stock"). Each share of Common Stock entitles
the holder to one vote. There is no cumulative voting and there are no other
voting securities of the Company outstanding.
All properly executed proxies received by the Company prior to the Meeting
and not revoked will be voted in accordance with the instructions marked
thereon. Unless instructions to the contrary are marked thereon, proxies will be
voted "FOR" the election as directors of those persons named below, "FOR" the
Company's proposed merger into Canmax-Delaware, Inc., pursuant to which the
Company would change its state of incorporation from Wyoming to Delaware, as
further described herein, and "FOR" the ratification of the Board of Directors'
selection of independent auditors for the Company's current fiscal year. The
Board of Directors of the Company knows of no business other than that mentioned
herein, which will be presented for consideration at the Meeting. If any other
matter is properly presented, it is the intention of the persons named in the
enclosed proxy to vote in accordance with their best judgment. You may revoke
your proxy at any time prior to the exercise thereof by giving written notice to
the Secretary of the Company at the Company's address indicated above, by
submitting a duly executed proxy bearing a later date, or by attending the
Annual Meeting and expressing a desire to vote in person. Attendance at the
Meeting will not, in itself, constitute revocation of a proxy.
ELECTION OF DIRECTORS AND MANAGEMENT INFORMATION
Seven directors are to be elected at the Meeting, to serve until the
Company's next annual meeting of shareholders and until their respective
successors are elected and qualified, or until their earlier resignation or
removal. Each of the nominees listed below currently serves as a director of the
Company and was
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<PAGE>
elected to the Board of Directors at the Company's 1997 Annual Meeting of
Shareholders, except for Mr. James C. Bernet and Mr. John Melideo. Under the
Bylaws of the Company and consistent with Wyoming law, directors shall be
elected by plurality vote at each annual meeting of shareholders and,
accordingly, abstentions and "broker non-votes" will have no effect on the
election of directors. A broker non-vote occurs if a broker or other nominee
does not have discretionary authority and has not received instructions with
respect to a particular item. Shareholders may not cumulate their votes in the
election of directors.
Unless authority to vote for one or more nominees is withheld, the enclosed
proxy will be voted "FOR" the election of the nominees listed below. Although
the Board of Directors does not contemplate that any of the nominees will be
unable to serve, if such a situation arises prior to the Meeting, the persons
named in the enclosed proxy will vote for the election of such other person(s)
as may be nominated by the Board of Directors.
The following table sets forth certain information regarding the executive
officers and directors of Canmax who are expected to be directors and executive
officers of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ----------------------------------- --- ----------------------------------------------------------------------
<S> <C> <C>
Roger D. Bryant.................... 54 President, Chief Executive Officer, and Director
Debra L. Burgess................... 39 Executive Vice President, Chief Operating Officer, Secretary and
Director
James C. Bernet.................... 33 President USCommunication Services, Inc. and Director
W. Thomas Rinehart................. 56 Director
Robert M. Fidler................... 58 Director
Nick DeMare........................ 42 Director
John Melideo....................... 39 Director
</TABLE>
ROGER D. BRYANT has served as President, Chief Executive Officer and a
director of Canmax since November 15, 1994. Prior to joining Canmax, Mr. Bryant
was President of Network Data Corporation (1993-1994), a private corporation
which specialized in developing software for the convenience store and retail
petroleum industries. Mr. Bryant has also served as President of Wayne Division,
USA (1991-1993), a division of Dresser Industries Inc., a manufacturer of fuel
dispensing equipment. Mr. Bryant currently serves as a director of Field Point
Petroleum Corporation. Mr. Bryant has extensive knowledge and experience in the
software development, retail petroleum and convenience store industries. Mr.
Bryant holds a degree in electrical engineering.
DEBRA L. BURGESS has served with the Company since 1989 in increasingly
responsible positions. Since November 1994, she has been the Company's Chief
Operating Officer and a director. Ms. Burgess has been the Secretary of the
Company since 1996. Prior to joining Canmax, Ms. Burgess was the Manager of
Retail Automation responsible for the selection and implementation of a retail
automation solution (1981-1989) at Fina Oil and Chemical Company, a retail
petroleum, petrochemical refining and exploration company. Ms. Burgess is a
Certified Public Accountant.
JAMES C. BERNET was elected a director on February 26, 1998 in conjunction
with Canmax's acquisition of USCommunication Services, Inc. ("USC"). He has been
the President of USC since its inception in August, 1996. USC provides
telecommunications products and Internet services to the transportation
industry. From November, 1992 to August, 1996, Mr. Bernet served as President of
the Baltimore Port Truck Plaza where he was responsible for the overall
management and day to day operations of the business. From 1990 until May, 1997,
Mr. Bernet was a member of AMBEST, an association of travel center owners
representing 130 franchised locations. He has previously served on the Board of
Directors
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(1992-1996) and various committees (1993-1996) of AMBEST. Mr. Bernet has
extensive knowledge and experience in the transportation industry.
W. THOMAS RINEHART has served as a director since May, 1991. He was
co-founder and Executive Vice President of BASS Inc., from June 1981 until his
retirement in September 1992. BASS Inc., a private corporation, is a supplier of
retail automation hardware and software to the grocery store industry. Prior to
BASS Inc., Mr. Rinehart was with NCR from 1964 to 1981, where he held various
staff and management positions within its retail software development divisions.
Mr. Rinehart has extensive experience in software development and retail
automation.
ROBERT M. FIDLER has served as a director of Canmax since November 1994. Mr.
Fidler joined Atlantic Richfield Company ("ARCO") in 1960, was a member of
ARCO's executive management team from 1976 to 1993 and was ARCO's manager of New
Marketing Programs from 1985 until his retirement in 1994. Mr. Fidler has
extensive knowledge and experience in managing retail petroleum operations.
NICK DEMARE, has served as a director of Canmax since January 1991. Since
May, 1991, Mr. DeMare has been the President and Chief Financial Officer of
Chase Management Ltd., where his overall responsibility included providing a
broad range of administrative, management and financial services to private and
public companies with varied interests in mineral exploration and development,
precious and base metals production, oil and gas, venture capital and computer
software. Mr. DeMare has served and continues to serve on the boards of a number
of Canadian public companies, and is a Chartered Accountant (Canada).
JOHN MELIDEO was elected a director on February 26, 1998 in conjunction with
Canmax's acquisition of USC. Since January, 1991, Mr. Melideo has been the Vice
President and Director of Real Estate Communication Services, Inc., a privately
held company specializing in apartment/condominium rental property listing
services. Since January, 1994, he has been the President and Director of
CallSource, Inc., a wholly owned subsidiary of Real Estate Communications
Services, Inc. CallSource, Inc. specializes in communications services. Mr.
Melideo has a degree in computer science and extensive technology and
telecommunications experience.
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held nine meetings during the fiscal year ended
October 31, 1997. The Board of Directors has two standing committees: an Audit
Committee and a Compensation Committee. There is no standing nominating
committee. Each of the directors attended at least 75% of the meetings of the
Board of Directors and any committee on which such director served.
COMMITTEES OF THE BOARD OF DIRECTORS
The Audit and Compensation Committee for 1997 consisted of Nick DeMare,
Robert M. Fidler, W. Thomas Rinehart and Gerald R. Seay through April 21, 1997,
at which time the Board of Directors elected to have each such committee
comprised of two members.
From April 21, 1997 through the remainder of the Company's 1997 fiscal year,
the Audit Committee consisted of Nick DeMare and C. William Robertson. The Board
of Directors appointed John Melideo as a member of the Audit Committee to
succeed Mr. Robertson following Mr. Robertson's resignation from the Company's
Board of Directors on January 30, 1998. The Audit Committee makes
recommendations to the Board of Directors or Management concerning the
engagement of the Company's independent public accountants and matters relating
to the Company's financial statements, the Company's accounting principles and
its system of internal accounting controls. The Audit Committee also reports its
recommendations to the Board of Directors as to the approval of the financial
statements of the Company. Two meetings of the Audit Committee were held during
the fiscal year ended October 31, 1997.
The Compensation Committee consists of Robert M. Fidler (Chairman) and W.
Thomas Rinehart. The Compensation Committee is responsible for considering and
making recommendations to the Board
4
<PAGE>
of Directors regarding executive compensation and is also responsible for
administration of the Company's stock option and executive incentive
compensation plans. Three meetings of the Compensation Committee were held
during the fiscal year ended October 31, 1997.
COMPENSATION OF DIRECTORS
Each director who is not an officer of the Company receives a fee of $1,500
for each Board meeting attended. Directors are not compensated for attending
committee meetings. Further, all directors participate in the Company's Stock
Option Plan and are awarded non-qualified stock options for 5,000 shares of
Common Stock, at the prevailing market prices each year, for service on the
Board of Directors.
SIGNIFICANT EMPLOYEES
A brief description of the business experience and position of certain
significant employees of the Company and its subsidiaries who are not also
directors is provided below.
PHILIP M. PARSONS has served as Executive Vice President, Chief Financial
Officer and Treasurer since June 1995 and as a director of the Company from
December, 1995 to February 26, 1998, on which date Mr. Parsons resigned from the
Company's Board of Directors to accommodate Canmax's acquisition of USC.
Previously, Mr. Parsons was a Director of International Financial Planning for
KFC International (1994-1995) responsible for international business and
strategic planning and was based in Louisville, Kentucky, and a Director of
Financial Planning for KFC South Pacific (Australia, New Zealand and South
Africa) responsible for business and strategic planning and was based in Sydney,
Australia (1990-1994). KFC (Kentucky Fried Chicken) is a fast food company and a
division of PepsiCo Inc. Mr. Parsons is a Chartered Accountant (Australia).
LYNN G. CHIANESE is Vice President of Customer Services of Canmax Retail
Systems Inc., ("CRSI") and has served in that capacity since April 1993. Ms.
Chianese joined Canmax in September 1986 and has held positions of increasing
responsibility. Prior to joining Canmax, she was the Operations Manager for
Darnell / Darcor, an international manufacturing company.
IVOR J. FLANNERY is Vice President of Advanced Research of CRSI and has
served in that capacity since January 1989. Mr. Flannery joined Canmax in
September 1983 and has held positions of increasing responsibility. Prior to
joining Canmax he was an Advanced Systems Engineer for a software development
company which developed point of sale systems for the retail petroleum industry.
RICHARD STEPHENS is Vice President of Development of CRSI and has served in
that capacity since April 1995. Previously, he spent 7 years with the Wayne
Division of Dresser Industries Inc., a manufacturer of fuel dispensing
equipment, as Manager--Systems Software, responsible for developing point of
sale systems and applications.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND MANAGEMENT
The following table sets forth certain information as of February 27, 1998,
concerning those persons known to Canmax, based on information obtained from
such persons, Canmax's records and schedules required to be filed with Canmax,
with respect to the beneficial ownership of Canmax's Common Stock by (i) each
shareholder known by Canmax to own beneficially 5% or more of such outstanding
Common Stock, (ii) each current director of Canmax, (iii) each Named Executive
Officer and (iv) all executive officers and directors of Canmax as a group.
Except as otherwise indicated below, each of the entities or persons named in
the table has sole voting and investment power with respect to all shares of
Common
5
<PAGE>
Stock beneficially owned. Effect has been given to shares reserved for issuance
under outstanding stock options and warrants where indicated.
<TABLE>
<CAPTION>
PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES CLASS(1)
- ---------------------------------------------------------- ----------------- -----------
<S> <C> <C>
Dodge Jones Foundation 1,000,000 12.3%
400 Pine Street, Suite 900
Abilene, Texas 79601
Joseph E. Canon 1,000,000(2) 12.3%
Dodge Jones Foundation
P.O. Box 176
Abilene, Texas 79601
Founders Equity Group 1,313,364(3) 15.3%
2602 McKinney, Suite 220
Dallas, Texas 75204
Roger D. Bryant (4) 540,000(5) 6.2%
Nick DeMare 46,880(6) *
Chase Management
1090 West Georgia Street, Suite 1305
Vancouver, BC V6E 3V7
W. Thomas Rinehart 101,600(7) 1.2%
700 Freeling Drive
Sarasota, Florida 34242
Philip M. Parsons (4) 190,400(8) 2.3%
Debra L. Burgess (4) 254,800(9) 3.0%
Ivor J. Flannery (4) 73,468(10) *
Robert M. Fidler 25,000(11) *
987 Laguna Road
Pasadena, California 91105
Delia O'Donnell 1,847,250(12) 20.4%
15136 Huntington Gate Dr.
Poway, California 92064
James C. Bernet 1,847,250(13) 20.4%
15136 Huntington Gate Dr.
Poway, California 92064
Richard Stephens (4) 20,000(14) *
Alan Anderson, Trustee 3,000,000(15) 31.2%
90 Windsor Road
Hamden, Connecticut 06517
John Melideo 0 0.0%
CallSource, Inc.
6900 Canby Avenue, Suite 106
Reseda, California 91335
All Executive Officers and Directors as a group (11
persons) 3,118,398(16) 30.6%
</TABLE>
- ------------------------
* Less than 1.0%
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(1) Based upon 8,111,005 shares of Canmax Common Stock outstanding as of
February 27, 1998.
(2) Includes 1,000,000 shares held by Dodge Jones Foundation, of which Mr. Canon
serves as the Executive Director. As such, Mr. Canon exercises voting power
over all such shares.
(3) Includes 50,000 shares subject to presently exercisable warrants and 400,000
shares subject to presently convertible debentures issued under a
convertible loan agreement.
(4) The business address for Canmax executives is 150 West Carpenter Freeway,
Irving, Texas 75039.
(5) Includes 290,000 shares of Common Stock which may be acquired through the
exercise of stock options which are exercisable within 60 days of February
27, 1998 ("Vested Options") and 250,000 shares subject to presently
exercisable warrants.
(6) Includes 36,600 Vested Options.
(7) Includes 35,000 Vested Options.
(8) Includes 90,000 Vested Options and 100,000 shares subject to presently
exercisable warrants.
(9) Includes 127,800 Vested Options and 125,000 shares subject to presently
exercisable warrants.
(10) Includes 30,250 Vested Options.
(11) Includes 20,000 Vested Options.
(12) All securities owned by Ms. O'Donnell are currently held by Alan Anderson,
as trustee of a voting trust. On January 30, 1998, Ms. O'Donnell delivered
written notice of her intent to withdraw her securities from the voting
trust, and such withdrawal is to become effective on or about May 1, 1998.
Ms. O'Donnell will not exercise voting or investment decisions with regard
to such securities until their distribution from the voting trust. Ms.
O'Donnell's shares include 923,625 shares to be received upon the effective
date of the withdrawal, and 923,625 shares subject to presently exercisable
warrants that are also being withdrawn from the voting trust.
(13) Includes 923,625 shares beneficially owned by Delia O'Donnell, wife of Mr.
Bernet, and 923,625 shares subject to presently exercisable warrants
beneficially owned by Ms. O'Donnell.
(14) Includes 20,000 Vested Options.
(15) Mr. Anderson serves as the trustee of a voting trust which holds 1.5
million shares and presently exercisable warrants to acquire 1.5 million
shares. Ms. O'Donnell, a beneficial owner of the voting trust, has elected
to withdraw 923,625 shares and presently exercisable warrants to acquire
923,625 shares, which withdrawal is anticipated to be effective on or about
May 1, 1998. Until the withdrawal is effective, Mr. Anderson will retain
sole voting and investment power with regard to all of such securities.
(16) Includes 668,650 Vested Options and 1,398,625 shares subject to presently
exercisable warrants.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the first quarter of 1995, a director, W. Thomas Rinehart advanced
Canmax $250,000. The advance was unsecured and had an interest rate of 10%. The
principal balance was due on demand. Principal payments of $95,765 were repaid
during the six months ended April 30, 1997, which fully satisfied Canmax's
obligation.
On April 30, 1997, Founders Equity Group, Inc. ("Founders") acquired from
Electronic Data Systems ("EDS") 863,364 shares of Canmax Common Stock in a
private transaction, in connection with which Canmax agreed to extend to
Founders certain registration rights similar to those previously held by EDS. On
May 9, 1997, Founders exercised its right to demand that Canmax file a
registration statement with regard to all of its shares of Canmax Common Stock.
Under applicable securities laws, Canmax was unable to file the Founders
registration statement until after the filing of the registration statement for
the
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<PAGE>
proposed Merger with Auto-Gas Systems, Inc. which was subsequently terminated.
Pursuant to the terms of the registration rights agreement with Founders, Canmax
was to have filed a registration statement on or about July 23, 1997 or incur a
registration penalty of 50,000 shares per month. Founders agreed to extend the
registration obligation until August 26, 1997 in exchange for its receipt of a
warrant to acquire 50,000 shares of Canmax Common Stock at an exercise price of
$2.00 per share. In addition, in May of 1997, Canmax retained Founders to
provide advisory services regarding the proposed Merger with Auto-Gas Systems,
Inc., and agreed to pay to Founders a fee of $25,000 for such services.
On April 30, 1997, the Dodge Jones Foundation acquired from EDS 1,000,000
shares of Canmax Common Stock in a private transaction, in connection with which
Canmax agreed to extend to the Dodge Jones Foundation certain registration
rights similar to those previously held by EDS.
On December 15, 1997, Canmax executed a convertible loan agreement with
Founders which provides financing of up to $500,000. Funds obtained under the
loan agreement are collateralized by all assets of Canmax and bear interest at
10.0%. Required payments are for interest only and are due monthly beginning
February 1, 1998. Borrowings under the loan agreement mature January 1, 1999,
unless otherwise redeemed or converted.
Under the terms of the loan agreement, Founders may exercise its right at
any time to convert all, or in multiples of $25,000, any part of the borrowed
funds into Canmax Common Stock at a conversion price of $1.25 per share. The
conversion price is subject to adjustment for certain events and transactions as
specified in the loan agreement. Additionally, the outstanding principal amount
is redeemable at the option of Canmax at 110% of par.
As of February 27, 1998, Founders had advanced to Canmax $500,000 under the
loan agreement. Canmax used these funds to pay fees and expenses related to the
USC acquisition, to advance USC $250,000 for equipment purchases and for USC's
general working capital requirements, and for Canmax's general working capital
requirements, all of which are permitted uses of proceeds under the loan
agreement.
On February 11, 1998, Canmax and Founders executed a loan commitment letter
which provides for multiple advance loans of up to $2 million over the ensuing
12 month period. Funds obtained under the loan commitment agreement are
collateralized by all assets of Canmax and bear interest of 10%. Interest is
payable monthly and borrowings under the agreement mature one year from the date
of the advance. Amounts borrowed under the agreement are convertible into Canmax
Common Stock at a conversion price equal to the five (5) day trading average of
the Canmax Common Stock immediately preceding the date of advance. The maximum
amount of Canmax Common Stock issuable under the loan commitment is 1.6 million
shares. As consideration for the loan commitment, Canmax paid a commitment fee
of $10,000. As of February 27, 1998, no amounts had been advanced to Canmax
under the loan commitment agreement.
A director, Mr. John Melideo, is the President and a Director of CallSource,
Inc., a company which operates USC's prepaid phone card platform. During USC's
year ended December 31, 1997, USC purchased from CallSource approximately
$125,000 of telephone switching equipment for the USC platform. Additionally,
USC has a monthly maintenance agreement with CallSource to service said
equipment for $4,000 per month.
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid by Canmax and its
subsidiaries during the years ended October 31, 1997, 1996 and 1995 for services
in all capacities to each of Canmax's chief executive officer and the four
highest paid executive officers (the "Named Executive Officers") of Canmax whose
total annual salary and bonus exceeded $100,000.
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SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION -------------
------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) COMPENSATION OPTIONS(#) COMPENSATION(4)
- ------------------------------ --------- --------- ----------- ------------- ------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Roger D. Bryant............... 1997 185,000 -- -- 45,000 538
President & CEO 1996 169,750 73,920 18,733(2) 210,000 --
1995 149,827 10,000 -- 35,000 --
Debra L. Burgess.............. 1997 140,000 -- -- 35,000 69
Executive Vice President 1996 118,542 40,320 -- 69,000 --
Chief Operating Officer 1995 104,260 4,000 -- 15,800 --
Secretary
Philip M. Parsons............. 1997 125,000 -- -- 25,000 65
Executive Vice President 1996 108,750 36,960 -- 55,000 --
Chief Financial Officer 1995 36,070 4,000 -- 10,000 --
Treasurer
Ivor Flannery................. 1997 105,000 -- -- 23,000 --
Vice President- 1996 94,050 21,056 -- 15,000 --
Advanced Research (3) 1995 91,055 12,750 -- --
Richard Stephens.............. 1997 110,000 -- -- 15,000 --
Vice President- 1996 94,000 21,056 -- 20,000 --
Development (3) 1995 52,724 4,500 -- 5,000 --
</TABLE>
- ------------------------
(1) Reflects bonus earned during the fiscal year but paid during the next year.
(2) Reflects compensation associated with relocation expenses incurred by Mr.
Bryant.
(3) Reflects positions held with Canmax's subsidiary, CRSI.
(4) Reflects compensation associated with supplemental long-term disability
insurance.
EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS
Messrs. Bryant and Parsons and Ms. Burgess serve as executive officers of
CRSI pursuant to written employment agreements that commenced July 1, 1997. Each
employment agreement provides these executives certain benefits and protections
upon a "Change of Control," which is defined to occur (i) at any time a person
becomes a "beneficial owner" of in excess of thirty percent of the combined
voting power of the outstanding securities of CRSI or Canmax, (ii) if, at any
time during the twenty-four month period following a merger, tender offer,
consolidation, sale of assets or contested election, or any combination thereof,
at least a majority of the Canmax Board shall cease to consist of either (a)
directors who served prior to such transaction or (b) directors whose nomination
for election by the stockholders of Canmax was approved by at least two-thirds
of all directors then serving, or (iii) at any time the stockholders of Canmax
approve an agreement to sell or dispose of all or substantially all of the
assets of CRSI or Canmax. Each employment agreement also permits CRSI to
terminate the executive for "Cause", meaning a termination as a result of (a)
acts of dishonesty constituting a felony or intended to result in substantial
gain for personal enrichment at the expense of CRSI or Canmax, or (b) the
willful and continued failure to substantially perform such person's duties and
responsibilities following a demand for substantial performance by CRSI or
Canmax. Each employment agreement prohibits the executive from engaging in any
activities in competition with CRSI or Canmax during the employment term and
prohibits
9
<PAGE>
the executive from soliciting any employees, customers or clients of Canmax or
CRSI during the 2-year period following any voluntary termination by the
executive or termination for Cause.
The employment agreements with Messrs. Bryant and Parsons and Ms. Burgess
also provide for the issuance of warrants ("Performance Warrants") to each
executive as additional employment compensation. Each Performance Warrant
expires 10 years from the date of issuance, and is exercisable at a price of
$2.25 per share, the closing price of the Canmax Common Stock on July 17, 1997,
the date that the compensation committee approved the issuance of such warrants.
The Performance Warrants vest 50% upon the "Trigger Date" and 50% on the
one-year anniversary of the Trigger Date. As used in each employment agreement,
the Trigger Date means the date of the earlier of the following events: (i) the
earnings per share of Canmax (after tax) equals or exceeds $0.30 per share
during any fiscal year, or (ii) the closing price of the Canmax Common Stock
equals or exceeds $8.00 per share for sixty-five consecutive trading days. The
Performance Warrants also vest upon a Change of Control.
On January 30, 1998, the Company acquired USCommunication Services, Inc., a
Delaware corporation ("USC"), pursuant to the terms of an Agreement and Plan of
Merger dated as of January 30, 1998 (the "Merger Agreement") by an among the
Company, USC and a wholly owned subsidiary of the Company (the "Subsidiary").
Pursuant to the terms of the Merger Agreement, USC was merged within and into
the Subsidiary, with the Subsidiary being the surviving corporation in the
merger (the "Surviving Corporation") and electing to continue its operations
under the name "USCommunication Services, Inc." Pursuant to the Merger
Agreement, the former stockholders of USC received an aggregate of 1.5 million
shares of Canmax Common Stock, a warrant to acquire 1.5 million shares of Canmax
Common Stock that was immediately exercisable, and a warrant to acquire 1.0
million shares of Canmax Common Stock exercisable during the five (5) year
period commencing January 30, 2000. For purposes of determining whether a Change
of Control has occurred, each of the Employment Contracts for Messrs. Bryant and
Parsons and Ms. Burgess adopts the definition of "beneficial ownership"
contained in Rule 13d-3 promulgated under the Securities Exchange Act of 1934,
as amended. Under this definition, securities that are presently outstanding or
which a holder has the right to acquire within sixty (60) days are deemed
"beneficially owned" by such holder. At the effective time of the Merger
Agreement, all shares held by the former stockholders of USC were held in a
voting trust. Because the power to vote all of the shares received in the merger
were consolidated in the voting trust, the 1.5 million shares issued pursuant to
the Merger Agreement and the 1.5 million shares issuable upon the exercise of
the presently exercisable warrant were deemed to be "beneficially owned" by the
voting trust upon consummation of the merger. As a result of the merger, the
trustee of the voting trust was deemed to be the "beneficial owner" of 31.2% of
Canmax Common Stock. Therefore, upon the consummation of the Merger Agreement, a
Change of Control occurred that caused the vesting of the Performance Warrants
and triggered other provisions of the Employment Contracts of Messers. Bryant
and Parsons and Ms. Burgess as set forth below.
Mr. Bryant's employment agreement expires June 30, 1999. Mr. Bryant is
entitled to receive an annual base salary of $185,000 and to participate in any
bonus programs established by the Canmax Board. Upon execution of his employment
agreement, Mr. Bryant was also granted Performance Warrants to acquire 250,000
shares of Canmax Common Stock. Pursuant to the terms of his agreement, Mr.
Bryant may elect to voluntarily terminate his employment within 90 days
following a Change of Control and receive a lump sum payment equal to one year's
base salary. If Mr. Bryant is terminated during his employment period without
Cause, he will be entitled to continue to receive his base salary and benefits
for a period of two years and an amount equal to any bonus paid during the
preceding 12 months (payable in 24 monthly installments) in accordance with
CRSI's standard payroll cycle; provided, however, that such amounts shall be
payable in a lump sum following a Change of Control.
Ms. Burgess' employment agreement expires June 30, 1998. Ms. Burgess is
entitled to receive an annual base salary of $140,000 and to participate in any
bonus programs established by the Canmax Board. Upon the execution of her
employment agreement, Ms. Burgess was also granted Performance Warrants to
acquire 125,000 shares of Canmax Common Stock. Pursuant to the terms of her
agreement, Ms. Burgess
10
<PAGE>
may elect to voluntarily terminate her employment within 90 days following a
Change of Control and receive a lump sum payment equal to one year's base
salary. If Ms. Burgess is terminated during her employment period without Cause,
she will be entitled to continue to receive her base salary and benefits for a
period of one year and an amount equal to 50% of any bonus paid during the
preceding 12 months (payable in 12 monthly installments) in accordance with
CRSI's standard payroll cycle; provided, however, that such amounts shall be
payable in a lump sum following a Change of Control.
Mr. Parsons' employment agreement expires June 30, 1998. Mr. Parsons is
entitled to receive an annual base salary of $125,000 and to participate in any
bonus programs established by the Canmax Board. Upon the execution of his
employment agreement, Mr. Parsons was also granted Performance Warrants to
acquire 100,000 shares of Canmax Common Stock. Pursuant to the terms of his
agreement, Mr. Parsons may elect to voluntarily terminate his employment within
90 days following a Change of Control and receive a lump sum payment equal to
one year's base salary. If Mr. Parsons is terminated during his employment
period without Cause, he will be entitled to continue to receive his base salary
and benefits for a period of one year and an amount equal to 50% of any bonus
paid during the preceding 12 months (payable in 12 monthly installments) in
accordance with CRSI's standard payroll cycle; provided, however, that such
amounts shall be payable in a lump sum following a Change of Control.
Upon consummation of the Merger Agreement, James C. Bernet, the former
President of USC, executed an Employment Contract with Surviving Corporation and
the Company pursuant to which he will continue to serve as a President of
Surviving Corporation. Mr. Bernet's Employment Contract expires January 29,
2001. Mr. Bernet is entitled to receive an annual base salary of $150,000 with a
minimum annual bonus of $30,000 (reduced by any future increases in base
salary). Mr. Bernet is also entitled to participate in any bonus programs
established by the Canmax Board. Upon the execution of his Employment Contract,
Mr. Bernet was also granted (a) warrants to acquire 1.0 million shares of Canmax
Common Stock at an exercise price of $2.00 per share, the vesting of which is
dependent upon the business operations of the Surviving Corporation generating
after tax earnings of at least $5.0 million (subject to certain adjustments),
and (b) warrants to acquire 1.0 million shares of Canmax Common Stock at an
exercise price of $3.00 per share, the vesting of which is dependent upon the
business operations of the Surviving Corporation generating after tax earnings
of at least $8.625 million (subject to certain adjustments). Each of the
warrants granted in connection with Mr. Bernet's Employment Contract must vest,
if at all, on or before January 30, 2001. Mr. Bernet's Employment Contract
prohibits him from engaging in any activities in competition with the Surviving
Corporation or Canmax during the employment term and prohibits him from
soliciting any employees, customers or clients of the Surviving Corporation or
Canmax during the 2-year period following any voluntary termination by him or
termination for Cause (as defined above). In addition, Mr. Bernet is also
subject to a separate non-competition agreement executed pursuant to the terms
of the Merger Agreement that prohibits him from competing with Canmax or the
Surviving Corporation through January 29, 2003. Mr. Bernet's warrants do not
contain any provisions for vesting upon a change of control. Pursuant to the
terms of his Employment Contract, if Mr. Bernet is terminated during his
employment period without Cause (as defined above), he will be entitled to
continue to receive his base salary and benefits for a period of year in
accordance with Surviving Corporation's regular payroll cycle; provided,
however, that twelve month's base salary plus 50% of any bonuses paid during the
preceding twelve month period shall be payable as a lump sum upon a termination
of his employment without Cause following a Change of Control. Mr. Bernet's
Employment Contract also provides that, upon his death, his estate shall be
entitled to continue to receive payments of base salary (of not less than
$15,000 per month) throughout the remaining term of the employment period in
accordance with the Surviving Corporation's regular payroll cycle.
11
<PAGE>
STOCK OPTIONS
The Board of Directors introduced a stock option plan (the "Stock Option
Plan"), pursuant to a resolution dated March 29, 1990, in the form approved by
Canmax's shareholders at an annual general meeting held March 20, 1990.
The Stock Option Plan authorizes the Directors to grant options to purchase
common shares of Canmax provided that, when exercised, such options will not
exceed 2.3 million shares of Canmax Common Stock and no options will be granted
to any individual director or employee which will, when exercised, exceed 5% of
the issued and outstanding shares of Canmax. The term of any option granted
under the Stock Option Plan is fixed by the Board of Directors at the time the
options are granted, provided that the exercise period may not be longer than 10
years from the date of granting. The exercise price of any options granted under
the Stock Option Plan is the fair market value at the date of grant. On February
26, 1998, the Board of Directors increased the number of shares issuable under
the Stock Option Plan from 1.2 million shares to 2.3 million shares so that
stock options previously granted by the Board in excess of those permitted by
the Stock Option Plan could be covered by the Plan. As of February 27, 1998,
1,121,990 shares of Canmax Common Stock have been issued under the Stock Option
Plan, 1,093,700 shares remain subject to outstanding options under the Stock
Option Plan, and 84,310 shares were available under the Stock Option Plan.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to stock options
pursuant to Canmax's stock option plans granted to the Named Executive Officers
during fiscal year ended October 31,1997.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------------ ANNUAL RATES OF
NUMBER OF STOCK PRICE
SECURITIES % OF TOTAL APPRECIATION FOR
UNDERLYING OPTIONS GRANTED EXERCISE OPTION TERM (1)
OPTIONS TO EMPLOYEES IN PRICE EXPIRATION --------------------
NAME GRANTED FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- --------------------------------------------- ----------- --------------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Roger D. Bryant.............................. 5,000 1.88 4/30/02 2,597 5,739
13,333 1.88 4/30/03 8,525 19,340
13,333 1.88 4/30/04 10,204 23,781
13,334 1.88 4/30/05 11,969 28,667
----------- --------- ---------
45,000 17% 33,295 77,527
Debra L. Burgess............................. 5,000 2.13 5/11/99 1,092 2,236
5,000 1.88 4/30/02 2,597 5,739
8,333 1.88 4/30/03 5,328 12,087
8,333 1.88 4/30/04 6,378 14,863
8,334 1.88 4/30/05 7,480 17,918
----------- --------- ---------
35,000 13% 22,875 52,843
Philip M. Parsons............................ 5,000 1.88 4/30/02 2,597 5,739
6,666 1.88 4/30/03 4,262 9,669
6,667 1.88 4/30/04 5,103 11,891
6,667 1.88 4/30/05 5,984 14,334
----------- --------- ---------
25,000 9% 17,946 41,633
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------------ ANNUAL RATES OF
NUMBER OF STOCK PRICE
SECURITIES % OF TOTAL APPRECIATION FOR
UNDERLYING OPTIONS GRANTED EXERCISE OPTION TERM (1)
OPTIONS TO EMPLOYEES IN PRICE EXPIRATION --------------------
NAME GRANTED FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- --------------------------------------------- ----------- --------------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Ivor J. Flannery............................. 8,000 2.13 5/11/99 1,746 3,578
5,000 1.88 4/30/03 3,197 7,253
5,000 1.88 4/30/04 3,827 8,918
5,000 1.88 4/30/05 4,488 10,750
----------- --------- ---------
23,000 9% 13,258 30,499
Richard Stephens............................. 5,000 1.88 4/30/03 3,197 7,253
5,000 1.88 4/30/04 3,827 8,918
5,000 1.88 4/30/05 4,488 10,750
----------- --------- ---------
15,000 6% 11,512 26,921
</TABLE>
- ------------------------
(1) Based upon the per share market price on the date of grant and on annual
appreciation of such market price through the expiration date of such
options at the stated rates. These amounts represent assumed rates of
appreciation only and may not necessarily be achieved. Actual gains, if any,
are dependent on the future performance of the Common Stock, as well as the
continued employment of the Named Executives through the vesting period. The
potential realizable values indicated have not taken into account amounts
required to be paid as income tax under the Internal Revenue Code of 1986,
as amended, and any applicable state laws.
No other annual or long-term compensation was received or is receivable by
the executive officers named above in respect of employment in 1997 or prior
years.
The following table sets forth information with respect to each exercise of
stock options during fiscal 1997, by each of the Named Executive Officers and
the number of options held at fiscal year end and the aggregate value of
in-the-money options held at fiscal year end. None of the Named Executive
Officers exercised options in fiscal 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED "IN-THE-MONEY" OPTIONS AT
OPTIONS AT FY-END (#) FY-END ($)
SHARES ACQUIRED VALUE REALIZED -------------------------- ----------------------------------
NAME ON EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- --------------- --------------- ----------- ------------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Roger D. Bryant................ -- -- 150,000 140,000 -- --
Debra L. Burgess............... -- -- 77,800 50,000 -- --
Philip M. Parsons.............. -- -- 45,000 45,000 -- --
Ivor J. Flannery............... -- -- 26,500 22,500 -- --
Richard Stephens............... -- -- 15,000 25,000 -- --
</TABLE>
On October 31, 1997, there were 1,017,700 outstanding stock options with a
weighted average exercise price of $2.23 per share.
13
<PAGE>
LONG TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
The following table sets forth information with respect to long term
incentive plan awards to the Named Executive Officers during fiscal year ended
October 31, 1997.
<TABLE>
<CAPTION>
ESTIMATED FUTURE
NUMBER OF SHARES PERFORMANCE OR OTHER PAYOUTS
UNDERLYING PERIOD UNTIL UNDER NON-STOCK PRICE-
NAME WARRANTS (#) MATURATION OR PAYOUT BASED PLANS (#)
- ------------------------------------- ----------------- ----------------------- -----------------------
<S> <C> <C> <C>
Roger D. Bryant...................... 250,000 (1) 250,000
Debra L. Burgess..................... 125,000 (1) 125,000
Philip M. Parsons.................... 100,000 (1) 100,000
</TABLE>
- ------------------------
(1) The long-term incentive plan awards to Mr. Bryant, Ms. Burgess and Mr.
Parsons relate to the Performance Warrants issued under each of their
employment agreements. See "Employment and Change of Control Agreements".
Under the terms of the Performance Warrants, vesting of such warrants is
dependent upon the earlier of (i) the earnings per share of Canmax (after
tax) equals or exceeds $0.30 per share during any fiscal year, (ii) the
closing price of the Canmax Common Stock equals or exceeds $8.00 per share
for sixty-five consecutive trading days, or (iii) a Change of Control.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Canmax has no interlocking relationships involving any of its Compensation
Committee members which would be required by the Commission to be reported
herein, and no officer or employee of Canmax serves on its Compensation
Committee.
COMPENSATION COMMITTEE REPORT
In fiscal 1997, Canmax's Compensation Committee consisted of two outside
directors; Messrs, Fidler, and Rinehart. The Committee was responsible for
determining the compensation of Canmax's executive officers and other key senior
employees, including Roger D. Bryant, Canmax's Chief Executive Officer, (the
"Chief Executive").
DETERMINATION OF CEO AND EXECUTIVE OFFICER COMPENSATION. Canmax has strived
to structure its executive compensation programs in a manner designed to attract
and retain a talented and capable management team, and to provide appropriate
compensation based on that team's achievement of financial performance
objectives. During fiscal 1997, the Compensation Committee held primary
responsibility for determining the compensation of the Chief Executive, and for
approving the determinations of compensation paid to other officers and senior
executives, as proposed by the Chief Executive.
Compensation is normally paid to the Chief Executive in the form of base
compensation, bonus compensation and the granting of options to buy shares of
Canmax's Common Stock at then prevailing market prices. Each year the Board of
Directors of Canmax sets forth certain financial performance objectives for
Canmax. Canmax's ability to meet such targeted financial goals, and the Chief
Executive's previous base compensation level, are the most important criteria
utilized by the Compensation Committee in determining the compensation of the
Chief Executive, although the Compensation Committee reviews other factors,
including the compensation awarded to chief executive officers of similar
corporations. Based on a review of such criteria, the Compensation Committee
will determine the annual base and bonus compensation of the Chief Executive. In
addition, the Compensation Committee may grant stock options in order to align
the interests of the Chief Executive with those of the shareholders. With
respect to the Chief Executive's compensation during fiscal 1997, the
Compensation Committee primarily considered Canmax's financial performance and
the previously existing compensation level of the Chief Executive.
14
<PAGE>
Compensation to other executive officers is also provided in the form of
base compensation, bonus compensation and the granting of stock options. Base
compensation is determined based on industry norms associated with the position
held by the executive and the recommendation of the Chief Executive, while bonus
compensation is normally linked to specific shorter-term (e.g., one to three
years) financial performance objectives. Stock options are granted to align the
interests of the executive officers with those of the shareholders. The Chief
Executive is principally responsible for the performance assessment of
individual executive officers and provides his recommendations to the
Compensation Committee for its review and approval.
Additionally, on July 17, 1997, the Compensation Committee approved
employment agreements for certain executives. The employment agreements provide
for the issuance of warrants to each executive as additional compensation. The
warrants were intended to align the interests of the executive officers with
those of the shareholders by providing incentive compensation based on the
performance of the Company and to retain key executive management by providing
protection against a change in control.
COMPENSATION COMMITTEE:
Robert M. Fidler (Chairman)
W. Thomas Rinehart
STOCK PERFORMANCE GRAPH
Securities and Exchange Commission rules require that a line graph
performance presentation be provided comparing cumulative total stockholder
return with a performance indicator of a broad market index and a nationally
recognized industry index. The following performance graph compares the
cumulative total shareholder return on the Company's stock with the Nasdaq Stock
Market Total Return Index (Nasdaq Index) and the Nasdaq Computer and Data
Processing Services Stocks Total Return Index (Industry Index).
The Company's stock has traded on the Nasdaq SmallCap market tier of The
Nasdaq Stock Market since February 10, 1994. The comparison assumes that $100
was invested on February 10, 1994 in the Company's shares and in each of the
indices. Past performance is not necessarily an indicator of future performance.
15
<PAGE>
COMPARISON OF THREE YEARS ENDED OCTOBER 31, 1997
CUMULATIVE TOTAL RETURN
CANMAX INC., NASDAQ STOCK MARKET INDEX AND NASDAQ COMPUTER AND DATA PROCESSING
SERVICES INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CANMAX NASDAQ INDEX INDUSTRY INDEX
<S> <C> <C> <C>
Feb-94 $100.00 $100.00 $100.00
Oct-95 $21.43 $132.90 $174.99
Oct-96 $11.07 $156.96 $203.20
Oct-97 $9.64 $206.72 $273.71
</TABLE>
<TABLE>
<CAPTION>
FEBRUARY 10, 1994 OCTOBER 31, 1995 OCTOBER 31, 1996 OCTOBER 31, 1997
--------------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Canmax Inc................................ 100 21.43 11.07 9.64
Nasdaq Index.............................. 100 132.90 156.96 206.72
Nasdaq Industry Index..................... 100 174.99 203.20 273.71
</TABLE>
The data set forth in the above graph and related table was obtained from
the Nasdaq Stock Market. All Canmax share data is based on the last closing
price of the month. The total return calculation is based upon weighting at the
beginning of the period.
SECTION 16(A) REPORTING
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers and persons who own more than 10%
of the Company's common stock to file with the SEC initial reports of ownership
and reports of changes in ownership of common stock and other equity securities
of the Company. Officers, directors and greater than 10% shareholders are
required by SEC regulations to furnish the Company with copies of all Section
16(a) reports they file. To the Company's knowledge, based solely on the review
of the copies of such reports filed during the fiscal year ended October 31,
1997, all Section 16(a) filing requirements applicable to its officers,
directors and greater than 10% beneficial owners were complied with, except (i)
Mr. Roger D. Bryant, Mr. Philip M. Parsons and Ms. Debra L. Burgess each filed
one late report concerning their receipt of the Performance Warrants, (ii) the
Dodge Jones Foundation has not filed a Form 3 to report their 10% ownership
interest in the Company, (iii) neither Mr. Bernet, Ms. Delia O'Donnell nor the
trustee of the voting trust for the former shareholders of USC have filed Form
3's reporting their receipt of shares of Company Common Stock on January 30,
1998 as a result of the Merger Agreement, and (iv) each of the Company's
officers and directors filed late their Form 5 Annual Statement of Beneficial
Ownership of Securities Report that was due on or about December 15, 1997.
16
<PAGE>
REINCORPORATION OF THE COMPANY IN DELAWARE
GENERAL
The Board of Directors of the Company has approved and recommends that the
shareholders approve the proposed merger of the Company into a wholly owned
subsidiary organized under the laws of the State of Delaware for the purpose of
changing the Company's state of incorporation from the State of Wyoming to the
State of Delaware (the "Reincorporation"). The Board of Directors believes that
the Reincorporation will result in significant advantages as more fully
described in the section entitled --PRINCIPAL REASONS FOR THE REINCORPORATION
AND THE MERGER below.
The following discussion summarizes certain aspects of the proposed
Reincorporation of the Company from the State of Wyoming to the State of
Delaware pursuant to the Agreement and Plan of Merger (the "Reincorporation
Merger Agreement") between the Company and Canmax-Delaware, Inc., a Delaware
corporation. This summary is not intended to be complete and is subject to, and
qualified in its entirety by, reference to (i) the "COMPARISON OF WYOMING AND
DELAWARE CORPORATE LAW" attached as EXHIBIT A to this Proxy Statement, (ii) the
Reincorporation Merger Agreement, a copy of which is attached to this Proxy
Statement as EXHIBIT B, (iii) the Certificate of Incorporation of
Canmax-Delaware ("Delaware Certificate"), a copy of which is attached to this
Proxy Statement as EXHIBIT C, (iv) the Bylaws of Canmax-Delaware ("Delaware
Bylaws"), a copy of which is attached to this Proxy Statement as EXHIBIT D and
(v) the WBCA Dissenters' Statue, a copy of which is attached to this Proxy
Statement as EXHIBIT E. Copies of the Articles of Incorporation and the Bylaws
of the Company ("Wyoming Articles" and "Wyoming Bylaws," respectively) are
available for inspection at the principal executive office of the Company and
copies will be sent to shareholders, without charge, upon oral or written
request directed to: Canmax Inc., 150 W. Carpenter Frwy., Irving, Texas 75039,
Attention: Corporate Secretary, (972) 541-1600. In this discussion of the
Reincorporation, the terms "Company" or "Canmax-Wyoming" refer to the existing
Wyoming corporation and the term "Canmax-Delaware" refers to the new Delaware
corporation which is the proposed successor to Canmax-Wyoming.
PRINCIPAL FEATURES OF THE REINCORPORATION AND THE MERGER
The Reincorporation will be effected by the merger (the "Merger") of
Canmax-Wyoming with and into Canmax-Delaware, which will be incorporated under
the Delaware General Corporation Law ("DGCL") for purposes of the Merger.
Canmax-Delaware will be the surviving corporation in the merger and will
continue under the name "Canmax Inc." Canmax-Wyoming will cease to exist as a
result of the Merger.
Pursuant to the Bylaws of the Company, the Merger and the resulting
Reincorporation must be approved by the affirmative vote of the holders of
two-thirds of the outstanding shares of Common Stock. Abstentions and broker
non-votes will have no effect on the approval of the Merger. Pursuant to the
Wyoming Business Corporation Act (the "WBCA"), holders of Company Common Stock
who do not vote in favor of the Merger and comply with the detailed provisions
contained in Article 13 of the WBCA will be entitled to dissent from the Merger
and seek the payment of the fair value of their shares of Canmax-Wyoming. A copy
of Article 13 of the WBCA is reproduced as EXHIBIT E to this Proxy Statement.
Shareholders wishing to dissent from the Merger should read such materials
carefully. A vote against the Merger without otherwise complying with the
provisions of Article 13 of the WBCA will not effectively exercise a dissenting
shareholder's dissenters' rights. The Merger will not become effective until the
requisite vote of the Company's shareholders is obtained and the Reincorporation
Merger Agreement or an appropriate certificate of merger is filed with the
Secretary of State of the State of Delaware and the Secretary of State of the
State of Wyoming. BECAUSE AN EXECUTED PROXY CARD WILL BE VOTED FOR THE APPROVAL
AND ADOPTION OF THE MERGER UNLESS OTHERWISE SPECIFIED, A SHAREHOLDER RETURNING A
SIGNED BUT UNMARKED PROXY CARD WILL WAIVE HIS OR HER RIGHT TO DISSENT FROM
MERGER. SEE "RIGHT TO DISSENT" BELOW.
17
<PAGE>
At the effective time of the Merger, the Company will be governed by the
Delaware Certificate, the Delaware Bylaws and the DGCL. Approval of the Merger
will result in changes to shareholder approval requirements for certain
transactions, the ability of shareholders to call special meetings, the
availability of dissenters' rights for certain corporation transactions, and the
ability of a person to acquire the Company in transactions not approved by the
Board of Directors. Shareholders should review EXHIBIT A for a summary of
material differences in the rights of shareholders of Canmax-Wyoming compared to
the rights available to stockholders of Canmax-Delaware.
Upon completion of the Merger, each outstanding share of Common Stock, no
par value per share, of Canmax-Wyoming will be converted into one share of
Common Stock, $.001 par value, of Canmax-Delaware. As a result, the existing
shareholders of Canmax-Wyoming will automatically become shareholders of
Canmax-Delaware, Canmax-Wyoming will cease to exist and Canmax-Delaware will
continue to operate the business of the company under the name "Canmax Inc."
Canmax-Wyoming stock certificates will be deemed to represent the same number of
Canmax-Delaware shares as were represented by such Canmax-Wyoming stock
certificates prior to the Reincorporation. IT WILL NOT BE NECESSARY FOR
SHAREHOLDERS TO EXCHANGE THEIR CANMAX-WYOMING STOCK CERTIFICATES FOR
CANMAX-DELAWARE STOCK CERTIFICATES. Following the Reincorporation, previously
outstanding Canmax-Wyoming stock will constitute "good delivery" in connection
with sales through a broker, or otherwise, of shares of Canmax-Delaware. The
Canmax-Delaware Common Stock will be listed on the Nasdaq Stock Market's
SmallCap Stock Market ("Nasdaq SmallCap") as the Common Stock of Canmax-Wyoming
is presently listed. Upon completion of the Reincorporation, the authorized
capital stock of Canmax-Delaware will consist of 44,169,100 shares of Common
Stock, $.001 par value, which is identical to the authorized capital stock of
Canmax-Wyoming other than the change from no par value share to share with a par
value of $.001 per share.
The Reincorporation will not result in any change to the daily business
operations of the Company or the present location of the principal executive
offices of the Company in Irving, Texas. The consolidated financial condition
and results of operations of Canmax-Delaware immediately after the consummation
of the Reincorporation will be identical to that of Canmax-Wyoming immediately
prior to the consummation of the Reincorporation. In addition, at the effective
time of the Merger, the Board of Directors of Canmax-Delaware will consist of
those persons who currently are directors of the Company, all of whom are
nominees for re-election at the Annual Meeting. In addition, the individuals
serving as executive officers of Canmax-Wyoming immediately prior to the Merger
will serve as executive officers of Canmax-Delaware upon the effectiveness of
the Merger.
Pursuant to the Reincorporation Merger Agreement, each option or right to
purchase a share of Canmax-Wyoming Common Stock outstanding immediately prior to
the effective time of the Merger will become an option or right to purchase a
share of Canmax-Delaware Common Stock upon the same terms and conditions as
existed immediately prior to the effective time of the Merger. Future options
and rights, if any, granted under the Company's Stock Option Plan or otherwise
will be for shares of Canmax-Delaware Common Stock. The terms of the Company's
Stock Option Plan and all currently outstanding options to purchase
Canmax-Wyoming Common Stock are set forth under the captions "EXECUTIVE
COMPENSATION--STOCK OPTION PLAN".
A vote for approval and adoption of the Reincorporation Merger Agreement and
the Reincorporation will also constitute specific approval of the Delaware
Certificate and the Delaware Bylaws. In addition, a vote for approval and
adoption of the Reincorporation Merger Agreement and the Reincorporation will
constitute approval of the assumption by Canmax-Delaware of the Company's Stock
Option Plan and agreements of Canmax-Wyoming, and the substitution of shares of
Canmax-Delaware Common Stock for shares of Canmax-Wyoming Common Stock as the
security to be received upon exercise of options, if any, granted in the future
under the Company's Stock Option Plan of Canmax-Wyoming.
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APPROVAL AND ADOPTION OF THE REINCORPORATION MERGER AGREEMENT AND THE
REINCORPORATION WILL AFFECT CERTAIN RIGHTS OF SHAREHOLDERS. ACCORDINGLY,
SHAREHOLDERS ARE URGED TO READ CAREFULLY THIS ENTIRE PROXY STATEMENT AND THE
EXHIBITS TO THE PROXY STATEMENT BEFORE VOTING.
PRINCIPAL REASONS FOR THE REINCORPORATION
As the Company plans for the future, Board of Directors and management
believe that it is essential to be able to draw upon well established principles
of corporate governance in making legal and business decisions. The prominence
and predictability of Delaware corporate law provide a reliable foundation on
which the Company's governance decisions can be based. The Company believes that
the shareholders will benefit from the responsiveness of Delaware corporate law
to their needs and to those of the corporation they own.
For many years the State of Delaware has followed a policy of encouraging
incorporation in that state and, in furtherance of that policy, has adopted
comprehensive, modern and flexible corporate laws which are periodically updated
and revised to meet changing business needs. As a result, many corporations have
been initially incorporated in Delaware or have subsequently reincorporated in
Delaware in a manner similar to that proposed by the Company. Because of
Delaware's prominence as a state of incorporation for many corporations, the
Delaware courts have developed considerable expertise in dealing with corporate
issues and a substantial body of case law has developed construing the DGCL and
establishing public policies with respect to corporations incorporated in
Delaware. Consequently, the DGCL is comparatively well known and understood. It
is anticipated that, as in the past, the DGCL will continue to be interpreted
and explained in a number of significant court decisions. The Board of Directors
believes that reincorporation in Delaware should provide greater predictability
with respect to the Company's corporate affairs.
In addition, the Delaware Secretary of State is particularly flexible,
expert and responsive in its administration of the filings required for mergers,
acquisitions and other corporate transactions. Delaware has become a preferred
domicile for most major corporations in the United States and Delaware law and
Delaware law and administrative practices have become comparatively well-known
and widely understood. As a result of these factors, it is anticipated that
Delaware law will provide greater efficiency, predictability and flexibility in
the Company's legal affairs than presently available under Wyoming law. For
example, the Canmax-Wyoming Bylaws currently require two-third shareholder
approval for certain corporate actions, such as a sale of substantially all of
the Company's assets, certain mergers and share exchanges, and amendments to the
Company's Articles of Incorporation. Under the DGCL and the Certificate of
Incorporation and Bylaws for Canmax-Delaware, these transactions will require
the approval of only a majority of the Company's shareholders. Further, the WBCA
provides shareholders of a Wyoming corporation the right to dissent and seek the
payment of "fair value" for their shares in certain corporate actions. Under the
DGCL, no dissenters' or appraisal rights are available for any class or series
of stock which, at the record date for the meeting held to approve the
transaction, were either (i) held of record by more than 2,000 stockholders or
(ii) listed on a national securities exchange or designated as a national market
system security on an inter-dealer quotation system maintained by the National
Association of Securities Dealers, Inc. (the "NASD"). The Company's stock is
currently listed on the Nasdaq SmallCap Market maintained by the NASD (as
opposed to the Nasdaq National Market), and therefore the limitations on
appraisal rights under the DGCL would not currently apply to stockholders of
Canmax-Delaware.
The Board believes that the proposed Reincorporation under Delaware law will
enhance the Company's ability to attract and retain qualified directors and
officers as well as encourage directors and officers to continue to make
independent decisions in good faith on behalf of the Company. The law of
Delaware offers greater certainty and stability from the perspective of those
who serve as corporate officers and directors. The intense competition that has
characterized the software industry has greatly
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expanded the challenges and risks facing the directors and officers of companies
within the software industry. To date, the Company has not experienced
difficulty in retaining directors or officers. However, as a result of the
significant potential liability and relatively small compensation associated
with service as a director, the Company believes that the better understood, and
comparatively stable, corporate environment afforded by Delaware will enable it
to compete more effectively with other public companies, most of which are
incorporated in Delaware, in the recruitment of talented and experienced
directors and officers. The parameters of director and officer liability are
more extensively addressed in Delaware court decisions and therefore are better
defined and better understood than under Wyoming law.
The Board believes that Delaware law strikes an appropriate balance with
respect to personal liability of directors and officers, and that
Reincorporation in Delaware will enhance the Company's ability to recruit and
retain directors and officers in the future, while providing appropriate
protection for shareholders from possible abuses by directors and officers. In
this regard, it should be noted that directors' personal liability is not, and
can not be, eliminated under Delaware law for intentional misconduct, bad faith
conduct or any transaction from which the director derives an improper personal
benefit, or for violations of federal laws such as federal securities laws.
The Board of Directors has not viewed the increased protections permitted
under the DGCL as a reason for recommending the Reincorporation. Shareholders
should note however that since members of the Board of Directors will receive
the benefit of expanded indemnification provisions and limitations on liability,
the Board of Directors may be viewed as having a personal interest in the
approval of the Reincorporation at the potential expense of shareholders.
As a Delaware corporation, Canmax-Delaware would qualify for the provisions
of Section 203 of DGCL (the "Delaware Business Combination Statute"), which
regulates certain business combinations between a corporation and an "Interested
Stockholder" thereof. Although Article 18 of the WBCA (the "Wyoming Business
Combination Statute") is a somewhat similar statute that regulates such
transactions, the Wyoming Business Combination Statute is only applicable to
corporations with substantial business operations within Wyoming. Canmax-Wyoming
does not have sufficient operations within the State of Wyoming to qualify for
the protections of the Wyoming Business Combination Statute, therefore the
statute is not currently applicable to Canmax-Wyoming. If the Company
reincorporates in Delaware, the Delaware Business Combination Statute, which has
no comparable residency requirements, would be applicable to the Company.
While the Reincorporation Proposal is not being recommended in response to
any specific effort of which the Company is aware to accumulate the Company's
shares or to obtain control of the Company, the Board believes that the
provisions of the Delaware Business Combination Statute will enhance the Board's
ability to assure more equitable treatment of the Company's stockholders in the
event that a possible take over attempt. For a description of the Delaware
Business Combinations Statute, see "State Takeover Statutes" of EXHIBIT A
attached to this Proxy Statement.
POSSIBLE DISADVANTAGES OF REINCORPORATION
As a result of the Merger, the Company would have the benefit of the
Delaware Business Combination Statute which may deter certain acquisitions of
the Company in transactions that are not approved by the Board of Directors.
Further, the Merger would result in the Company being able to consummate certain
corporate acquisitions or reorganizations upon the approval of the holders of
the majority of its outstanding shares, as opposed to the two-thirds approval
currently required under the Company's Bylaws. The Merger would also remove the
ability of the Company's shareholders to call a special meeting. The Company's
Bylaws currently provide that special meetings may be called by the holders of
10% of the Company's outstanding shares. Following the Merger, shareholders
would no longer have the ability to call a special meeting, and the power to
call a special meeting would be vested solely on the Board of Directors or the
Chairman of the Board. The Board of Directors believes that protections of the
Delaware Business
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Combination Statute, the greater flexibility afforded to the Company (by way of
reduced shareholder approval requirements) and the removable of the ability of
the shareholders of the Company to call a special meeting are in the best
interests of the Company in that the Company has more flexibility to enter into
certain transactions and is protected from certain "hostile" acquisitions. See
"--PRINCIPAL FEATURES OF REINCORPORATION AND THE MERGER." Shareholders should be
aware, however, that the DGCL has been publicly criticized on the grounds that
it does not afford minority shareholders all the same substantive rights and
protections that are available under the laws of a number of other states
(including Wyoming) and that, as a result of the proposed Reincorporation, the
rights of shareholders will change in a number of important respects. For
example, if the Reincorporation is consummated, the Company will not be required
in the future under the DGCL to obtain shareholder approval, or to grant class
voting and appraisal rights, in connection with certain kinds of mergers and
corporate reorganizations which under Wyoming law would be subject to those
requirements. For information regarding those and other material differences
between the WBCA and the DGCL, see EXHIBIT A attached to this Proxy Statement.
The Board of Directors believes that the advantages of the Reincorporation to
the Company and its shareholders outweigh its possible disadvantages.
SHAREHOLDERS ARE URGED TO READ THE SUMMARY OF CERTAIN SIGNIFICANT
DIFFERENCES IN THE PROVISIONS OF THE WBCA AND THE DGCL AFFECTING THE RIGHTS AND
INTERESTS OF SHAREHOLDERS SET FORTH IN EXHIBIT A ATTACHED TO THIS PROXY
STATEMENT.
DISSENTERS' RIGHTS
Holders of Common Stock of Canmax-Wyoming will have the right to dissent and
seek the payment of "fair value" of their shares with regard to the Merger
Agreement and the Reincorporation proposal. Pursuant to Article 13 of the WBCA,
holders of record of Canmax-Wyoming Common Stock who object to the Merger and
the Proposed Reincorporation and who follow the procedures prescribed by Article
13 of the WBCA will be entitled to receive a cash payment equal to the "fair
value" of the shares of Canmax-Wyoming Common Stock held by them in lieu of
receiving an equal number of shares of Canmax-Delaware Common Stock pursuant to
the Merger Agreement. Set forth below is a summary of the procedures holders of
Canmax-Wyoming Common Stock must follow in order to exercise their dissenters'
rights under the WBCA. This summary does not purport to be complete and is
qualified in its entirety by reference to Article 13 of the WBCA (a copy of
which, as of the date hereof, is attached to this Proxy Statement as EXHIBIT E)
and to any amendments to, or modifications of, such provisions as may be adopted
after the date hereof.
Any holder of shares of Common Stock of Canmax-Wyoming contemplating a
possibility of objecting to the Merger and Proposed Reincorporation should
carefully review the text of EXHIBIT E (particularly the specified procedural
steps required to perfect their dissenters' rights) and should consult as
appropriate with such holder's legal counsel. The dissenters' rights will be
lost if the procedural requirements of Article 13 of the WBCA are not fully and
precisely satisfied.
A record shareholder may assert dissenters' rights to fewer than all shares
registered in his name only if he dissents with respect to all shares
beneficially owned by a beneficial holder for whom he acts as nominee and
notifies the Company in writing of the name and address of each person on whose
behalf he has such dissenters' rights. A beneficial holder may assert
dissenters' right as to shares held on his behalf only if he submits to the
Company the record holder's written consent to the dissent not later than the
time the beneficial shareholder asserts dissenters' rights and does so with
respect to all shares to which he is beneficial owner.
Under Article 13 of the WBCA, any shareholder who desires to assert
dissenters' rights shall deliver to the Company before the vote is taken written
notice of his intent to demand payment for his shares if the proposed action is
effected and shall not vote his shares in favor of the proposed action. If the
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proposed corporate action is effected, the Company shall deliver a written
dissenters' notice to all shareholders who properly exercised their dissenters'
rights within ten (10) days after the corporate action is effected. Such notice
from Company shall include, among other items, a form for demanding payment (and
deliver certificates representing shares of Canmax-Wyoming), as well as a date
not less than thirty (30) days and not more than sixty (60) days after the date
of the Company's delivery of the initial dissenters' notice by which the Company
must receive the payment demand. A shareholder who demands payment and deposits
his share certificates in accordance with the terms of the Company's payment
demand shall be entitled to receive from the Company the amount that the Company
estimates to be the "fair value" of the shares plus accrued interest. Such
payment is to be accompanied by specified financial information regarding the
Company, a statement of the Company's estimate of the fair value of the shares
and an explanation of how any accrued interest was calculated. If a dissenting
shareholder disagrees with the Company's calculation of the "fair value" for the
shares tendered, he may notify the corporation in writing of his own estimate of
fair value or reject the Company's offer and demand payment of fair value of his
shares. If a dissenting shareholder waives his rights to contest the Company's
determination of "fair value," he must notify the Company of his demand of
payment of a different value in writing within thirty (30) days after the
Company made or offered payment for his shares.
If a demand for payment remains unsettled, the Company may commence a
proceeding within sixty (60) days after receiving the payment demand and
petition the court to determine the fair value of the shares and accrued
interest. If the Company does not commence a proceeding within the sixty day
period, it must pay to each dissenting shareholder the amount demanded by such
shareholder.
The term "fair value" as used in the WBCA means the value of the shares
immediately before the corporate action to which the dissenter objects is
effected and will exclude any appreciation or depreciation resulting from the
Merger or proposed Reincorporation. Except as provided herein, no other holders
of Canmax securities will be entitled to dissenters' rights in connection with
the Merger and proposed Reincorporation.
INTERESTED PARTIES
Except as described above with regard to potential benefits to be received
by the officers and directors of the Company arising from the liability
limitation and indemnification provisions under the DGCL, no director or
executive officer of the Company has any interest, direct or indirect, in the
Merger or the proposed Reincorporation, other than any interest arising from the
ownership of securities of the Company.
AMENDMENT, DEFERRAL OR TERMINATION OF THE REINCORPORATION MERGER AGREEMENT
If approved by the shareholders at the Annual Meeting, it is anticipated
that the Reincorporation will become effective at the earliest practicable date.
However, the Reincorporation Merger Agreement provides that it may be amended,
modified or supplemented before or after approval by the shareholders of the
Company; but no such amendment, modification or supplement may be made if it
would have a material adverse effect upon the rights of the Company's
shareholders unless it has been approved by the shareholders. The
Reincorporation Merger Agreement also provides that the Company may terminate
and abandon the Merger or defer its consummation for a reasonable period,
notwithstanding shareholder approval, if in the opinion of the Board of
Directors or, in the case of deferral, of an authorized officer, such action
would be in the best interests of the Company and its shareholders.
FEDERAL INCOME TAX CONSEQUENCES OF THE REINCORPORATION
The Company believes that, for federal income tax purposes, no gain or loss
will be recognized by the holders of Common Stock as a result of the
consummation of the Reincorporation and no gain or loss will be recognized by
Canmax-Wyoming or Canmax-Delaware. Each holder of Common Stock will have the
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same basis in the Canmax-Delaware Common Stock received pursuant to the
Reincorporation (other than those who exercise dissenters' rights) as such
shareholder had in the Common Stock held immediately prior to the
Reincorporation, and the shareholder's holding period with respect to the
Canmax-Delaware Common Stock will include the period during which such
shareholder held the corresponding Common Stock, so long as the Common Stock was
held as a capital asset at the time of consummation of the Reincorporation.
ALTHOUGH IT IS NOT ANTICIPATED THAT STATE OR LOCAL INCOME TAX CONSEQUENCES
TO SHAREHOLDERS WILL VARY FROM THE FEDERAL INCOME TAX CONSEQUENCES DESCRIBED
ABOVE, SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE EFFECT OF
THE REINCORPORATION UNDER STATE, LOCAL OR FOREIGN INCOME TAX LAWS.
The Company also believes that it will not recognize gain or loss for
Federal income tax purposes as a result of the Merger, and that Canmax-Delaware
will succeed without adjustment to the tax attributes of the Company.
Shareholders should be aware that franchise taxes in the State of Delaware are
likely to be higher than those in the State of Wyoming. Based on the Company's
present financial position, the estimated annual franchise tax in the State of
Delaware will be approximately $6,000 greater than the amount of tax paid last
year to the State of Wyoming.
A dissenting shareholder who receives payment for his shares upon exercise
of his rights of dissent may recognize capital gain or loss for federal income
tax purposes, measured by the difference between the basis for his shares and
the amount of the payment received. Shareholders who may dissent and seek cash
payment for their shares should consult with their tax advisors.
APPROVAL
Assuming the presence of a quorum, the affirmative vote of the holders of
two-thirds of the outstanding shares of Common Stock is required for the
approval of the Merger Agreement and the Reincorporation. Proxies will be voted
for or against such approval in accordance with the specifications marked
thereon and, if no specification is made, will be voted "FOR" such approval. As
the sole shareholder of Canmax-Delaware, the Company has authorized the Merger
for Canmax-Delaware.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT THE SHAREHOLDERS VOTE "FOR" THE APPROVAL
AND ADOPTION OF THE MERGER AGREEMENT
AND THE REINCORPORATION PROPOSAL
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has approved Ernst & Young LLP, which has served as
independent auditors of the Company since 1986, to serve as independent auditors
of the Company for the fiscal year ending October 31, 1998, and recommends
ratification by the shareholders of such appointment. Such ratification requires
the affirmative vote of the holders of a majority of the Common Stock of the
Company entitled to vote on this matter and represented in person or by proxy at
the Meeting. Abstentions on this proposal will have the same legal effect as a
vote against this proposal. Broker non-votes will have no effect on the outcome
of the vote on this proposal.
In the event the appointment is not ratified, the Board of Directors will
consider the appointment of other independent auditors. The Board of Directors
may terminate the appointment of Ernst & Young as the Company's independent
auditors without the approval of the shareholders of the Company if the Board of
Directors deems such termination necessary or appropriate. A representative of
Ernst & Young is
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expected to attend the Meeting and will have the opportunity to make a
statement, if such representative desires to do so, and will be available to
respond to appropriate questions.
SOLICITATION OF PROXIES
The solicitation of proxies by the Board of Directors will be conducted
primarily by mail. THE HERMAN GROUP, INC. HAS BEEN RETAINED TO ASSIST THE
COMPANY IN THE SOLICITATION OF PROXIES IN CONNECTION WITH THE MEETING FOR A FEE
OF $5,000 PLUS OUT-OF-POCKET EXPENSES. In addition, officers, directors and
employees of the Company may solicit proxies personally or by telephone,
telegram or other forms of wire or facsimile communication. These persons will
receive no special compensation for any solicitation activities. The Company
will, upon request, reimburse brokers, custodians, nominees and fiduciaries for
reasonable expenses incurred by them in forwarding proxy material to beneficial
owners of Common Stock. The costs of the solicitation will be borne by the
Company.
SHAREHOLDER PROPOSALS
Any shareholder who wishes to submit a proposal for inclusion in the
Company's proxy material and for presentation at the Company's 1999 Annual
Meeting of Shareholders must forward such proposal to the Secretary of the
Company at the address indicated on the first page of this proxy statement, so
that the Secretary receives it no later than December 1, 1998.
OTHER MATTERS
The Board of Directors is not aware of any other matters that are to be
presented for action at the Meeting. However, if any other matters properly come
before the Meeting or any adjournment(s) thereof, it is intended that the
enclosed proxy will be voted in accordance with the judgment of the persons
voting the proxy.
By Order of the Board of Directors.
/s/ Debra L. Burgess
- ----------------------------
Debra L. Burgess
Secretary
February 27, 1998
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EXHIBIT A
COMPARISON OF WYOMING AND DELAWARE CORPORATE LAW
The rights of the shareholders of Canmax Inc., a Wyoming corporation
("Canmax-Wyoming") are governed by the Wyoming Business Corporation Act
("WBCA"). Upon consummation of the Merger, the former shareholders of
Canmax-Wyoming will become stockholders of Canmax-Delaware, Inc. a Delaware
corporation ("Canmax-Delaware"). As stockholders of Canmax-Delaware, the
Shareholders' rights will differ in certain respects (in some cases materially)
from those presently held such rights are set forth in the WBCA, the Articles of
Incorporation of Canmax-Wyoming (the "Canmax-Wyoming Articles") and the bylaws
of Canmax-Wyoming (the "Canmax-Wyoming Bylaws").
Certain differences and similarities between the rights of stockholders of
Canmax-Delaware and those of Canmax-Wyoming are set forth below. This summary is
not intended to be relied upon as an exhaustive list of the differences or
detailed description and analysis of the provisions discussed and is qualified
in its entirety by the WBCA, the Canmax-Wyoming Articles, the Canmax-Wyoming
Bylaws, Delaware General Corporation Law ("DGCL"), the Certificate of
Incorporation of Canmax-Delaware (the "Canmax-Delaware Certificate") and the
bylaws of Canmax-Delaware (the "Canmax-Delaware Bylaws").
AUTHORIZED CAPITAL
The Canmax-Wyoming Articles authorize an aggregate of 44,169,100 shares of
Canmax-Wyoming Common Stock.
The Canmax-Delaware Certificate authorizes an aggregate of 44,169,100 shares
of Canmax-Delaware Common Stock.
BUSINESS COMBINATIONS
Under the DGCL, the Canmax-Delaware Articles and the Canmax-Delaware Bylaws,
the approval by the affirmative vote of the holders of a majority of the
outstanding stock of a corporation entitled to vote on the matter is required
for a merger or consolidation or sale, lease or exchange, of all or
substantially all of a corporation's assets to be consummated.
Under the WBCA, unless the WBCA, the Articles of Incorporation or the Board
of Directors acting pursuant to the WBCA require a greater vote or a vote by
voting groups, the approval by the affirmative vote of the holders of a majority
of the outstanding stock of a corporation entitled to vote or of each voting
group entitled to vote on the matter is required for a merger, share exchange,
consolidation or sale, lease or exchange of all or substantially all of a
corporation's assets to be consummated. However, the Canmax-Wyoming Bylaws
require a two-thirds shareholder approval for such actions.
DISSENTERS' RIGHTS
Under the DGCL, stockholders generally have the right to demand and receive
payment of the fair value of their stock in the event of a merger or
consolidation; provided, however, that no dissenters or appraisal rights are
available for the shares of any class or series of stock which, at the record
date for the meeting held to approve such transaction, were either (i) held of
record by more than 2,000 stockholders or (ii) listed on a national securities
exchange or, only under the DGCL, designated as a national market system
security on an inter-dealer quotation system by the NASD. Even if the shares of
any class or series of stock meet the requirements of clause (i) or (ii) above,
appraisal rights are available for such class or series if the holders thereof
receive in the merger or consolidation anything except: (a) shares of stock of
the corporation surviving or resulting from such merger or consolidation; (b)
shares of stock of any other corporation which at the effective date of the
merger or consolidation will be either listed on a national securities exchange
or held of record by more than 2,000 stockholders or, only under the DGCL,
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designated as a national market system security on an inter-dealer quotation
system by the NASD; (c) cash in lieu of fractional shares of the corporations
described in clause (a) or (b) of this sentence; or (d) any combination of
shares of stock and cash in lieu of fractional shares described in the foregoing
clauses (a), (b) and (c).
Under the WBCA, shareholders generally have the right to dissent from, and
to obtain payment of the fair value of their shares in the event of a merger or
consolidation, a share exchange or a sale or exchange of all or substantially
all of the property of a corporation. The WBCA imposes significant duties on
shareholders who wish to avail themselves of the right to demand and receive
payment of the fair cash value of their stock, and any shareholder who does not
satisfy these duties will not be entitled to payment for his or her shares. The
shareholders of Canmax-Wyoming will be entitled to exercise dissenters' rights
in connection with the Merger and Proposed Reincorporation.
STATE TAKEOVER STATUTES
BUSINESS COMBINATIONS WITH INTERESTED STOCKHOLDERS
Section 203 of the DGCL generally prohibits any business combination
(defined to include a variety of transactions, including (i) mergers and
consolidations; (ii) sales or dispositions of assets having an aggregate market
value equal to 10% or more of the aggregate market value of the corporation
determined on a consolidated basis; (iii) issuances of stock (except for certain
pro rata and other issuances); and (iv) disproportionate benefits from the
corporation (including loans and guarantees)) between a Delaware corporation and
any interested stockholder (defined generally as any person who, directly or
indirectly, beneficially owns 15% or more of the outstanding voting stock of the
corporation) for a period of three years after the date on which the interested
stockholder became an interested stockholder. These restrictions do not apply,
however, (a) if, prior to such date, the board of directors of the corporation
approved either the business combination or the transaction which resulted in
such stockholder becoming an interested stockholder; (b) if, upon consummation
of the transaction resulting in such stockholder becoming an interested
stockholder, the interested stockholder owned at least 85% of the voting stock
of the corporation at the time the transaction was commenced (excluding, for the
purposes of determining the number of shares outstanding, shares owned by
persons who are directors and also officers and by certain employee plans of the
corporation); (c) if, on or subsequent to such date, the business combination is
approved by the board of directors and the holders of at least two-thirds (2/3)
of the shares not involved in the transaction; or (d) under certain other
circumstances.
In addition, a Delaware corporation may adopt an amendment to its
Certificate of Incorporation or Bylaws expressly electing not to be governed by
Section 203 of the DGCL if, in addition to any other vote required by law, such
amendment is approved by the affirmative vote of a majority of the shares
entitled to vote. Such amendment will not, however, be effective until twelve
(12) months after such stockholder vote and will not apply to any business
combination with an interested stockholder who was such on or prior to the
effective date of such amendment.
Canmax-Delaware has not adopted an amendment to the Canmax-Delaware Articles
or Canmax-Delaware Bylaws electing not to be governed by Section 203 of the
DGCL. Therefore, Canmax-Delaware will be entitled to the protections of Section
203 of the DGCL.
Section 17-18-104 of the Wyoming Management Stability Act ("WMSA") generally
restricts the ability of a "Qualified Corporation" (defined in the WMSA to
include certain publicly traded corporations incorporated in Wyoming--generally
having at least $10,000,000 of assets and in excess of 1,000 record
stockholders--And with substantial business operations within the state) to
engage in any business combination (defined to include a variety of
transactions, including (i) any merger, consolidation or share exchange; (ii)
any sale, lease, exchange, mortgage, pledge, transfer or other disposition of
assets having an aggregate market value or book value equal to 10% or more of
the aggregate market value or book value of the corporation determined on a
consolidated basis; (iii) any issuance or transfer of stock (except for
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certain prorata and other issuance); (iv) disproportionate benefits from the
corporation (including loans and guarantees); and (v) any agreements,
arrangements or understandings relating to the adoption of a plan or a proposed
plan for liquidation and dissolution of the corporation) with an interested
shareholder (defined generally as any person who, directly or indirectly,
beneficially owns 15% or more of the outstanding voting stock of the
corporation) for a period of three years after the date on which the interested
shareholder became an interested shareholder. These restrictions do not apply,
however, (a) if, prior to such date, the board of directors of the corporation
approved either the business combination or the transaction which resulted in
such shareholder becoming an interested shareholder, (b) if, on or subsequent to
such date, the business combination is approved by the board of directors and
the holders of at least two-thirds (2/3) of the voting shares not involved in
the transaction, or (c) under certain other circumstances.
In addition, a Wyoming corporation may adopt an amendment to its Articles of
Incorporation or Bylaws electing not to be governed by Section 17-18-104 of the
WMSA or by filing a statement making the election with the Secretary of State,
such election to be authorized by the board of directors of the corporation. The
election made by the corporation shall be effective immediately upon adoption of
the Bylaws or on the date of filing with the Secretary of State.
Canmax-Wyoming has not adopted an amendment to either the Canmax-Wyoming
Articles or the Canmax-Wyoming Bylaws electing not to be governed by Section
17-18-104 of the WMSA; however, Canmax-Wyoming does not meet the requirements of
a Qualified Corporation and therefore is not subject to the protections of the
WMSA.
WYOMING CONTROL SHARE ACQUISITION STATUTE
Under the WMSA, shares of a Qualified Corporation acquired in a "control
share acquisition" do not have voting rights unless conferred by the
stockholders of such corporation pursuant to the WMSA. As used in the WMSA, a
"control share acquisition" generally means the acquisition by any person (an
"acquiring person") of shares of voting stock giving the acquiring person direct
or indirect voting power in the election of directors within any of the
following ranges: (i) 1/5th or more but less than a of such voting power; (ii)
aor more but less than a majority of such voting power; or (iii) a majority or
more of such voting power. An acquiring person may make a control share
acquisition only if: (i) such person delivers an acquiring person's statement to
a Qualified Corporation, and (ii) a resolution is adopted and approved by both a
majority of (a) all outstanding voting shares including interested shares (as
hereafter defined), and (b) all outstanding shares, excluding interested shares.
"Interested shares" means the shares of a Qualified Corporation in respect of
which any of the following persons may exercise or direct the exercise of the
voting power of a Qualified Corporation in the election of directors: (i) the
acquiring person, (ii) any officer of a Qualified Corporation elected or
appointed by the directors of a Qualified Corporation, or (iii) any employee of
Canmax-Wyoming who is also a director of a Qualified Corporation. Canmax-Wyoming
has not taken any corporate action to opt out of the Wyoming Control Share
Acquisition Statute; however Canmax-Wyoming does not meet the requirements of a
Qualified Corporation and therefore is not subject to the protections of the
WMSA.
WYOMING SHAREHOLDER TAKEOVER PROTECTION STATUTE
The WMSA requires that any offeror (defined as any person who makes or in
any way participates in making a takeover offer), before making a takeover offer
with regard to a Qualified Corporation, shall file with the Secretary of State
certain information specified in the Wyoming Securities Act or as prescribed by
the Secretary of State, and shall, not later than the filing date of the
statement, deliver a copy of the statement to the target company at its
principal office or to its registered agent for service of process in the State
of Wyoming. No takeover offer shall be made which is not made to all offerees
holding the same class of equity securities of a Qualified Corporation on
substantially equivalent terms. No stock shall be contracted for, purchased or
paid for pursuant to a takeover offer within the first 20 business days after
the
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offer is made and no shares shall be purchased or paid for in violation of any
order of the Secretary of State. No offeror may acquire in any manner any equity
securities of any class of a Qualified Corporation at any time within two years
following the conclusion of a takeover offer with respect to that class,
including, but not limited to, acquisitions made by purchase, exchange, merger,
consolidation, partial or complete liquidation, redemption, reverse stock split
and any other recapitalization or reorganization unless the holder of that
equity security is also afforded, at the time of that acquisition, a reasonable
opportunity to dispose of that security to the offeror upon substantially
equivalent terms. For purposes of the WMSA, a "takeover offer" means an offer to
acquire or an acquisition of any equity security of a Qualified Corporation
pursuant to a tender offer or request or invitation for tenders, if, after the
acquisition, the offeror is or will be directly or indirectly a record or
beneficial owner of more than 10% of any class of the outstanding equity
securities of a Qualified Corporation.
A Wyoming corporation may elect not to be governed by the Shareholder
Takeover Protection Statute (i) by adopting a specific provision in its Articles
of Incorporation; (ii) through a statement in the Bylaws that the corporation
elects not to be subject to the restrictions of the shareholder takeover
protection provisions, such election to be effective immediately upon adoption
of the Bylaws unless the Articles of Incorporation provide otherwise; or (iii)
by filing a statement with the Secretary of State making the election not to be
governed by such statute, such election to be effective from the date of filing
with the Secretary of State. If a corporation has elected not to be subject to
the provisions of the Shareholder Takeover Protection Statute, such provisions
will not apply to the following: (i) an acquisition by an offeror, if the
instant transaction and all acquisitions of equity securities of the same class
during the preceding 12 months by the offeror or any of its affiliates do not
exceed 2% of that class; or (ii) an acquisition determined by order of the
Secretary of State to be a takeover offer but is not made for the purpose of,
and not having the effect of, changing or influencing the control of a Qualified
Corporation. Canmax-Wyoming has not made an election to opt out of the
Shareholder Takeover Protection Statute; however, Canmax-Wyoming does not meet
the requirements of a Qualified Corporation and therefore is not subject to the
protections of the WMSA.
AMENDMENTS TO CERTIFICATE OF INCORPORATION
Under the DGCL, unless otherwise provided in the Certificate of
Incorporation, a proposed amendment to the Certificate of Incorporation requires
the affirmative vote of a majority of all shares outstanding and entitled to be
cast on the matter. If any such amendment would adversely affect the rights of
any holders of shares of a class or series of stock, the vote of the holders of
a majority of all outstanding shares of the class or series, voting as a class,
is also necessary to authorize such amendment. The Canmax-Delaware Certificate
does not provide additional requirements regarding amendments to its Certificate
of Incorporation.
Under the WBCA, unless the WBCA, the Articles or Incorporation or the Board
of Directors acting pursuant to the WBCA require a greater vote or a vote by
voting groups, a proposed amendment to the Articles of Incorporation requires
the affirmative vote of the holders of a majority of the votes entitled to be
cast on the amendment or of each voting group entitled to vote on the amendment.
The Canmax-Wyoming Articles do not provide additional requirements regarding
amendments to its Articles of Incorporation; however, the Canmax-Wyoming Bylaws
require a two-thirds shareholder approval requirement to amend its Articles of
Incorporation.
AMENDMENTS TO BYLAWS
Under the DGCL, the power to adopt, alter, amend and repeal the Bylaws is
vested exclusively in the stockholders, except to the extent that the
Certificate of Incorporation vests such power in the board of directors. The
Canmax-Delaware Certificate vests in its Board of Directors the power to adopt,
alter, amend, or repeal the Bylaws.
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Under the WBCA, a corporation's board of directors may amend or repeal the
Bylaws unless (i) the Articles of Incorporation or the WBCA reserves such power
exclusively to the shareholders in whole or in part, or (ii) the shareholders in
amending or repealing a particular Bylaw provide expressly that the Board of
Directors may not amend or repeal that Bylaw, provided that a Bylaw that fixes a
greater quorum or voting requirement for shareholders under the WBCA may not be
adopted, amended or repealed by the Board of Directors. The Canmax-Wyoming
Bylaws provide that the power to alter, amend or repeal the Bylaws and to adopt
new Bylaws is reserved to the Board of Directors, to be exercised by a majority
vote of the Board of Directors.
PREEMPTIVE RIGHTS
Under the DGCL, a stockholder does not possess preemptive rights unless such
rights are specifically granted in the Certificate of Incorporation. The
Canmax-Delaware Certificate does not provide for preemptive rights.
Under the WBCA, a shareholder does not possess preemptive rights unless such
rights are specifically granted in the Articles of Incorporation. The
Canmax-Wyoming Articles do not provide for preemptive rights.
DIVIDEND SOURCES
Under the DGCL, a board of directors may authorize a corporation to make
distributions to its stockholders, subject to any restrictions in its
Certificate of Incorporation, either (i) out of surplus; or (ii) if there is no
surplus, out of net profits for the fiscal year in which the dividend is
declared and/or the preceding fiscal year. Under the DGCL, no distribution out
of net profits is permitted, however, if the corporation's capital is less than
the amount of capital represented by the issued and outstanding stock of all
classes having a preference upon the distribution of assets, until such
deficiency has been repaired. The Canmax-Delaware Certificate does not provide
additional requirements regarding the distribution of dividends.
Under the WBCA, a Board of Directors may authorize a corporation to make
distributions to its shareholders subject to any restrictions imposed by the
Articles of Incorporation, provided that no distribution may be made if after
giving it effect (i) the corporation would not be able to pay its debts as they
become due in the usual course of business, or (ii) the corporation's total
assets would be less than the sum of its total liabilities plus (unless the
Articles of Incorporation permit otherwise) the amount that would be needed, if
the corporation were to be dissolved at the time of distribution, to satisfy the
preferential rights upon dissolution of shareholders whose preferential rights
are superior to those receiving the distribution. The Canmax-Wyoming Articles do
not provide additional requirements regarding the distribution of dividends.
DURATION OF PROXIES
Generally, under the DGCL, no proxy is valid for more than three years after
its date unless otherwise provided in the proxy. The Canmax-Delaware Bylaws do
not alter the effective period of a proxy.
Under the WBCA, no proxy is valid for more than eleven months unless a
longer period is expressly provided in the proxy. The Canmax-Wyoming Bylaws do
not alter the effective period of a proxy.
STOCKHOLDER ACTION WITHOUT A MEETING
Under the DGCL, unless otherwise provided in the Certificate of
Incorporation, action requiring the vote of stockholders may be taken without a
meeting, without prior notice and without a vote, by the written consent of
stockholders having not less than the minimum number of votes that would be
necessary to take such action at a meeting at which all shares entitled to vote
thereon were present and acted. The
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Canmax-Delaware Bylaws do not provide additional requirements regarding
stockholder action by written consent.
Under the WBCA, action required or permitted by the WBCA to be taken at a
shareholder's meeting may be taken without a meeting if notice of the proposed
action is given to all voting shareholders and the action is taken by the
holders of all shares entitled to vote on the action. The action shall be
evidenced by one or more written consents describing the action taken, signed,
either manually or by facsimile, by the holders of the requisite number of
shares entitled to vote on the action, and delivered to the corporation for
inclusion in the minutes or filing with the corporate records. The
Canmax-Wyoming Certificate does not provide additional requirements regarding
shareholder action by written consent.
SPECIAL STOCKHOLDER MEETINGS
The DGCL provides that a special meeting of stockholders may be called by
the Board of Directors or by such person or persons as may be authorized by the
Certificate of Incorporation or by the Bylaws. The Canmax-Delaware Bylaws permit
the Board of Directors or the Chairman of the Board to call a special meeting of
the stockholders for any purpose or purposes. Stockholders of Canmax-Delaware
will not be entitled to call a special meeting.
The WBCA provides that a special meeting of shareholders may be called by
the Board of Directors, any person or persons authorized by the Articles of
Incorporation or Bylaws, or the holders of at least 10% of all votes entitled to
be cast on any issue proposed to be considered at the proposed special meeting
upon one or more written demands by such holders. The Canmax-Wyoming Bylaws
provide that special meetings of the shareholders may be called by the Board of
Directors or by the shareholders holding at least 10% of all of the votes
entitled to be cast on any issue proposed to be considered at the proposed
special meeting.
CUMULATIVE VOTING
The DGCL permits cumulative voting for the election of directors if provided
for in a corporation's Certificate of Incorporation. The Canmax-Delaware
Certificate does not provide for cumulative voting for the election of
directors.
The WBCA permits cumulative voting for the election of directors if provided
for in the corporation's Articles of Incorporation. The Canmax-Wyoming Articles
do not provide for cumulative voting for the election of directors.
NUMBER AND ELECTION OF DIRECTORS
The DGCL permits the Certificate of Incorporation or the Bylaws of a
corporation to contain provisions governing the number and terms of directors.
However, if the Certificate of Incorporation contains provisions fixing the
number of directors, such number may not be changed without amending the
Certificate of Incorporation. The Canmax-Delaware Certificate does not fix the
number of directors. The Canmax-Delaware Bylaws permit the Board of Directors to
establish the number of directors, not less than three, by action of the Board.
The DGCL permits the Certificate of Incorporation of a corporation, the
initial Bylaws or a Bylaw adopted by the stockholders to provide that directors
be divided into one, two or three classes. The term of office of one class of
directors shall expire each year with the terms of office of no two classes
expiring the same year. Canmax-Delaware has not established a classified Board
of Directors.
The WBCA permits the Articles of Incorporation or the Bylaws of a
corporation to contain provisions governing the number and terms of directors,
provided that the number of directors shall not be less than one. The Articles
of Incorporation or Bylaws may establish a variable range for size of the Board
of Directors by fixing a minimum and maximum number of directors and the number
of directors may be fixed or changed from time to time within such range by the
shareholders or the Board of Directors. The
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terms for all directors expire at the next annual meeting of the shareholders
following their election unless their terms are staggered under the provisions
of the WBCA. The Canmax-Wyoming Bylaws provide that the number of directors
shall be fixed from time to time by resolution of the Board of Directors and
that each director shall hold office until the next annual meeting of
shareholders or until his or her successor has been elected and qualified. The
Canmax-Wyoming Bylaws further state that directors shall be natural persons who
are eighteen years of age or older, but need not be residents of Wyoming or
shareholders of Canmax-Wyoming.
The WBCA provides that if there are three or more directors, the Articles of
Incorporation may provide for staggered terms by dividing the total number of
directors into two or three groups, with each group containing one-half or
one-third of the total, as the case may be. The term of office of one class of
directors shall expire each year with the terms of office of no two classes
expiring in the same year. Canmax-Wyoming has not established staggered terms
for their Board of Directors.
REMOVAL OF DIRECTORS
The DGCL provides that a director or directors may be removed with or
without cause by the holders of a majority of the shares then entitled to vote
at an election of directors, except that (i) members of a classified board may
be removed only for cause, unless the Certificate of Incorporation provides
otherwise and (ii) in the case of a corporation having cumulative voting, if
less than the entire board is to be removed, no director may be removed without
cause if the votes cast against such director's removal would be sufficient to
elect such director if then cumulatively voted at an election of the entire
board of directors or of the class of directors of which such director is a
part. The Canmax-Delaware Bylaws provide that any director may be removed at any
time with or without cause by the affirmative vote of the stockholders having a
majority of the voting power at a special meeting of the stockholders called for
that purpose.
The WBCA provides that the shareholders may remove one or more directors
with or without cause unless the Articles of Incorporation provide that the
directors may be removed only for cause, except that (i) if a director is
elected by a voting group of shareholders, only the shareholders of that voting
group may participate in the vote to remove him; (ii) if cumulative voting is
authorized, a director may not be removed if the number of votes sufficient to
elect him under cumulative voting is voted against his removal, or if cumulative
voting is not authorized, a director may be removed only if the number of the
votes cast to remove him exceeds the number of votes cast not to remove him; and
(iii) a director may be removed by the shareholders only at a meeting called for
the purpose of removing him and the meeting notice shall state that the purpose
or one of the purposes of the meeting is removal of a director. The
Canmax-Wyoming Bylaws provide that the shareholders may remove the entire Board
of Directors or any lesser number with or without cause, at a meeting called
expressly for the purpose of removal of directors by a vote of the holders of a
majority of the shares then entitled to vote at an election of directors.
VACANCIES
Under the DGCL, unless otherwise provided in the Certificate of
Incorporation or the Bylaws, vacancies on the Board of Directors and newly
created directorships resulting from an increase in the authorized number of
directors may be filled by a majority of the directors then in office, although
less than a quorum, or by the sole remaining director, provided that, in the
case of a classified board, such vacancies and newly created directorships may
be filled by a majority of the directors elected by such class, or by the sole
remaining director so elected. In the case of a classified board, directors
elected to fill vacancies or newly created directorships shall hold office until
the next election of the class for which such directors have been chosen, and
until their successors have been duly elected and qualified. In addition, if, at
the time of the filing of any such vacancy or newly created directorship, the
directors in office constitute less than a majority of the whole board (as
constituted immediately prior to any such increase), the Delaware Court of
Chancery may, upon application of any stockholder or stockholders holding at
least 10% of the total number of outstanding shares entitled to vote for such
directors, summarily order an
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election to fill any such vacancy or newly created directorship, or replace the
directors chosen by the directors then in office. Neither the Canmax-Delaware
Certificate nor the Canmax-Delaware Bylaws provide additional requirements
regarding vacancies of directors.
Under the WBCA, unless the Articles of Incorporation provide otherwise, if a
vacancy occurs on the Board of Directors, including a vacancy resulting from an
increase in the number of directors, the shareholders or the Board of Directors
may fill the vacancy, except that if the directors remaining in office
constitute fewer than a quorum, the board of directors may fill the vacancy by
the affirmative vote of a majority of all directors remaining in office. If the
vacancy was held by a director elected by a voting group of shareholders and if
such vacancy is to be filled by the shareholders, only the holders of shares of
that voting group are entitled to vote to fill such vacancy. In addition to the
foregoing statutory provisions, the Canmax-Wyoming Bylaws provide that any
directorship to be filled by reason of an increase in the number of directors
may be filled by the affirmative vote of a majority of the directors then in
office or by election at an annual meeting or at a special meeting called for
that purpose. A director chosen to fill a position resulting from an increase in
the number of directors shall hold office until the next election of directors
by the shareholders and until his or her successor shall have been elected and
qualified.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under the DGCL, a corporation may indemnify a director, officer, employee or
agent of a corporation against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him or
her if he or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the corporation and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful. In the case of an action brought by or
in the right of a corporation, the corporation may indemnify a director,
officer, employee or agent of the corporation against expenses (including
attorneys' fees) actually and reasonably incurred by him or her if he or she
acted in good faith and in a manner he or she reasonably believed to be in the
best interests of the corporation, except that no indemnification may be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless the court in which such action
or suit was brought or, the Delaware Court of Chancery determines that, in view
of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses as the court shall deem proper. The
Canmax-Delaware Bylaws provide that such persons shall be indemnified to the
fullest extent authorized by the DGCL.
A director, officer, employee or agent who is successful, on the merits or
otherwise, in defense of any proceeding subject to the DGCL's (as the case may
be) indemnification provisions must be indemnified by the corporation for
reasonable expenses incurred therein, including attorneys' fees. The DGCL states
that any indemnification, unless ordered by a court, shall be made only upon a
determination that a director or officer has met the required standard of
conduct before the director or officer may be indemnified. The determination may
be made (i) by a majority vote of a quorum of disinterested directors; (ii) if a
quorum of disinterested directors is not obtainable, or even if obtainable, a
quorum of disinterested directors so directs, by independent legal counsel; or
(iii) by the stockholders.
The DGCL requires Canmax-Delaware to advance reasonable expenses to a
director or officer after such person provides an undertaking to repay the
corporation if it is determined that the required standard of conduct has not
been met. This indemnification and advancement of expenses is not exclusive of
any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any Bylaw, agreement, vote of stockholders or
disinterested directors or otherwise. Delaware corporations may procure
insurance for purposes of indemnification of directors and officers. In addition
to the statutory provisions, the Canmax-Delaware Bylaws provide that the
indemnification and advancement of expenses provided by, or granted pursuant to,
the Bylaws shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and administrators
of such a person.
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Under the WBCA, a corporation may indemnify an individual made a party to a
proceeding because he or she is or was a director of the corporation, against
expenses (including attorneys' fees), judgments and fines incurred with respect
to such proceeding if (i) he or she acted in good faith, (ii) he or she
reasonably believed that his or her conduct was in, or at least not opposed to,
the corporation's best interests, and (iii) in the case of any criminal
proceeding, he or she had no reasonable cause to believe his or her conduct was
unlawful. Unless otherwise limited by its Articles of Incorporation, a
corporation shall indemnify a director who was wholly successful, on the merits
or otherwise, in the defense of any proceeding to which he or she was a party
because he or she is or was a director of the corporation against reasonable
expenses incurred by him or her in connection with the proceeding. In the case
of an action brought by or in the right of a corporation, indemnification shall
be limited to reasonable expenses incurred in connection with such proceeding. A
corporation may not indemnify a director (i) in connection with a proceeding by
or in the right of the corporation in which the director was adjudged liable to
the corporation, or (ii) in connection with any other proceeding charging
improper personal benefit to him, whether or not involving action in his or her
official capacity, in which he or she was adjudged liable on the basis that
personal benefit was improperly received by him or her.
The WBCA states that a corporation may not indemnify a director unless a
determination has been made that indemnification of the director is permissible
because he or she has met the standard of conduct set forth in the WBCA. The
determination shall be made (i) by a majority vote of a quorum of disinterested
directors, (ii) if a quorum of disinterested directors is not obtainable, by
majority vote of a committee duly designated by the board of directors
consisting solely of two or more disinterested directors, (iii) by special legal
counsel selected (a) by the board of directors or its committee in the manner
prescribed above, or (b) if a quorum of the board of directors cannot be
obtained or a committee cannot be designated, by majority vote of the full board
of directors, including directors who are parties, or (iv) by the shareholders.
Determination of a proceeding by judgment, order, settlement, conviction or upon
a plea of nolo contendere or its equivalent is not, of itself, determinative,
that the director did not meet the standard of conduct required by the WBCA.
The WBCA provides that a corporation may advance reasonable expenses
incurred by a director who is a party to a proceeding if (i) the director
furnishes the corporation a written affirmation of his or her good faith belief
that he or she has met the standard of conduct, (ii) the director furnishes the
corporation a written undertaking, executed personally or on his or her behalf,
to repay the advance if it is ultimately determined that he or she did not meet
the standard of conduct, and (iii) a determination is made that the facts then
known to those making the determination would not preclude indemnification under
the WBCA. The undertaking required by (ii) above shall be an unlimited general
obligation of the director but need not be secured and may be accepted without
reference to financial ability to make repayment. Wyoming corporations may
procure insurance for purposes of indemnification of directors and officers.
Neither the Canmax-Wyoming Articles nor the Canmax-Wyoming Bylaws provide any
provision inconsistent with the WBCA.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors or persons controlling Canmax-Wyoming pursuant to
the foregoing provisions, Canmax-Wyoming has been informed that in the opinion
of the Commission such indemnification is against public policy as expressed in
the Securities Act and is therefore unenforceable.
LIMITATION OF PERSONAL LIABILITY OF DIRECTORS
The DGCL provides that a corporation's Certificate of Incorporation may
include a provision limiting the personal liability of a director to the
corporation or its stockholders for monetary damages for breach of a fiduciary
duty as a director. However, no such provision can eliminate or limit the
liability of a director for (i) any breach of the director's duty of loyalty to
the corporation or its stockholders; (ii) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of the law; (iii)
violation of certain provisions of the DGCL; (iv) any transaction from which the
director derived an
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improper personal benefit; or (v) any act or omission prior to the adoption of
such a provision in the Certificate of Incorporation. The Canmax-Delaware
Certificate provides a provision eliminating the personal liability for monetary
damages of its directors to the fullest extent permitted under the DGCL.
The WBCA provides that a corporation's Articles of Incorporation may contain
a provision eliminating or limiting the personal liability of a director to the
corporation or its shareholders from monetary damages, for breach of fiduciary
duty as a director. However, no such provision shall eliminate or limit the
liability of a director for (i) breach of the director's duty of loyalty to the
corporation or its shareholders, (ii) acts or omissions not in good faith or
which involved intentional misconduct or a knowing violation of law, (iii)
violation of certain provisions of the WBCA, or (iv) any transaction from which
the director derived an improper personal benefit. Further, the WBCA provides
that a corporation shall not eliminate or limit the liability of a director for
any act or omission occurring prior to May 22, 1987. Neither the Canmax-Wyoming
Articles nor the Canmax-Wyoming Bylaws provide provisions for limiting personal
liability of directors.
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EXHIBIT B
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Merger Agreement") is entered into on
this day of , 1998 by and between CANMAX INC., a Wyoming
corporation ("Canmax-Wyoming") and CANMAX-DELAWARE, INC., a Delaware corporation
("Canmax-Delaware").
RECITALS:
WHEREAS, Canmax-Wyoming is a corporation duly organized and existing under
the laws of the State of Wyoming;
WHEREAS, Canmax-Delaware is a corporation duly organized and existing under
the laws of the State of Delaware;
WHEREAS, on the date hereof, the authorized capital of Canmax-Wyoming
consists of 44,169,100 shares of common stock, no par value per share
("Canmax-Wyoming Common Stock"), of which 8,111,005 shares are issued and
outstanding;
WHEREAS, on the date hereof, the authorized capital of Canmax-Delaware
consists of 44,169,100 shares of common stock, par value $.001 per share
("Canmax-Delaware Common Stock"), of which 100 shares are issued and
outstanding;
WHEREAS, the respective Boards of Directors of Canmax-Wyoming and
Canmax-Delaware have determined that it is advisable and in the best interests
of each such corporation that Canmax-Wyoming merge with and into Canmax-Delaware
upon the terms and subject to the conditions of this Merger Agreement for the
purpose of effecting the reincorporation of Canmax-Wyoming in the State of
Delaware, and the respective Boards of Directors of Canmax-Wyoming and
Canmax-Delaware have, by resolutions duly adopted, approved and adopted this
Merger Agreement; and
WHEREAS, the parties intend by this Merger Agreement to effect a
"reorganization" under Section 368 of the Internal Revenue Code of 1986, as
amended.
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties and agreements contained herein, the parties hereto agree as follows:
AGREEMENTS:
A. MERGER. At the Effective Time (as hereinafter defined), Canmax-Wyoming
shall be merged with and into Canmax-Delaware (the "Merger"). Canmax-Delaware
shall be the surviving corporation of the Merger (hereinafter sometimes referred
to as the "Surviving Corporation"), and the separate corporate existence of
Canmax-Wyoming shall cease. The Merger shall become effective upon the filing of
a Certificate of Merger with the Secretary of State of the State of Delaware and
the Secretary of State of the State of Wyoming. The date and time when the
Merger shall become effective is herein referred to as the "Effective Time."
B. GOVERNING DOCUMENTS.
1. The Certificate of Incorporation of Canmax-Delaware as it may be
amended or restated subject to applicable law, and as in effect immediately
prior to the Effective Time, shall constitute the Certificate of
Incorporation of the Surviving Corporation without further change or
amendment until thereafter amended in accordance with the provisions thereof
and applicable law.
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2. The Bylaws of Canmax-Delaware as in effect immediately prior to the
Effective Time shall constitute the Bylaws of the Surviving Corporation
without change or amendment until thereafter amended in accordance with the
provisions thereof and applicable law.
3. As of the Effective Time, the Certificate of Incorporation of
Canmax-Delaware shall be automatically amended, without further requirement
of filing to change the name of the surviving corporation to:
"CANMAX INC."
C. OFFICERS AND DIRECTORS. The persons who are officers and directors of
Canmax-Wyoming immediately prior to the Effective Time shall, after the
Effective Time, be the officers and directors of the Surviving Corporation,
without change until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Certificate of Incorporation and Bylaws and
applicable law.
D. RIGHTS, PRIVILEGES, ETC. At the Effective Time, the separate corporate
existence of Canmax-Wyoming shall cease, and the Surviving Corporation shall
possess all the rights, privileges, powers and franchises of a public or private
nature and be subject to all the restrictions, disabilities and duties of
Canmax-Wyoming; and all the rights, privileges, powers and franchises of
Canmax-Wyoming on whatever account, as well for share subscriptions and all
other things in action, shall be vested in the Surviving Corporation; and all
property, rights, privileges, powers and franchises, and all and every other
interest shall be thereafter as effectively the property of the Surviving
Corporation as the same were of Canmax-Wyoming, and the title to any real estate
vested by deed or otherwise shall not revert or be in any way impaired by reason
of the Merger, but all rights of creditor and liens upon any property of Canmax-
Wyoming shall be reserved unimpaired, and all debts, liabilities and duties of
Canmax-Wyoming shall thenceforth attach to the Surviving Corporation and may be
enforced against it to the same extent as if such debts, liabilities and duties
had been incurred or contracted by it; provided, however, that such liens upon
property of Canmax-Wyoming will be limited to the property affected thereby
immediately prior to the Merger. All corporate acts, plans, policies,
agreements, arrangements, approvals and authorizations of Canmax-Wyoming, its
shareholders, Board of Directors and committees thereof, officers and agents
which were valid and effective immediately prior to the Effective Time, shall be
taken for all purposes as the acts, plans, policies, agreements, arrangements,
approvals and authorizations of the Surviving Corporation, its shareholders,
Board of Directors and committees thereof, respectively, and shall be as
effective and binding thereon a the same were with respect to Canmax-Wyoming.
E. CONVERSION OF SHARES. At the Effective Time, by virtue of the Merger
and without any action on the part of the holder thereof:
1. Each share of Canmax-Wyoming Common Stock outstanding immediately
prior to the Effective Time shall, except as provided in Section 9 hereof,
be converted into, and shall become, one fully paid and nonassessable share
of Canmax-Delaware Common Stock.
2. Each share of Canmax-Wyoming Common Stock held in the treasury of
Canmax-Wyoming immediately prior to the Effective Time shall be
automatically converted into one share of Canmax-Delaware Common Stock,
which shares shall continue to be retained and held by Canmax-Delaware in
the treasury thereof.
3. Each option, warrant, purchase right, convertible debt instrument or
other security of Canmax-Wyoming issued and outstanding immediately prior to
the Effective Time shall be changed and converted into and shall be an
identical security of Canmax-Delaware, and the same number of shares of
Canmax-Delaware Common Stock shall be reserved for purposes of the exercise
of such option, warrant, purchase right, convertible debt instrument or
other securities as is equal to the number of shares of Canmax-Wyoming
Common Stock so reserved at the Effective Time; and
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4. Each share of Canmax-Delaware Common Stock issued and outstanding
immediately prior to the Effective Time shall be canceled and retired, and
no payment shall be made with respect thereto, and such shares shall resume
the status of unauthorized and unissued shares of Canmax-Delaware Common
Stock.
F. STOCK CERTIFICATES. At and after the Effective Time, all of the
outstanding certificates which immediately prior to the Effective Time
represented shares of Canmax-Wyoming Common Stock shall be deemed for all
purposes to evidence ownership of, and to represent shares of, Canmax-Delaware
Common Stock into which the shares of Canmax-Wyoming Common Stock formerly
represented by such certificates have been converted as herein provided. The
registered owner on the books and records of Canmax-Wyoming or its transfer
agent of any such outstanding stock certificate shall, until such certificate
shall have been surrendered for transfer or otherwise accounted for to the
Surviving Corporation or its transfer agent, have and be entitled to exercise
any voting or other rights with respect to and to receive any dividends and
other distributions upon the shares of Canmax-Delaware Common Stock evidenced by
such outstanding certificate as above provided. Nothing contained herein shall
be deemed to require the holder of any shares of Canmax-Wyoming Common Stock to
surrender the certificate or certificates representing such shares in exchange
for a certificate or certificates representing shares of Canmax-Delaware Common
Stock.
G. OPTIONS. Each right in or to, or option to purchase, shares of
Canmax-Wyoming Common Stock, granted under Canmax-Wyoming's Stock Option Plan
(the "Plan") and otherwise, which is outstanding immediately prior to the
Effective Time, shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into and become a right in or to, or an
option to purchase at the same option price per share, the same number of shares
of Canmax-Delaware Common Stock, upon the same terms and subject to the same
conditions as set forth in the Plan or otherwise as in effective at the
Effective Time. The same number of shares of Canmax-Delaware Common Stock shall
be reserved for purposes of the outstanding options as is equal to the number of
shares of Canmax-Wyoming Common Stock, upon the same terms and subject to the
same conditions as set forth in the Plan or otherwise as in effect at the
Effective Time. The same number of shares of Canmax-Delaware Common Stock shall
be reserved for purposes of the outstanding options as is equal to the number of
shares of Canmax-Wyoming Common Stock so reserved as of the Effective Time. As
of the Effective Time, the Surviving Corporation hereby assumes the Plan and all
obligations of Canmax-Wyoming under the Plan including the outstanding rights or
options or portions thereof granted pursuant to the Plan and otherwise.
H. OTHER EMPLOYEE BENEFIT PLANS. As of the Effective Time, the Surviving
Corporation hereby assumes all obligations of Canmax-Wyoming under any and all
employee benefit plans in effect as of the Effective Time or with respect to
which employee rights or accrued benefits are outstanding as of the Effective
Time.
I. DISSENTING SHAREHOLDERS.
1. Notwithstanding the provisions of Section 5.a. hereof, any
outstanding shares of Canmax-Wyoming Common Stock held by a shareholder who
shall have elected to dissent from the Merger and who shall have exercised
and perfected his right to dissent with respect to such shares in accordance
with Article 13 of the Wyoming Business Corporation Act (a "Dissenting
Shareholder") shall not be converted into shares of Wyoming-Delaware Common
Stock as a result of the Merger, but such Dissenting Shareholders shall be
entitled to receive in lieu thereof only such consideration as shall be
provided in such Article 13, except that shares of Canmax-Wyoming Common
Stock outstanding immediately prior to the Effective Time and held by a
Dissenting Shareholder who shall thereafter withdraw his election to dissent
from the Merger or lose his right to dissent from the Merger as provided in
such Article 13 shall be deemed converted, as of the Effective Time, into
such number of shares of Canmax-Wyoming Common Stock as such holder
otherwise would have been entitled to receive as a result of the Merger.
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2. Canmax-Delaware hereby agrees that it may be served with process in
the State of Wyoming in any proceeding to enforce any obligation or the
rights of a Dissenting Shareholder arising from the Merger. Canmax-Delaware
appoints the Secretary of State of Wyoming as its agent to accept service of
process for any such proceeding and a copy of such process shall be mailed
by the Secretary of State of the State of Wyoming to Canmax-Delaware at 150
West Carpenter Freeway, Irving, Texas 75039, Attention: Corporate Secretary.
J. GOVERNING LAW. This Merger Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
K. AMENDMENT. Subject to applicable law and subject to the rights of
Canmax-Wyoming's shareholders further to approve any amendment which would have
a material adverse effect on such shareholders, this Merger Agreement may be
amended, modified or supplemented by written agreement of the parties hereto at
any time prior to the Effective Time with respect to any of the terms contained
herein.
L. DEFERRAL OR ABANDONMENT. At any time prior to the Effective Time, this
Merger Agreement maybe terminated and the Merger may be abandoned or the time of
consummation of the Merger may be deferred for a reasonable time by the Board of
Directors of either Canmax-Wyoming or Canmax-Delaware or both, notwithstanding
approval of this Merger Agreement by the shareholders of Canmax-Wyoming or the
stockholders of Canmax-Delaware, or both, if circumstances arise which, in the
opinion of the Board of Directors of Canmax-Wyoming or Canmax-Delaware, make the
Merger inadvisable or such deferral of the time of consummation thereof
advisable.
M. COUNTERPARTS. This Merger Agreement may be executed in any number of
counterparts, each of which shall constitute an original document but all of
which together shall constitute one and the same Agreement.
N. FURTHER ASSURANCES. From time to time, as and when required or
requested by either Canmax-Wyoming or Canmax-Delaware, as applicable, or by its
respective successors and assigns, there shall be executed and delivered on
behalf of the other corporation, or by its respective successors and assigns,
such deeds, assignments and other instruments, and there shall be taken or
caused to be taken by it all such further and other action, as shall be
appropriate or necessary in order to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation the title to and possession of all
property, interests, assets, rights, privileges, immunities, powers, franchise
and authority of Canmax-Wyoming and otherwise to carry out the purposes of this
Merger Agreement, and the officers and directors of each corporation are fully
authorized in the name and on behalf of such corporation or otherwise, to take
any and all such action and to execute and deliver any and all such deeds,
assignments and other instruments.
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IN WITNESS WHEREOF, Canmax-Wyoming and Canmax-Delaware have caused this
Merger Agreement to be signed by their respective duly authorized officers and
delivered this day of , 1998.
<TABLE>
<S> <C> <C>
CANMAX, INC.,
a Wyoming corporation
By:
-----------------------------------------
Name: Roger D. Bryant
Title: Chief Executive Officer
CANMAX-DELAWARE, INC.,
a Delaware corporation
By:
-----------------------------------------
Name: Roger D. Bryant
Title: Chief Executive Officer
</TABLE>
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EXHIBIT C
CERTIFICATE OF INCORPORATION
OF
CANMAX-DELAWARE, INC.
FIRST: The name of the Corporation is CANMAX-DELAWARE, INC. (the
"Corporation").
SECOND: The address of its registered office in the State of Delaware is
1209 Orange Street, in the City of Wilmington, County of New Castle 19801. Its
registered agent at such address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the Delaware General
Corporation Law.
FOURTH: The aggregate number of shares which the Corporation shall have
authority to issue is 44,169,100 shares, having a par value of $0.001 per share.
The shares are designated Common Stock and have identical rights and privileges
in every respect.
FIFTH: The name and mailing address of the Incorporator of the Corporation
is William L. Rivers,
c/o Arter & Hadden LLP, 1717 Main Street, Suite 4100, Dallas, Texas 75201.
SIXTH: In furtherance and not in limitation of the powers conferred on it by
the laws of the State of Delaware, the Board of Directors is expressly
authorized to adopt, amend or repeal the Bylaws of the Corporation.
SEVENTH: The Corporation is to have perpetual existence.
EIGHTH: Election of directors need not be by written ballot unless the
Bylaws of the Corporation shall so provide.
NINTH: No director of the Corporation shall be personally liable to the
Corporation or any of its stockholders for monetary damages for breach of
fiduciary duty as a director of the Corporation; PROVIDED, HOWEVER, that the
foregoing is not intended to eliminate or limit the liability of a director of
the Corporation for (i) any breach of a director's duty of loyalty to the
Corporation or its stockholders, (ii) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) a
violation of Section 174 of the Delaware General Corporation Law, or (iv) any
transaction from which the director derived an improper personal benefit. No
amendment to or repeal of this Article NINTH shall apply to or have any effect
on the liability or alleged liability of any director of the Corporation for or
with respect to any acts or omissions of such director occurring prior to such
amendment.
TENTH: The Corporation shall, to the fullest extent permitted by Section 145
of the Delaware General Corporation Law, as that section may be amended and
supplemented from time to time, indemnify any director or officer of the
Corporation (and any director, trustee or officer of any corporation, business
trust or other entity to whose business the Corporation shall have succeeded)
which it shall have power to indemnify under that Section against any expenses,
liabilities or other matter referred to in or covered by that Section. The
indemnification provided for in this Article TENTH (a) shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any Bylaw, agreement or vote of stockholders or disinterested directors or
otherwise, both as to action in their official capacities and as to action in
another capacity while holding such office, (b) shall continue as to a person
who has ceased to be a director or officer and (c) shall inure to the benefit of
the heirs, executors and administrators of such a person. To assure
indemnification under this Article TENTH of all such persons who are determined
by the Corporation or otherwise to be or to have been "Fiduciaries" of any
employee
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benefit plan of the Corporation which may exist from time to time and which is
governed by the Act of Congress entitled "Employee Retirement Income Security
Act of 1974," as amended from time to time, such Section 145 shall, for the
purposes of this Article, be interpreted as follows: an "other enterprise" shall
be deemed to include such an employee benefit plan; the Corporation shall be
deemed to have requested a person to serve an employee benefit plan where the
performance by such person of his duties to the Corporation also imposes duties
on, or otherwise involves services by, such person to the plan or participants
or beneficiaries of the plan; excise taxes assessed on a person with respect to
an employee benefit plan pursuant to such Act of Congress shall be deemed
"fines;" and action taken or omitted by a person with respect to an employee
benefit plan in the performance of such person's duties for a purpose reasonably
believed by such person to be in the interest of the participants and
beneficiaries of the plan shall be deemed to be for a purpose which is not
opposed to the best interests of the Corporation.
ELEVENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation in the
manner now or hereafter prescribed by the laws of the State of Delaware, and all
rights herein conferred are granted subject to this reserve power.
TWELFTH: Meetings of stockholders may be held within or without the State of
Delaware as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the Delaware General Corporation Law)
outside the State of Delaware at such place or places as may be designated form
time to time by the Board of Directors or in the Bylaws of the Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand this day of March, 1998,
and affirm the statements contained therein as true under penalties of perjury.
<TABLE>
<S> <C> <C>
-----------------------------------------
William L. Rivers
INCORPORATOR
</TABLE>
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EXHIBIT D
BYLAWS
OF
CANMAX-DELAWARE, INC.
(A DELAWARE CORPORATION)
ARTICLE I
OFFICES
SECTION 1.1. The registered office of the Corporation shall be in the City
of Wilmington, County of New Castle, State of Delaware.
SECTION 1.2. The Corporation may also have offices at such other places
both within and without the State of Delaware as the Board of Directors may from
time to time determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 2.1. ANNUAL MEETINGS. The annual meeting of the stockholders for
the election of directors and for the transaction of such other business as may
properly come before the meeting shall be held at such place within or without
the State of Delaware, and at such hour of the day as the Board of Directors
shall determine by resolution.
SECTION 2.2. SPECIAL MEETINGS. Special meetings of the stockholders for
the transaction of any proper business may be called at any time by the Board or
by the Chairman of the Board.
SECTION 2.3. NOTICE OF MEETINGS. Written notice of every meeting of
stockholders, stating the time, place and purposes thereof, shall be given
personally or by mail at least ten (10), but not more than sixty (60), days
(except as otherwise provided by law) before the date of such meeting to each
person who appears on the stock transfer books of the Corporation as a
stockholder and who is entitled to vote at such meeting. If such notice is
mailed, it shall be directed to such stockholder at his address as it appears on
the stock transfer books of the Corporation.
SECTION 2.4. QUORUM. At any meeting of the stockholders the holders of a
majority of the shares of the Corporation entitled to vote at such meeting,
present in person or represented by proxy, shall constitute a quorum for all
purposes, except where otherwise provided by law or in the Certificate of
Incorporation. A quorum, once established, shall not be broken by the withdrawal
of enough votes to leave less than a quorum and the votes present may continue
to transact business until adjournment, provided that any action (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum.
SECTION 2.5. ADJOURNMENTS. If at any meeting of stockholders a quorum
shall fail to attend in person or by proxy, the holders of a majority of the
shares present in person or by proxy and entitled to vote at such meeting may
adjourn the meeting from time to time until a quorum shall attend, and thereupon
any business may be transacted which might have been transacted at the meeting
as originally called. Notice need not be given of the adjourned meeting if the
time and place thereof are announced at the meeting at which the adjournment is
taken, provided, however, that if the adjournment is for more than thirty (30)
days or if after the adjournment a new record date is fixed, notice of the
adjourned date shall be given.
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SECTION 2.6. ORGANIZATION. The Chairman of the Board, if one is elected,
and in his absence the President, and in their absence the Vice President, shall
call meetings of the stockholders to order and shall act as chairman thereof.
The Secretary or an Assistant Secretary of the Corporation shall act as
secretary at all meetings of the stockholders when present, and, in the absence
of both, the presiding officer may appoint any person to act as secretary. The
chairman of any meeting of stockholders shall determine the order of business
and the procedure at the meeting, including such regulation of the manner of
voting and the conduct of discussion as he may deem appropriate in his
discretion.
SECTION 2.7. VOTING. At each meeting of the stockholders, each holder of
the shares of Common Stock shall be entitled to one vote on such matter for each
such share and may exercise such voting right either in person or by proxy
appointed by an instrument in writing subscribed by such stockholder or his duly
authorized attorney. No such proxy shall be voted or acted upon after three (3)
years from its date unless the proxy provides for a longer period. Voting need
not be by ballot. All elections of directors shall be decided by a plurality
vote and all questions decided and actions authorized by a majority vote, except
as otherwise required by law.
SECTION 2.8. INSPECTORS. At any meeting of stockholders, inspectors of
election may be appointed by the presiding officer of the meeting for the
purpose of opening and closing the polls, receiving and taking charge of the
proxies, and receiving and counting the ballots or the vote of stockholders
otherwise given. The inspectors shall be appointed by the presiding officer of
the meeting, shall be sworn to faithfully perform their duties, and shall in
writing certify to the returns. No candidate for election as director shall be
appointed or act as inspector.
SECTION 2.9. STOCKHOLDER LIST. At least ten (10) days before every meeting
of stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of such stockholder,
shall be prepared and held open to the examination of any stockholder, for any
purpose germane to the meeting, during ordinary business hours for said ten (10)
days either at a place within the city where the meeting is to be held, which
place shall be specified in the notice of the meeting, or, if not so specified,
at the place where the meeting is to be held. The list shall also be produced
and kept at the meeting during the whole time thereof, and may be inspected by
any stockholder who is present.
SECTION 2.10. ACTION WITHOUT MEETING. Any action that may be taken at any
annual or special meeting of the stockholders of the Corporation, may be taken
without a meeting, without prior notice, and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted, provided that a consent must
bear the date of each stockholder's signature and no consent will be effective
unless written consents received by a sufficient number of stockholders to take
the contemplated action are delivered to the Corporation within sixty days of
the date that the earliest consent is delivered to the Corporation. Prompt
notice of the taking of corporate action without a meeting by less than
unanimous written consent shall be given to those stockholders who have not
consented in writing. In the event that the action which is consented to is such
as would have required the filing of a certificate under any section of Delaware
law, if such action had been voted on by stockholders at a meeting thereof, the
certificate filed under such other section shall state, in lieu of any statement
required by such section concerning any vote of stockholders, that written
consent and that written notice have been given in accordance with Section 228
of the General Corporation Law of the State of Delaware.
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ARTICLE III
DIRECTORS
SECTION 3.1. FUNCTIONS AND NUMBER. The property, business and affairs of
the Corporation shall be managed and controlled by a board of directors, who
need not be stockholders, citizens of the United States or residents of the
State of Delaware. The number of members which shall constitute the Board of
Directors shall be such number, not less than three, determined by resolution of
the Board of Directors or by the stockholders at an annual or special meeting
held for that purpose, but no decrease in the Board of Directors shall have the
effect of shortening the term of an incumbent director. The first Board of
Directors shall consist of three (3) members, such number to constitute the
first whole Board of Directors. The use of the phrase "whole Board" herein
refers to the total number of directors which the Corporation would have if
there were no vacancies. Except as otherwise provided by law or in these Bylaws
or in the Certificate of Incorporation, the directors shall be elected by the
stockholders entitled to vote at the annual meeting of stockholders of the
Corporation, and shall be elected to serve until the next annual meeting of
stockholders and until their successors shall be elected and shall qualify.
SECTION 3.2. REMOVAL. Any director may be removed, with or without cause,
by the affirmative vote of the holders of a majority of the then outstanding
shares of Common Stock.
SECTION 3.3. VACANCIES. Unless otherwise provided in the Certificate of
Incorporation or in these Bylaws, vacancies among the directors, whether caused
by resignation, death, disqualification, removal, an increase in the authorized
number of directors or otherwise, may be filled by a majority of the directors
then in office, although less than a quorum, or by a sole remaining director.
SECTION 3.4. PLACE OF MEETING. The directors may hold their meetings and
may have one or more offices and keep the books of the Corporation (except as
otherwise may at any time be provided by law) at such place or places within or
without the State of Delaware as the Board may from time to time determine.
SECTION 3.5. ANNUAL MEETING. The newly elected Board may meet for the
purpose of organization, the election of officers and the transaction of other
business, at such time and place within or without the State of Delaware as
shall be fixed as provided in Section 3.7 of this Article for special meetings
of the Board of Directors.
SECTION 3.6. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held at such time and place within or without the State of Delaware as
the Board of Directors shall from time to time by resolution determine and no
notice of such regular meetings shall be required.
SECTION 3.7. SPECIAL MEETINGS. Special meetings of the Board of Directors
shall be held whenever called by the direction of the President or a majority of
the directors then in office. The Secretary or some other officer or director of
the Corporation shall give notice to each director of the time and place of each
special meeting by mailing the same at least five (5) days before the meeting or
by telexing, telegraphing or telephoning the same not later than the day before
the meeting, at the residence address of each director or at his usual place of
business. Special meetings of the Board shall be held at such place within or
without the State of Delaware as shall be specified in the call for the meeting.
Unless expressly required by statute, by the Certificate of Incorporation or by
the Bylaws, neither the business to be transacted at, nor the purpose of, any
special meeting of the Board of Directors need be specified in the notice of a
meeting.
SECTION 3.8. QUORUM. Except as otherwise provided by law or in the
Certificate of Incorporation, a majority of the directors in office shall
constitute a quorum for the transaction of business. A majority of those present
at the time and place of any regular or special meeting, if less than a quorum
be present, may adjourn from time to time without notice, until a quorum be had.
The act of a majority of directors present
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at any meeting at which there is a quorum shall be the act of the Board of
Directors, except as may be otherwise provided by law or in the Certificate of
Incorporation.
SECTION 3.9. COMPENSATION. The Board of Directors shall have the authority
to fix by resolution the compensation of directors.
SECTION 3.10. ORGANIZATION. At all meetings of the Board of Directors, the
President, or in his absence the Vice President if he is a member of the Board,
or in their absence, a chairman chosen by the directors shall preside. The
Secretary or an Assistant Secretary of the Corporation shall act as secretary at
all meetings of the Board of Directors when present, and, in the absence of
both, the presiding officer may appoint any person to act as secretary.
SECTION 3.11. TELEPHONE MEETINGS. Any member of the Board of Directors may
participate in any meeting of such Board by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation in any meeting pursuant to
this provision shall constitute presence in person at such meeting.
SECTION 3.12. ACTION WITHOUT MEETING. Any action required or permitted to
be taken at any meeting of the Board of Directors, or any committee thereof, may
be taken without a meeting if all the members of the Board consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board.
ARTICLE IV
COMMITTEES
SECTION 4.1. EXECUTIVE COMMITTEE. The Board of Directors, by a resolution
passed by a vote of a majority of the whole Board, may appoint an Executive
Committee of one or more directors, which to the extent permitted by law and in
said resolution shall, during the intervals between the meetings of the Board of
Directors, in all cases where special directions shall not have been given by
the Board, have and exercise the powers of the Board of Directors, including
those powers enumerated in these Bylaws which are not specifically reserved to
the Board of Directors, in the management of the property, business and affairs
of the Corporation; provided, however, that the Executive Committee shall not
have any power or authority to amend the Certificate of Incorporation, to adopt
any agreement of merger or consolidation, to recommend to the stockholders the
sale, lease or exchange of all or substantially all of the Corporation's
property and assets, to recommend to the stockholders a dissolution of the
Corporation or a revocation of dissolution, to amend the Bylaws of the
Corporation, to declare a dividend, to authorize the issuance of stock or to
adopt a certificate of ownership and merger. The Executive Committee shall have
power to authorize the seal of the Corporation to be affixed to all papers which
may require it. The Board of Directors shall appoint the Chairman of the
Executive Committee. The members of the Executive Committee shall receive such
compensation and fees as from time to time may be fixed by the Board of
Directors.
SECTION 4.2. ALTERNATES AND VACANCIES. The Board of Directors may
designate one or more
directors as alternate members of the Executive Committee who may replace any
absent or disqualified member at any meeting of the Executive Committee. In the
absence or disqualification of a member of the Executive Committee, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absent or disqualified member. All other vacancies in the Executive Committee
shall be filled by the Board of Directors in the same manner as original
appointments to such Committee.
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SECTION 4.3. COMMITTEES TO REPORT TO BOARD. The Executive Committee shall
keep regular minutes of its proceedings and all action by the Executive
Committee shall be reported to the Board of Directors at its meeting next
succeeding such action.
SECTION 4.4. PROCEDURE. The Executive Committee shall fix its own rules of
procedure, and shall meet where and as provided by such rules or by resolution
of the Board of Directors. The presence of a majority of the then appointed
number of each committee created pursuant to this Article IV shall constitute a
quorum and in every case an affirmative vote by a majority of the members of the
committee present and not disqualified from voting shall be the act of the
committee.
SECTION 4.5. OTHER COMMITTEES. From time to time the Board of Directors by
a resolution adopted by a majority of the whole Board may appoint any other
committee or committees for any purpose or purposes, to the extent lawful, which
shall have such powers as shall be determined and specified by the Board of
Directors in the resolution of appointment.
SECTION 4.6. TERMINATION OF COMMITTEE MEMBERSHIP. In the event any person
shall cease to be a director of the Corporation, such person shall
simultaneously therewith cease to be a member of any committee appointed by the
Board of Directors, or any subcommittee thereof.
ARTICLE V
OFFICERS
SECTION 5.1. EXECUTIVE OFFICERS. The executive officers of the Corporation
may consist of a Chairman of the Board, a President and Chief Executive Officer,
one or more Vice Presidents, a Treasurer and a Secretary, all of whom shall be
elected annually by the Board of Directors. Unless otherwise provided in the
resolution of election, each officer shall hold office until the next annual
election of directors and until his successor shall have been qualified. Any two
of such offices may be held by the same person.
SECTION 5.2. SUBORDINATE OFFICERS. The Board of Directors may appoint one
or more Assistant Secretaries, one or more Assistant Treasurers and such other
subordinate officers and agents as it may deem necessary or advisable, for such
term as the Board of Directors shall fix in such appointment, who shall have
such authority and perform such duties as may from time to time be prescribed by
the Board.
SECTION 5.3. COMPENSATION. The Board of Directors shall have the power to
fix the compensation of all officers, agents and employees of the Corporation,
which power, as to other than elected officers, may be delegated as the Board of
Directors shall determine.
SECTION 5.4. REMOVAL. All officers, agents and employees of the
Corporation shall be subject to removal, with or without cause, at any time by
affirmative vote of the majority of the whole Board of Directors whenever, in
the judgment of the Board of Directors, the best interests of the Corporation
will be served thereby. The power to remove agents and employees, other than
officers or agents elected or appointed by the Board of Directors, may be
delegated as the Board of Directors shall determine.
SECTION 5.5. CHAIRMAN OF THE BOARD. If a Chairman of the Board is elected,
he shall be chosen from among the members of the Board of Directors and shall
preside at all meetings of the directors and the stockholders of the
Corporation. The Chairman of the Board shall, in general, have supervisory power
over the President and all other officers of the Corporation.
SECTION 5.6. THE PRESIDENT. The President shall be the chief operating
officer of the Corporation and shall have the general powers and duties of
supervision and management of the Corporation. The President shall also be the
chief executive officer of the Corporation and, in the absence of the Chairman
of the Board, shall preside at all meetings of the stockholders and directors at
which he is present. The
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President shall also perform such other duties as may from time to time be
assigned to him by the Board of Directors.
SECTION 5.7. VICE PRESIDENTS. Each Vice President shall perform such
duties and shall have such authority as from time to time may be assigned to him
by the Board of Directors or the President.
SECTION 5.8. THE TREASURER. The Treasurer shall have the general care and
custody of all the funds and securities of the Corporation which may come into
his hands and shall deposit the same to the credit of the Corporation in such
bank or banks or depositaries as from time to time may be designated by the
Board of Directors or by an officer or officers authorized by the Board of
Directors to make such designation, and the Treasurer shall pay out and dispose
of the same under the direction of the Board of Directors. He shall have general
charge of all securities of the Corporation and shall in general perform all
duties incident to the position of Treasurer.
SECTION 5.9. THE SECRETARY. The Secretary shall keep the minutes of all
proceedings of the Board of Directors and the minutes of all meetings of the
stockholders and also, unless otherwise directed by such committee, the minutes
of each standing committee, in books provided for that purpose, of which he
shall be the custodian; he shall attend to the giving and serving of all notices
for the Corporation; he shall have charge of the seal of the Corporation, of the
stock certificate books and such other books and papers as the Board of
Directors may direct; and he shall in general perform all the duties incident to
the office of Secretary and such other duties as may be assigned to him by the
Board of Directors.
SECTION 5.10. VACANCIES. All vacancies among the officers for any cause
shall be filled only by the Board of Directors.
SECTION 5.11. BONDING. The Board of Directors shall have power to require
any officer or employee of the Corporation to give bond for the faithful
discharge of his duties in such form and with such surety or sureties as the
Board of Directors may deem advisable.
ARTICLE VI
STOCK
SECTION 6.1. FORM AND EXECUTION OF CERTIFICATES. The shares of stock of
the Corporation shall be represented by certificates in such form as shall be
approved by the Board of Directors; provided that the Board of Directors of the
Corporation may provide by resolution that some or all of any or all classes or
series of its stock shall be uncertificated shares. Any such resolution shall
not apply to shares represented by a certificate until such certificate is
surrendered to the Corporation; and, notwithstanding the adoption of such a
resolution by the Board of Directors, every holder of stock represented by
certificates and every holder of uncertificated shares shall be entitled to a
certificate or certificates representing his shares upon delivery of a written
request therefor to the Secretary of the Corporation. The certificates shall be
signed by the President or the Vice President and the Treasurer or the Secretary
or an Assistant Treasurer or Assistant Secretary, except that where any such
certificates shall be countersigned by a transfer agent and by a registrar, the
signatures of any of the officers above specified, and the seal of the
Corporation upon such certificates, may be facsimiles, engraved or printed. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon such certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the Corporation with the same effect as if he were such officer,
transfer agent or registrar at the date of its issue.
SECTION 6.2. REGULATIONS. The Board of Directors may make such rules and
regulations consistent with any governing statute as it may deem expedient
concerning the issue, transfer and registration of certificates of stock and
concerning certificates of stock issued, transferred or registered in lieu or
replacement of any lost, stolen, destroyed or mutilated certificates of stock.
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SECTION 6.3. FIXING OF RECORD DATE. For the purpose of determining the
stockholders entitled to notice of, and to vote at, any meeting of stockholders
or any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or for the purpose of determining stockholders entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or to exercise any rights in respect of any change, conversion or
exchange of stock, or for the purpose of any other lawful action, the Board of
Directors may fix, in advance, a date as the record date for any such
determination of stockholders, and all persons who are stockholders of record on
the date so fixed, and no others, shall be entitled to notice of, and to vote
at, such meeting or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or to receive payment of any dividend or
other distribution or allotment of any rights, or to exercise any rights in
respect of any change, conversion or exchange of stock or to take any other
lawful action, as the case may be. Such record date shall not be more than sixty
(60) days nor less than ten (10) days before the date of any such meeting, nor
more than sixty (60) days prior to any other action, provided that any record
date established by the Board of Directors may not precede the date of the
resolution establishing the record date. The record date for determining
stockholders entitled to consent to corporate actions in writing shall not be
more than ten (10) days after the date upon which the resolution fixing the
record date was adopted. If no record date is established prior to an action
undertaken by consent, the record date shall be, if no action of the Board of
Directors is required, the first date on which a signed written consent setting
forth the action taken is delivered to the corporation. If action by the Board
of Directors is required, the record date shall be the close of business on the
day the board adopts the resolution taking the prior action.
SECTION 6.4. TRANSFER AGENT AND REGISTRAR. The Board of Directors may
appoint a transfer agent or transfer agents and a registrar or registrars for
any or all classes of the capital stock of the Corporation, and may require
stock certificates of any or all classes to bear the signature of either or
both.
ARTICLE VII
SEAL
SECTION 7.1. SEAL. The seal of the Corporation shall be circular in form
and contain the name of the Corporation, the year of its organization, and the
words "CORPORATE SEAL, DELAWARE", which seal shall be in charge of the Secretary
to be used as directed by the Board of Directors.
ARTICLE VIII
FISCAL YEAR
SECTION 8.1. FISCAL YEAR. The fiscal year of the Corporation shall end
October 31 of each year unless otherwise fixed by resolution of the Board of
Directors.
ARTICLE IX
WAIVER OF NOTICE
SECTION 9.1. WAIVER OF NOTICE. Any person may waive any notice required to
be given by law, in the Certificate of Incorporation or under these Bylaws by
attendance in person, or by proxy if a stockholder, at any meeting, except when
such person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened, or by a writing signed by the person or
persons entitled to said notice, whether before or after the time stated in said
notice, which waiver shall be deemed equivalent to such notice. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders, directors, or members of a committee appointed by the Board
of Directors need be specified in any written waiver of notice.
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ARTICLE X
CHECKS, NOTES, DRAFTS, CONTRACTS, VOTING OF SECURITIES, ETC.
SECTION 10.1. CHECKS, NOTES, DRAFTS, ETC. All checks, notes, drafts or
other orders for the payment of money of the Corporation shall be signed,
endorsed or accepted in the name of the Corporation by such officer, officers,
person or persons as from time to time may be designated by the Board of
Directors or by an officer or officers authorized by the Board of Directors to
make such designation.
SECTION 10.2. EXECUTION OF CONTRACTS, DEEDS, ETC. The Board of Directors
may authorize any officer or officers, agent or agents, in the name and on
behalf of the Corporation, to enter into or execute and deliver any and all
deeds, bonds, mortgages, contracts and other obligations or instruments, and
such authority may be general or confined to specific instances.
SECTION 10.3. PROVISION REGARDING CONFLICTS OF INTERESTS. No contract or
transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation, partnership,
association, or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because the director or officer is
present at or participates in the meeting of the Board of Directors or committee
thereof which authorizes the contract or transaction, or solely because his or
their votes are counted for such purpose, if:
(a) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of Directors
or the committee, and the Board or committee in good faith authorizes the
contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less
than a quorum; or
(b) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the shareholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the shareholders; or
(c) The contract or transaction is fair as to the Corporation as of the
time it is authorized, approved or ratified by the Board of Directors, a
committee thereof, or the shareholders.
Common or interested directors may be counted in determining the presence of
a quorum at a meeting of the Board of Directors or of a committee which
authorizes the contract or transaction.
SECTION 10.4. VOTING OF SECURITIES OWNED BY THE CORPORATION. Subject
always to the specific directions of the Board of Directors, any share or shares
of stock or other securities issued by any other corporation and owned or
controlled by the Corporation may be voted, whether by written consent as set
forth hereinbelow or at any meeting of such other corporation, by the President
of the Corporation, or in the absence of the President, by any Vice President of
the Corporation who may be present at such meeting or available to sign such
written consent. Whenever in the judgment of the President, or in his absence,
of any Vice President, it shall be desirable for the Corporation to execute a
proxy or give a consent with respect to any share or shares of stock or other
securities issued by any other corporation and owned by the Corporation, such
proxy or consent shall be executed in the name of the Corporation by the
President or one of the Vice Presidents of the Corporation without necessity of
any authorization by the Board of Directors. Any person or persons so designated
as the proxy or proxies of the Corporation shall have full right, power and
authority to vote the share or shares of stock or other securities issued by
such other corporation and owned by the Corporation.
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ARTICLE XI
INDEMNIFICATION
SECTION 11.1. INDEMNIFICATION. Each person who was or is made a party or
is threatened to be made a party to or is involved in any threatened, pending or
completed action suit or proceeding, whether civil, criminal or investigative (a
"proceeding"), by reason of the fact that he or a person for whom he is the
legal representative is or was a director, officer, employee or agent of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, trustee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise (including service with
respect to employee benefit plans) whether the basis of such proceeding is
alleged action in his official capacity as a director, officer, employee or
agent, or in any other capacity while serving as a director, officer, employee
or agent, shall be indemnified and held harmless by the Corporation to the
fullest extent permitted by the Delaware General Corporation Law against all
expenses, liability and loss (including attorneys' fees, judgments, fines,
special excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith. Such
right shall be a contract right and shall include the right to require
advancement by the Corporation of attorneys' fees and other expenses incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that the payment of such expenses incurred by a director or officer of
the Corporation in his capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such person while a director or
officer, including, without limitation, service to an employee benefit plan) in
advance of the final disposition of such proceeding, shall be made by the
Corporation only upon delivery to the corporation of an undertaking, by or on
behalf of such director or officer, to repay all amount so advanced if it should
be determined ultimately that such director or officer is not entitled to be
indemnified under this section or otherwise.
SECTION 11.2. INDEMNIFICATION NOT EXCLUSIVE. The indemnification and
advancement of expenses provided by this Article XI shall not be deemed
exclusive of any other rights to which a person seeking indemnification may be
entitled under the Certificate of Incorporation, any agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
SECTION 11.3. INSURANCE. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee, trustee or agent of another
corporation, partnership, joint venture, trust or other enterprise (including
service with respect to employee benefit plans) against any liability assessed
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the corporation would have the power to indemnify
him against such liability under the provisions of this Article XI.
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EXHIBIT E
WYOMING DISSENTERS' STATUE
Set forth herein is a reproduction of Article 13 of the Wyoming Business
Corporation Act (the "WBCA").
ARTICLE 13. DISSENTERS' RIGHTS
SUBARTICLE A. RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
17-16-1301 DEFINITIONS. --(a) As used in this article:
(i) "Beneficial shareholder" means the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record shareholder;
(ii) "Corporation" means the issuer of the shares held by a dissenter before
the corporate action, or the surviving, new, or acquiring corporation by merger,
consolidation, or share exchange of that issuer,
(iii) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under W.S. 17-16-1302 and who exercises that right when and in
the manner required by W.S. 17-16-1320 through 17-16-1328;
(iv) "Fair value," with respect to a dissenter's shares, means the value of
the shares immediately before the effectuation of the corporate action to which
the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action unless exclusion would be inequitable;
(v) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans, or, if none, at a rate that is fair and
equitable under all the circumstances;
(vi) "Record shareholder" means the person in whose names shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation;
(vii) "Shareholder" means the record shareholder or the beneficial
shareholder.
17-16-1302 RIGHT TO DISSENT. --(a) A shareholder is entitled to dissent
from, and to obtain payment of the fair value of his shares in the event of, any
of the following corporate actions:
(i) Consummation of a plan of merger or consolidation to which the
corporation is a party if:
(A) Shareholder approval is required for the merger or the consolidation
by W.S. 17 16-1103 or 17-6-1111 or the articles of incorporation and the
shareholder is entitled to vote on the merger or consolidation; or
(B) The corporation is a subsidiary that is merged with its parent under
W.S 17-16-1104.
(ii) Consummation of a plan of share exchange to which the corporation is a
party as the corporation whose shares will be acquired, if the shareholder is
entitled to vote on the plan;
(iii) Consummation of a sale or exchange of all, or substantially all, of the
properly of the corporation other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange,
including a sale in dissolution, but not including a sale pursuant to court
order or a sale for cash pursuant to a plan by which all or substantially all of
the net proceeds of the sale will be distributed to the shareholders within one
(1) year after the date of sale;
(iv) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:
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(A) Alters or abolishes a preferential right of the shares;
(B) Creates, alters or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption or
repurchase, of the shares;
(C) Alters or abolishes a preemptive right of the holder of the shares
to acquire shares or other securities;
(D) Excludes or limits the right of the shares to vote on any matter, or
to cumulate votes, other than a limitation by dilution through issuance of
shares or other securities with similar voting rights; or
(E) Reduces the number of shares owned by the shareholder to a fraction
of a share if the fractional share so created is to be acquired for cash
under W.S. 17-16-604.
(v) Any corporate action taken pursuant to a shareholder vote to the extent
the articles of incorporation, bylaws, or a resolution of the board of directors
provides that voting or nonvoting shareholders are entitled to dissent and
obtain payment for their shares.
(b) A shareholder entitled to dissent and obtain payment for his shares
under this article may not challenge the corporate action creating his
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
17-16-1303 DISSENT BY NOMINEES AND BENEFICIAL OWNERS. --(a) A record
shareholder may assert dissenters' rights as to fewer than all the shares
registered in his name only if he dissents with respect to all shares
beneficially owned by any one (1) person and notifies the corporation in writing
of the name and address of each person on whose behalf he asserts dissenters'
rights. The rights of a partial dissenter under this subsection are determined
as if the shares as to which he dissents and his other shares were registered in
the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares held
on his behalf only if:
(i) He submits to the corporation the record shareholder's written
consent to the dissent not later than the time the beneficial shareholder
asserts dissenters' rights; and
(ii) He does so with respect to all shares of which he is the beneficial
shareholder or over which he has power to direct the vote.
SUBARTICLE B. PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
17-16-1320 NOTICE OF DISSENTERS' RIGHTS. --(a) If proposed corporate action
creating dissenters' rights under W.S. 17-16-1302 is submitted to a vote at a
shareholders' meeting, the meeting notice shall state that shareholders are or
may be entitled to assert dissenters' rights under this article and be
accompanied by a copy of this article.
(b) If corporate action creating dissenters' rights under W.S. 17-16-1302 is
taken without a vote of shareholders, the corporation shall notify in writing
all shareholders entitled to assert dissenters' rights that the action was taken
and send them the dissenters' notice described in W.S. 17-16-1322.
17-16-1321 NOTICE OF INTENT TO DEMAND PAYMENT. --(a) If proposed corporate
action creating dissenters' rights under W.S. 17-16-1302 is submitted to a vote
at a shareholders' meeting, a shareholder who wishes to assert dissenters'
rights shall deliver to the corporation before the vote is taken written notice
of his intent to demand payment for his shares if the proposed action is
effectuated and shall not vote his shares in favor of the proposed action.
(b) A shareholder who does not satisfy the requirements of subsection (a) of
this section is not entitled to payment for his shares under this article.
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17-16-1322 DISSENTERS' NOTICE. --(a) If proposed corporate action creating
dissenters' rights under W.S. 17-16-1302 is authorized at a shareholders'
meeting, the corporation shall deliver a written dissenters' notice to all
shareholders who satisfied the requirements of W.S. 17-16-1321.
(b) The dissenters' notice shall be sent no later than ten (10) days after
the corporate action was taken, and shall:
(i) State where the payment demand shall be sent and where and when
certificates for certificated shares shall be deposited;
(ii) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(iii) Supply a form for demanding payment that includes the date of the
first announcement to news media or to shareholders of the terms of the
proposed corporate action and requires that the person asserting dissenters'
rights certify whether or not he acquired beneficial ownership of the shares
before that date;
(iv) Set a date by which the corporation shall receive the payment
demand, which date may not be fewer than thirty (30) nor more than sixty
(60) days after the date the notice required by subsection (a) of this
section is delivered; and
(v) Be accompanied by a copy of this article.
17-16-1323 DUTY TO DEMAND PAYMENT. --(a) A shareholder sent a dissenters'
notice described in W.S. 17-16-1322 shall demand payment, certify whether he
acquired beneficial ownership of the shares before the date required to be set
forth in the dissenters' notice pursuant to W.S. 17-16-1322(b)(iii), and deposit
his certificates in accordance with the terms of the notice.
(b) The shareholder who demands payment and deposits his share certificates
under subsection (a) of this section retains all other rights of a shareholder
until these rights are cancelled or modified by the taking of the proposed
corporate action.
(c) A shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under this article.
17-16-1324 SHARE RESTRICTIONS. --(a) The corporation may restrict the
transfer of uncertificated shares from the date the demand for their payment is
received until the proposed corporate action is taken or the restrictions
released under W.S. 17-16-1326.
(b) The person for whom dissenters' rights are asserted as to uncertificated
shares retains all other rights of a shareholder until these rights are
cancelled or modified by the taking of the proposed corporate action.
17-16-1325 PAYMENT. --(a) Except as provided in W.S. 17-16-1327, as soon as
the proposed corporate action is taken, or upon receipt of a payment demand, the
corporation shall pay each dissenter who complied with W.S. 17-16-1323 the
amount the corporation estimates to be the fair value of his shares, plus
accrued interest.
(b) The payment shall be accompanied by:
(i) The corporation's balance sheet as of the end of a fiscal year
ending not more than sixteen (16) months before the date of payment, an
income statement for that year, a statement of changes in shareholders'
equity for that year, and the latest available interim financial statements,
if any;
(ii) A statement of the corporation's estimate of the fair value of the
shares;
(iii) An explanation of how the interest was calculated;
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(iv) A statement of the dissenter's rights to demand payment under W.S.
17-16-1328; and
(v) A copy of this article.
17-16-1326 FAILURE TO TAKE ACTION. --(a) If the corporation does not take
the proposed action within sixty (60) days after the date set for demanding
payment and depositing share certificates, the corporation shall return the
deposited certificates and release the transfer restrictions imposed on
uncertificated shares.
(b) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it shall send a new
dissenters' notice under W.S. 17-16 1322 and repeat the payment demand
procedure.
17-16-1327 AFTER-ACQUIRED SHARES. --(a) A corporation may elect to with
hold payment required by W.S. 17-16-1325 from a dissenter unless he was the
beneficial owner of the shares before the date set forth in the dissenters'
notice as the date of the first announcement to news media or to shareholders of
the terms of the proposed corporate action.
(b) To the extent the corporation elects to withhold payment under
subsection (a) of this section, after taking the proposed corporate action, it
shall estimate the fair value of the shares, plus accrued interest, and shall
pay this amount to each dissenter who agrees to accept it in full satisfaction
of his demand. The corporation shall send with its offer a statement of its
estimate of the fair value of the shares, an explanation of how the interest was
calculated, and a statement of the dissenter's right to demand payment under
W.S. 17-16-1328.
17-16-1328 PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.
- --(a) A dissenter may notify the corporation in writing of his own estimate of
the fair value of his shares and amount of interest due, and demand payment of
his estimate, less any payment under W.S. 17-16-1325, or reject the
corporation's offer under W.S. 17-16-1327 and demand payment of the fair value
of his shares and interest due, if:
(i) The dissenter believes that the amount paid under W.S. 17-16-1325 or
offered under W.S. 17-16-1327 is less than the fair value of his shares or
that the interest due is incorrectly calculated;
(ii) The corporation fails to make payment under W.S. 17-16-1325 within
sixty (60) days after the date set for demanding payment; or
(iii) The corporation, having failed to take the proposed action, does
not return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within sixty (60) days after the date set
for demanding payment.
(b) A dissenter waives his right to demand payment under this section unless
he notifies the corporation of his demand in writing under subsection (a) of
this section within thirty (30) days after the corporation made or offered
payment for his shares.
SUBARTICLE C. JUDICIAL APPRAISAL OF SHARES
17-16-1330 COURT ACTION. --(a) If a demand for payment under W.S.
17-16-1328 remains unsettled, the corporation shall commence a proceeding within
sixty (60) days after receiving the payment demand and petition the court to
determine the fair value of the shares and accrued interest. If the corporation
does not commence the proceeding within the sixty (60) day period, it shall pay
each dissenter whose demand remains unsettled the amount demanded.
I. The corporation shall commence the proceeding in the district court of
the county where a corporation's principal office, or if none in this state, its
registered office, is located. If the corporation is a
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foreign corporation without a registered office in this state, it shall commence
the proceeding in the county in this state where the registered office of the
domestic corporation merged with or whose shares were acquired by the foreign
corporation was located.
II. The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled parties to the proceeding as in an
action against their shares and all parties shall be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
III. The jurisdiction of the court in which the proceeding is commenced
under subsection (b) of this section is plenary and exclusive. The court may
appoint one (1) or more persons as appraisers to receive evidence and recommend
decision on the question of fair value. The appraisers have the powers described
in the order appointing them, or in the amendment to it. The dissenters are
entitled to the same discovery rights as parties in other civil proceedings.
IV. Each dissenter made a party to the proceeding is entitled to judgment
for:
(i) The amount, if any, by which the court finds the fair value of his
shares, plus interest, exceeds the amount paid by the corporation; or
(ii) The fair value, plus accrued interest, of his after-acquired shares
for which the corporation elected to withhold payment under W.S. 17-16-1327.
17-16-1331 COURT COSTS AND COUNSEL FEES. --(a) The court in an appraisal
proceeding commenced under W.S. 17-16-1330 shall determine all costs of the
proceeding, including the reasonable compensation and expenses of appraisers
appointed by the court. The court shall assess the costs against the
corporation, except that the court may assess costs against all or some of the
dissenters, in amounts the court finds equitable, to the extent the court finds
the dissenters acted arbitrarily, vexatiously, or not in good faith in demanding
payment under W.S. 17-16-1328.
I. The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable:
(i) Against the corporation and in favor of any or all dissenters if the
court finds the corporation did not substantially comply with the
requirements of W.S. 17-16-1320 through 17-16-1328; or
(ii) Against either the corporation or a dissenter, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith
with respect to the rights provided by this article.
II. If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to these counsel reasonable fees to be paid out of the amounts awarded the
dissenters who were benefited.
E-5
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PROXY
CANMAX INC.
ANNUAL MEETING OF SHAREHOLDERS
APRIL 20, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Roger D. Bryant and
Robert M. Fidler, or either of them, as the true and lawful attorneys and
proxies of the undersigned, with full power of substitution, to represent
the undersigned and to vote all of the shares of Common Stock of Canmax
Inc. (the "Company"), that the undersigned is entitled to vote at the
Annual Meeting of Shareholders of the Company to be held on April 20, 1998
and at any adjournments thereof.
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<S> <C> <C> <C> <C>
1. Election of
Directors
/ / FOR All nominees named below / /
(except as marked to the contrary)
NOMINEES: Roger D. Bryant, James C. Bernet, Debra L. Burgess, Nick DeMare, Robert M. Fidler,
John Melideo, W. Thomas Rinehart
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THE NOMINEE'S
NAME ON THE LINE BELOW.)
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2. Reincorporation of the Company in Delaware.
/ / FOR / / AGAINST / / ABSTAIN
3. To ratify the selection of Ernst & Young LLP to serve as independent public accountants for the Company for the 1998
fiscal year.
/ / FOR / / AGAINST / / ABSTAIN
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<S> <C>
4. In their discretion, to vote upon such other business as may properly come before the meeting or any adjournments
thereof.
</TABLE>
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFIC DIRECTIONS ARE GIVEN,
THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF DIRECTORS, "FOR" EACH OF THE
PROPOSALS SET FORTH HEREIN AND IN THE DISCRETION OF THE PROXY HOLDERS ON ALL
OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING.
Please sign exactly as the name appears on the certificate or certificates
representing shares to be voted by this proxy. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by president or other
authorized person. If a partnership, please sign in partnership name by
authorized person.
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Dated:
---------------------------------
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Signature of Shareholder
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Signature (if jointly owned)
PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
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