Exhibit 10.12
REDEEMABLE PREFERENCE SHARE SUBSCRIPTION AGREEMENT
THIS REDEEMABLE SHARE SUBSCRIPTION AGREEMENT is made as of the 6th day of
February 2004 (the "Agreement").
BETWEEN: STRATEGY HOLDING COMPANY LIMITED an exempt insurance holding company
established under the laws of the Barbados, with its registered
office at 30E Lower Halcyon Heights, in the parish of St. Xxxxx in
the Island of Barbados (the "Subscriber"); and
AND: STRATEGY INSURANCE LIMITED an exempt insurance established under the
laws of Barbados, with its registered office at Xxxxxxxx Xxxxx, Xxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxx (the "Company")
WHEREAS:
A. The Company has been formed pursuant to the Companies Act of the laws of
Barbados ("Companies Act").
B. The authorised capital of the Company consists of:
(i) an unlimited number of shares of one class, designated Common
Shares;
(ii) an unlimited number of redeemable preference shares of once class,
designated Class A Redeemable Preference Shares Series 1 ("Class A
Preference Shares Series 1");
(iii) an unlimited number of redeemable preference shares of one class,
designated Class B Redeemable Preference Shares Series l ("Class B
Preference Shares Series 1");
(iv) an unlimited number of redeemable preference shares of one class,
designated Class C Redeemable Preference Shares Series 1("Class C
Preference Shares Series 1");
(v) an unlimited number of redeemable preference shares of one class,
designated Class D Redeemable Preference Shares Series 1("Class D
Preference Shares Series 1");
C. It is intended that the Subscriber, subscribe for and FOURTY SEVEN
THOUSAND SIX HUNDERED AND SEVENTY (47,670) Class A Preference Shares
Series 1, representing 100% of the issued and outstanding Class A
Preference Shares Series 1 then outstanding, determined on fully diluted
basis for a subscription price of Forty Seven Million Six Hundred and
Seventy Six Thousand and Eighty Four United Stated Dollars
(USD$47,670,084.00).
D. The purchase and sale of the Class A Preference Shares Series 1 and the
completion of the other transactions as contemplated herein are referred
to as the "Transactions".
CONDITIONS PRECEDENT:
1. The Transaction is conditional upon exemption from any prospectus and
registration requirements of all-applicable securities legislation, rules
and policies. Each of the Subscriber and the Company hereby agrees to
execute and deliver 2.11 documentation required by applicable securities
legislation to permit the issuance and sale of all shares on the terms
herein set forth.
2. The Transaction is further conditional upon (1) the Subscriber having
subscribed for and the Company having issued to the Subscriber an
approximately equal number of non-voting 10% cumulative ten-year Class B
Preference Shares Series 1 Shares of the Company on terms substantially
similar to those contemplated herein, and (ii) the Subscriber having
subscribed for and the Company having issued to that Subscriber One
Thousand (1000) Common Shares (representing 100% of the Common Shares then
outstanding determined on a fully diluted basis) for a subscription price
of US$300 per Common Share.
3. It shall also be condition of the Closing (as hereinafter defined) that
all documentation relating to the Transaction shall be in form and
substance satisfactory to Subscriber's legal counsel for Company, each
acting reasonably, and that all warranties of the parties contained herein
are true and correct on Closing as if made by the respective parties on
and as at that date.
1. INTERPRETATION
As used in this Agreement, the following terms have the following meanings:
"Affiliate" means an affiliated company or affiliated body corporate
within the meaning of the Companies Act Cap. 308 of the laws of Barbados.
"Business" means the Company's proposed business to be carried on directly
or indirectly through one or more wholly owned subsidiaries of the
international (non-domestic) insurance and reinsurance matters ancillary
thereto and other business as the board of directors of the Company may
from time to time determine.
"Closing" has the meaning ascribed thereto in Section 3.
"Closing Date" has the meaning ascribed thereto in Section 3.
"Common Shares" means the common shares in the capital of the Company as
from time to time constituted.
2
"Company" means Strategy Insurance Limited.
"Control" a body Corporate is controlled by a person if any shares of the
body corporate carrying voting rights sufficient to elect a majority of
the directors of the body corporate, except by way of security only, held,
directly or indirectly, by or on behalf of that person.
"Fair Market Value" of any property at any date means the highest cash
price in terms of money which would be obtainable for that property as at
that date in an open and unrestricted market without compulsion to a
willing and knowledgeable purchaser acting at arm's length, as determined
by the auditors of the Company having regard to such considerations as may
in their sole and unfettered discretion be considered relevant.
"Government Body" means any domestic or foreign legislative executives,
judicial or administrative body or Person having or purporting to have
jurisdiction in relevant circumstances.
"Laws" means all statutes, codes, ordinances, decrees, rules, regulations,
municipal by-laws; all judicial, arbitral, administrative, ministerial,
departmental or regulatory judgements, orders, decisions, rulings or
awards, policies, published guidelines; or any provisions of the
foregoing, including general principles of common and civil law and
equity, binding on or affecting the person referred to in the context in
which such word is used; and "Law" means any one of them.
"Mortgages" means the fixed rate registered mortgages and charges on Real
Property having an estimated aggregate Fair Market Value and principal
value of USD$47,670,084.00 each with a minimum remaining term to maturity
of no less than ten years, all as more particular described on Exhibit "A"
annexed hereto, and any mortgage substituted for any thereof in accordance
with the provisions of section 5 hereof.
"Person" or "person" means any individual, partnership, limited
partnership, corporation, joint venture, association, joint stock company,
trust, unincorporated organization or a government or an agency thereof.
"Purchased Shares" has the meaning ascribed thereto in Section 2.
"Real Property" means the lands, premises and buildings which are from
time to time the subject of the mortgages and charges created by the
Mortgages, all as more particularly described in Exhibit "B" hereto.
"Subsidiary" means another body Corporate, which is controlled by the
Company being Strategy Insurance Limited.
IT IS HEREBY AGREED as follows:
2. SUBSCRIPTION FOR SHARES
3
2.1 The Subscriber hereby subscribes for and irrevocably agrees to take up on
Closing FOURTY SEVEN THOUSAND SIX HUNDERED AND SEVENTY (47,670) Class A
Preference Shares Series 1 in the capital of the Company, and tenders
herewith the subscription amount of Forty Seven Million Six Hundred and
Seventy Six Thousand and Eighty Four United States Dollars
(USD$47,670,084.00).) (the "Subscription Amount") representing USD$1,000
per Class A Preference Shares Series 1, in full payment of the aggregate
subscription price for such shares.
2.2 The Class A-D Preference Shares Series l and the Common Shares shall have
attached thereto in substance the rights, privileges, restrictions, and
conditions set forth on Exhibit "C" hereto.
3. TENDER AND PAYMENT OF SUBSCRIPTION AMOUNT
3.1 The Subscriber will tender the Subscription Amount in full on Closing by
delivery and conveyance on Closing to the Company of good and marketable
title to the Mortgages, free and clear of any lien, charge, encumbrance,
right or claim of any nature. The Subscriber agrees that upon Closing it
shall deliver to the Company the original registered duplicate of each of
the Mortgages, together with a legal opinion as to the title and ownership
and provenance of each Mortgage in form and :substance.
3.2 The Transaction shall be completed (the "Closing") at the offices of the
Company's counsel in Bridgetown, Barbados, as soon as practicable after
and in any event no later than the 6th day of February 2004 or such other
date as counsel to the parties hereto may agree in writing (such date
being herein referred to as the "Closing Date").
4. ISSUE OF SHARES
4.1 In consideration of the Subscription Amount, the Company pursuant to a
resolution of the Board of Directors, shall issue to the Subscriber on
payment in full, as set out in Clause 3.1 hereof, therefor FOURTY SEVEN
THOUSAND SIX HUNDERED AND SEVENTY (47,670) Class A Preference Shares
Series 1 in the capital of the Company, such shares to be issued as fully
paid and non-assessable, and as evidence thereof the Company shall issue a
share certificate representing such shares in the name of the Subscriber.
5. SUBSCRIBER'S RIGHT OF SUBSTITUTION OF MORTGAGES
5.1 The Company hereby irrevocably grants to the Subscriber, effective upon
Closing; [but only so long as the Subscriber or any subsidiary or
affiliate of the Subscriber is the registered holder of any Class A
Preference Shares Series 1 of the Company] the option to acquire at any
time all or from time to time any of the Mortgages then held by the
Company or its Subsidiary, upon and subject to the following terms and
conditions:
(a) The Subscriber shall have the option, exercisable at any time upon
at least thirty (30) days' prior written notice delivered to the
Company and the Custodian, to require the Company or its Subsidiary
to sell to the Subscriber any or all of the Mortgages then held by
the Company or its Subsidiary for a purchase price equal to the Fair
Market Value thereof as at the date of such notice, payable in the
manner set forth in Sub-Clause 5.1(b) below, and upon delivery of
such notice, together with payment in full, the Company or its
Subsidiary shall deliver to the Subscriber good and marketable title
to such Mortgages free and clear of any liens, charges,
encumbrances, rights or claims of any nature, the Custodian shall
deliver to the Subscriber the Mortgages so purchased and the
proceeds of such sale be released to the Company or its Subscriber.
4
(b) The purchase price payable under Sub-clause 5.1(a) above shall be
payable in immediately available funds denominated in US dollars,
provided that Subscriber may at its option, if so stated in its
notice of exercise under Sub clause 5.1(a) above, elect to pay the
whole or any part of such purchase price by way of delivery and
conveyance to Company of good and marketable title, free and clear
of any lien, charge, encumbrance, right or claim of any nature, of
another mortgage or mortgages:
(i) having a Fair Market Value at the time of substitution no less
than such purchase price or part thereof;
(ii) having a maturity date within 90 days of the maturity date of
the Mortgage being purchased,
(iii) secured on Real Property then having a Fair Market Value no
less than the greater of (A) the then Fair Market Value at the
time of substitution, and (B) the original Fair Market Value
as at Closing; of the Real Property subject to the Mortgage
being purchased; and
(iv) otherwise of a nature, form and substance acceptable to the
Company, acting reasonably.
(c) Except as otherwise contemplated herein, neither the Company nor its
Subsidiary shall be entitled to sell transfer, assign or otherwise
dispose of (otherwise than by way of pledge, charge or security
interest) any interest in any of the Mortgages without the prior
written consent of the Subscriber.
(d) Notwithstanding the foregoing Sub-clause 5.1(c), the Company or its
Subsidiary shall be entitled, upon delivery to the Subscriber and
the Custodian of at least 15 days' prior written notice together
with the certificate of the Company's auditors confirming that the
Company or its Subsidiary lacks the liquidity necessary to honour
any claim or claims enforceable against it and the amount of any
such deficiency, to sell such one or more of the Mortgages in such
manner and to such person or persons as may in the discretion of the
Company's or its Subsidiary's board of directors be necessary or
advisable in order to fund such deficiency and honour such claims.
Upon receipt of such notice and certificate the Custodian shall
release to the Company's or its Subsidiary's attorney-at-law the
Mortgages to be sold, to be held in escrow against receipt of the
net sale proceeds thereof of the Company, which proceeds shall be
released to the Company or its Subsidiary.
5
(e) Notwithstanding the foregoing Sub-clause 5.1(d), the Subscriber
shall be entitled to participate in any sale process on the same
basis as any other potential purchaser of the Mortgages to be sold.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
6.1 The Company hereby represents and warrants to the Subscriber as follows:
(a) The Company has been duly and validly incorporated and organised and
is validly existing under the laws of Barbados and has all requisite
corporate power and authority to carry on its business, own its
property and assets and to carry out the provisions hereof and has
full power and capacity to execute deliver and perform its
obligations under this Agreement and to complete the Transaction.
(b) Each of this Agreement and other agreements entered into in
connection with the Transaction when executed, will have been duly
authorised, executed and delivered on behalf of the Company and will
be a valid and binding obligation of the Company enforceable in
accordance with its terms subject, however, to limitations on
enforcement imposed by bankruptcy, insolvency, liquidation,
reorganisation, reconstruction and other similar Laws affecting the
enforcement of the rights of creditors and others and to the extent
that equitable remedies such as specific performance and injunctions
are only available in the discretion of the court from which they
are sought.
(c) The Company does not have any direct or indirect ownership or other
interest in any business, venture or endeavour other than the
Business.
(d) The Company, or a wholly owned subsidiary thereof, will be on
Closing duly qualified or licensed and in good standing as a company
authorised to do business in Barbados, which is the only
jurisdiction in which it carries on the Business or where the nature
of business carried on or proposed to be carried on by it or
requires it to be so licensed or qualified.
(e) There are no material liabilities, indebtedness or obligations of
the Company of any kind whatsoever, whether or not absolute or
contingent, other than liabilities incurred in the ordinary course
of business since the date of incorporation.
(f) Immediately prior to giving effect to the Transaction, the
authorised capital of the Company will on Closing consist of an
unlimited number of shares of one class, designated Common Shares;
an unlimited number of redeemable preference shares of one class,
designated Class A Redeemable Preference Shares Series 1; an
unlimited number of redeemable preferrence shares of one class,
designated Class B Redeemable Preference Shares Series 1; an
unlimited number of redeemable preference shares of one class,
designated Class C Redeemable Preference Shares Series 1; and an
unlimited number of redeemable preference shares of one class,
designated Class D Redeemable Preference Shares Series 1 and only
One Thousand (1000) Common Shares, will be duly issued and
outstanding as fully paid and non-assessable.
6
(g) At Closing, all necessary corporate action will have been taken by
the Company to authorize the creation and issuance of the Purchased
Shares and all of the Purchased Shares will, upon their issuance, be
validly issued as fully-paid and non-assessable shares. The
Purchased Shares will on Closing be issued in compliance with all
applicable security laws.
(h) There is no action, suit, proceeding or investigation (whether or
not purportedly on behalf of the Company) which has been commenced
or, to the knowledge of the directors and officers of the Company,
no action, proceeding or investigation is threatened against the
Company before any court or before any Government Body or before any
arbitrator or board.
(i) There is no person, firm, or corporation acting or purporting to act
for the Company entitled to any brokerage or finder's fee in
connection with this Agreement.
(j) Each of the Company's warranties herein shall be true and correct on
Closing as if made by the Company on and as at that date.
6.2 The Company hereby acknowledges and agrees that each of the above
representations and warranties is being relied on by the Subscriber in
connection with its decision to enter into this Agreement and to complete
the transactions herein and therein contemplated and that each such
representation and warranty shall not merge in or be prejudiced by, and
shall survive and continue in full force and effect following Closing.
7. REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBER
7.1 The Company hereby represents and warrants to the Subscriber as follows:
(a) The Subscriber is duly incorporated and validly existing under the
laws of Barbados and has all requisite corporate power and capacity
to enter and perform its obligations under this Agreement and to
complete the Transaction.
(b) This Agreement has been duly authorised, executed and delivered on
behalf of the Subscriber and is a valid and binding obligation of
the Subscriber, enforceable in accordance with its respective terms,
subject to the usual exceptions as to bankruptcy and the
availability of equitable remedies.
(c) The execution and delivery of this Agreement, and the performance of
the Subscriber's obligations hereunder or the consummation of the
transactions herein provided for will not result in or constitute a
breach of any term or provision of, or constitute a breach of any
term or provision of, or constitute a default under, the constating
documents, Articles of Incorporation or By-laws of the Subscriber or
any agreement to which the Subscriber is a party or by which the
Subscriber is bound.
(d) The Subscriber is or will, subject to the provisions hereof, be
purchasing the Purchased Shares for its own account, for investment
purposes and not with a view to the distribution thereof. The
Subscriber will not, directly or indirectly, offer, transfer, sell,
assign, pledge, hypothecate or otherwise dispose of any Purchased
Shares (or solicit any offers to buy, purchase, or otherwise acquire
any of such Purchased Shares) acquired by it, except in compliance
with the Articles and all applicable securities Laws.
7
(e) The Subscriber understands that the transfer of the Purchased Shares
acquired by it pursuant hereto shall be subject to the restrictions
imposed by the Articles or applicable securities Laws and may bear
restrictive legends describing such restrictions.
(f) The Subscriber is the sole and exclusive beneficial owner of right
of the mortgages, with good and marketable title thereto free and
clear of any liens, charges, encumbrances, rights or claims of any
nature.
(g) The Mortgages constitute valid and enforceable first registered
mortgages and charges against all Real Property, subject to no prior
registered charges.
(h) The Subscriber's decision to execute this Agreement and purchase the
Purchased Shares has not been based upon any verbal or written
representations as to fact or otherwise made by or on behalf of the
Company other than those contained in this Agreement.
(i) The Subscriber acknowledges that no prospectus has been filed by the
Company with any securities commission or similar regulatory
authority in any jurisdiction in connection with the sale of the
Purchased Shares and as a result (i) the Subscriber may be
restricted from using most of the civil remedies available under
applicable securities Laws, (ii) the Subscriber may not receive
information that would otherwise be required to be provided to it
under applicable securities Laws, and (iii) the Company may be
relieved from certain obligations that would otherwise apply under
applicable securities Laws.
(j) The Subscriber acknowledges that the investment in the Purchased
Shares may have tax and/or other consequences to the Subscriber
under applicable Laws, which the Subscriber is solely responsible
for determining and in respect of which no assistance will be
provided by the Company or its advisors, and the Subscriber has
obtained its own legal and tax advice.
(k) There is no person, firm or corporation acting or purporting to act
for the Subscriber entitled to any brokerage or finder's fee in
connection with this Agreement.
(l) The aggregate Fair Market Value of the Real Property will be at
Closing no less than [100%,] of the aggregate Fair Market Value of
the Mortgages on that date.
(m) Each of the Subscriber's warranties herein shall be true and correct
on Closing as if made by the Subscriber on and as that date.
8
7.2 The Subscriber hereby acknowledges and agrees that each of the above
representations and warranties is being relied on by the Company without
independent inquiry in connection with the issue and sale to the
Subscriber of the Purchased Shares acquired by it and that each such
representation and warranty shall not merge in or be prejudiced by, and
shall survive and continue in full force and effect following Closing.
8. COVENANTS OF THE COMPANY
8.1 The Company shall maintain its corporate existence, rights and franchises
in full force and effect.
8.2 The Company shall comply with all applicable Laws, non-compliance with
which could materially adversely affect its business or condition,
financial or otherwise.
8.3 The Company shall make all dividend payments on all Classes and Series of
the Preference Shares, as they become due and payable.
9. DIVIDEND PAYMENTS
9.1 In the event that any dividend payments that are due and payable, on the
Class A Preference Shares Series 1 shares, are not paid, the Company
shall; at the option of the Subscriber, immediately pay the equivalent of
the six (6) months anticipated dividend to the Subscriber.
10. GENERAL
10.1 Governing Law. This Agreement is a Barbados contract governed by the laws
of Barbados. Both parties hereby irrevocably attorn to the non-exclusive
jurisdiction of the courts of Barbados.
10.2 Time of the Essence. Time shall be of the essence hereof.
10.3 Currency. All references herein to monetary amounts are references to
lawful money of the United States of America.
10.4 Entire Agreement. This Agreement and the other agreements contemplated
herein constitute the only agreement between the parties with respect to
the subject matter hereof and shall supersede any and all prior
negotiations and understandings.
10.5 Amendments. This Agreement may be amended, modified or supplemented in any
respect by written instrument only signed by each party hereto.
10.6 Execution by Facsimile. This Agreement may be executed by the parties and
transmitted by facsimile transmission, and if so executed and transmitted
this Agreement will be for all purposes as effective as if the parties had
delivered an executed original agreement.
9
10.7 Counterparts. This Agreement may be executed in several counterparts, each
of which when so executed shall be deemed to be an original and such
counterparts together shall constitute one and the same instrument.
10.8 Severability. Any Section, paragraph or other subdivision of this
Agreement or any provision of this Agreement which is or becomes, or is
determined by an arbitrator, as provided for in section 10.8, hereto or
court of competent jurisdiction to be, illegal, invalid or unenforceable
shall be severed from this Agreement and be effective to the extent of
such illegality, invalidity or unenforceability and shall not affect or
impair the remaining provisions hereof.
10.9 Arbitration. In the event of any dispute between any of the Parties hereto
arising out of this Agreement, the matter in dispute shall be referred to
arbitration in accordance with this Section 10.9 and a Party may make a
demand for arbitration by written notice to the other party stating the
matter and amount, if any, in dispute. The matter in dispute shall be
referred to a panel of three (3) arbitrators (the "Arbitrators") agreed to
by the parties and arbitration proceedings shall be conducted in
accordance with the Arbitration Act, Cap. 110 of the laws of Barbados.
10.10 Waiver. No waiver of any of the provisions of this Agreement shall be
deemed to constitute a waiver of any other provision (whether or not
similar), nor shall such waiver constitute a waiver or continuing waiver
unless otherwise expressly provided in writing duly executed by the party
to be bound thereby.
10.11 Assignment and Enurement. This Agreement is not transferable or
assignable. This Agreement shall enure to the benefit of and be binding
upon the parties, their successors and permitted assigns.
10.12 Non-Merger of Agreement. The rights and obligations of this Agreement
shall not merge on the consummation of the Agreement, but shall be binding
on the parties until such time as the Subscriber, his successors or
permitted assigns ceases to be a Shareholder of the Company.
10.13 Further Assurances. Each of the parties covenants and agrees that it will
sign such further agreements, assurances, waivers and documents, and do
and perform or cause to be done and performed such further and other acts
and things as may be necessary or desirable from time to time in order to
give full effect to this Agreement and every part hereof.
10.14 Notice. Any notice required or permitted to be given or made hereunder
shall be given in writing and shall be effectively given or made if sent
by electronic facsimile or personally delivered to any party hereto,
except the Company, at its last address as set forth in the records of the
Company, and if to the Company, at its then registered office, in each
case to the attention of the President. If delivered personally or by way
of electronic facsimile, any such notice shall be deemed to have been
given or made on the date of such delivery or transmission. Any party may
change its address for service by giving notice of such change of address
to the Company and the other parties hereto in the manner herein provided.
10
This Agreement is signed and executed by the respective parties in counterpart;
each counterpart is to be read as an original document and all such counterparts
are to be deemed as representing the same document.
A telecopied transmission of this Agreement by any person named below shall be
sufficient to establish the signature of that person and to constitute the
authority in writing of such person to the foregoing resolution.
If the foregoing is in accordance with your understanding, please sign and
return the enclosed copy of this Agreement as soon as possible to evidence the
Subscriber's agreement to purchase the Purchased Shares.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first before written.
SIGNED by )
for and on behalf of STRATEGY HOLDING COMPANY LIMITED. )
in the presence of:- /s/ Xx. Xxxxxx X. Xxxxxxxxxx
----------------------------
) Name: Xx. Xxxxxx X. Xxxxxxxxxx
) Title: Director
Witness: /s/ Kezsha X. Xxxx
-------------------
Name: Kezsha X. Xxxx
Address: Apt #3 Pilgrim Road, Xxxxxx Church
Calling/Description: Attorney-at-law
SIGNED by )
for and on behalf of STRATEGY HOLDING COMPANY LIMITED. )
in the presence of:- /s/ Xx. Xxxxxx X. Xxxxxxxxxx
----------------------------
) Name: Xx. Xxxxxx X. Xxxxxxxxxx
) Title: Director
Witness: /s/ Kezsha X. Xxxx
-------------------
Name: Kezsha X. Xxxx
Address: Apt #3 Pilgrim Road, Xxxxxx Church
Calling/Description: Attorney-at-law
11
EXHIBIT A
Description of Mortgages
[to be inserted]
12
EXHIBIT B
Description of Real Property
[to be inserted]
13
EXHIBIT C
Share Attributes
PREFERENCE SHARES
Each Series of Preferred Shares shall have attached thereto the following
rights, privileges, restrictions and conditions:
(a) Each Series of Preferred Shares shall rank pari passu in all
respects.
(b) The Redeemable Preferred Shares shall bear a cumulative preferential
dividend equal to 10% per annum of the par value thereof, payable
quarterly on the last business day of each calendar quarter, in
preference and priority to any payment of dividends to the holders
of any other class of shares in the capital of the Company in
respect of that quarter, but the holders of the Preferred shares
shall have no further right to dividends. The said preferential
dividend shall accrue from January 1, 2004 and the first payment of
such dividend shall be payable on April 1, 2004.
(c) The Preferred Shares shall be retractable in whole or part at the
option of the holder at any time by the shareholder and is mandatory
after the tenth anniversary of the Closing Date upon at least
fifteen (15) working days prior written notice at the redemption
price of US$1,000 per preferred share, plus accrued and unpaid
cumulative preferential dividends.
(d) The Preferred Shares shall rank in priority to the shares of all
classes in the capital of the Company as to the return of capital
upon the liquidation, dissolution or other winding-up of tine
Company, but thereafter the holders of the Preferred Shares shall
have no further right to participate in the assets of the Company.
(e) In the case of any redemption or retraction of Preferred Shares, or
the liquidation, dissolution or other winding-up of the Company, the
Company may at its option pay the whole or any part of the amount
payable to any one or more holders of the Preferred shares in such
event by way of the delivery and conveyance to such holders of good
and marketable title to Property having an aggregate Fair Market
Value equal to or greater than such amount or part thereof. For the
purposes hereof "Property" means property then owned by the Company
which was acquired by the Company in consideration of the issuance
of any Preferred Shares of the Series being redeemed or repurchased,
or any property of the Company received by the Company pursuant to
any right of substitution of property exercised by the party to whom
any such shares were issued.
(f) The Preferred Shares shall be non-voting in all events.
(g) The Preferred Shares shall be non-transferable without the prior
written consent of the Company, which consent may be arbitrarily
granted or denied, provided that the Preferred Shares may be
transferred to Subsidiary or an Affiliate of the Subscriber upon
prior written notice of the Company.
14
COMMON SHARES:
(a) Subject to the prior rights of the holders of the Preferred Shares,
the holders of the Common Shares shall have the right to receive
dividends, if any, as the directors in their discretion may from
time to time declare.
(b) Subject to the prior rights of the holders of the Preferred Shares,
the holders of the Common Shares shall have the right on the
liquidation, dissolution or winding-up of the Company or other
distribution of its assets among its shareholders for the purpose of
winding-up its affairs to receive the remaining assets of the
Company.
(c) The holders of the Common Shares shall be entitled to receive notice
of and to attend all meetings of shareholders of the company and to
vote at any such meeting on the basis of one vote of each Common
Share held.
(d) The Common Shares shall be in registered form and shall be
transferable upon the prior written consent of the Company, which
consent may not be unreasonably withheld or delayed.
(e) In the event that the holders of at least two-thirds of Common
Shares then outstanding shall at any time hereafter receive from a
third party dealing at arm's length with each holder of Common
Shares an irrevocable bona fide offer to purchase all, but not less
than all, of the outstanding Common Shares of the Company for a
purchase price payable in cash or by way of shares the purchaser of
a class listed for trading on a recognized North American stock
exchange, which offer they desire to accept, then all holders of
Common shares shall be immediately provided with a complete and
accurate copy of that offer and all holders of Common Shares shall
be obliged to accept and shall sell their Common Shares to the third
party in accordance with the terms of that offer.
15
