EXHIBIT 2.1
BUSINESS COMBINATION AGREEMENT
THIS BUSINESS COMBINATION AGREEMENT dated as of the 10th day of August, 1999.
BETWEEN:
MED-EMERG INTERNATIONAL INC., a corporation incorporated under
the laws of Ontario
(hereinafter referred to as "MEII")
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YFMC HEALTHCARE INC., a corporation continued under the laws
of Ontario
(hereinafter referred to as "YFMC")
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XXXXXX XXXXXX
(hereinafter referred to as "Xxxxxx")
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XXXXXX XXXXXXXX
(hereinafter referred to as "Xxxxxxxx")
(Xxxxxx and Xxxxxxxx are hereinafter referred to as the
"Principals")
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977675 ONTARIO INC., a corporation incorporated under the laws
of Ontario
(hereinafter referred to as "977675")
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PAGE XXXXXXX & ASSOCIATES LTD., a corporation incorporated
under the laws of Ontario
(hereinafter referred to as "PRAL")
(977675 and PRAL are hereinafter referred to as the "Principal
Shareholders")
WITNESSES THAT:
WHEREAS MEII intends to make an offer to purchase all of the issued and
outstanding securities of YFMC in accordance with the provisions hereof;
AND WHEREAS Xxxxxx is an officer, director and principal shareholder of
977675;
AND WHEREAS Xxxxxxxx is an officer, director and principal shareholder
of PRAL;
AND WHEREAS the Principal Shareholders have agreed, subject to
regulatory approval, to tender all of their securities of YFMC to MEII's
offer in accordance with the provisions hereof;
NOW THEREFORE, in consideration of the premises and the respective
covenants and agreements herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged
by each of the parties hereto, the parties hereto hereby covenant and agree
as follows:
ARTICLE ONE
DEFINITIONS AND INTERPRETATION
SECTION 1.1 DEFINITIONS: In this Agreement, unless there is something in
the subject matter or context inconsistent therewith, the following
capitalized words and terms shall have the following meanings:
"AGREEMENT" means this Business Combination Agreement, including the
schedules, annexes and exhibits hereto, as the same may be supplemented or
amended from time to time and the expressions "Article", "Section",
"subsection" and "Exhibit" followed by a number or letter means and refers to
the specified Article, Section, subsection or Exhibit of this Agreement;
"ASC" means the Alberta Securities Commission;
"ASE" means The Alberta Stock Exchange;
"BSE" means the Boston Stock Exchange;
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"BUSINESS DAY" means a day which is not a Saturday, Sunday or statutory
holiday in the Province of Ontario;
"CHARTER DOCUMENTS" means articles and by-laws of a corporation;
"COMMISSIONS" means collectively, the securities commissions or similar
securities regulatory authorities of the Provinces of Ontario, Quebec and
Alberta;
"ITA" means the INCOME TAX ACT (Canada), as amended from time to time;
"INTERIM MEII FINANCIAL STATEMENTS" means the interim unaudited financial
statements of MEII, together with the notes thereto, for the three months
ended March 31, 1999;
"INTERIM YFMC FINANCIAL STATEMENTS" means the interim unaudited financial
statements of YFMC, together with the notes thereto, for the three months
ended March 31, 1999;
"LOCK-UP AGREEMENT" has the meaning ascribed thereto in Section 2.2;
"MATERIAL ADVERSE CHANGE" means any change (or any condition, event or
development involving a prospective change) in the business, operations,
affairs, assets, liabilities (including any contingent liability that may
arise through outstanding, pending or threatened litigation or otherwise),
capitalization, financial condition, licences, permits, rights or privileges
or prospects of a Person which could reasonably be expect to materially and
adversely affect a Person;
"MATERIAL FACT", "MATERIAL CHANGE" and "MISREPRESENTATION" are used as
defined under the SECURITIES ACT (Ontario);
"MEII ANNUAL REPORT" means the annual report of MEII for the financial year
ended December 31, 1998;
"MEII ASSETS" means the assets, property and undertakings of MEII and its
Subsidiaries;
"MEII FINANCIAL STATEMENTS" means the audited financial statements of MEII,
together with the notes thereto, for the financial years ended December 31,
1997 and December 31, 1998;
"MEII PRESS RELEASES" means press releases of MEII issued since December 31,
1997;
"MEII SECURITIES" means MEII Shares, Series A Warrants and Series B Warrants;
"MEII SHARES" means the common shares of MEII, as the same are constituted on
the date hereof;
"NASDAQ" means the National Association of Securities Dealers Automated
Quotation System Inc.;
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"NON-ARM'S LENGTH TRANSACTIONS" means any contract or agreement by YFMC or
any Subsidiary and any officer, director, employee of YFMC and/or any
Subsidiary or any Person not dealing at arm's length (within the meaning of
the ITA) with any of them or any affiliate of any of them;
"OBCA" means the Business Corporations Act (Ontario), R.S.O. 1990, c.B.16, as
amended;
"OFFER" has the meaning ascribed thereto in Section 2.1;
"OSC" means the Ontario Securities Commission;
"PERSON" means and includes an individual, sole proprietorship, partnership,
unincorporated association, unincorporated syndicate, unincorporated
organization, trust, body corporate, a trustee, executor, administrator or
other legal representative and the Crown or any agency or instrumentality
thereof, and words importing "PERSONS" have a similar meaning;
"SEC" means the United States Securities and Exchange Commission;
"SERIES A WARRANTS" means Series A warrants of MEII, such that each Series A
warrant entitles the holder thereof to acquire one MEII Share at an exercise
price of US$2.70 per share expiring June 12, 2000;
"SERIES B WARRANTS" means Series B warrants of MEII, such that each Series B
warrant entitles the holder thereof to acquire one MEII Share at an exercise
price of US$3.40 per share expiring June 12, 2000;
"SUBSIDIARY" means, with respect to a specified body corporate, a body
corporate of which more than 50% of the outstanding shares ordinarily
entitled to elect a majority of the directors thereof, whether or not shares
of any other class or classes shall or might be entitled to vote upon the
happening of any event or contingency, are at the time owned, directly or
indirectly, by such specified body corporate, and includes a body corporate
in like relation to a Subsidiary;
"TAKE-OVER BID CIRCULAR" has the meaning ascribed thereto in Section 2.3;
"WORKING AGREEMENT" means an agreement dated as of the date hereof between
MEII and YFMC concerning the operation of their respective businesses pending
completion of the Offer;
"YFMC ASSETS" means the assets, property and undertaking of YFMC and its
Subsidiaries;
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"YFMC FINANCIAL STATEMENTS" mean the audited consolidated financial
statements of YFMC, together with the notes thereto, for the financial years
ended December 31, 1997 and December 31, 1998;
"YFMC OPTIONS" means outstanding options to purchase an aggregate of
1,003,000 YFMC Shares at prices ranging from $0.20 to $0.36 per share;
"YFMC PREFERRED SHARES" means the 1,000,000 outstanding first preferred
shares, Series A, of YFMC, as the same are constituted on the date hereof;
"YFMC PRESS RELEASES" means press releases of YFMC issued since June 12, 1998;
"YFMC SHARES" means the common shares of YFMC, as the same are constituted on
the date hereof;
"YFMC SECURITIES" means YFMC Shares, YFMC Preferred Shares, YFMC Series A
Warrants, YFMC Series B Warrants and YFMC Options;
"YFMC SERIES A WARRANTS" means the 356,680 outstanding common share purchase
warrants of YFMC, each such warrant entitling the holder thereof to acquire
one YFMC Share at an exercise price of $0.40 per share for a period of two
years from the date of issuance; and
"YFMC SERIES B WARRANTS" means the 356,680 outstanding common share purchase
warrants of YFMC, each such warrant entitling the holder thereof to acquire
one YFMC Share at an exercise price of $0.50 per share for a period of two
years from the date of issuance.
SECTION 1.2 CURRENCY. All amounts of money which are referred to in this
Agreement are expressed in lawful money of Canada, unless otherwise specified.
SECTION 1.3 INTERPRETATION NOT AFFECTED BY HEADINGS. The division of this
Agreement into articles, sections, subsections, paragraphs and subparagraphs
and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation of the provisions of this
Agreement. The terms "this Agreement", "hereof", "herein", "hereunder" and
similar expressions refer to this Agreement and the schedules hereto as a
whole and not to any particular article, section, subsection, paragraph or
subparagraph hereof and include any agreement or instrument supplementary or
ancillary hereto.
SECTION 1.4 NUMBER AND GENDER. Unless the context otherwise requires, words
importing the singular number only shall include the plural and vice versa
and words importing the use of either gender shall include both genders and
the neuter and words importing persons shall include firms and corporations.
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SECTION 1.5 DATE FOR ANY ACTION. In the event that any date on which any
action is required to be taken hereunder by any of the parties hereto is not
a Business Day, such action shall be required to be taken on the next
succeeding day which is a Business Day.
SECTION 1.6 MEANING. Words and phrases used herein and defined in the OBCA
shall have the same meaning herein as in the OBCA, unless the context
otherwise requires.
SECTION 1.7 EXHIBITS. The following are the Exhibits attached and
incorporated in this Agreement by reference and are deemed to be a part
hereof:
Exhibit A - Form of Lock-Up Agreement
Exhibit B - Form of Series A Warrant Certificate
Exhibit C - Form of Series B Warrant Certificate
Exhibit D - Form of Working Agreement
ARTICLE TWO
BUSINESS COMBINATION
SECTION 2.1 Offer. (a) MEII agrees to make an offer (the "Offer") on
substantially the terms and conditions provided for in this Agreement to
purchase all of the issued and outstanding YFMC Securities (other than YFMC
Options) on the basis of:
(i) one MEII Share for every 6.875 YFMC Shares;
(ii) one Series A Warrant for every eight YFMC Series A
Warrants held;
(iii) one Series B Warrant for every eight YFMC Series B
Warrants held; and
(iv) one MEII Share for each ten YFMC Preferred Shares held.
In addition, in connection with, but not as part of the Offer, with respect
to the outstanding YFMC Options, YFMC and MEII agree to substitute, subject
to obtaining all necessary approvals or consents of any Person, the right to
acquire MEII Shares at a price of US$1.75 per share on a basis consistent
with the exchange ratio for the YFMC Series A and Series B Warrants set out
above. MEII and YFMC agree to use reasonable commercial efforts to accomplish
the foregoing, including obtaining all necessary regulatory approvals or
consents of any Person, in a form acceptable to MEII and YFMC, acting
reasonably.
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(b) The Offer will be made as promptly as practicable after the date
hereof, but in any event not later than 21 days following the date that all
of the conditions set out in Section 2.2 and Article 5 have been satisfied.
SECTION 2.2 LOCK-UP AGREEMENT. The Offer is subject to the conditions set
out in Article 5 including, without limitation, the execution by the
Principal Shareholders of a lock-up agreement (the "LOCK-UP AGREEMENT") which
will be substantially in the form of Exhibit A annexed hereto.
SECTION 2.3 MAILING OF TAKE-OVER BID CIRCULAR. (a) Subject to the
conditions set out in Article 5 hereof, upon the Principal Shareholders
executing the Lock-Up Agreement and depositing their YFMC Shares pursuant
thereto, MEII shall mail, and file with the Commissions, a take-over bid
circular (the "TAKE-OVER BID CIRCULAR") in order to effect the Offer.
(b) YFMC agrees to provide such information with respect to itself as
MEII may require, acting reasonably, for insertion in the Take-Over Bid
Circular and take all such steps and do all such acts and things as are
necessary or desirable to give full effect to the Offer, including providing
MEII with a current list of YFMC's securityholders of all classes, including
names, addresses and number of securities held and advising YFMC's registrar
and transfer agent to assist MEII in completing the Offer and the
transactions contemplated thereby and permitting YFMC's registrar and
transfer agent to act as depositary under the Offer.
SECTION 2.4 DIRECTORS' CIRCULAR. Forthwith after MEII mails the Take-Over
Bid Circular to YFMC's shareholders, YFMC agrees to cause its board of
directors to:
(a) support the Offer and recommend acceptance of the Offer by the
securityholders of YFMC; and
(b) prepare, file and mail, as required by applicable law, a directors'
circular recommending the Offer.
SECTION 2.5 COMPULSORY ACQUISITION. Subject to completion of the Offer,
MEII may acquire all outstanding YFMC Shares which it did not acquire
pursuant to the terms of the Offer under the compulsory acquisition
provisions of applicable corporate legislation.
SECTION 2.6 INVESTIGATIONS. (a) Until completion of the Offer, MEII and its
solicitors, accountants, appraisers and other advisers shall, during normal
business hours, have full and complete access to the premises, books, leases
and other records of YFMC for the purposes of investigating its affairs. In
addition, YFMC shall make available to MEII such documents and data as MEII
may request, acting reasonably, relating to YFMC. All information, records
and data furnished to MEII and its representatives pursuant to this Section
shall, to the best of YFMC's knowledge and belief, be accurate in all
material respects.
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(b) Until completion of the Offer, YFMC and its solicitors,
accountants, appraisers and other advisers shall, during normal business
hours, have full and complete access to the premises, books, leases and other
records of MEII for the purpose of investigating its affairs. In addition,
MEII shall make available to YFMC such documents and data as YFMC may
request, acting reasonably, relating to MEII. All information, records and
data furnished to MEII and its representatives pursuant to this Section
shall, to the best of MEII's knowledge and belief, be accurate in all
material respects.
SECTION 2.7 RETURN OF DOCUMENTS. If the Offer shall not be completed in
accordance with its provisions, YFMC shall return to MEII all books,
accounts, records and other data of MEII (including any copies thereof) that
are in YFMC's possession, and MEII shall return to YFMC all books, accounts,
records and other data of YFMC (including any copies thereof) that are in
MEII's possession.
SECTION 2.8 CONFIDENTIALITY. Notwithstanding any other provision of this
Agreement, in the event of the termination of this Agreement, MEII shall keep
confidential any information obtained relating to YFMC, and YFMC shall keep
confidential any information obtained relating to MEII (unless, in each case,
the information is readily ascertainable from public or published information
or until the same become so ascertainable) and shall return to the
appropriate party all copies of any exhibits, statements or other written
information obtained in connection herewith.
SECTION 2.9 EFFECTIVE DATE. The business combination contemplated hereby
shall become effective upon completion of the Offer.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF MEII. Subject to the
disclosure set out in the Take-Over Bid Circular, the MEII Annual Report, the
MEII Financial Statements, the MEII Press Releases, the Interim MEII
Financial Statements and the schedules hereto, MEII hereby represents and
warrants to and in favour of YFMC and the Principal Shareholders that:
(a) MEII has been duly incorporated and is a valid and subsisting
corporation under the provisions of the OBCA, has all requisite
corporate power and authority to carry on its business as now being
carried on by it and to own or lease and operate its properties and
assets and is duly licenced or otherwise qualified to carry on
business in each jurisdiction in which a material amount of its
business is conducted or wherein the character of the properties
and assets now owned by it makes such qualification necessary;
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(b) as of the date hereof, the issued and outstanding share capital of
MEII consists of 3,095,544 MEII Shares and 500,000 preferred
shares, all of which are outstanding as fully paid and
non-assessable shares;
(c) to the best of its knowledge, MEII is in compliance with the UNITED
STATES SECURITIES AND EXCHANGE ACT OF 1933, the rules and
regulations of the SEC and the rules and policies of NASDAQ, and no
material change relating to MEII has occurred within the past 24
months which has not been publicly disclosed;
(d) all press releases, material change reports and other documents
required to be filed with NASDAQ within the past 24 months have
been filed by or on behalf of MEII and were true and correct in all
material respects, provided full, true and plain disclosure of the
matters referred to therein and did not contain any
misrepresentation, as at the respective dates of such filings;
(e) no order ceasing or suspending trading in securities of MEII or
prohibiting the sale of securities by MEII has been issued and, to
the knowledge of MEII, no proceedings for this purpose have been
instituted or are pending, contemplated or threatened;
(f) the execution, delivery and performance of this Agreement, the
consummation of the Offer and the agreements, documents and
transactions contemplated herein are within the corporate power and
authority of MEII and, subject to MEII obtaining the approval of
the Offer by the holders of MEII Shares, have been duly authorized
by all necessary corporate action and this Agreement constitutes a
valid and binding obligation of MEII, enforceable in accordance
with its terms, subject to the customary qualifications for a
commercial transaction of this nature;
(g) none of MEII or any of its Subsidiaries has any outstanding
agreements, subscriptions, warrants, options or commitments, nor
has it granted any rights or privileges capable of becoming an
agreement, subscription, warrant, option or commitment obligating
MEII or its Subsidiaries, as the case may be, to issue any
additional shares or other securities, except as disclosed in the
MEII Financial Statements or the Take-Over Bid Circular or in
connection with the transactions contemplated by Section 4.1;
(h) the MEII Financial Statements present fairly all of the assets and
liabilities of MEII on a consolidated basis and the financial
condition and results of operations of MEII as at the dates thereof
and for the financial periods then ended and have been prepared in
accordance with Canadian generally accepted accounting principles
applied on a consistent basis with that of prior periods, except as
otherwise stated in the notes to the MEII Financial Statements;
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(i) since December 31, 1998, there has been no Material Adverse Change
with respect to MEII, on a consolidated basis, from that shown in
the MEII Financial Statements, except as disclosed in the Interim
MEII Financial Statements, the MEII Annual Report or the Take-Over
Bid Circular;
(j) except for security granted by MEII and certain of its Subsidiaries
to HongKong Bank of Canada or security granted in the ordinary
course of business or as disclosed in the Take-Over Bid Circular or
in the Interim MEII Financial Statements, each of MEII and its
Subsidiaries is the beneficial owner of the properties and assets
described as being owned by it in the Take-Over Bid Circular with
good and marketable title thereto free and clear of material
encumbrances and, in particular, MEII is the beneficial owner of
the shares of its Subsidiaries as described in the Take-Over Bid
Circular with good and marketable title thereto free and clear of
any material covenant, condition or restriction on sale or other
disposition, lien, charge, security interest or encumbrance, and no
person has any agreement, option, right or privilege (including,
without limitation, by law, pre-emptive right, contract or
otherwise) to purchase, convert into, exchange for or otherwise
acquire, nor any agreement, option, right or privilege capable of
becoming any such agreement, option, right or privilege, any of
such shares or any interest therein;
(k) none of MEII or any of its Subsidiaries has any liability or
obligation, whether accrued, absolute, contingent or otherwise,
other than contingent liability for GST, not reflected in the MEII
Financial Statements, the Interim MEII Financial Statements or the
Take-Over Bid Circular, except liabilities and obligations incurred
in the ordinary course of its business since December 31, 1998,
which liabilities and obligations are not materially adverse in the
aggregate or which are disclosed in the Take-Over Bid Circular.
(l) each of the Subsidiaries of MEII that carries on a material portion
of the business of MEII or which owns a material portion of the
MEII Assets on a consolidated basis (meaning any Subsidiary the
total assets of which constitute more than 10% of the consolidated
assets of MEII or the total revenues of which constitute more than
10% of the consolidated revenues of MEII, in each case, for the
period ended March 31, 1999) is duly incorporated and is a valid
and subsisting corporation under the laws of its jurisdiction of
incorporation and has all requisite corporate power and authority
to carry on its business as now carried on by it and to own or
lease and to operate its properties and assets and is duly licenced
or otherwise qualified in each jurisdiction in which a material
amount of its business is conducted or wherein the character of the
properties and assets now owned by it makes such qualification
necessary;
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(m) except as described in the Take-Over Bid Circular or as disclosed
in the MEII Financial Statements or in the Interim MEII Financial
Statements, there are no actions, suits, proceedings,
investigations or outstanding claims or demands, whether or not
purportedly on behalf of MEII or any of its Subsidiaries,
instituted, pending or, to the knowledge of MEII, threatened
against or affecting MEII or any of its Subsidiaries, at law or in
equity or before or by any governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, or
before any arbitrator, nor is there any judgment, order, decree or
award of any court or other governmental authority having
jurisdiction, obtained, pending or, to the knowledge of MEII, or
any of its Subsidiaries, threatened, against MEII, or any of its
Subsidiaries, which would prevent or materially hinder the
consummation of the Offer or the other transactions contemplated by
this Agreement or which would involve the reasonable possibility of
any material judgment or liability, whether or not covered by
insurance, or which in the aggregate would have a material adverse
effect on the business, operations, properties, assets or
condition, financial or otherwise, of MEII and its Subsidiaries on
a consolidated basis and, to the knowledge of MEII, there are no
grounds upon which any such actions, suits, proceedings,
investigations, claims or demands may be commenced or made with a
reasonable likelihood of success;
(n) except as set out in the Interim MEII Financial Statements with
respect to quarterly dividends payable on MEII's preferred shares,
since December 31, 1998, MEII has not declared or paid any
dividends or made any distribution of its properties or assets to
its shareholders and none of MEII or any of its Subsidiaries has
disposed of any of its material properties or assets or incurred
any material indebtedness except in the ordinary course of business
or among its wholly-owned subsidiaries, except as disclosed in the
Take-Over Bid Circular, the MEII Annual Report, the MEII Financial
Statements or the Interim MEII Financial Statements;
(o) the business of MEII and its Subsidiaries is being conducted in all
material respects in compliance with all material applicable laws,
regulations and ordinances of all authorities having jurisdiction;
(p) each contract or agreement between MEII or any of its Subsidiaries
and any other Person which is material to the ownership, use or
operation of a material portion of the business, properties or
assets of MEII or its Subsidiaries on a consolidated basis, is in
full force and effect and, to the knowledge of MEII, is valid,
binding and enforceable against each of the parties thereto in
accordance with its terms, subject to the customary qualifications
for a commercial transaction of such nature, and no material breach
or default exists in respect thereof on the part of any party
thereto,
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and no event has occurred which, with the giving of notice or the
lapse of time or both, would constitute such a material breach or
default;
(q) With the exception of obtaining the consent of NASDAQ and related
MEII shareholder approval, the BSE and the SEC, MEII is not a party
to or bound by any outstanding contract or agreement which requires
the prior approval of any third parties to the completion of the
Offer or of any other transaction contemplated hereby and none of
the execution and delivery of this Agreement, the consummation of
the transactions contemplated hereby or the fulfillment of or
compliance with the terms and provisions hereof do or will, nor
will they with the giving of notice or the lapse of time or both:
(i) violate any provision of any material, law or administrative
regulation or any material judicial or administrative order,
award, judgment or decree applicable to MEII or any of its
Subsidiaries;
(ii) conflict with any of the terms, conditions or provisions of
the Charter Documents of MEII or any of its Subsidiaries;
(iii) conflict with, result in a breach of, constitute a default
under, or accelerate or permit the acceleration of the
performance required by, any material agreement, covenant,
undertaking, commitment, instrument, judgment, order, decree
or award to which MEII or any of its Subsidiaries is a party
or by which it is bound or to which its property is subject;
or
(iv) result in the cancellation, suspension or material alteration
in the terms of any material licence, permit or authority
held by MEII or any of its Subsidiaries or in the creation of
any lien, charge, security interest or encumbrance in a
material amount upon any of the material assets of MEII or
any of its Subsidiaries under any such material agreement,
covenant, undertaking, commitment, instrument, judgment,
order, decree or award or give to any other Person any
material interest or rights, including rights of purchase,
termination, cancellation or acceleration, under any such
material agreement, covenant, undertaking, commitment,
instrument, judgment, order, decree or award;
(r) except as described in the Take-Over Bid Circular, MEII has not
incurred any liability for brokerage fees, finder's fees, agent's
commissions or other similar forms of compensation in connection
with this Agreement or the transactions contemplated hereby;
(s) the Take-Over Bid Circular contains full, true and plain disclosure
of all material facts relating to MEII and does not contain an
untrue statement of
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any material fact concerning MEII and does not omit to state a
material fact concerning MEII that is required to be stated or that
is necessary to make a statement contained therein not misleading
in light of the circumstances in which it was made;
(t) other than as disclosed in writing to YFMC or as disclosed in the
MEII Financial Statements or the Take-Over Bid Circular, MEII has
no material Subsidiaries or agreements of any nature to acquire any
Subsidiary or any interest in any other Person or to acquire or
lease any other business operations out of the ordinary course (for
purposes hereof, ordinary course includes the direct or indirect
acquisition of businesses related to the business of MEII);
(u) since March 31, 1999, MEII has:
(i) not amended its articles, by-laws or other constating
documents;
(ii) conducted its business and that of each of its Subsidiaries
in all material respects in the ordinary course (for
purposes hereof, ordinary course includes the direct or
indirect acquisition of businesses related to the business
of MEII);
(iii) not suffered (on a consolidated basis) any Material Adverse
Change or any occurrences or circumstances which have
resulted or might reasonably be expected to result in a
Material Adverse Change;
(iv) not made any change in its accounting principles and
practices as theretofore applied, including, without
limitation, the basis upon which its assets and liabilities
are recorded on its books and its earnings and profits and
losses are ascertained; and
(v) other than as disclosed to YFMC and except for changes
resulting from negotiations currently ongoing with certain
senior officers, maintained in effect (on a consolidated
basis) salary and other compensation levels in accordance with
its then existing salary administration program;
(v) all filings made by MEII or any of its Subsidiaries under which it
has received or is entitled to government incentives, have been
made in accordance, in all material respects, with all applicable
legislation and contain no misrepresentations of material fact or
omit to state any material fact which could cause any amount
previously paid to MEII or its Subsidiaries or previously accrued
on the accounts thereof to be recovered or disallowed;
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(w) MEII has not received any notices of material violation or alleged
material violation of the provisions of any agreement in respect of
the MEII Assets and, to the knowledge of MEII, the properties and
assets comprising the MEII Assets have been used and operated, as
the case may be, in accordance with all material agreements that
relate to them;
(x) all ad valorem, property, production, severance and similar taxes and
assessments based on or measured by the ownership of the MEII Assets
or the receipt of proceeds therefrom payable in respect of or in
relation to any MEII Assets have been properly and fully paid and
discharged or have been properly accrued on the books of MEII and
each of its Subsidiaries;
(y) all material documents and agreements of whatsoever nature and kind
affecting title to the MEII Assets which are in the possession of
MEII or of which MEII is otherwise aware have been made available for
review by YFMC;
(z) to its knowledge, MEII has done no act or thing, nor has MEII
suffered or permitted any act or omission, whereby its title to any
of the MEII Assets may be cancelled or terminated, except as
disclosed in the MEII Annual Report or the Take-Over Bid Circular;
(aa) to MEII's knowledge, MEII has been and is in compliance in all
material respects with all governmental laws, regulations, orders,
decrees or ordinances with respect to environmental, health and
safety matters (collectively, "Environmental Laws") and MEII has
received no written notice of non-compliance, and for greater
certainty and without limiting the foregoing, to MEII's knowledge:
(i) there have been no unrectified spills, releases, deposits or
discharges of hazardous or toxic substances, contaminants or
wastes on any of the real property owned or leased by MEII or
any of its Subsidiaries or under their respective control, nor
has any such real property been used at any time by any person
as a landfill or waste disposal site;
(ii) there have been no releases, deposits or discharges in
violation of Environmental Laws of any hazardous or toxic
substances, contaminants or wastes into the earth, air or into
any body of water or any municipal or other sewer or drain
water systems by any of MEII or its Subsidiaries;
(iii) no orders, directions or notices have been issued and remain
outstanding pursuant to any Environmental Laws relating to the
business or assets of MEII or any of its Subsidiaries; and
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(iv) each of MEII and its Subsidiaries holds all material licences,
permits and approvals required under any Environmental Laws in
connection with the operation of its business and the
ownership and use of its assets, all such licences, permits
and approvals are in full force and effect and none of MEII
or its Subsidiaries has received any notification pursuant to
any Environmental Laws that any repairs, construction or
capital expenditures are required to be made by it as a
condition of continued compliance with any Environmental Laws,
or any licence, permit or approval issued pursuant thereto, or
that any licence, permit or approval referred to above is
about to be reviewed, made subject to limitations or
conditions, revoked, withdrawn or terminated;
(bb) each of MEII and/or its Subsidiaries has all necessary governmental
authorizations and permits required to enable them to carry on their
respective businesses as conducted by them and all such licenses,
permits and approvals are in full force and effect;
(cc) MEII is not aware of any material Y2K issues relating to the business
and operations of MEII and its Subsidiaries, other than those
disclosed in the public record of MEII or disclosed to YFMC;
(dd) the board of directors of MEII has reserved and allotted to the
holders of YFMC Securities that accept the Offer a sufficient number
of MEII Securities to give effect to the Offer, and upon acceptance
of the Offer in accordance with the terms thereof, the MEII
Securities issuable in connection therewith will be validly issued
and, in the case of the MEII Shares, will be fully paid and
non-assessable to previous holders of YFMC Securities who accept the
Offer and MEII is not aware of any restrictions which would preclude
it from effecting the grant of options to acquire MEII Shares
contemplated by Section 2.1 hereof;
(ee) the MEII Shares will, upon the closing of the Offer, be qualified
investments for trusts governed by registered retirement savings
plans and registered retirement income funds, in each case, within
the meaning of the ITA; and
(ff) MEII acknowledges that it has been advised of the claim of Xxxxxx
against Xx. Xxxxxx, and notwithstanding anything to the contrary
contained herein, MEII has no objection to, and agrees that no
provision of this Agreement shall preclude, Xxxxxx from pursuing
such claim.
SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF YFMC AND THE PRINCIPALS.
Subject to the disclosure set out in the Take-Over Bid Circular, the YFMC
Financial Statements, the YFMC Press Releases and the Interim YFMC Financial
Statements, each of YFMC
- 16 -
and, to the best of their knowledge, information and belief, the Principals
hereby represent and warrant to and in favour of MEII that:
(a) YFMC has been duly continued and is a valid and subsisting
corporation under the provisions of the OBCA, has all requisite
corporate power and authority to carry on its business as now being
carried on by it and to own or lease and operate its properties and
assets and is duly licenced or otherwise qualified to carry on
business in each jurisdiction in which a material amount of its
business is conducted or wherein the character of the properties and
assets now owned by it makes such qualification necessary;
(b) as of the date hereof, the issued and outstanding share capital of
YFMC consists of 10,710,143 YFMC Shares and 1,000,000 YFMC Preferred
Shares, all of which are issued and outstanding as fully paid and
non-assessable shares;
(c) YFMC is a reporting issuer "not in default" under the securities laws
of Alberta and Ontario and, to the best of the knowledge of YFMC and
the Principals, is in compliance with the by-laws, rules and
regulations of the ASE and no material change relating to YFMC has
occurred within the past 24 months which has not been publicly
disclosed;
(d) all press releases, material change reports and other documents
required to be filed with the OSC or the ASE within the past 24
months have been filed by or on behalf of YFMC and were true in all
material respects, provided full, true and plain disclosure of the
matters referred to therein and did not contain any
misrepresentation, as at the respective dates of such filings;
(e) no order ceasing or suspending trading in securities of YFMC or
prohibiting the sale of securities by YFMC has been issued and, to
the knowledge of YFMC and the Principals, no proceedings for this
purpose have been instituted, or are pending, contemplated or
threatened.
(f) the execution, delivery and performance of this Agreement, the
consummation of the Offer and the agreements, documents and
transactions contemplated herein are within the corporate power and
authority of YFMC and have been duly authorized by all necessary
corporate action and this Agreement constitutes a valid and binding
obligation of YFMC, enforceable in accordance with its terms, subject
to customary qualifications for a commercial transaction of this
nature;
(g) none of YFMC or any of its Subsidiaries has any outstanding
agreements, subscriptions, warrants, options or commitments, nor has
it granted any rights or privileges capable of becoming an agreement,
subscription,
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warrant, option or commitment obligating YFMC or its Subsidiaries as
the case may be, to issue any additional shares or other securities,
except for YFMC Preferred Shares, YFMC Series A Warrants, YFMC Series
B Warrants, YFMC Options and up to an aggregate of 361,536 YFMC
Shares which may be issued within the next 30 days;
(h) the YFMC Financial Statements present fairly all of the assets and
liabilities of YFMC and the financial condition and results of
operations of YFMC as at the dates thereof and for the financial
periods then ended and have been prepared in accordance with Canadian
generally accepted accounting principles applied on a consistent
basis with that of prior periods, except as otherwise stated in the
notes to the YFMC Financial Statements;
(i) with the exception of the lost contract with Dynacare Laboratories,
which has been previously been disclosed to MEII in writing, since
December 31, 1998, there has been no Material Adverse Change with
respect to YFMC from that shown in the YFMC Financial Statements,
except as disclosed in the Interim YFMC Financial Statements, the
Take-Over Bid Circular;
(j) except for security granted by YFMC and certain of its subsidiaries
to the Bank of Nova Scotia in respect of a $350,000 operating line
and a lending facility in the aggregate principal amount of $350,000,
of which approximately $58,000 has been drawn down, the
Toronto-Dominion Bank with respect to a $250,000 operating line and a
lending facility of $500,000, of which approximately $300,000 has
been drawn down, in favour of YFMC Healthcare (Alberta) Inc., in each
case, with such bank, X.X. Xxxxxx Professional Corporation and X.
Xxxxxx Professional Corporation pursuant to a general security
agreement (with respect to the XxXxxxxx principals) and 540074
Alberta Ltd. with respect to a general security agreement granted by
YFMC Healthcare (Alberta) Inc., which obligations are guaranteed by
YFMC to the aggregate amount of $100,000 (with respect to the
Martindale principal) or security granted in the ordinary course of
business or as disclosed in the Take-Over Bid Circular or in the
Interim YFMC Financial Statements, each of YFMC and its Subsidiaries
is the beneficial owner of the properties and assets described as
being owned by it in the Take-Over Bid Circular with good and
marketable title thereto free and clear of material encumbrances,
and, in particular, YFMC is the beneficial owner of the shares of its
Subsidiaries as described in the Take-Over Bid Circular with good and
marketable title thereto free and clear of any material covenant,
condition or restriction on sale or other disposition, lien, charge,
security interest or encumbrance, and no person has any agreement,
option, right or privilege (including, without limitation, by law,
pre-emptive right, contract or otherwise) to
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purchase, convert into, exchange for or otherwise acquire, nor any
agreement, option, right or privilege capable of becoming any such
agreement, right, option or privilege, any of such securities or any
interest therein;
(k) none of YFMC or any of its Subsidiaries has any liability or
obligation, whether accrued, absolute, contingent or otherwise, not
reflected in the YFMC Financial Statements, the Interim YFMC
Financial Statements or the Take-Over Bid Circular, except
liabilities and obligations incurred in the ordinary course of
business since December 31, 1998, which liabilities and obligations
are not materially adverse in the aggregate or which are disclosed
in the Take-Over Bid Circular;
(l) each of the Subsidiaries of YFMC that carries on a material portion
of the business of YFMC or which owns a material portion of the YFMC
Assets on a consolidated basis (meaning any Subsidiary the total
assets of which constitute more than 10% of the consolidated assets
of YFMC or the total revenues of which constitute more than 10% of
the consolidated revenues of YFMC, in each case, for the period
ended March 31, 1999) is duly incorporated and is a valid and
subsisting corporation under the laws of its jurisdiction of
incorporation and has all requisite corporate power and authority to
carry on its business as now carried on by it and to own or lease and
to operate its properties and assets and is duly licenced or
otherwise qualified in each jurisdiction in which a material amount
of its business is conducted or wherein the character of the
properties and assets now owned by it makes such qualification
necessary;
(m) except as described in the Take-Over Bid Circular, or as disclosed in
the YFMC Financial Statements or in the Interim YFMC Financial
Statements, there are no actions, suits, proceedings, investigations
or outstanding claims or demands, whether or not purportedly on
behalf of YFMC or any of its Subsidiaries, instituted, pending, or,
to the knowledge of YFMC and the Principals, threatened against or
affecting of YFMC or any of its Subsidiaries at law or in equity or
before or by any governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, or before any
arbitrator, nor is there any judgment, order, decree or award of any
court or other governmental authority having jurisdiction, obtained,
pending or, to the knowledge of YFMC and the Principals, threatened
against YFMC or any of its Subsidiaries which would prevent or
materially hinder the consummation of the Offer or the other
transactions contemplated by this Agreement or which would involve
the reasonable possibility of any material judgment or liability,
whether or not covered by insurance, or which in the aggregate would
have a material adverse effect on the business, operations,
properties, assets or condition, financial or otherwise, of YFMC and
its
- 19 -
Subsidiaries, on a consolidated basis, and to the knowledge of YFMC
and the Principals, there are no grounds upon which any such actions,
suits, proceedings, investigations, claims or demands may be
commenced or made with a reasonable likelihood of success;
(n) with the exception of an aggregate of approximately $5,000 in accrued
dividends payable on the YFMC Preferred Shares which relate to a
period prior to June 30, 1999, since December 31, 1998, YFMC has not
declared or paid any dividends or made any distribution of its
properties or assets to its shareholders and none of YFMC or any of
its Subsidiaries has disposed of any of its material properties or
assets or incurred any material indebtedness, with the exception of
financial arrangements which YFMC has entered into with the
Toronto-Dominion Bank, except in the ordinary course of business or
among its wholly-owned subsidiaries, except as disclosed in the
Take-Over Bid Circular, the YFMC Financial Statements or the Interim
YFMC Financial Statements;
(o) the business of YFMC and its Subsidiaries is being conducted in all
material respects in compliance with all material applicable laws,
regulations and ordinances of all authorities having jurisdiction;
(p) each contract or agreement between YFMC or any of its Subsidiaries
and any other Person which is material to the ownership, use or
operation of a material portion of the business, properties or assets
of YFMC or its Subsidiaries on a consolidated basis, is in full force
and effect and, to the knowledge of YFMC and the Principals, is
valid, binding and enforceable against each of the parties thereto in
accordance with its terms, subject to the customary qualifications
for a commercial transaction of this nature, and no material breach
or default exists in respect thereof on the part of any party thereto
and no event has occurred which, with the giving of notice or the
lapse of time or both, would constitute such a material breach or
default;
(q) with the exception of obtaining the consent of the ASE and the ASC
for the release from escrow of the YFMC Shares of the Principal
Shareholders and certain other shareholders and consents required
pursuant to change of control clauses in leases with landlords and
the financial institutions set forth in a list dated July 29, 1999
provided to MEII, none of the execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby
or the fulfillment of or compliance with the terms and provisions
hereof do or will, nor will they with the giving of notice or the
lapse of time or both:
- 20 -
(i) violate any provision of any material law or administrative
regulation or any material judicial or administrative order,
award, judgment or decree applicable to YFMC or any of its
Subsidiaries;
(ii) conflict with any of the terms, conditions or provisions of
the Charter Documents of YFMC or any of its Subsidiaries;
(iii) conflict with, result in a breach of, constitute a default
under, or accelerate or permit the acceleration of the
performance required by, any material agreement, covenant,
undertaking, commitment, instrument, judgment, order, decree
or award to which YFMC or any of its Subsidiaries is a party
or by which any of them is bound or to which the property of
any of them is subject; or
(iv) result in the cancellation, suspension or material alteration
in the terms of any material licence, permit or authority held
by YFMC or any of its Subsidiaries or in the creation of any
lien, charge, security interest or encumbrance in a material
amount upon any material assets of YFMC or any of its
Subsidiaries under any such material agreement, covenant,
undertaking, commitment, instrument, judgment, order, decree
or award or give to any other Person any material interest or
rights, including rights of purchase, termination,
cancellation or acceleration, under any such material
agreement, covenant, undertaking, commitment, instrument,
judgment, order, decree or award;
(r) except as described in the Take-Over Bid Circular, YFMC has not
incurred any liability for brokerage fees, finder's fees, agent's
commissions or other similar forms of compensation in connection with
this Agreement or the transactions contemplated hereby;
(s) the Take-Over Bid Circular contains full, true and plain disclosure
of all material facts relating to YFMC and does not contain an untrue
statement of a material fact concerning YFMC and does not omit to
state a material fact concerning YFMC that is required to be stated
or that is necessary to make a statement contained therein not
misleading in the light of the circumstances in which it was made;
(t) other than as disclosed in writing to MEII or as disclosed in the
YFMC Financial Statements or the Take-Over Bid Circular, YFMC has no
material Subsidiaries or agreements of any nature to acquire any
Subsidiary or any interest in any other Person, or to acquire or
lease any other business operations out of the ordinary course;
- 21 -
(u) the respective minute books of YFMC and its Subsidiaries are complete
and correct in all material respects and contain the minutes of all
meetings and all resolutions of the directors and shareholders
thereof;
(v) since December 31, 1998, YFMC has:
(i) not amended its articles, by-laws or other constating
documents;
(ii) conducted its business and that of each of its Subsidiaries in
all material respects in the ordinary course;
(iii) not suffered (on a consolidated basis) any Material Adverse
Change or any occurrences or circumstances which have resulted
or might reasonably be expected to result in a Material
Adverse Change;
(iv) not made any change in its accounting principles and practices
as theretofore applied including, without limitation, the
basis upon which its assets and liabilities are recorded on
its books and its earnings and profits and losses are
ascertained; and
(v) maintained in effect (on a consolidated basis) salary and
other compensation levels in accordance with its then existing
salary administration program;
(w) each of YFMC and its Subsidiaries:
(i) has duly and in a timely manner filed all returns, elections,
filings and reports required pursuant to any income, sales or
value added tax legislation of any jurisdictions having
jurisdiction over the affairs of YFMC or any of its
Subsidiaries for all prior periods in respect of which such
filings have heretofore been required, and such filings are
substantially true, complete and correct, the tax liability of
YFMC and each of its Subsidiaries is as indicated by the above
returns and filings, and YFMC and each of its Subsidiaries has
made timely payment of or has duly and properly accrued on the
books thereof, the taxes (including interest and penalties
thereon) shown in these returns and filings, with respect to
periods ending on or prior to the date hereof, and any
subsequent assessments, reassessments or determinations
thereof;
(ii) has made adequate provision for taxes or other amounts payable
pursuant to any legislation referred to in (i) above for the
current period for which returns, reports, elections or other
filings are not yet required to be filed, and has paid all
required installments of
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income, capital, property and business taxes payable on
account of the current period;
(iii) is not aware of any contingent tax liability or any grounds
that could prompt an assessment or reassessment, other than a
potential PST liability in the Province of Quebec estimated at
approximately $10,000, and has not received any indication
from any taxation authorities that an assessment or
reassessment, regardless of its merits, is proposed or is
under consideration, other than as disclosed in the YFMC
Financial Statements or the Take-Over Bid Circular;
(iv) is not a party to any agreements or waivers extending the
statutory period of limitations applicable to any federal,
provincial or other tax return for any period;
(v) has withheld, and will continue to withhold until the date of
closing of the Offer, from each payment made to any of its
officers, directors and employees, former officers, directors
and employees and to all non-residents of Canada and other
persons with respect to whom it is required by law to withhold
any amounts, the amount of all taxes (including, without
limitation, income tax) and other deductions required to be
withheld therefrom and has paid the same to the proper tax or
other authority within the time required under any applicable
legislation; and
(vi) has not undergone an acquisition of control, for the purposes
of the ITA or any relevant provincial statute, that would
affect any taxation years of such corporations ending before
the date hereof, except as a result of transactions
contemplated by this Agreement;
(x) all filings made by YFMC or any of its Subsidiaries under which it
has received or is entitled to government incentives, have been made
in accordance, in all material respects, with all applicable
legislation and contain no misrepresentations of material fact or
omit to state any material fact which could cause any amount
previously paid to YFMC or its Subsidiaries or previously accrued on
the accounts thereof to be recovered or disallowed;
(y) neither YFMC nor any of its Subsidiaries is a party to any written
contracts of employment, management services contracts or collective
bargaining agreements, other than as disclosed in the Take-Over Bid
Circular or entered into in the ordinary course of business;
- 23 -
(z) YFMC has not received any notices of material violation or alleged
material violation of the provisions of any agreement in respect of
the YFMC Assets and to the knowledge of YFMC and the Principals, the
properties and assets comprising the YFMC Assets have been used and
operated in accordance with all material agreements that relate to
them;
(aa) all ad valorem, property, production, severance and similar taxes and
assessments based on or measured by the ownership of the YFMC Assets
or the receipt of proceeds therefrom payable in respect of or in
relation to any YFMC Assets have been properly and fully paid and
discharged or have been properly accrued on the books of YFMC and
each of its Subsidiaries;
(bb) all material documents and agreements of whatsoever nature and kind
affecting title to the YFMC Assets which are in the possession of
YFMC or of which YFMC is otherwise aware have been made available
for review by MEII;
(cc) to the knowledge of YFMC and the Principals, YFMC has done no act or
thing, nor has YFMC suffered or permitted any act or omission,
whereby its title to any material YFMC Assets may be cancelled or
terminated, except as disclosed in the Take-Over Bid Circular;
(dd) to the knowledge of YFMC and the Principal Shareholders, YFMC has
been and is in compliance in all material respects with all
Environmental Laws and YFMC has received no written notice of
non-compliance, and does not know, and does not have reasonable
grounds to know, of any facts which could give rise to a notice of
non-compliance, and for greater certainty and without limiting the
foregoing, to the knowledge of YFMC and the Principals:
(i) there have been no unrectified spills, releases, deposits or
discharges of hazardous or toxic substances, contaminants or
wastes on any of the real property owned or leased by YFMC or
any of its Subsidiaries or under their respective control,
nor has any such real property been used at any time by any
person as a landfill or waste disposal site;
(ii) there have been no releases, deposits or discharges in
violation of Environmental Laws of any hazardous or toxic
substances, contaminants or wastes into the earth, air or into
any body of water or any municipal or other sewer or drain
water systems by YFMC or its Subsidiaries;
- 24 -
(iii) no orders, directions or notices have been issued and remain
outstanding pursuant to any Environmental Laws relating to the
business or assets of YFMC or any of its Subsidiaries; and
(iv) each of YFMC and its Subsidiaries holds all material licences,
permits and approvals required under any Environmental Laws in
connection with the operation of its business and the
ownership and use of its assets, all such licences, permits
and approvals are in full force and effect, and none of YFMC
or its Subsidiaries has received any notification pursuant to
any Environmental Laws that any work, repairs, construction or
capital expenditures are required to be made by it as a
condition of continued compliance with any Environmental Laws
or any licence, permit or approval issued pursuant thereto, or
that any licence, permit or approval referred to above is
about to be reviewed, made subject to limitations or
conditions, revoked, withdrawn or terminated;
(ee) there is no fact which YFMC has not disclosed to MEII in writing with
reasonable specificity and detail of which any of its directors,
officers or members of senior management is aware and which has or
would reasonably be expected to have a material adverse effect on
YFMC or materially impede the completion of the Offer or the other
transactions contemplated in this Agreement;
(ff) each of YFMC and/or its Subsidiaries has all necessary governmental
authorizations and permits required to enable them to carry on their
respective businesses as conducted by them and all such licenses,
permits and approvals are in full force and effect and neither YFMC
or its Subsidiaries has received any notification pursuant to
applicable laws that any matters must be undertaken by them as a
condition of the continued compliance of any such licenses, permits
and approvals or any license, permit or approval issued to them is
about to be reviewed, made subject to limitations or conditions,
revoked, withdrawn or terminated;
(gg) YFMC is not aware of any material Y2K issues relating to the business
and operations of YFMC and its Subsidiaries, other than those
disclosed in the public record of YFMC; and
(hh) to the knowledge of YFMC, based solely on a review of its
shareholders' list of recent date, all of the registered and
beneficial owners of YFMC securities are residents of Ontario,
Alberta and Quebec.
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SECTION 3.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE PRINCIPALS AND
MEII.
The representations and warranties contained herein and given by the
Principals to MEII and given by MEII to the Principals shall, in each case,
survive the completion of the transaction contemplated by the Offer for a
period of 18 months thereafter.
ARTICLE FOUR
COVENANTS
SECTION 4.1 COVENANTS OF MEII. Until the transaction contemplated by the
Offer is completed or this Agreement is terminated, MEII hereby covenants and
agrees with YFMC and the Principals as follows:
(a) MEII and its Subsidiaries will carry on business in the ordinary
course consistent with past practice (for purposes hereof, carrying
on business in the ordinary course includes the direct or indirect
acquisition of businesses related to the business of MEII), except as
contemplated in the Working Agreement, this Agreement, the Interim
MEII Financial Statements, the MEII Annual Report or the Take-Over
Bid Circular, or as disclosed in writing to YFMC or as otherwise
agreed in writing by YFMC, acting reasonably and MEII shall keep
YFMC apprised of all material developments relating thereto;
(b) MEII will not, and will not permit any of its Subsidiaries to, alter
or amend its Charter Documents as the same exist at the date of this
Agreement;
(c) MEII will not, and will not permit any of its Subsidiaries to,
subdivide, consolidate, redeem, purchase, offer to purchase or
otherwise acquire or reclassify any of its outstanding shares of any
class, declare any dividends (with the exception of dividends paid on
MEII's preferred shares in the ordinary course) or make other
distributions (whether in cash, shares or property, or any
combination thereof) or reduce the stated capital in respect of its
shares of any class;
(d) MEII will:
(i) make all required filings pursuant to the SECURITIES EXCHANGE
ACT OF 1934, as amended; and
(ii) use its reasonable best efforts to maintain the NASDAQ
SmallCap Market listing of the MEII Shares;
- 26 -
(e) MEII will use its reasonable best efforts to obtain listing on NASDAQ
and the BSE of the MEII Shares to be issued pursuant to the Offer and
the MEII Shares issuable upon exercise of MEII Securities issued
pursuant to or in connection with the Offer which contain rights to
receive MEII Shares;
(f) subject to Section 2.1 hereof, MEII will, in a timely and expeditious
manner, file the Take-Over Bid Circular in all jurisdictions where it
is required to be filed and mail the same to YFMC's shareholders in
accordance with applicable law;
(g) MEII will use its reasonable best efforts to do all such other acts
and things as may be necessary or required in order to give effect to
the Offer and, without limiting the generality of the foregoing, MEII
will use its reasonable best efforts to apply for and/or obtain such
other consents, orders and approvals as counsel may advise are
necessary or desirable for the implementation of the Offer, including
those referred to in Sections 5.1 and 5.2 hereof;
(h) MEII will use its reasonable best efforts to cause each of the
conditions precedent set forth in Article Five hereof to be complied
with on or before the date of closing of the Offer and will not take
or fail to take any action reasonably within its control which would
result in a condition precedent to the Offer not being satisfied;
(i) except as may be required to complete the Offer, MEII nor any other
party acting jointly or in concert with MEII shall acquire or dispose
of securities of YFMC, directly or indirectly, except pursuant to
existing rights and obligations, during the period commencing on the
date hereof and ending on the date of termination of this Agreement;
(j) at the meeting of MEII shareholders held to approve the transaction,
MEII shall include a proposal to reconstitute its board of directors
such that the same will include one (1) nominee of YFMC, who will be
either Xxxxxx Xxxxxxxx or Xxxxxx Xxxxxx, with the understanding that
the resignation of such individual(s) shall be held by Blake, Xxxxxxx
& Xxxxxxx, in trust and shall be released to MEII if the Offer does
not proceed or is not consummated and shall be of no force and effect
if MEII takes up and pays for the YFMC Securities of PRAL or 977675,
as applicable, under the Offer; and
(k) MEII shall not withdraw the Offer prior to the time of expiry of the
Offer and will take up and pay for the YFMC Securities tendered
pursuant to the Offer if all of the conditions to the Offer are
satisfied or waived.
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SECTION 4.2 COVENANTS OF YFMC AND THE PRINCIPALS. Until the transaction
contemplated by the Offer is completed or this Agreement is terminated, YFMC
hereby covenants and agrees with MEII, and the Principals covenant and agree
with MEII to use their reasonable best efforts to cause YFMC, to do the
following:
(a) YFMC and its Subsidiaries will carry on business in the ordinary
course consistent with past practice and will not enter into any
transaction or incur any material obligation or liability out of
the ordinary course of business, except as contemplated in the
Working Agreement, this Agreement, the Interim YFMC Financial
Statements, the Take-Over Bid Circular or as otherwise agreed in
writing by MEII, acting reasonably and YFMC shall keep MEII
apprised of material developments relating thereto;
(b) with the exception of matters previously disclosed in writing to
MEII prior to the date hereof, without the prior written consent of
MEII, which consent will not be unreasonably withheld, YFMC will not,
and will not permit any of its Subsidiaries to, merge into or with,
or amalgamate or consolidate with, or enter into any other corporate
reorganization with, any other corporation or person or perform any
act or enter into any transaction or negotiation which interferes or
is inconsistent with the completion of the transactions contemplated
hereby or would render inaccurate in any material respect any of the
representations and warranties set forth in Section 3.2 hereof if
such representations and warranties were made at a date subsequent to
such act, negotiation or transaction and all references to the date
of this Agreement were deemed to be such later date, as contemplated
in this Agreement, the Take-Over Bid Circular, the Interim YFMC
Financial Statements, and, without limiting the generality of the
foregoing, YFMC will not, and will not permit any of its
Subsidiaries to:
(i) make any distribution by way of dividend, return of capital or
otherwise to or for the benefit of its shareholders;
(ii) issue any shares, except upon the due exercise of outstanding
options, warrants or other rights to purchase YFMC Shares, or
other securities convertible into or exchangeable for shares
or enter into any commitment or agreement therefor except as
contemplated in the Take-Over Bid Circular;
(iii) increase or decrease its paid-up capital; or
(iv) enter into any Non-Arm's Length Transactions;
- 28 -
(c) YFMC will not, and will not permit any of its Subsidiaries to,
alter or amend its Charter Documents as the same exist at the date of
this Agreement;
(d) YFMC will not, and will not permit any of its Subsidiaries to,
subdivide, consolidate, redeem, purchase, offer to purchase or
otherwise acquire or reclassify any of its outstanding shares,
declare any dividends or make other distributions (whether in cash,
shares or property, or any combination thereof) or reduce the stated
capital in respect of its shares;
(e) YFMC will use its reasonable best efforts to maintain its status as a
reporting issuer "not in default" under the securities laws of
Alberta and Ontario and will use its reasonable best efforts to
remain in compliance with the by-laws, rules and regulations of the
ASE such that no order ceasing or suspending trading in securities of
YFMC or prohibiting the sale of securities by YFMC will be
instituted, contemplated or threatened;
(f) YFMC will use it reasonable best efforts to assist MEII in obtaining
listing on NASDAQ and the BSE of the MEII Shares to be issued
pursuant to or in connection with the Offer and the MEII Shares
issuable upon the exercise of MEII Securities issued pursuant to the
Offer which contain rights to receive MEII Shares;
(g) YFMC will not, and will not permit any of its Subsidiaries to, engage
in any business, enterprise or activity materially different from
that carried on by it at the date of this Agreement or enter into any
transaction or incur any obligation if the same would have a material
adverse effect on YFMC or the Offer, other than in the ordinary
course of business;
(h) YFMC will use its reasonable best efforts to do all such other acts
and things as may be necessary or required in order to give effect to
the Offer and, without limiting the generality of the foregoing, YFMC
will use its reasonable best efforts to apply for and/or obtain such
other consents, orders and approvals as counsel may advise are
necessary or desirable for the implementation of the Offer, including
those referred to in Section 5.1 hereof;
(i) YFMC will use its reasonable best efforts to cause each of the
conditions precedent set forth in Article Five hereof to be complied
with on or before the date of closing of the Offer and will not take
or fail to take any action reasonably within its control which would
result in a condition precedent to the Offer not being satisfied;
(j) YFMC agrees that it shall not solicit any offers to purchase any of
its shares or any of its material assets and will not initiate,
encourage or participate, directly or indirectly, in any discussions
or negotiations with
- 29 -
any third party with respect to such a transaction or similar
business combination during the period commencing on the date hereof
and ending on the date of termination of this Agreement;
(k) YFMC nor any other party acting jointly or in concert with YFMC shall
acquire or dispose of securities of MEII, directly or indirectly,
except pursuant to existing rights and obligations, during the period
commencing on the date hereof and ending on the date of termination
of this Agreement;
(l) YFMC agrees to use its best reasonable efforts to assist MEII to
successfully complete the Offer, including co-operating in making all
requisite regulatory filings and mailings to shareholders;
(m) YFMC will not take any action of any kind which may reduce the
likelihood of success of or delay the take up and payment of YFMC
Shares deposited under the Offer or the completion of the Offer,
including but not limited to any action to continue, solicit,
initiate, assist or encourage inquiries, submissions, proposals or
offers from any other Person, entity or group relating to, and will
not continue or participate in any discussions or negotiations
regarding or furnish to any other Person, entity or group any
information with respect to, or otherwise cooperate in any way with
or assist or participate in, or encourage any effort or attempt with
respect to:
(i) the direct or indirect acquisition or disposition of all or any
shares or any other securities of YFMC; or
(ii) any amalgamation, merger, sale (other than a sale in the
ordinary course of business consistent with past practice) of
any part of YFMC's assets, take-over bid, plan of arrangement,
reorganization, recapitalization, liquidation or winding-up or
reverse take-over or other business combination or similar
transaction involving YFMC or any of its assets;
(n) YFMC will use its reasonable best efforts to obtain the consents
required as a result of the transactions provided for herein pursuant
to any contract to which YFMC is a party or by which it is bound;
(o) YFMC will use its reasonable best efforts to do all such other acts
and things as may be necessary or required in order to give effect to
the Offer and, without limiting the generality of the foregoing, will
use its best efforts to apply for and obtain such consents, orders
and approvals as its solicitors may advise are necessary or desirable
for the implementation of the Offer;
- 30 -
(p) YFMC will use its reasonable best efforts to obtain the execution of
the Lock-Up Agreement by the Principal Shareholders and the deposit
of YFMC Shares pursuant to the terms thereof;
(q) YFMC will use all reasonable efforts to cause each of the conditions
precedent set forth in Article 5 hereof to be complied with on or
before the commencement of the Offer; and
(r) other than the right to convert YFMC Options into options of MEII
neither YFMC nor any of its Subsidiaries shall adopt or amend or make
any contribution to any bonus, profit sharing, option, pension,
retirement, deferred compensation, insurance, incentive compensation,
other compensation or other similar plan, agreement, trust, fund or
arrangements for the benefit of employees, except as is necessary to
comply with law or with respect to existing provisions of any such
plans, programs, arrangements or agreements.
Notwithstanding anything to the contrary contained herein, the board of
directors of YFMC may withdraw, modify or change any recommendation regarding
the Offer if, in the opinion of the board of directors of YFMC, acting
reasonably, and upon the written advice of counsel, such withdrawal,
modification or change is required in the discharge of the fiduciary duties
of the board of directors of YFMC. Notwithstanding any termination of this
Agreement, if the board of directors of YFMC withdraws, modifies or changes
its recommendation regarding the Offer, other than by mutual agreement of the
parties or if MEII is in default of its material obligations, or there has
been a material breach by it of its material representations, warranties and
covenants under this Agreement, in each case which constitute a Material
Adverse Change in respect of MEII, YFMC shall forthwith pay MEII a break-up
fee of $500,000.
ARTICLE FIVE
CONDITIONS
SECTION 5.1 MEII CONDITIONS PRECEDENT. Notwithstanding Section 2.1, MEII
shall not be required to make the Offer (and MEII may, without prejudice to
any other rights, by notice to YFMC, terminate this Agreement) if:
(a) YFMC shall not have taken all steps requested by MEII, acting
reasonably (other than steps which would have a material adverse
effect on YFMC's business if the Offer was not completed) in
connection with the Offer, including, without limitation, any steps
required up to the date of the Offer to satisfy the regulatory
requirements or approvals (domestic or foreign) in order for MEII to
purchase the YFMC Shares;
- 31 -
(b) any representation or warranty of YFMC in this Agreement shall not
have been, as of the date made and as of the date that the Offer is
required to be made pursuant to Section 2.1, true and correct;
(c) YFMC shall not have performed or complied in all material respects
with any of its covenants or agreements and such non-performance or
non-compliance gives rise to a Material Adverse Change; or
(d) the YFMC Shares and YFMC Preferred Shares currently being held in
escrow pursuant to certain escrow agreements between certain YFMC
shareholders and Montreal Trust Company of Canada pursuant to
requirements of the ASE and the ASC, as applicable, have not been
released from escrow.
The foregoing conditions are for the sole benefit of MEII, may be waived by
MEII at any time and shall be deemed to have been waived by the making of the
Offer.
SECTION 5.2 YFMC CONDITIONS PRECEDENT. (a) Notwithstanding Sections 2.3 and
2.4 or any provision to the contrary contained herein, YFMC shall not be
required to recommend acceptance of the Offer by its shareholders until YFMC
shall have received confirmation to its satisfaction that the MEII Shares to
be issued to YFMC shareholders have been registered pursuant to the
SECURITIES ACT OF 1933, as amended, and, provided such shares are traded on
NASDAQ or the BSE, contain no resale restrictions as to such shares, with the
exception of any restrictions applicable to Persons deemed to be affiliates.
(b) Notwithstanding Sections 2.3 and 2.4 or any provision to the
contrary herein contained, YFMC shall not be required to recommend acceptance
of the Offer by its shareholders if the representations and warranties of
MEII contained in this Agreement shall be untrue or incorrect on and as of
the date of the Offer as if made on and as of such date (except as affected
by transactions contemplated or permitted by this Agreement) or if MEII is in
default of its material obligations or covenants under this Agreement on or
before the date the Offer is made, where the facts which are the subject of
such untrue or incorrect representation or warranty or such breach of
obligation or covenant constitute a Material Adverse Change in respect of
MEII.
The foregoing are for the sole benefit of YFMC and may be waived by YFMC
at any time and shall be deemed to have been waived by the mailing of the
directors' circular referred to in Section 2.4.
SECTION 5.3 MUTUAL CONDITIONS PRECEDENT. The respective obligations of the
parties hereto to give effect to the making of the Offer shall be subject to
the satisfaction of the following conditions:
(a) prior to the making of the Offer (i) no act, action, suit or
proceeding shall have been taken before or by any domestic or foreign
arbitrator, court or
- 32 -
tribunal or governmental agency or other regulatory authority or
administrative agency or commission or by any elected or appointed
public official or private person (including, without limitation,
any individual, corporation, firm, group or other entity) in Canada
or elsewhere, whether or not having the force of law; or (ii) no
law, regulation, rule or policy shall have been proposed, enacted,
promulgated or applied, in the case of (i) or (ii) above:
(i) to cease trade, enjoin, prohibit or impose material
limitations or conditions on the purchase by or the sale to
MEII of the YFMC Securities or the rights of MEII to own or
exercise full rights or ownership of the YFMC Securities; or
(ii) which has resulted in, or if the Offer was consummated would
result in, a Material Adverse Change,
provided that in the judgment of MEII or YFMC, acting reasonably,
there is a reasonable risk that the circumstances referred to above
would result in the occurrence of any of the consequences referred
to above and further provided, however, MEII shall not be required
to make the Offer and YFMC shall not be obligated to fulfill its
obligations hereunder as a result of any action, suit or proceeding
taken by a private Person only if such act, action, suit or
proceeding shall be been resolved in favour of such private Person
as evidenced by an order, ruling or decision by any domestic or
foreign arbitrator, court or tribunal or governmental agency or
other regulatory authority or administrative agency or commission
in Canada or elsewhere having jurisdiction in respect of MEII, YFMC
or the Offer, or if, in the opinion of MEII's or YFMC's solicitors,
respectively, acting reasonably, there is a reasonable risk that
such act, action, suit or proceeding will be so resolved in favour
of such private person;
(b) at the time MEII proposes to make the Offer, there shall exist no
prohibition at law against MEII making the Offer or taking up and
paying for the YFMC Securities under the Offer;
(c) all regulatory approvals, orders and consents required or necessary
(i) for making the Offer; and
(ii) to ensure no resale restrictions attach, other than those
applicable to "control persons" or as contemplated by the
Lock-Up Agreement, to the first trade of MEII Securities on
NASDAQ issued to YFMC Shareholders pursuant to the Offer
shall have been obtained or received from the persons, authorities
or bodies having jurisdiction in the circumstances, including, for
greater
- 33 -
certainty, approval of such related matters by the OSC or the SEC,
as applicable;
(d) there shall be no action taken under any existing applicable law or
regulation, nor any statute, rule, regulation or order which is
enacted, enforced, promulgated or issued by any court, department,
commission, board, regulatory body, government or governmental
authority or similar agency, domestic or foreign, that:
(i) makes it illegal or otherwise directly or indirectly
restrains, enjoins or prohibits the Offer or any other
transactions contemplated herein;
(ii) results in a judgment or assessment of material damages
directly or indirectly relating to the transactions
contemplated herein; or
(iii) prohibits MEII's or YFMC's ownership or operation of all or
any material portion of their respective business or assets
or compels MEII to dispose of or hold separately all or any
portion of the business or assets of YFMC or MEII;
(e) prior to the making of the Offer, there shall have been no Material
Adverse Change since the date hereof with respect to MEII or its
Subsidiaries on a consolidated basis or YFMC or its Subsidiaries on
a consolidated basis or any occurrences or circumstances which have
resulted or might reasonably be expected to result in a Material
Adverse Change thereto;
(f) none of the consents, orders or approvals contemplated herein
pursuant to subsection 5.3(c) shall contain terms or conditions or
require undertakings or security deemed unsatisfactory or
unacceptable by any of the parties hereto, acting reasonably; and
(g) this Agreement shall not have been terminated pursuant to the
provisions of Article Six.
SECTION 5.4 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The obligation of each
of the YFMC and MEII and to complete the transactions contemplated by this
Agreement is further subject to the condition, which may be waived by each of
YFMC or MEII, without prejudice to its right to rely on any other condition
in favour of YFMC or MEII, that the covenants of the other party hereto to be
performed on or before the commencement of the Offer pursuant to the
provisions of this Agreement shall have been duly performed by such other
party and that, except as affected by the transactions contemplated by this
Agreement, the representations and warranties of such other party shall be
true and correct as at the commencement of the Offer, with the same effect as
if such representations and warranties had been made at, and as of, such time
and each of
- 34 -
YFMC and MEII shall receive a certificate, dated the commencement of the
Offer, of a senior officer of YFMC or MEII, as the case may be, to such
effect.
ARTICLE SIX
TERMINATION
SECTION 6.1 RIGHTS OF TERMINATION. (1) If any of the conditions contained
in Sections 5.1, 5.2 or 5.3 shall not be fulfilled or performed on or before
November 30, 1999, either of YFMC or MEII, as applicable, may terminate this
Agreement by notice to the other party hereto, and in such event YFMC and
MEII shall be released from all obligations under this Agreement (with the
exception of the obligations contained in Section 2.8), all rights of
specific performance by any such party shall terminate and, unless such party
can show that the condition or conditions the non-performance of which has
caused such party to terminate this Agreement where reasonably capable of
being performed by the other party, then the other party shall also be
released from all obligations hereunder; provided that such party can show
that the other party could reasonably have performed such condition or
conditions, then that party shall not be released from its obligations
hereunder, and further provided that any of such conditions may be waived in
full or in part by any of the parties without prejudice to its rights of
termination in the event of the non-fulfillment or non-performance of any
other condition.
(2) In addition, and notwithstanding anything to the contrary contained
herein, this Agreement shall terminate without further notice or agreement if
the Offer is not completed by January 31, 2000. Upon such termination, the
parties hereto shall be released from all further obligations under this
Agreement (with the exception of the obligations contained in Section 2.8)
and all rights of specific performance by any of the parties hereto shall
terminate.
(3) In addition, this Agreement may be terminated:
(a) at any time with the mutual consent of all of the parties hereto;
(b) by either MEII or YFMC, if MEII shall not have taken up and paid
for the YFMC Securities tendered under the Offer on or before the
required time period following the Expiry Time (as defined in the
Take-Over Bid Circular) (as such time may be extended) of the Offer
unless the absence of such occurrence shall be due to the failure
of the party seeking to terminate this Agreement to perform the
obligations under this Agreement required to be performed by it;
(c) by either MEII or YFMC, if a court of competent jurisdiction or a
governmental, regulatory or administrative agency or commission
shall have issued an order, decree or ruling or taken any other
action permanently restraining, enjoining or otherwise prohibiting
any of the
- 35 -
transactions contemplated by this Agreement and such order, decree,
ruling or other action shall have become final and non-appealable,
provided that the party seeking to terminate this Agreement
pursuant to this section shall have used all commercially
reasonable efforts to remove such order, decree, ruling or
injunction; or
(d) by MEII, if YFMC does not consent to any matter for which YFMC's
consent is required pursuant to subsection 4.1(a) hereof.
SECTION 6.2 NOTICE OF UNFULFILLED CONDITIONS. If any party shall determine
at any time prior to the closing of the transactions contemplated by the Offer
that it intends to refuse to consummate any of the transactions contemplated
hereby because of any unfulfilled or unperformed condition precedent contained
in this Agreement on the part of another party to be fulfilled or performed,
such party shall so notify the other party forthwith upon making such
determination in order that any one or more of the other parties shall have the
right and opportunity to take such steps, at their own expense, as may be
necessary for the purpose of fulfilling or performing such condition precedent
within a reasonable period of time, but in no event later than January 31, 2000.
ARTICLE SEVEN
GENERAL
SECTION 7.1 NOTICES. All notices which may or are required to be given
pursuant to any provision of this Agreement shall be given or made in writing
and shall be served personally or by telecopy, in each case addressed to the
attention of the following persons at:
(a) in the case of MEII:
Med-Emerg International, Inc.
0000 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
Attention: President
Telecopy number: (000) 000-0000
- 36 -
with a copy to:
Blake, Xxxxxxx & Xxxxxxx
Suite 2800
000 Xxx Xxxxxx
Xxxxxxxx Xxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxx Xxxxx
Telecopy number: (000) 000-0000
(b) in the case of YFMC:
YFMC Health Care Inc.
Xxxxx 000-000 XxxXxxxx Xxxxxx
Xxxxxx, Xxxxxxx
X0X 0X0
Attention: President
Telecopy number: (000) 000-0000
with a copy to:
Burnet, Xxxxxxxxx & Xxxxxx
0000, 000-0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxx Xxxxxx
Telecopy number: (000) 000-0000
(c) in the case of Xxxxxx and 977675:
977675 Ontario Inc.
x/x Xxxxx 000-000 XxxXxxxx Xxxxxx
Xxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxx Xxxxxx
Telecopy number: (000) 000-0000
- 37 -
with a copy to:
Burnet, Xxxxxxxxx & Xxxxxx
0000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxx Xxxxxx
Telecopy number: (000) 000-0000
(d) in the case of Xxxxxxxx and PRAL:
Page Xxxxxxx & Associates Ltd.
x/x Xxxxx 000-000 XxxXxxxx Xxxxxx
Xxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxx Xxxxxxxx
Telecopy No.: (000) 000-0000
with a copy to:
Burnet, Xxxxxxxxx & Xxxxxx
0000, 000-0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxx Xxxxxx
Telecopy number: (000) 000-0000
SECTION 7.2 ASSIGNMENT. A party may not assign its rights or obligations
under this Agreement without the prior written consent of the other parties
hereto.
SECTION 7.3 BINDING EFFECT. This Agreement shall be binding upon and shall
enure to the benefit of the parties hereto and their respective successors
and permitted assigns.
SECTION 7.4 WAIVER. Any waiver or release of any of the provisions of this
Agreement, to be effective, must be in writing and executed by the party
granting such waiver or release.
SECTION 7.5 GOVERNING LAW. This Agreement shall be governed by and be
construed in accordance with the laws of the Province of Ontario and the laws
of Canada applicable therein and shall be treated in all respects as an
Ontario contract.
- 38 -
SECTION 7.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
SECTION 7.7 ENTIRE AGREEMENT. This Agreement and all agreements and other
documents herein referred to, constitute the entire agreement between the
parties hereto pertaining to the subject matter hereof and supersede all
prior agreements, understandings, negotiations and discussions, whether oral
or written, between the parties hereto with respect to the subject matter
hereof.
SECTION 7.8 EXPENSES. All expenses incurred in connection with this
Agreement and the transactions contemplated hereby and thereby shall be paid
by the party incurring such expense. The provisions of this Section 7.8 shall
survive the termination of this Agreement.
SECTION 7.9 TIME OF ESSENCE. Time is of the essence of this Agreement.
SECTION 7.10 CONFIDENTIALITY. The parties to this Agreement agree to hold
in confidence all confidential information disclosed to them by the other
party or parties or as a result of these negotiations, except with respect to
the individuals and entities listed in the immediately following sentence,
and except for any information that (a) was or is in the public domain, (b)
was previously known to the other party, as the case may be, (c) becomes
generally available to the public other than through the breach of any
obligation of confidentiality by any party hereto, (d) is obtained in good
faith from a third party, (e) is independently developed by the other party,
or (f) the disclosure of which is required by operation of law. The parties
to this Agreement also agree that, without the express written consent of the
other party, they shall not disclose to any third party (other than to their
respective advisors, officers, directors and subsidiaries) the confidential
information of the other party. The parties to this Agreement further agree
(y) that the confidentiality provisions of this Agreement shall apply to its
employees and advisors and (z) to advise such employees and advisors of the
confidential nature of such information. If the transaction is not
consummated, the parties to this Agreement agree that they will not, directly
or indirectly, use such confidential information for their own benefit, and
the parties shall, upon written request of the other party, return, and shall
cause their advisors to return, to the other party all such confidential
information in their possession and shall destroy, and shall cause their
advisors to destroy, portions of any notes, projections and other
internally-created documents to be the extent they contain such confidential
information.
SECTION 7.11 PRESS RELEASES. MEII and YFMC agree that, other than as may be
required by applicable law or the requirements of the ASE or NASDAQ, all
press releases issued in connection with the Offer shall be joint press
releases of such companies.
SECTION 7.12 NO THIRD PARTY BENEFICIARIES. Nothing contained herein shall
confer any rights or benefits on any third party.
- 39 -
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the
date first written above.
SIGNED, SEALED AND DELIVERED )
In the presence of: )
) MED-EMERG INTERNATIONAL INC.
)
) /s/Xxxxxx Xxxxxxxxx
) Per: --------------------------------
) Authorized Signing Officer
)
) /s/Xxxxxxx Xxxxxx
) Per: --------------------------------
) Authorized Signing Officer
)
)
) YFMC HEALTHCARE INC.
)
) /s/Xxxxxx Xxxxxx
) Per: --------------------------------
) Authorized Signing Officer
)
) /s/Xxxxxx Xxxxxxxx
) Per: --------------------------------
) Authorized Signing Officer
)
/s/Xxxx Xxxxx ) /s/Xxxxxx Xxxxxx
------------------------------------- ) --------------------------------
Witness ) Xxxxxx Xxxxxx
)
/s/Xxxx Xxxxx ) /s/Xxxxxx Xxxxxxxx
------------------------------------- ) --------------------------------
Witness ) Xxxxxx Xxxxxxxx
977675 ONTARIO INC.
Per: /s/Xxxxxx Xxxxxx
--------------------------------
Authorized Signing Officer
- 40 -
PAGE XXXXXXX & ASSOCIATES LTD.
Per: /s/Xxxxxx Xxxxxxxx
-------------------------------
Authorized Signing Officer
EXHIBIT A
FORM OF LOCK-UP AGREEMENT
EXHIBIT B
FORM OF SERIES A WARRANT CERTIFICATE
DRAFT: AUGUST 5, 1999
SERIES A WARRANT CERTIFICATE
Void after 5:00 p.m. Toronto time on the 12th day of June, 2000.
Number of Warrants: [-] Warrant Certificate No. [-]
MED-EMERG INTERNATIONAL INC.
(Incorporated under the laws of Ontario)
This is to certify that, for value received, the bearer of this Warrant (the
"Holder") shall have the right to purchase from Med-Emerg International Inc.
(hereinafter the "Corporation"), at any time on or after [-], 1999 (the
"Issue Date") and up to 5:00 p.m. (Toronto time) on June 12, 2000 (the
"Expiry Time"), one fully paid and non-assessable Common Share in the capital
stock of the Corporation for each warrant (collectively, the "Warrants" and
individually, a "Warrant") represented hereby at the price of US$2.70 per
share (the "Exercise Price"), upon and subject to the following terms and
conditions:
1. For the purpose of this Warrant, the term "Common Shares" means common
shares without nominal or par value in the capital of the Corporation as
constituted on the date hereof; provided that in the event of a Common Share
Reorganization (as hereinafter defined), or successive such Common Share
Reorganizations, then subject to the adjustments, if any, having been made in
accordance with the provisions of this Warrant Certificate, "Common Shares"
shall thereafter mean the shares, other securities or other property
resulting from such Common Share Reorganization(s).
2. All Warrant Certificates shall be signed by an officer of the
Corporation holding office at the time of signing, and notwithstanding any
change in any of the persons holding said offices between the time of actual
signing and the delivery of the Warrant Certificate and notwithstanding that
such officer signing may not have held office at the date of the delivery of
the Warrant Certificate, the Warrant Certificate so signed shall be valid and
binding upon the Corporation. Warrant Certificates shall be dated as of the
Issue Date regardless of their date of issue.
3. All rights under any of the Warrants in respect of which the right of
subscription and purchase herein provided for shall not theretofore have been
exercised shall wholly cease and terminate and such Warrants shall be wholly
void and of no valid or binding effect after the Expiry Time.
4. The right to purchase Common Shares of the Corporation pursuant to the
Warrants may only be exercised by the Holder on or after the Issue Date and
at or before the Expiry Time by:
- 2 -
(a) duly completing and executing a subscription substantially in the
form attached hereto, in the manner therein indicated; and
(b) surrendering this Warrant Certificate and the duly completed and
executed subscription form to the Corporation at its principal office
(which address is currently 0000 Xxxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxxxxx, Xxxxxxx, X0X 0X0) [OR TO THE REGISTERED TRANSFER AGENT
FOR THE WARRANTS], together with payment of the purchase price for
the Common Shares subscribed for in the form of cash or a certified
cheque payable to the Corporation or other manner acceptable to the
Corporation in an amount equal to the then applicable Exercise Price
multiplied by the number of Common Shares subscribed for.
5. Upon such delivery and payment as aforesaid, the Corporation shall cause
to be issued to the Holder the number of Common Shares to be issued and the
Holder shall become a shareholder of the Corporation in respect of such
Common Shares with effect from the date of such delivery and payment and
shall be entitled to delivery of a certificate or certificates evidencing
such Common Shares. The Corporation shall cause such certificate or
certificates to be mailed to the Holder at the address or addresses specified
in such subscription form within five (5) business days of such delivery and
payment as herein provided or, if so instructed by the Holder, held for
pick-up by the Holder at the principal office of the transfer agent of the
Corporation.
6. The holding of a Warrant shall not constitute the Holder a shareholder
of the Corporation nor entitle him, her or it to any right or interest in
respect thereof except as herein expressly provided.
7. The Corporation covenants and agrees that until the Expiry Time, while
any of the Warrants shall be outstanding, it shall reserve and there shall
remain unissued out of its authorized capital a sufficient number of Common
Shares to satisfy the right of purchase herein provided, as such right of
purchase may be adjusted pursuant to section 8 hereof and shall use its
reasonable best efforts to: (i) maintain its status as a reporting issuer in
the Province of Ontario and Alberta; and (ii) preserve and maintain its
corporate existence. All Common Shares which shall be issued upon the
exercise of the right to purchase herein provided for, upon payment therefor
of the amount at which such Common Shares may at the time be purchased
pursuant to the provisions hereof, shall be issued as fully paid and
non-assessable shares and the holders thereof shall not be liable to the
Corporation or its creditors in respect thereof.
8. If and whenever at any time after the date hereof and prior to the
Expiry Time the Corporation shall:
(i) issue Common Shares or securities exchangeable for or convertible
into Common Shares without the receipt of any consideration
therefor to all or substantially all of the holders of the Common
Shares by way of stock dividend or other distribution;
(ii) subdivide its outstanding Common Shares into a greater number of
Common Shares;
- 3 -
(iii) consolidate its outstanding Common Shares into a lesser number
of Common Shares;
(iv) issue rights, options or warrants to all or substantially all of
the holders of Common Shares under which such holders are entitled
to subscribe for or purchase Common Shares or securities
exchangeable for or convertible into Common Shares;
(v) reclassify its Common Shares at any time outstanding or change the
Common Shares into other shares or other securities; or
(vi) consolidate, amalgamate, arrange or merge the Corporation with or
into any other corporation or other entity,
which event in the opinion of the directors of the Corporation would
materially affect the rights of Holders (such an event herein called a
"Common Share Reorganization"), then, subject to regulatory approval, the
Exercise Price and/or the number or kind of Common Shares or securities
purchasable upon exercise shall be adjusted in such manner, if any, and at
such time, by action by the directors, in their sole discretion as they
may determine to be equitable in the circumstances, but subject in all
cases to any necessary regulatory approval. Failure of the taking of
action by the directors so as to provide for an adjustment on or prior to
the effective date of any action by the Corporation affecting the Common
Shares shall be conclusive evidence that the board of directors of the
Corporation has determined that it is equitable to make no adjustment in
the circumstances. In the event that any questions arise with respect to
the adjustments provided herein, subject to regulatory approval, such
questions shall be conclusively determined by the auditors of the
Corporation. Such auditors shall have access to all necessary records of
the Corporation and such determination by the auditors shall be binding on
the Corporation and the Holder.
9. The Corporation shall, promptly after such adjustment is determinable,
give notice to Holders specifying the particulars of such event and, if
determinable, the required adjustment and the computation of such adjustment.
10. The Corporation shall not be required to deliver certificates for Common
Shares while the share transfer books of the Corporation are properly closed,
having regard to the provisions of section 8 hereof, prior to any meeting of
shareholders or for the payment of dividends or for any other purpose and in
the event of the surrender of any Warrant in accordance with the provisions
hereof and the making of any subscription and payment for the Common Shares
called for thereby during any such period, delivery of certificates for
Common Shares may be postponed for not more than five (5) days after the date
of the re-opening of said share transfer books. Provided, however, that any
such postponement of delivery of certificates shall be without prejudice to
the right of the Holder so surrendering the same and making payment during
such period to receive after the share transfer books shall have been
re-opened such certificates for the Common Shares called for, as the same may
be adjusted pursuant to section 8 hereof as a result of the completion of the
event in respect of which the transfer books were closed.
- 4 -
11. Subject as hereinafter provided, all or any of the rights conferred upon
the Holder by the terms hereof may be enforced by the Holder by appropriate
legal proceedings. No recourse under or upon any obligation, covenant or
agreement contained herein shall be had against any past, present or future
shareholder, director or officer of the Corporation either directly or
through the Corporation, it being expressly agreed and declared that the
obligations under the Warrants are solely corporate obligations and that no
personal liability whatever shall attach to or be incurred by the past,
present or future shareholders, directors or officers of the Corporation or
any of them in respect thereof, any and all rights and claims against every
such past, present or future shareholder, officer or director being hereby
expressly waived as a condition of and as a consideration for the issue of
the Warrants.
12. The Holder may subscribe for and purchase any lesser whole number of
Common Shares than the number of shares expressed in the Warrant Certificate.
In the case of any subscription for a lesser number of Common Shares than
expressed in any Warrant Certificate, the Holder hereof shall be entitled to
receive at no cost to the Holder a new Warrant Certificate in respect of the
balance of the Warrants not then exercised. Such new Warrant Certificate
shall be mailed to the Holder by the Corporation or, at its direction, the
transfer agent, contemporaneously with the mailing of the certificate or
certificates representing the Common Shares issued pursuant to section 5.
13. The Corporation shall not be required to issue fractional Common Shares
in satisfaction of its obligations hereunder nor make any payment to a Holder
in lieu of delivering any fractional Common Shares.
14. If any Warrant Certificate becomes stolen, lost, mutilated or destroyed,
the Corporation shall, on such terms as it may in its discretion acting
reasonably impose, issue and sign a new Warrant Certificate of like
denomination, tenor and date as the Warrant Certificate so stolen, lost,
mutilated or destroyed for delivery to the Holder.
15. The Corporation shall cause to be kept (a) a register of holders in
which shall be entered the names and addresses of the holders of the Warrants
and of the number of Warrants held by them and (b) a register of transfers in
which shall be entered the date and other particulars of each transfer of
Warrants.
16. The transferee of a Warrant Certificate shall, after the transfer form
attached to the Warrant Certificate or any other form of transfer acceptable
to the Corporation, acting reasonably, is duly completed and the Warrant
Certificate is lodged with the Corporation and upon compliance with all other
conditions in that regard required by this Warrant or by law, be entitled to
have his name entered on the register of holders as the owner of the Warrants
represented thereby free from all equities or rights of set-off or
counterclaim between the Corporation and the transferor or any previous
holder of such Warrant, save in respect of equities of which the Corporation
or the transferee is required to take notice by statute or by order of a
court of competent jurisdiction. No transfer shall be entered in the register
for a period of 40 days from the Issue Date.
17. The registers hereinbefore referred to shall be open at all reasonable
times for inspection by any Holder or any other person so entitled at law.
- 5 -
18. (a) Warrant Certificates may, upon compliance with the reasonable
requirements of the Corporation, be exchanged for Warrant
Certificates in any other denomination representing in the aggregate
the same number of Warrants. The Corporation shall sign, in
accordance with section 2 hereof, all Warrant Certificates necessary
to carry out the exchanges contemplated herein.
(b) Warrant Certificates may be exchanged only at the principal office
of the Corporation [OR OF THE REGISTERED TRANSFER AGENT FOR THE
WARRANTS] in the City of Mississauga, Ontario. Any Warrant
Certificates tendered for exchange shall be surrendered to the
Corporation and cancelled.
(c) Except as otherwise herein provided, the Corporation may charge
Holders requesting an exchange a reasonable sum for each new Warrant
Certificate issued; and payment of such charges and reimbursement of
the Corporation for any and all stamp taxes or governmental or other
charges required to be paid shall be made by the party requesting
such exchange as a condition precedent to such exchange.
19. The Corporation may deem and treat the registered holder of any Warrant
Certificate as the absolute owner of the Warrants represented thereby for all
purposes. In addition, the Corporation shall not be affected by any notice or
knowledge to the contrary except where the Corporation is required to take
notice by statute or by order of a court of competent jurisdiction. A Holder
shall be entitled to the rights evidenced by such Warrant free from all
equities or rights of set-off or counterclaim between the Corporation and the
original or any intermediate holder thereof and all persons may act
accordingly and the receipt by any such Holder of the Common Shares
purchasable pursuant to such Warrant shall be a good discharge to the
Corporation for the same and the Corporation shall not be bound to inquire
into the title of any such Holder except where the Corporation is required to
take notice by statute or by order of a court of competent jurisdiction.
20. Holders shall have the power from time to time by an extraordinary
resolution (as hereinafter defined):
(a) to agree to any modification, abrogation, alteration or compromise of
the rights of Holders against the Corporation, whether such rights
arise under this Warrant Certificate, or otherwise, which shall be
agreed to by the Corporation;
(b) to amend, alter or appeal any extraordinary resolution previously
passed or sanctioned by Holders;
(c) to assent to any modification of or change in or omission from the
provisions contained herein or in any instrument ancillary or
supplemental hereto which shall be agreed to by the Corporation;
(d) to restrain any Holder from taking or instituting any suit or
proceedings against the Corporation for the enforcement of any of the
covenants on the part of the Corporation conferred upon the Holders
by the terms of the Warrants; and/or
- 6 -
(e) to direct any Holder who, as such, has brought any suit, action or
proceeding, to stay or to discontinue or otherwise to deal with the
same upon such terms as Holders may determine.
Any such extraordinary resolution as aforesaid shall be binding upon all
the Holders of Warrants whether or not assenting in writing or otherwise to
any such extraordinary resolution, and each Holder of any of the Warrants
shall be bound to give effect thereto accordingly. Such extraordinary
resolution shall, where applicable, be binding on the Corporation which shall
give effect thereto accordingly.
The Corporation shall forthwith upon receipt of an extraordinary
resolution provide notice to all Holders of the date and text of such
resolution. The Holders of Warrants assenting to an extraordinary resolution
agree to provide the Corporation forthwith with a copy of any extraordinary
resolution passed.
Any one or more of the powers or any combination of the powers in this
Warrant Certificate stated to be exercisable by the Holders of Warrants by
extraordinary resolution or otherwise may be exercised from time to time and
the exercise of any one or more of such powers or any combination of powers
from time to time shall not be deemed to exhaust the right of the Holders of
Warrants to exercise such power or powers or combination of powers then or
thereafter from time to time.
The term "extraordinary resolution" when used herein shall mean a
resolution assented to in writing, in one or more counterparts, by the
Holders of Warrants entitled to purchase not less than sixty-six and
two-thirds per cent (66 2/3%) of the aggregate number of Common Shares which
can be purchased pursuant to all of the Warrants which are, at the applicable
time, outstanding.
21. From time to time, the Corporation (when authorized by action by the
directors) may, subject to the provisions hereof, execute and deliver by its
proper officers, certificates, or instruments supplemental hereto, which
thereafter shall form part hereof, for any one or more or all of the
following purposes:
(a) setting forth any adjustments resulting from the application of a
Common Share Reorganization in accordance with the provisions of
section 8;
(b) adding to the provisions hereof such additional covenants and
enforcement provisions as, in the opinion of counsel, are necessary
or advisable in the premises;
(c) giving effect to any extraordinary resolution passed as provided in
section 20;
(d) making such provisions not inconsistent with this Warrant
Certificate, and which are not detrimental to the Holder, as may be
necessary or desirable with respect to matters or questions arising
hereunder;
- 7 -
(e) adding to or altering the provisions hereof in respect of the
transfer of Warrants, making provision for the exchange of Warrant
Certificates, and making any modification in the form of the Warrant
Certificates which does not affect the substance thereof and which is
not detrimental to the Holder;
(f) modifying any of the provisions of this Warrant Certificate, by
providing for the creation and the authority to issue additional
Warrants, or relieving the Corporation from any of the obligations,
conditions or restrictions herein contained; and
(g) for any other purpose not inconsistent with the terms of this Warrant
Certificate, including the correction or rectification of any
ambiguities, defective or inconsistent provisions, errors, mistakes
or omissions herein.
22. All notices to be sent hereunder shall be deemed to be validly given to
the Holders if delivered or if sent by mail, postage prepaid by letter
addressed to such Holders at their respective addresses appearing in the
register of Warrant holders caused to be maintained by the Corporation
pursuant to section 15 hereof, and such notice shall be deemed to have been
given, if delivered personally when so delivered, and if sent by post on the
third business day next following the posting thereof.
23. (a) The Corporation may not enter into any transaction whereby all or
substantially all of its undertaking, property and assets become the
property of any other corporation (herein called a "Successor
Corporation") whether by way of re-organization, restructuring,
consolidation, amalgamation, merger, transfer, sale, disposition or
otherwise, unless prior to or contemporaneously with the consummation
of such transaction the Corporation and the Successor Corporation
shall have executed such instruments and done such things, as, in the
opinion of counsel to the Holder, acting reasonably, are necessary or
advisable to establish that upon the consummation of such transaction:
(i) the Successor Corporation will have assumed all of the
covenants and obligations of the Corporation under this
Warrant; and
(ii) the Warrant will be a valid and binding obligation of the
Successor Corporation entitling the Holder, as against the
Successor Corporation, to all of the rights of the Holder under
this Warrant.
(b) Whenever the conditions of the foregoing subsection shall have been
duly observed and performed, the Successor Corporation shall possess,
and from time to time may exercise, each and every right and power of
the Corporation under this Warrant in the name of the Corporation or
otherwise and any act or proceeding by any provision hereof required
to be done or performed by any director or officer of the Corporation
may be done and performed with like force and effect by the directors
or officers of the Successor Corporation.
- 8 -
24. This Warrant shall be governed by the laws of the Province of Ontario
and the federal laws of Canada applicable herein.
IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate
to be signed by its duly authorized officer.
DATED as of the_______ day of _____________________, 1999.
MED-EMERG INTERNATIONAL INC.
Per: _________________________________
Xxxx Xxxxxxxx
President
SUBSCRIPTION FORM
TO BE COMPLETED IF WARRANTS ARE TO BE EXERCISED:
The undersigned hereby subscribes for ______________________ Common Shares of
Med-Emerg International Inc. according to the terms and conditions set forth
in the annexed Warrant Certificate (or such number of other securities or
property to which such warrant entitles the undersigned to acquire under the
terms and conditions set forth in the annexed Warrant Certificate).
Address for Delivery of Shares: _________________________________________
_________________________________________
_________________________________________
Attention: ______________________________
Exercise Price
Tendered (US$2.70 per share or
as adjusted) $____________________
Dated at ____________, this ______ day of _____________, _____________.
Witness: ) ________________________________
) Holder's Name
)
) ________________________________
) Authorized Signature
)
) ________________________________
Title (if applicable)
Signature guaranteed:
THE SIGNATURE MUST BE GUARANTEED BY A CANADIAN CHARTERED BANK OR A MEMBER OF
A RECOGNIZED STOCK EXCHANGE OR OTHER ENTITY ACCEPTABLE TO MED-EMERG
INTERNATIONAL INC.
ASSIGNMENT FORM
TO BE COMPLETED IF WARRANTS ARE TO BE ASSIGNED:
TO: MED-EMERG INTERNATIONAL INC.
0000 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
FOR VALUE RECEIVED, ____________________ WARRANTS represented by this Warrant
Certificate are hereby transferred to ____________________________ residing
at ______________________________________.
You are hereby instructed to take the necessary steps to effect this transfer.
Dated at ____________, this ______ day of _____________, _____________.
Witness: ) ________________________________
) Holder's Name
)
) ________________________________
) Authorized Signature
)
) ________________________________
Title (if applicable)
Signature guaranteed:
THE SIGNATURE MUST BE GUARANTEED BY A CANADIAN CHARTERED BANK OR A MEMBER OF
A RECOGNIZED STOCK EXCHANGE OR OTHER ENTITY ACCEPTABLE TO MED-EMERG
INTERNATIONAL INC.
EXHIBIT C
FORM OF SERIES B WARRANT CERTIFICATE
DRAFT: AUGUST 5, 1999
SERIES B WARRANT CERTIFICATE
Void after 5:00 p.m. Toronto time on the 12th day of June, 2000.
Number of Warrants: [-] Warrant Certificate No. [-]
MED-EMERG INTERNATIONAL INC.
(Incorporated under the laws of Ontario)
This is to certify that, for value received, the bearer of this Warrant (the
"Holder") shall have the right to purchase from Med-Emerg International Inc.
(hereinafter the "Corporation"), at any time on or after [-], 1999 (the
"Issue Date") and up to 5:00 p.m. (Toronto time) on June 12, 2000 (the
"Expiry Time"), one fully paid and non-assessable Common Share in the capital
stock of the Corporation for each warrant (collectively, the "Warrants" and
individually, a "Warrant") represented hereby at the price of US$3.40 per
share (the "Exercise Price"), upon and subject to the following terms and
conditions:
1. For the purpose of this Warrant, the term "Common Shares" means common
shares without nominal or par value in the capital of the Corporation as
constituted on the date hereof; provided that in the event of a Common Share
Reorganization (as hereinafter defined), or successive such Common Share
Reorganizations, then subject to the adjustments, if any, having been made in
accordance with the provisions of this Warrant Certificate, "Common Shares"
shall thereafter mean the shares, other securities or other property
resulting from such Common Share Reorganization(s).
2. All Warrant Certificates shall be signed by an officer of the
Corporation holding office at the time of signing, and notwithstanding any
change in any of the persons holding said offices between the time of actual
signing and the delivery of the Warrant Certificate and notwithstanding that
such officer signing may not have held office at the date of the delivery of
the Warrant Certificate, the Warrant Certificate so signed shall be valid and
binding upon the Corporation. Warrant Certificates shall be dated as of the
Issue Date regardless of their date of issue.
3. All rights under any of the Warrants in respect of which the right of
subscription and purchase herein provided for shall not theretofore have been
exercised shall wholly cease and terminate and such Warrants shall be wholly
void and of no valid or binding effect after the Expiry Time.
4. The right to purchase Common Shares of the Corporation pursuant to the
Warrants may only be exercised by the Holder on or after the Issue Date and
at or before the Expiry Time by:
- 2 -
(a) duly completing and executing a subscription substantially in the
form attached hereto, in the manner therein indicated; and
(b) surrendering this Warrant Certificate and the duly completed and
executed subscription form to the Corporation at its principal office
(which address is currently 0000 Xxxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxxxxx, Xxxxxxx, X0X 0X0) [OR TO THE REGISTERED TRANSFER AGENT
FOR THE WARRANTS], together with payment of the purchase price for
the Common Shares subscribed for in the form of cash or a certified
cheque payable to the Corporation or other manner acceptable to the
Corporation in an amount equal to the then applicable Exercise Price
multiplied by the number of Common Shares subscribed for.
5. Upon such delivery and payment as aforesaid, the Corporation shall cause
to be issued to the Holder the number of Common Shares to be issued and the
Holder shall become a shareholder of the Corporation in respect of such
Common Shares with effect from the date of such delivery and payment and
shall be entitled to delivery of a certificate or certificates evidencing
such Common Shares. The Corporation shall cause such certificate or
certificates to be mailed to the Holder at the address or addresses specified
in such subscription form within five (5) business days of such delivery and
payment as herein provided or, if so instructed by the Holder, held for
pick-up by the Holder at the principal office of the transfer agent of the
Corporation.
6. The holding of a Warrant shall not constitute the Holder a shareholder
of the Corporation nor entitle him, her or it to any right or interest in
respect thereof except as herein expressly provided.
7. The Corporation covenants and agrees that until the Expiry Time, while
any of the Warrants shall be outstanding, it shall reserve and there shall
remain unissued out of its authorized capital a sufficient number of Common
Shares to satisfy the right of purchase herein provided, as such right of
purchase may be adjusted pursuant to section 8 hereof and shall use its
reasonable best efforts to: (i) maintain its status as a reporting issuer in
the Province of Ontario and Alberta; and (ii) preserve and maintain its
corporate existence. All Common Shares which shall be issued upon the
exercise of the right to purchase herein provided for, upon payment therefor
of the amount at which such Common Shares may at the time be purchased
pursuant to the provisions hereof, shall be issued as fully paid and
non-assessable shares and the holders thereof shall not be liable to the
Corporation or its creditors in respect thereof.
8. If and whenever at any time after the date hereof and prior to the
Expiry Time the Corporation shall:
(i) issue Common Shares or securities exchangeable for or convertible
into Common Shares without the receipt of any consideration
therefor to all or substantially all of the holders of the Common
Shares by way of stock dividend or other distribution;
(ii) subdivide its outstanding Common Shares into a greater number of
Common Shares;
- 3 -
(iii) consolidate its outstanding Common Shares into a lesser number of
Common Shares;
(iv) issue rights, options or warrants to all or substantially all of
the holders of Common Shares under which such holders are entitled
to subscribe for or purchase Common Shares or securities
exchangeable for or convertible into Common Shares;
(v) reclassify its Common Shares at any time outstanding or change the
Common Shares into other shares or other securities; or
(vi) consolidate, amalgamate, arrange or merge the Corporation with or
into any other corporation or other entity,
which event in the opinion of the directors of the Corporation would
materially affect the rights of Holders (such an event herein called a
"Common Share Reorganization"), then, subject to regulatory approval, the
Exercise Price and/or the number or kind of Common Shares or securities
purchasable upon exercise shall be adjusted in such manner, if any, and at
such time, by action by the directors, in their sole discretion as they
may determine to be equitable in the circumstances, but subject in all
cases to any necessary regulatory approval. Failure of the taking of
action by the directors so as to provide for an adjustment on or prior to
the effective date of any action by the Corporation affecting the Common
Shares shall be conclusive evidence that the board of directors of the
Corporation has determined that it is equitable to make no adjustment in
the circumstances. In the event that any questions arise with respect to
the adjustments provided herein, subject to regulatory approval, such
questions shall be conclusively determined by the auditors of the
Corporation. Such auditors shall have access to all necessary records of
the Corporation and such determination by the auditors shall be binding on
the Corporation and the Holder.
9. The Corporation shall, promptly after such adjustment is determinable,
give notice to Holders specifying the particulars of such event and, if
determinable, the required adjustment and the computation of such adjustment.
10. The Corporation shall not be required to deliver certificates for Common
Shares while the share transfer books of the Corporation are properly closed,
having regard to the provisions of section 8 hereof, prior to any meeting of
shareholders or for the payment of dividends or for any other purpose and in
the event of the surrender of any Warrant in accordance with the provisions
hereof and the making of any subscription and payment for the Common Shares
called for thereby during any such period, delivery of certificates for
Common Shares may be postponed for not more than five (5) days after the date
of the re-opening of said share transfer books. Provided, however, that any
such postponement of delivery of certificates shall be without prejudice to
the right of the Holder so surrendering the same and making payment during
such period to receive after the share transfer books shall have been
re-opened such certificates for the Common Shares called for, as the same may
be adjusted pursuant to section 8 hereof as a result of the completion of the
event in respect of which the transfer books were closed.
- 4 -
11. Subject as hereinafter provided, all or any of the rights conferred upon
the Holder by the terms hereof may be enforced by the Holder by appropriate
legal proceedings. No recourse under or upon any obligation, covenant or
agreement contained herein shall be had against any past, present or future
shareholder, director or officer of the Corporation either directly or
through the Corporation, it being expressly agreed and declared that the
obligations under the Warrants are solely corporate obligations and that no
personal liability whatever shall attach to or be incurred by the past,
present or future shareholders, directors or officers of the Corporation or
any of them in respect thereof, any and all rights and claims against every
such past, present or future shareholder, officer or director being hereby
expressly waived as a condition of and as a consideration for the issue of
the Warrants.
12. The Holder may subscribe for and purchase any lesser whole number of
Common Shares than the number of shares expressed in the Warrant Certificate.
In the case of any subscription for a lesser number of Common Shares than
expressed in any Warrant Certificate, the Holder hereof shall be entitled to
receive at no cost to the Holder a new Warrant Certificate in respect of the
balance of the Warrants not then exercised. Such new Warrant Certificate
shall be mailed to the Holder by the Corporation or, at its direction, the
transfer agent, contemporaneously with the mailing of the certificate or
certificates representing the Common Shares issued pursuant to section 5.
13. The Corporation shall not be required to issue fractional Common Shares
in satisfaction of its obligations hereunder nor make any payment to a Holder
in lieu of delivering any fractional Common Shares.
14. If any Warrant Certificate becomes stolen, lost, mutilated or destroyed,
the Corporation shall, on such terms as it may in its discretion acting
reasonably impose, issue and sign a new Warrant Certificate of like
denomination, tenor and date as the Warrant Certificate so stolen, lost,
mutilated or destroyed for delivery to the Holder.
15. The Corporation shall cause to be kept (a) a register of holders in
which shall be entered the names and addresses of the holders of the Warrants
and of the number of Warrants held by them and (b) a register of transfers in
which shall be entered the date and other particulars of each transfer of
Warrants.
16. The transferee of a Warrant Certificate shall, after the transfer form
attached to the Warrant Certificate or any other form of transfer acceptable
to the Corporation, acting reasonably, is duly completed and the Warrant
Certificate is lodged with the Corporation and upon compliance with all other
conditions in that regard required by this Warrant or by law, be entitled to
have his name entered on the register of holders as the owner of the Warrants
represented thereby free from all equities or rights of set-off or
counterclaim between the Corporation and the transferor or any previous
holder of such Warrant, save in respect of equities of which the Corporation
or the transferee is required to take notice by statute or by order of a
court of competent jurisdiction. No transfer shall be entered in the register
for a period of 40 days from the Issue Date.
17. The registers hereinbefore referred to shall be open at all reasonable
times for inspection by any Holder or any other person so entitled at law.
- 5 -
18. (a) Warrant Certificates may, upon compliance with the reasonable
requirements of the Corporation, be exchanged for Warrant
Certificates in any other denomination representing in the aggregate
the same number of Warrants. The Corporation shall sign, in
accordance with section 2 hereof, all Warrant Certificates necessary
to carry out the exchanges contemplated herein.
(b) Warrant Certificates may be exchanged only at the principal office of
the Corporation [OR OF THE REGISTERED TRANSFER AGENT FOR THE
WARRANTS]. Any Warrant Certificates tendered for exchange shall be
surrendered to the Corporation and cancelled.
(c) Except as otherwise herein provided, the Corporation may charge
Holders requesting an exchange a reasonable sum for each new Warrant
Certificate issued; and payment of such charges and reimbursement of
the Corporation for any and all stamp taxes or governmental or other
charges required to be paid shall be made by the party requesting
such exchange as a condition precedent to such exchange.
19. The Corporation may deem and treat the registered holder of any Warrant
Certificate as the absolute owner of the Warrants represented thereby for all
purposes. In addition, the Corporation shall not be affected by any notice or
knowledge to the contrary except where the Corporation is required to take
notice by statute or by order of a court of competent jurisdiction. A Holder
shall be entitled to the rights evidenced by such Warrant free from all
equities or rights of set-off or counterclaim between the Corporation and the
original or any intermediate holder thereof and all persons may act
accordingly and the receipt by any such Holder of the Common Shares
purchasable pursuant to such Warrant shall be a good discharge to the
Corporation for the same and the Corporation shall not be bound to inquire
into the title of any such Holder except where the Corporation is required to
take notice by statute or by order of a court of competent jurisdiction.
20. Holders shall have the power from time to time by an extraordinary
resolution (as hereinafter defined):
(a) to agree to any modification, abrogation, alteration or compromise of
the rights of Holders against the Corporation, whether such rights
arise under this Warrant Certificate, or otherwise, which shall be
agreed to by the Corporation;
(b) to amend, alter or appeal any extraordinary resolution previously
passed or sanctioned by Holders;
(c) to assent to any modification of or change in or omission from the
provisions contained herein or in any instrument ancillary or
supplemental hereto which shall be agreed to by the Corporation;
(d) to restrain any Holder from taking or instituting any suit or
proceedings against the Corporation for the enforcement of any of the
covenants on the part of the Corporation conferred upon the Holders
by the terms of the Warrants; and/or
- 6 -
(e) to direct any Holder who, as such, has brought any suit, action or
proceeding, to stay or to discontinue or otherwise to deal with the
same upon such terms as Holders may determine.
Any such extraordinary resolution as aforesaid shall be binding upon all
the Holders of Warrants whether or not assenting in writing or otherwise to
any such extraordinary resolution, and each Holder of any of the Warrants
shall be bound to give effect thereto accordingly. Such extraordinary
resolution shall, where applicable, be binding on the Corporation which shall
give effect thereto accordingly.
The Corporation shall forthwith upon receipt of an extraordinary
resolution provide notice to all Holders of the date and text of such
resolution. The Holders of Warrants assenting to an extraordinary resolution
agree to provide the Corporation forthwith with a copy of any extraordinary
resolution passed.
Any one or more of the powers or any combination of the powers in this
Warrant Certificate stated to be exercisable by the Holders of Warrants by
extraordinary resolution or otherwise may be exercised from time to time and
the exercise of any one or more of such powers or any combination of powers
from time to time shall not be deemed to exhaust the right of the Holders of
Warrants to exercise such power or powers or combination of powers then or
thereafter from time to time.
The term "extraordinary resolution" when used herein shall mean a
resolution assented to in writing, in one or more counterparts, by the
Holders of Warrants entitled to purchase not less than sixty-six and
two-thirds per cent (66 2/3%) of the aggregate number of Common Shares which
can be purchased pursuant to all of the Warrants which are, at the applicable
time, outstanding.
21. From time to time the Corporation (when authorized by action by the
directors) may, subject to the provisions hereof, execute and deliver by its
proper officers, certificates, or instruments supplemental hereto, which
thereafter shall form part hereof, for any one or more or all of the
following purposes:
(a) setting forth any adjustments resulting from the application of a
Common Share Reorganization in accordance with the provisions of
section 8;
(b) adding to the provisions hereof such additional covenants and
enforcement provisions as, in the opinion of counsel, are necessary
or advisable in the premises;
(c) giving effect to any extraordinary resolution passed as provided in
section 20;
(d) making such provisions not inconsistent with this Warrant
Certificate, and which are not detrimental to the Holder, as may be
necessary or desirable with respect to matters or questions arising
hereunder;
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(e) adding to or altering the provisions hereof in respect of the
transfer of Warrants, making provision for the exchange of Warrant
Certificates, and making any modification in the form of the Warrant
Certificates which does not affect the substance thereof and which is
not detrimental to the Holder;
(f) modifying any of the provisions of this Warrant Certificate, by
providing for the creation and the authority to issue additional
Warrants, or relieving the Corporation from any of the obligations,
conditions or restrictions herein contained; and
(g) for any other purpose not inconsistent with the terms of this Warrant
Certificate, including the correction or rectification of any
ambiguities, defective or inconsistent provisions, errors, mistakes
or omissions herein.
22. All notices to be sent hereunder shall be deemed to be validly given to
the Holders if delivered or if sent by mail, postage prepaid by letter
addressed to such Holders at their respective addresses appearing in the
register of Warrant holders caused to be maintained by the Corporation
pursuant to section 15 hereof, and such notice shall be deemed to have been
given, if delivered personally when so delivered, and if sent by post on the
third business day next following the posting thereof.
23. (a) The Corporation may not enter into any transaction whereby all or
substantially all of its undertaking, property and assets become the
property of any other corporation (herein called a "Successor
Corporation") whether by way of re-organization, restructuring,
consolidation, amalgamation, merger, transfer, sale, disposition or
otherwise, unless prior to or contemporaneously with the consummation
of such transaction the Corporation and the Successor Corporation
shall have executed such instruments and done such things, as, in the
opinion of counsel to the Holder, acting reasonably, are necessary or
advisable to establish that upon the consummation of such transaction:
(i) the Successor Corporation will have assumed all of the
covenants and obligations of the Corporation under this
Warrant; and
(ii) the Warrant will be a valid and binding obligation of the
Successor Corporation entitling the Holder, as against the
Successor Corporation, to all of the rights of the Holder under
this Warrant.
(b) Whenever the conditions of the foregoing subsection shall have been
duly observed and performed, the Successor Corporation shall possess,
and from time to time may exercise, each and every right and power of
the Corporation under this Warrant in the name of the Corporation or
otherwise and any act or proceeding by any provision hereof required
to be done or performed by any director or officer of the Corporation
may be done and performed with like force and effect by the directors
or officers of the Successor Corporation.
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24. This Warrant shall be governed by the laws of the Province of Ontario
and the federal laws of Canada applicable herein.
IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate
to be signed by its duly authorized officer.
DATED as of the_______ day of _____________________, 1999.
MED-EMERG INTERNATIONAL INC.
Per: _______________________________
Xxxx Xxxxxxxx
President
SUBSCRIPTION FORM
TO BE COMPLETED IF WARRANTS ARE TO BE EXERCISED:
The undersigned hereby subscribes for _________________ Common Shares of
Med-Emerg International Inc. according to the terms and conditions set forth
in the annexed Warrant Certificate (or such number of other securities or
property to which such warrant entitles the undersigned to acquire under the
terms and conditions set forth in the annexed Warrant Certificate).
Address for Delivery of Shares: _________________________________________
_________________________________________
_________________________________________
Attention: ______________________________
Exercise Price
Tendered (US$3.40 per share or
as adjusted) $____________________
Dated at ____________, this ______ day of _____________, _____________.
Witness: ) ________________________________
) Holder's Name
)
) ________________________________
) Authorized Signature
)
) ________________________________
Title (if applicable)
Signature guaranteed:
THE SIGNATURE MUST BE GUARANTEED BY A CANADIAN CHARTERED BANK OR A MEMBER OF
A RECOGNIZED STOCK EXCHANGE OR OTHER ENTITY ACCEPTABLE TO MED-EMERG
INTERNATIONAL INC.
ASSIGNMENT FORM
TO BE COMPLETED IF WARRANTS ARE TO BE ASSIGNED:
TO: MED-EMERG INTERNATIONAL INC.
0000 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
FOR VALUE RECEIVED, ___________________ WARRANTS represented by this Warrant
Certificate are hereby transferred to ____________________________ residing
at ______________________________________.
You are hereby instructed to take the necessary steps to effect this transfer.
Dated at ____________, this ______ day of _____________, _____________.
Witness: ) ________________________________
) Holder's Name
)
) ________________________________
) Authorized Signature
)
) ________________________________
Title (if applicable)
Signature guaranteed:
THE SIGNATURE MUST BE GUARANTEED BY A CANADIAN CHARTERED BANK OR A MEMBER OF
A RECOGNIZED STOCK EXCHANGE OR OTHER ENTITY ACCEPTABLE TO MED-EMERG
INTERNATIONAL INC.
EXHIBIT D
FORM OF WORKING AGREEMENT
