GENTERRA INC. and CONSOLIDATED MERCANTILE INCORPORATED AMALGAMATION AGREEMENT Dated as of April 27, 2009 as amended on October __,2009
EXHIBIT 2.2
and
CONSOLIDATED
MERCANTILE INCORPORATED
Dated
as of April 27, 2009
as
amended on October __,2009
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TABLE
OF CONTENTS
ARTICLE 1 DEFINITIONS AND
INTERPRETATION 2
Section
1.1 Definitions
2
Section
1.2 Currency
6
Section
1.3 Interpretation
Not Affected By
Headings 6
Section
1.4 Number
and
Gender
6
Section
1.5 Date
for Any
Action
7
Section
1.6 Meanings
7
Section
1.7 Knowledge
7
Section
1.8 Schedules 7
ARTICLE 2 THE
AMALGAMATION 8
Section
2.1 Implementation
Steps
8
Section
2.2 Notice
of CMI Meeting, Notice of Genterra Meeting and
Circular 8
Section
2.3 Securities
Compliance
8
Section
2.4 Preparation
of
Filings
9
Section
2.5 Filing
of Articles of
Amalgamation 10
Section
2.6 Effect
of the
Amalgamation 10
Section
2.7 Amalgamated
Corporation 11
Section
2.8 Stated
Capital
13
ARTICLE 3 RIGHTS OF
DISSENT 13
Section
3.1 CMI
Dissent
Rights
13
Section
3.2 Genterra
Dissent
Rights 13
ARTICLE 4 REPRESENTATIONS AND
WARRANTIES OF
CMI 14
Section
4.1 Organization
and
Standing
14
Section
4.2 Capitalization
of
CMI
14
Section
4.3 Authority
and No
Violation 15
Section
4.4 Consents,
Approvals 16
Section
4.5 Public
Disclosure
16
Section
4.6 Financial
Statements,
Reports 16
Section
4.7 Property,
Assets
17
Section
4.8 Liabilities
17
Section
4.9 Litigation,
Etc.
17
Section
4.10 Insurance
17
Section
4.11 Absence
of Certain Changes or
Events 17
Section
4.12 Tax
18
Section
4.13 Employment
Matters 19
Section
4.14 Corporate
Records
20
Section
4.15 Contracts
20
Section
4.16 Compliance
with Laws;
Permits 20
Section
4.17 Restrictions
on Business
Activities 21
Section
4.18 Intellectual
Property
21
Section
4.19 Brokerage
and Finders’
Fees 21
Section
4.20 Securities
laws and Stock
Exchanges 21
Section
4.21 Solvency
of
CMI
21
Section
4.22 Creditors
of
CMI
22
Section
4.23 Non-Arms
Length
Contracts 22
Section
4.24 CMI
Information 22
Section
4.25 Survival
of Representations and
Warranties 22
ARTICLE 5 REPRESENTATIONS AND
WARRANTIES OF
GENTERRA 22
Section
5.1 Organization
and
Standing 22
Section
5.2 Capitalization
of
Genterra. 23
Section
5.3 Authority
and No
Violation 23
Section
5.4 Consents,
Approvals
24
Section
5.5 Public
Disclosure
25
Section
5.6 Financial
Statements,
Reports 25
Section
5.7 Property,
Assets 25
Section
5.8 Liabilities
25
Section
5.9 Litigation,
Etc.
26
Section
5.10 Insurance
26
Section
5.11 Absence
of Certain Changes or
Events. 26
Section
5.12 Tax
26
Section
5.13 Employment
Matters 27
Section
5.14 Corporate
Records
28
Section
5.15 Contracts.
29
Section
5.16 Compliance
with Laws;
Permits. 29
Section
5.17 Restrictions
on Business
Activities. 29
Section
5.18 Environmental.
29
Section
5.19 Intellectual
Property 30
Section
5.20 Brokerage
and Finders’
Fees 30
Section
5.21 Securities
Laws and Stock
Exchanges 30
Section
5.22 Solvency
of
Genterra 30
Section
5.23 Creditors
of
Genterra 30
Section
5.24 Non-Arms
length
Contracts 30
Section
5.25 Genterra
Information 31
Section
5.26 Survival
of Representations and
Warranties 31
ARTICLE 6 COVENANTS AND
AGREEMENTS
31
Section
6.1 Mutual
Covenants
31
Section
6.2 Covenants
of
CMI
35
Section
6.2A Covenants
of CMI Regarding
Non-Solicitation 35
Section
6.2B Notice
by CMI of Superior Proposal
Determination 37
Section
6.3 Covenants
of
Genterra 38
Section
6.3A Covenants
of Genterra Regarding
Non-Solicitation
39
Section
6.3B Notice
by Genterra of Superior Proposal
Determination 40
Section
6.4 Access
to
Information 41
Section
6.5 Closing
Matters
42
ARTICLE 7
CONDITIONS
42
Section
7.1 Mutual
Conditions
Precedent. 42
Section
7.2 Additional
Conditions Precedent to the Obligations of
Genterra 43
Section
7.3 Additional
Conditions Precedent to the Obligations of
CMI 44
Section
7.4 Merger
of
Conditions 45
ARTICLE 8 AMENDMENT AND
TERMINATION 45
Section
8.1 Amendment
45
Section
8.2 Termination
45
Section
8.3 Effect
of
Termination
47
ARTICLE 9
GENERAL 47
Section
9.1 Investigation 47
Section
9.2 Notices
47
Section
9.3 Assignment
48
Section
9.4 Binding
Effect
48
Section
9.5 Third
Party
Beneficiaries 48
Section
9.6 Waiver
and
Modification 48
Section
9.7 No
Personal
Liability
48
Section
9.8 Further
Assurances
48
Section
9.9 Expenses.
48
Section
9.10 Public
Announcements 49
Section
9.11 Governing
Law; Consent to
Jurisdiction
49
Section
9.12 Entire
Agreement
49
Section
9.13 Time
of
Essence
49
Section
9.14 Severability
49
Section
9.15 Counterparts
50
SCHEDULE
“2.1(a)” FORM OF GENTERRA AMALGAMATION
RESOLUTION
51
SCHEDULE
“2.1(b)” FORM OF CMI AMALGAMATION
RESOLUTION 52
SCHEDULE
“2.7(d)” AMALCO SHARE
ATTRIBUTES 53
SCHEDULE
“2.7(m)” AMALCO STOCK OPTION
PLAN
64
SCHEDULE
“4.2(c)” CMI
SUBSIDIARIES 74
SCHEDULE
“4.15” MATERIAL CONTRACTS OF
CMI
75
SCHEDULE
“5.2(c)” GENTERRA
SUBSIDIARIES 76
SCHEDULE
“5.15” MATERIAL CONTRACTS OF
GENTERRA 77
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THIS
AMALGAMATION AGREEMENT dated as of the 27th day of April, 2009.
BETWEEN:
a corporation existing pursuant to the
provisions
of the Business Corporations Act
(Ontario)
(hereinafter referred to as “Genterra”)
OF THE FIRST PART
- and
CONSOLIDATED MERCANTILE
INCORPORATED,
a corporation existing pursuant to the
provisions
of the Business Corporations Act
(Ontario)
(hereinafter referred to as “CMI”)
OF THE SECOND PART
WITNESSES
THAT:
WHEREAS the board of directors of
Genterra has determined that the Amalgamation to be effected pursuant to this
Agreement is advisable and in the best interests of Genterra and has approved
the transactions contemplated by this Agreement and determined to recommend
approval of the Amalgamation and the other transactions contemplated hereby to
the Holders of Genterra Shares;
AND WHEREAS in furtherance of the
Amalgamation, the board of directors of Genterra has agreed to submit the
Genterra Amalgamation Resolution in accordance with Section 176 of the OBCA to
the Holders of Genterra Shares for approval;
AND WHEREAS the board of directors of
CMI has determined that the Amalgamation to be effected pursuant to this
Agreement is advisable and in the best interests of CMI and has approved the
transactions contemplated by this Agreement and determined to recommend approval
of the Amalgamation and the other transactions contemplated hereby to the
Holders of CMI Shares;
AND WHEREAS, in furtherance of the
Amalgamation, the board of directors of CMI has agreed to submit the CMI
Amalgamation Resolution in accordance with Section 176 of the OBCA to the
Holders of CMI Shares for approval;
AND WHEREAS, upon the Amalgamation
becoming effective, the CMI Shares will be exchanged for Amalco Shares in
accordance with the provisions of this Agreement and the Genterra Shares will be
exchanged for corresponding Amalco Shares in accordance with the provisions of
this Agreement;
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
1
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
“affiliate” has the meaning
ascribed thereto in the Securities Act unless otherwise expressly stated
herein;
“Acquisition Proposal” means
any merger, amalgamation, take-over bid, tender offer, arrangement,
recapitalization, liquidation, dissolution, share exchange, material sale of
assets (or any lease, long term supply agreement or other arrangement having the
same economic effect as a material sale of assets), any sale of more than 20% of
any class of equity securities of the Target or any of its Subsidiaries or
rights or interests therein or thereto, or similar transactions involving the
Target or any Subsidiaries thereof, or any other transaction, the consummation
of which would reasonably be expected to impede, interfere with, prevent or
materially delay the Amalgamation or a proposal or offer, or public announcement
of an intention, to do so, directly or indirectly, or any modification or
proposed modification of any of the foregoing, excluding the Amalgamation or any
transaction to which either CMI or Genterra, to the extent it is not the Target,
is a party;
“Acquisition Proposal Assessment
Period” has the meaning set forth in Section 6.2A(a)(iii).
“Agreement” means this
amalgamation agreement, provided for in Section 175 of the OBCA, including the
schedules hereto;
“Amalco” means “Genterra
Capital Inc.”, the corporation resulting from the Amalgamation upon the
Effective Date;
“Amalco Common Shares” means
the common shares in the capital of Amalco;
“Amalco Class A Preference
Shares” means the Class A Preference Shares in the capital of
Amalco;
“Amalco Class B Preference
Shares” means the Class B Preference Shares in the capital of
Amalco;
“Amalco Option Plan” means the
stock option plan attached as Schedule 2.7(m) hereto, under which options to
purchase Amalco Common Shares may be issued in accordance with the policies of
the TSX;
“Amalco Shares” means the Amalco
Common Shares, the Amalco Class A Preference Shares and the Amalco Class B
Preference Shares;
“Amalgamation” means the
amalgamation of Genterra and CMI pursuant to Section 176 of the OBCA as provided
for in this Agreement;
“Appropriate Regulatory Approvals” means all of the
rulings, consents, orders, exemptions, permits and other approvals of
Governmental Entities, the TSX and the TSXV required or necessary for the
completion of the transactions provided for in this Agreement;
“Articles of Amalgamation” means the
articles of amalgamation in respect of the Amalgamation, in the form required by
the OBCA, to be sent to the Director, subject to the conditions of this
Agreement, following the approval of the CMI Amalgamation Resolution by the
Holders of CMI Shares and the approval of the Genterra Amalgamation Resolution
by the Holders of Genterra Shares, as applicable;
“Business Day” means a day on which
commercial banks are generally open for business in Toronto, Ontario other than
a Saturday, Sunday or a day observed as a holiday in Toronto, Ontario under the
Laws of the Province of Ontario or the federal Laws of Canada;
“Charter Documents” means, as
applicable, the articles and by-laws, memorandum and articles of association or
other similar constating documents of any body corporate;
“Circular” means the joint
management information circular of Genterra and CMI prepared for the Genterra
Meeting and CMI Meeting and describing the Amalgamation prepared by Genterra and
CMI and accepted by the TSX and the TSXV;
“CMI” means Consolidated
Mercantile Incorporated, a corporation existing under the OBCA;
“CMI Amalgamation Resolution” means the special
resolution of the Holders of CMI Shares approving the Amalgamation, to be
substantially in the form and content of Schedule “2.01 (a)”
hereto;
“CMI Dissent Rights” has the meaning
specified in Subsection 3.1(a);
“CMI Dissenting Shareholder” means a Holder of
CMI Shares who dissents from the CMI Amalgamation Resolution in compliance with
the CMI Dissent Rights;
“CMI Meeting” means the special
meeting of the Holders of CMI Shares (including any adjournment(s) or
postponements thereof) to be called and held for, the purpose of considering
and, if deemed advisable, approving the Amalgamation and the CMI Amalgamation
Resolution;
“CMI Public Disclosure” has
the meaning specified in Section 4.5;
“CMI Class A Preference
Shares” means the Class A Preference Shares in the capital of CMI that
are currently issued and outstanding;
“CMI Shares” means all of the
outstanding common shares in the capital of CMI;
“Director” means the Director
appointed under Section 278 of the OBCA;
“Effective Date” means the date shown on
the certificate of amendment and the certificate of amalgamation issued by the
Director giving effect to the Amalgamation;
“Effective Time” means 12:01 a.m.
(Toronto time) on the Effective Date;
“Encumbrance” includes whether
or not registered or recorded, any and all mortgages, liens, licences, charges,
security interests, pledges, conditional sales contracts, options or other
rights to acquire any interest in any property, and any adverse claims or rights
in any property;
“Genterra” means Genterra Inc.,
a company existing pursuant to the provisions of the OBCA;
“Genterra Amalgamation Resolution” means the special
resolution of the Holders of Genterra Shares approving the Amalgamation, to be
substantially in the form and content of Schedule “2.01(b)” hereto;
“Genterra Class A Preference
Shares” means the Class A Preference Shares in the capital of Genterra
that are currently issued and outstanding;
“Genterra Class B Preference
Shares” means the Class B Preference Shares in the capital of Genterra
that are currently issued and outstanding;
“Genterra Common Shares” means
the common shares in the capital of Genterra that are currently issued and
outstanding;
“Genterra Dissenting Shareholder” means a holder of
Genterra Shares who dissents from the Genterra Amalgamation Resolution in
compliance with the Genterra Dissent Rights;
“Genterra Dissent Rights” has
the meaning specified in Subsection 3.2(a);
“Genterra Meeting” means the
special meeting of the Holders of Genterra Shares (including any adjournment(s)
or postponements thereof) to be called and held for, the purpose of considering
and, if deemed advisable, approving the Amalgamation and the Genterra
Amalgamation Resolution;
“Genterra Preferred Shares”
means the Genterra Class A Preference Shares and the Genterra Class B Preference
Shares;;
“Genterra Public Disclosure” has the
meaning specified in Section 5.5;
“Genterra Shareholders” means all of the
Holders of the Genterra Shares;
“Genterra Shares” means the Genterra
Common Shares and Genterra Preferred Shares that are currently issued and
outstanding;
“Governmental Entity” means
any (a) multinational, federal, provincial, territorial, state, regional,
municipal, local or other government, governmental or public department, central
bank, court, tribunal, arbitral body, commission, board, bureau or agency,
domestic or foreign, (b) subdivision, agent, commission, board, or authority of
any of the foregoing, or (c) quasi-governmental or private body exercising any
regulatory, expropriation or taxing authority under, or for the account of, any
of the foregoing;
“Holders” means, when used
with reference to the CMI Shares, Genterra Shares or the Amalco Shares, the
holders of such CMI Shares, Genterra Shares or Amalco Shares, as applicable,
shown from time to time in the register maintained by or on behalf of CMI,
Genterra or Amalco, as applicable, in respect of such CMI Shares, Genterra
Shares or Amalco Shares, as applicable;
“Laws” means all statutes,
regulations, rules, orders, judgments, decrees and terms and conditions of any
grant of approval, permission, authority, permit or license of any court,
Governmental Entity, statutory body or self-regulatory authority (including the
TSX and/or the TSXV);
“Material Adverse Effect”,
when used in connection with CMI or Genterra, means any change, effect,
event or occurrence with respect to its condition (financial or otherwise),
properties, assets, liabilities, obligations (whether absolute, accrued,
conditional or otherwise), businesses, prospects, operations or results of
operations or those of its subsidiaries, that is, or would be reasonably
expected to be, material and adverse to the current or future business,
operations, regulatory status, financial condition or results of operations of
CMI or Genterra, as the case may be, taken as a whole, but shall, for greater
certainty, exclude (a) any decrease in the trading price or value of the common
shares of CMI or Genterra immediately following and reasonably attributable to
the announcement of the Amalgamation or (b) any change, effect, event or
occurrence relating to the North American economy as a whole or securities
markets in general;
“Material Fact” has the
meaning ascribed thereto in the Securities Act;
“misrepresentation” has the
meaning ascribed thereto in the Securities Act;
“Notice of Genterra Meeting”
means the notice of the Genterra Meeting to be provided by Genterra to
the Holders of the Genterra Shares;
“Notice of CMI Meeting” means
the notice of the CMI Meeting to be provided by CMI to the Holders of the CMI
Shares;
“OBCA” means the Business
Corporations Act (Ontario), as amended;
“Person” means and includes an
individual, firm, sole proprietorship, partnership, joint venture,
unincorporated association, unincorporated syndicate, unincorporated
organization, trust, body corporate, a trustee, executor, administrator or other
legal representative, Governmental Entity, or other entity, whether or not
having legal status;
“Securities Act” means the Securities Act (Ontario), as
amended;
“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;
“Superior Proposal” means a
bona fide written
Acquisition Proposal (i) to purchase or otherwise acquire, directly or
indirectly, by means of a merger, take-over bid, amalgamation, plan of
arrangement, business combination or similar transaction, all of the common
shares of the Target, or all or substantially all of the assets of the Target
and its Subsidiaries that the Board of Directors of the Target has determined in
good faith (after consultation with its financial advisors and with its outside
legal counsel) is reasonably capable of completion without undue delay taking
into account all legal, financial, regulatory and other aspects of such
Acquisition Proposal and the party making such Acquisition Proposal and such
Acquisition Proposal would, if consummated in accordance with its terms (but not
assuming away any risk of non-completion), result in a transaction more
favourable financially to the shareholders of the Target than the Amalgamation
(including any adjustment to the terms and conditions of the Amalgamation
proposed by either CMI or Genterra, to the extent it is not the Target, pursuant
to Section 6.2B or Section 6.3B below, as the case may be);
“Target” means either CMI or
Genterra, as the case may be, to the extent that it is the subject of an
Acquisition Proposal;
“Tax” and “Taxes” means, with respect to
any Person, all income taxes (including any tax on or based upon net income,
gross income, income as specially defined, earnings, profits or selected items
of income, earnings or profits) and all capital taxes, gross receipts taxes,
environmental taxes, sales taxes, use taxes, ad valorem taxes, value added
taxes, transfer taxes, franchise taxes, license taxes, withholding taxes
(including source withholdings in respect of income taxes, Canada Pension Plan
and employment insurance premiums), payroll taxes, employment taxes, pension
plan premiums, excise, severance, social security premiums, workers’
compensation premiums, unemployment insurance or compensation premiums, stamp
taxes, occupation taxes, premium taxes, property taxes, windfall profits taxes,
alternative or add-on minimum taxes, goods and services tax, customs duties or
other taxes, fees, imports, assessments or charges of any kind whatsoever,
together with any interest and any penalties or additional amounts imposed by
any taxing authority (domestic or foreign) on such entity, and any interest,
penalties, additional taxes and additions to tax imposed with respect to the
foregoing;
“Tax Act” means the Income Tax Act (Canada), as
amended;
“Tax Returns” means all returns,
declarations, reports, information returns and statements filed or required to
be filed with any taxing authority relating to Taxes;
“Termination Time” means the time that this
Agreement is terminated;
“Time of Closing” shall have the
meaning ascribed to such term in Section 6.5(a) of this Agreement;
“TSX” means the Toronto Stock
Exchange; and
“TSXV” means the TSX Venture
Exchange.
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 any gender
shall include all genders.
- -
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 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 Meanings.
Words and
phrases used herein and defined in the OBCA shall have the same meaning herein
as in the OBCA, unless otherwise defined herein or the context otherwise
requires. Unless otherwise specifically indicated or the context otherwise
requires, “include”, “includes” and “including” shall be deemed to be followed
by the words “without limitation”.
Section
1.7 Knowledge.
Where any
matter is stated to be “to the knowledge” or “to the best of the knowledge” of
CMI or words to like effect in this Agreement, CMI shall be required, in
addition to making any other reasonable inquiries, to make inquiries of officers
of CMI.
Where any
matter is stated to be “to the knowledge” or “to the best of the knowledge” of
Genterra or words to like effect in this Agreement, Genterra, shall be required,
in addition to making any other reasonable inquiries, to make inquiries of
officers of Genterra.
Section
1.8 Schedules.
The
following Schedules are annexed to this Agreement and are hereby incorporated by
reference into this Agreement and form part hereof:
Schedule “2.
1(a)” - Form
of CMI Amalgamation Resolution
Schedule
“2.1(b)” - Form
of Genterra Amalgamation Resolution
Schedule
“2.7(d)” - Amalco
Share Attributes
Schedule
“2.7(m)” - Amalco
Stock Option Plan
Schedule
“4.2(c)” - CMI
Subsidiaries
Schedule
“4.15” - Material
Contracts of CMI
Schedule
“5.2(c)” - Genterra
Subsidiaries
Schedule
“5.15” - Material
Contracts of Genterra
- -
ARTICLE
2
THE
AMALGAMATION
Section
2.1 Implementation
Steps.
|
|
(a)
|
CMI
covenants in favour of Genterra that CMI shall either lawfully convene and
hold the CMI Meeting for the purpose of considering the CMI Amalgamation
Resolution or circulate the CMI Amalgamation Resolution for signature by
all of the Holders of CMI Shares as soon as reasonably practicable and, in
any event, no later than December 31, 2009 subject to adjournments or
postponements, as may be agreed to by CMI and
Genterra.
|
|
|
(b)
|
Genterra
covenants in favour of CMI that Genterra shall lawfully convene and hold
the Genterra Meeting for the purpose of considering the Genterra
Amalgamation Resolution as soon as reasonably practicable and, in any
event, no later than December 31, 2009 , subject to
adjournments or postponements, as may be agreed to by CMI and
Genterra.
|
Section
2.2 Notice
of CMI Meeting, Notice of Genterra Meeting and Circular.
As
promptly as reasonably practicable, CMI shall give the Notice of CMI Meeting,
Genterra shall give the Notice of the Genterra Meeting and Genterra and CMI
shall prepare the Circular together with any other documents required by the
Securities Act, the OBCA or other applicable Laws in connection with the
approval of the CMI Amalgamation Resolution, the Genterra Amalgamation
Resolution and matters related thereto. Genterra and CMI shall give the other
party timely opportunity to review and comment on all such documentation and all
such documentation shall be reasonably satisfactory to Genterra and CMI, as the
case may be, before it is filed or distributed to the Holders of CMI Shares;
provided, that Genterra and CMI will provide the other party with its comments
and any proposed additions and deletions within five Business Days after each
receipt of a draft Notice of CMI Meeting, draft Notice of Genterra Meeting and
Circular from CMI and Genterra, as the case may be. As promptly as practicable
after the date hereof, CMI shall cause the Notice of CMI Meeting and other
documentation required in connection with the CMI Meeting to be sent to each
holder of CMI Shares and shall cause the Circular to be filed with the
TSX. As promptly as practicable after the date hereof, Genterra shall
cause the Notice of Genterra Meeting and other documentation required in
connection with the Genterra Meeting to be sent to each holder of Genterra
Shares and shall cause the Circular to be filed with the TSXV.
Section
2.3 Securities
Compliance.
Each of
Genterra and CMI, acting jointly, shall use reasonable best efforts to obtain
all orders required from the applicable Governmental Entities and the TSX and/or
the TSXV to permit the
issuance and resale of the Amalco Shares issuable pursuant to the Amalgamation
as well as the Amalco Shares issuable upon the exercise of the Amalco Options
without qualification with, or approval of, or the filing of any prospectus or
similar document, or the taking of any proceeding with, or the obtaining of any
further order, ruling or consent from, any Governmental Entity under any
Canadian federal, provincial or territorial securities or other Laws or pursuant
to the rules and regulations of any Governmental Entity administering such Laws,
or the fulfillment of any other legal requirement in any such jurisdiction
(other than, with respect to such first resales, any restrictions on transfer by
reason of, among other things, a holder being a “control person” for purposes of
Canadian federal, provincial or territorial securities Laws).
- -
Section
2.4 Preparation
of Filings.
(a) Genterra
and CMI shall cooperate in:
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(i)
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the
preparation of any application for the orders and the preparation of any
documents reasonably deemed by Genterra or CMI to be necessary to
discharge their respective obligations under applicable Canadian and
United States federal, provincial, territorial or state securities Laws in
connection with the Amalgamation and the other transactions contemplated
hereby;
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(ii)
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the
taking of all such action as may be required under any applicable Canadian
and United States federal, provincial, territorial or state securities
Laws (including “blue sky laws”) in connection with the issuance of the
Amalco Shares and any securities issuable upon the exercise thereof in
connection with the Amalgamation; provided, however, that with respect to
the United States “blue sky” and Canadian provincial qualifications
neither Genterra nor CMI shall be required to register or qualify as a
foreign corporation or to take any action that would subject it to service
of process in any jurisdiction where such entity is not now so subject,
except as to matters and transactions arising solely from the offer and
sale of the Amalco Shares; and
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(iii)
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the
taking of all such action as may be required under the OBCA in connection
with the transactions contemplated by this
Agreement.
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(b)
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Each
of Genterra and CMI shall promptly furnish to the other all information
concerning it and its security holders as may be required for the
effectuation of the actions described in Sections 2.2 and 2.3 and the
foregoing provisions of this Section 2.4, and each covenants that no
information furnished by it (to its knowledge in the case of information
concerning its shareholders) in connection with such actions or otherwise
in connection with the consummation of the Amalgamation and the other
transactions contemplated by this Agreement will contain any
misrepresentation or any untrue statement of a material fact or omit to
state a material fact required to be stated in any such document or
necessary in order to make any information so furnished for use in any
such document not misleading in the light of the circumstances in which it
is furnished.
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(c)
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Each
of Genterra and CMI shall promptly notify the other if at any time before
or after the Effective Time it becomes aware that the Notice of CMI
Meeting, the Notice of Genterra Meeting, the Circular or an application
for an order described in Section 2.3 contains any misrepresentation or
any untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
contained therein not misleading in light of the circumstances in which
they are made, or that otherwise requires an amendment or supplement to
the Notice of CMI Meeting, the Notice of Genterra Meeting, the Circular or
such application. In any such event, Genterra and CMI shall cooperate in
the preparation of a supplement or amendment to the Notice of CMI Meeting,
the Notice of Genterra Meeting, the Circular or such other document, as
required and as the case may be, and, if required, shall cause the same to
be distributed to the Holders of CMI Shares, Holders of Genterra Shares or
filed with the relevant securities regulatory authorities, as the case
maybe.
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(d)
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Subject
to CMI complying with Subsection 2.4(b), Genterra shall ensure that each
of the Notice of Genterra Meeting and the Circular complies with all
applicable Laws and, without limiting the generality of the foregoing,
that the portion of the Circular which relates to Genterra does not
contain any misrepresentation or any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein not misleading in light
of the circumstances in which they are
made.
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(e)
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Subject
to Genterra complying with Subsection 2.4(b), CMI shall ensure that the
Notice of CMI Meeting and the Circular comply with all applicable Laws
and, without limiting the generality of the foregoing, that the portion of
the Circular which relates to CMI does not contain any misrepresentation
or any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
contained therein not misleading in light of the circumstances in which
they are made.
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Section
2.5 Filing
of Articles of Amalgamation.
Subject
to the rights of termination contained in Article 8 hereof, upon the Holders of
CMI Shares approving the CMI Amalgamation Resolution and upon the Holders of
Genterra Shares approving the Genterra Amalgamation Resolution, in accordance
with the provisions of the OBCA, CMI and Genterra shall jointly file with the
Registrar of the OBCA the Articles of Amalgamation and such other documents as
are required to be filed under the OBCA for acceptance by the Registrar of the
OBCA to give effect to the Amalgamation, pursuant to provisions of the
OBCA.
Section
2.6 Effect
of the Amalgamation.
On the
Effective Date of the Amalgamation, the following shall occur and shall be
deemed to occur in the following order without any further act or
formality:
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(a)
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CMI
and Genterra shall amalgamate to form Amalco and shall continue as one
company under the OBCA in the manner set out in Section 2.7 hereof and
with the effect set out in Section 179 of the OBCA, unless the
Amalgamation does not proceed;
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(b)
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immediately
upon the amalgamation of CMI and Genterra to form Amalco as set forth in
Subsection 2.6(a):
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(i)
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each
CMI Share issued and outstanding on the Effective Date (other than CMI
Shares held by Dissenting Shareholders, to whom Subsection 3.1(b) applies,
and the 24 CMI Shares owned by Genterra, which shall be cancelled pursuant
to Clause 2.6(b)(v))) shall be converted into one (1) Amalco Common
Share and provided that fractional Amalco Common Shares shall not be
issued to Holders of CMI Shares;
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(ii)
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each
three and six-tenths Genterra Common Shares issued and outstanding on the
Effective Date (other than Genterra Shares held by Dissenting
Shareholders, to whom Subsection 3.2(b) applies, and the 292,117 Genterra
Common Shares owned by CMI, which shall be cancelled pursuant to Clause
2.6(b)(v)) shall be converted into one Amalco Common Share and provided
that fractional Amalco Common Shares shall not be issued to holders of
Genterra Common Shares;
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(iii)
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each
one Genterra Class A Preference Share issued and outstanding on the
Effective Date (other than Genterra Shares held by Dissenting
Shareholders, to whom Subsection 3.2(b) applies) shall be converted into
one Amalco Class A Preference Share and provided that fractional Amalco
Class A Preference Shares shall not be issued to holders of Genterra Class
A Preference Shares;
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(iv)
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each
one Genterra Class B Preference Share issued and outstanding on the
Effective Date (other than Genterra Shares held by Dissenting
Shareholders, to whom Subsection 3.2(b) applies) shall be converted into
one Amalco Class B Preference Share and provided that fractional Amalco
Class B Preference Shares shall not be issued to holders of Genterra Class
B Preference Shares; and
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(v)
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each
of the 292,117 Genterra Common Share owned by CMI and each of the 24 CMI
Shares owned by Genterra shall be cancelled;
and
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(c)
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with
respect to the CMI Shares and the Genterra Shares exchanged in accordance
with Subsection 2.6(b):
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(i)
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the
Holders thereof shall cease to be the holder of such CMI Shares and
Genterra Shares, and the name of such holder shall be removed from the
register of holders of such CMI Shares or Genterra Shares, as the case
maybe;
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(ii)
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the
certificates (if any) representing any CMI Shares and Genterra Shares
shall be deemed to have been cancelled as of the Effective
Date;
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(iii)
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the
holders thereof shall be deemed to have executed and delivered all
consents, releases, assignments and waivers, statutory or otherwise,
required to exchange or transfer such securities in accordance with
Subsection 2.6(b);
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(iv)
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any
fractional interests resulting from the transactions provided for in
Subsection 2.6(b) shall be rounded up or down to the nearest whole Amalco
Share;
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provided
that none of the foregoing shall occur or shall be deemed to occur unless all of
the foregoing occurs.
Section
2.7 Amalgamated
Corporation.
Unless
and until otherwise determined in the manner required by law, by Amalco or by
its directors or the Holder or Holders of the Amalco Shares, the following
provisions shall apply:
(a) Name. The name of Amalco shall
be “Genterra Capital Inc.”;
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(b)
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Registered Office. The
registered office of Amalco shall be located in ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇. The
address of the registered office of Amalco shall be ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇;
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(c)
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Business and Powers.
There shall be no restrictions on the business that Amalco may
carry on or on the powers it may
exercise;
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(d)
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Authorized Share Capital.
Amalco shall be authorized to issue an unlimited number of common
shares, an unlimited number of Class A Preference shares, and an unlimited
number of Class B Preference shares, and the attributes of the common
shares, Class A Preference shares, and Class B Preference shares shall be
as set forth in Schedule 2.7(d)
hereof;
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(e)
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Share Restrictions.
There shall be no restrictions upon the right to transfer any
shares of Amalco;
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(f)
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Number of Directors. The
number of directors of Amalco shall be not less than three and not more
than fifteen as the shareholders of Amalco may from time to time
determine;
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(g)
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Initial Directors. The
initial directors of Amalco shall be as
follows:
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(i)
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▇▇▇▇
▇▇▇▇▇▇;
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(ii)
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▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
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(iii)
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▇▇▇▇
▇▇▇▇▇▇;
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(iv)
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▇▇▇
▇▇▇▇▇▇; and
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(v)
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▇▇▇▇
▇▇▇▇▇▇▇▇
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(h)
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Initial Officers. The
initial officers of Amalco and their positions shall be as
follows:
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(i)
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▇▇▇▇
▇▇▇▇▇▇, President;
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(ii)
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▇▇▇▇
▇▇▇▇▇▇, Vice-President; and
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(iii)
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▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, Chief Financial Officer and
Secretary.
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(i)
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By-laws. The by-laws of
Amalco, until repealed, amended or altered, shall be the same as the
by-laws of Genterra with such amendments thereto as may be necessary to
give effect to this Agreement;
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(j)
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Auditors. The auditors
of Amalco, until the first annual general meeting of shareholders of
Amalco, shall be BDO Dunwoody LLP, unless and until such
auditors resign or are removed in accordance with the provisions of the
OBCA;
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(k)
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Additional Directors.
The directors of Amalco may, between annual meetings, appoint one
or more additional directors of Amalco to serve until the next annual
meeting of Amalco but the number of additional directors is not at any
time to exceed 1/3 of the number of directors who held office at the
expiration of the last annual general meeting of
Amalco;
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(l)
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Fiscal Year. The fiscal
year end of Amalco is to be September
30;
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(m)
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Stock Option Plan. The
stock option plan for Amalco will be as set forth in Schedule 2.7(m)
hereof; and
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(n)
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Transfer Agent. Amalco’s
registrar and transfer agent is to be Computershare Investor Services Inc.
at its office in Toronto, Ontario or such other registrar or transfer
agent that is approved by the directors of
Amalco.
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Section
2.8 Stated
Capital.
Upon the
Amalgamation, Amalco shall add to the stated capital account maintained in
respect of the Amalco Shares an amount equal to the aggregate paid up capital
for purposes of the Tax Act of the Genterra Shares immediately before the
Effective Time plus the aggregate paid up capital for purposes of the Tax Act of
the CMI Shares immediately before the Effective Time.
ARTICLE
3
RIGHTS
OF DISSENT
Section
3.1 CMI
Dissent Rights.
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(a)
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A
holder of CMI Shares may exercise rights of dissent with respect to such
CMI Shares pursuant to and in the manner set forth in Section 185 of the
OBCA (the “CMI Dissent
Rights”) in connection with the Amalgamation. A holder of CMI
Shares who duly exercises such CMI Dissent Rights (including the sending
of a notice of dissent to CMI) and such CMI Dissenting Shareholder is
ultimately entitled to be paid fair value for their CMI Shares, such
shares are deemed to have been surrendered to CMI for cancellation
immediately prior to the Effective
Time.
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(b)
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If
a CMI Dissenting Shareholder is ultimately determined not to be entitled,
for any reason, to be paid fair value for their CMI Shares, a holder of
CMI Shares shall be deemed to have participated in the Amalgamation, as of
the Effective Time, on the same basis as a non-CMI Dissenting
Shareholder.
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Section
3.2 Genterra
Dissent Rights.
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(a)
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A
holder of Genterra Shares may exercise rights of dissent with respect to
such Genterra Shares pursuant to and in the manner set forth in Section
185 of the OBCA (the “Genterra Dissent
Rights”) in connection with the Amalgamation. A holder of Genterra
Shares who duly exercises such Genterra Dissent Rights (including the
sending of a notice of dissent to Genterra) and such Genterra Dissenting
Shareholder is ultimately entitled to be paid fair value for their
Genterra Shares, such shares are deemed to have been surrendered to
Genterra for cancellation immediately prior to the Effective
Time.
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(b)
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If
a Genterra Dissenting Shareholder is ultimately determined not to be
entitled, for any reason, to be paid fair value for their Genterra Shares,
a holder of Genterra Shares shall be deemed to have participated in the
Amalgamation, as of the Effective Time, on the same basis as a
non-Genterra Dissenting
Shareholder.
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- -
ARTICLE
4
REPRESENTATIONS
AND WARRANTIES OF CMI
CMI represents and warrants to and in
favour of Genterra as follows:
Section
4.1 Organization
and Standing.
CMI has
been duly incorporated and is a valid and subsisting corporation under the
provisions of the Laws of its jurisdiction of continuance or incorporation, 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 licensed or otherwise qualified to carry on business in each
jurisdiction in which the nature of the business conducted by it or the
ownership or leasing of its properties makes such qualification necessary,
except where, individually or in the aggregate, the failure to be so licensed or
qualified would not have a Material Adverse Effect on CMI.
Section
4.2 Capitalization
of CMI.
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(a)
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The
authorized share capital of CMI consists of (i) an unlimited number of CMI
Shares; and (ii) an unlimited number of preference shares. As
of the date hereof, 5,076,407 CMI Shares and 315,544 CMI Class A
Preference Shares were issued and outstanding. All of such issued and
outstanding shares are fully paid and non-assessable. All the
CMI Shares and CMI Class A Preference Shares were offered, issued and sold
in compliance with applicable securities laws, and all notices and filings
in respect of such distributions have been made by CMI within the time and
within the manner required by the securities
laws.
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(b)
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CMI
does not have any outstanding agreements, subscriptions, warrants, options
or commitments (pre-emptive, contingent or otherwise), nor has it granted
any rights or privileges capable of becoming an agreement, subscription,
warrant, option or commitment, obligating CMI to offer, sell, repurchase
or otherwise acquire, transfer, pledge or encumber any shares in the
capital of CMI, or other securities, nor are there outstanding any
securities or obligations of any kind convertible into or exercisable or
exchangeable for any capital stock of CMI. There are no outstanding bonds,
debentures or other evidences of indebtedness of CMI having the right to
vote or that are exchangeable or convertible for or exercisable into
securities having the right to vote with Holders of CMI Shares on any
matter as of the date hereof. There are no outstanding securities of CMI
in addition to CMI Shares having the right to vote with Holders of CMI
Shares on any matter.
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(c)
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Except
as set forth in Schedule 4.2(c) hereto, CMI does not have any shares or
other interests in any company or Person and is not a party to any
agreement or arrangement to acquire any shares or other interests in any
other companies or Persons and is not a party to any agreement or
arrangement to acquire or lease any other business
operations.
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(d)
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As
of the date hereof, there are no shareholder agreements, proxies, voting
trusts, rights to require registration under securities Laws or other
arrangements or commitments to which CMI is a party or bound with respect
to the voting, disposition or registration of any outstanding securities
of CMI.
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- -
Section
4.3 Authority
and No Violation.
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(a)
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CMI
has all requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance
of this Agreement and the agreements, documents and transactions
contemplated herein have been duly authorized by all necessary corporate
action of CMI. This Agreement has been duly executed and delivered by CMI
and constitutes a valid and binding obligation of CMI, enforceable in
accordance with its terms subject only to the following
qualifications:
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(i)
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an
order of specific performance and an injunction are discretionary remedies
and, in particular, may not be available where damages are considered an
adequate remedy; and
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(ii)
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enforcement
may be limited by bankruptcy, insolvency, liquidation, reorganization,
reconstruction and other similar laws generally affecting the
enforceability of creditors’
rights.
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(b)
|
None
of the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby or the fulfilment 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:
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(i)
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conflict
with any of the terms, conditions or provisions of the Charter Documents
of CMI;
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(ii)
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subject
to the consents, approvals, orders, authorizations, registrations,
declarations or filings referred to in Section 4.4 being made or obtained,
violate any provision of any Laws applicable to CMI;
or
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(iii)
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conflict
with, result in a breach of, constitute a default under, or accelerate or
permit the acceleration of the performance required by, any agreement,
covenant, undertaking, commitment, instrument, judgment, order, decree or
award to which CMI is a party or by which it is bound or to which its
property is subject, all as of the Effective Date;
or
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(iv)
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result
in the cancellation, suspension or alteration in the terms of any licence,
permit or authority held by CMI, or in the creation of any Encumbrance
upon any of the assets of CMI under any such agreement, covenant,
undertaking, commitment, instrument, judgment, order, decree or award or
give to any other Person any interest or rights, including rights of
purchase, termination, cancellation or
acceleration;
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except
in the case of clauses (ii) through (iv) for any of the foregoing that
would not, individually or in the aggregate, have a Material Adverse
Effect on CMI or impair the ability of CMI to perform its obligations
hereunder or prevent or delay the consummation of any of the transactions
contemplated hereby; and
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(c)
|
The
board of directors of CMI at a meeting duly called and held or by written
resolution has determined by unanimous approval that the transactions
contemplated by this Agreement are fair to the Holders of CMI Shares and
in the best interests of CMI and recommends that such Holders of CMI
Shares vote in favour of the transactions contemplated by this
Agreement.
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Section
4.4
|
Consents,
Approvals.
|
No consent, approval, order or
authorization of, or registration, declaration or filing with, any third party
or Governmental Entity is required by or with respect to CMI in connection with
the execution and delivery of this Agreement by CMI, the performance of its
obligations hereunder or the consummation by CMI of the transactions
contemplated hereby other than (a) the approval by the shareholders of CMI of
the CMI Amalgamation Resolution, (b) the approval of the TSX, (c) such
registrations and other actions required under federal, state, provincial, and
territorial securities Laws as are contemplated by this Agreement, (d) any
filings with the Director appointed under Section 278 of the OBCA, and (e) any
other consents, approvals, orders, authorizations, registrations, declarations
or filings which, if not obtained or made, would not, individually or in the
aggregate, have a Material Adverse Effect on CMI or prevent or delay the
consummation of any of the transactions contemplated hereby or impair CMI’s
ability to perform its obligations hereunder.
Section
4.5 Public
Disclosure.
Since January 1, 2007, CMI has filed any
and all required forms, reports and documents (collectively, the “CMI Public Disclosure”) with
the applicable Canadian securities regulatory authorities having jurisdiction.
None of the CMI Public Disclosure filed by CMI with the applicable Canadian
securities regulatory authorities having jurisdiction, at the time filed or as
subsequently amended, contained any misrepresentation or any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not misleading.
Section
4.6 Financial
Statements, Reports.
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(a)
|
The
audited financial statements of CMI as at and for the twelve months ended
December 31, 2008 (i) have been prepared in accordance with Canadian
generally accepted accounting principles applied on a consistent basis
during the period involved, (ii) complied in all material respects with
the requirements of applicable securities Laws, and (iii) fairly present
the consolidated financial position, results of operations, the changes in
its financial position and cash flows of CMI as of the date thereof and
for the period covered thereby. Except as disclosed in writing to
Genterra, no information has come to the attention of CMI since the date
that such financial statements were issued that would or would reasonably
be expected to require any restatement or revision of such financial
statements.
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(b)
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Except
as set forth in the CMI Public Disclosure, from December 31, 2008 to the
date of this Agreement, there has been no change by CMI in its accounting
policies, methods, practices or
principles.
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- -
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Section
4.7
|
Property,
Assets.
|
CMI is the legal and beneficial owner
of the properties and assets described as being owned by it in the CMI Public
Disclosure with good and marketable title thereto free and clear of material
encumbrances, except as disclosed in the CMI Public Disclosure, 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
other encumbrance of any kind or nature whatsoever, except as disclosed in the
CMI Public Disclosure. CMI does not own or lease any real property.
Section
4.8 Liabilities.
Except as disclosed or reflected in the
CMI financial statements described in Section 4.6, or as disclosed in writing to
Genterra, or as reasonably incurred in the ordinary course of CMI business since
December 31, 2008, CMI has no liabilities of any nature, whether accrued,
contingent or otherwise (or which would be required by Canadian generally
accepted accounting principles to be reflected on a balance sheet of CMI) that
have constituted or would be reasonably likely to constitute a Material Adverse
Effect. Without limiting the generality of the foregoing provisions of this
Section 4.8, CMI has not committed to make any capital expenditures, nor have
any capital expenditures been authorized by CMI at any time since December 31,
2008.
Section
4.9 Litigation,
Etc.
There are no actions, suits,
proceedings, investigations or outstanding claims or demands, whether or not
purportedly on behalf of CMI or, instituted, pending, or, to the knowledge of
CMI, threatened against or affecting CMI at law or in equity or before or by any
Governmental Entity, nor is there any judgment, order, decree or award of any
Governmental Entity having jurisdiction, obtained, pending or, to the knowledge
of CMI, threatened against CMI and CMI nor its respective assets and properties,
is subject to any outstanding judgment, order, writ, injunction or
decree.
Section
4.10 Insurance.
CMI has its assets insured against loss
or damages as is appropriate to its business and assets, in such amounts and
against such risks as are customarily carried and insured against by owners of
comparable businesses and assets, and such insurance coverages are and will be
continued in full force and effect to and including the Effective Date and no
notice of cancellation or termination has been received and there is no existing
default or event which, with the giving of notice or lapse of time or both,
would constitute a default thereunder.
Section
4.11 Absence
of Certain Changes or Events.
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(a)
|
Each
contract or agreement between CMI and any other Person which is material
to the ownership, use or operation of a material portion of the business,
properties or assets of CMI, is in full force and effect and, to the best
of the knowledge and belief of CMI is valid, binding and enforceable
against each of the parties thereto in accordance with its terms (subject
only to the qualifications set out in Subsections 4.3(a)(i) and (ii)
hereof) 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 except as disclosed in the CMI Public
Disclosure.
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(b)
|
Since
December 31, 2008, CMI has not: (i) declared or paid any dividends or made
any distribution of its properties or assets to its shareholders and CMI
has not disposed of any of its properties or assets or incurred any
material indebtedness except as disclosed in the CMI Public Disclosure; or
(ii) made or suffered any change or changes in its financial condition,
assets, liabilities or business which, singly or in the aggregate, have a
Material Adverse Effect or could have a Material Adverse Effect on its
financial condition, assets, liabilities or business as currently or
proposed to be conducted.
|
|
|
(c)
|
Except
as disclosed in the CMI Public Disclosure, since December 31, 2008, CMI
has conducted its businesses only in the ordinary course in a manner
consistent with past practice.
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|
Section
4.12
|
Tax.
|
|
|
(a)
|
CMI
has timely filed, or caused to be filed, all Tax Returns required to be
filed by it (all of which returns were correct and complete in all
material respects), has timely paid, or caused to be paid, all Taxes due
and payable by either of them, and has satisfied in full in all respects
all Tax withholding, deposit and remittance requirements imposed on or
with respect to CMI, and CMI’s consolidated financial statements for the
fiscal period ending December 31, 2008 contain an adequate provision in
accordance with Canadian generally accepted accounting principles for all
material amounts of Taxes payable in respect of each period covered by
such financial statements to the extent such Taxes have not been paid,
whether or not due and whether or not shown as being due on any Tax
Returns. CMI has made adequate provision in accordance with Canadian
generally accepted accounting principles in its books and records for any
amount of Taxes material to CMI and accruing in respect of any accounting
period ending subsequent to the period covered by such financial
statements.
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|
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(b)
|
Except
as disclosed in writing to
Genterra:
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|
(i)
|
CMI
has not received any written notification that any issue involving an
amount of Taxes has been raised (and is currently pending) by the Canada
Customs and Revenue Agency, the United States Internal Revenue Service or
any other taxing authority, including any sales tax authority, and no
waivers of statutes of limitations or objections to any assessments or
reassessments involving an amount of Taxes have been given, filed or
requested with respect to CMI;
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|
|
(ii)
|
CMI
has not received any notice from any taxing authority to the effect that
any Tax Return is being examined, and CMI has no knowledge of any Tax
audit or issue;
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|
|
(iii)
|
There
are no proposed (but unassessed) additional Taxes applicable by CMI and
none has been asserted against CMI;
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(iv)
|
There
are no Tax liens on, or statutory trusts in respect of, any assets of CMI
except for Taxes not yet due and payable;
and
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|
|
(v)
|
CMI
has not received a refund of any Taxes to which it was not
entitled.
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|
|
(c)
|
CMI
has withheld from each payment made to any present or former employees,
officers, consultants and directors and to all persons who are
non-residents of Canada for the purposes of the Tax Act all amounts
required by Law and have remitted such withheld amounts within the
prescribed periods to the appropriate federal or provincial taxing
authority. CMI has remitted all Canada Pension Plan contributions,
Employment Insurance premiums, Employer Health Taxes and other Taxes
payable by it and has or will have remitted such amounts to the proper
taxing authority within the time required by applicable Law. CMI charged,
collected and remitted on a timely basis all Taxes required by applicable
Law (including, without limitation, Part IX of the Excise Tax Act (Canada)
or the retail sales tax legislation of any province of Canada) on any
sale, supply or delivery whatsoever, made by
CMI.
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|
Section
4.13
|
Employment
Matters.
|
|
|
(a)
|
Except
as disclosed to Genterra in writing, CMI is not a party to (i) any written
or oral policy, agreement, obligation or understanding providing for
severance or termination payments to any former or current director,
officer, employee or consultant, or (ii) any employment agreement with,
any former or current director, officer, employee or
consultant.
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|
|
(b)
|
CMI
is not a party to written or oral employment agreements or consulting
agreements other than as has been disclosed to Genterra in
writing.
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|
|
(c)
|
There
are no complaints against CMI before any employment standards branch or
tribunal or human rights tribunal, nor, to the knowledge of CMI, any
complaints or any occurrence which might lead to a complaint under any
human rights legislation or employment standards legislation. There are no
outstanding decisions or settlements or pending settlements under
applicable employment standards legislation which place any obligation
upon the CMI to do or refrain from doing any act. Except for
noncompliance that is not or would not result in a Material Adverse
Effect on CMI, CMI is currently in full compliance with all workers’
compensation, occupational health and safety and similar legislation,
including payment in full of all amounts owing thereunder, and there are
no pending claims or outstanding orders against CMI under applicable
workers’ compensation legislation, occupational health and safety or
similar legislation nor has any event occurred which may give rise to any
such claim.
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(d)
|
CMI
has complied in all material respects with all applicable Laws relating to
employment in its businesses, including those relating to wages, hours,
collective bargaining, occupational health and safety, employment
standards, pay equity and workers’ compensation. All salaries or wages,
vacation pay (including banked vacation pay), bonuses, commissions,
premiums for employment insurance, pension plan, premiums, and other
employee benefit payments are accurately reflected and have been accrued
in the books and records of CMI and no salaries or wages are owing to any
employee of CMI except for those salaries and wages accrued as of the date
hereof at each employee’s current salary level or wage amount payable on
the next scheduled pay period.
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(e)
|
To
the best of the knowledge of CMI, no employee or independent contractor of
CMI is obligated under any contract (including licences, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would
interfere with the use of such employee’s or independent contractor’s best
efforts to promote the interests of CMI. To the best of the knowledge of
CMI, no present or former employee or independent contractor of CMI has
violated any term of any employment contract, non-competition or
non-solicitation agreement, patent or other proprietary information
agreement or similar contract with, or any fiduciary duty in favour of, a
former employer of such employee or independent contractor or any other
third party. CMI has not received any notice from any third party alleging
that such a violation has occurred.
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(f)
|
CMI
has not, and is not, subject to any present or future obligation or
liability under any pension plan, deferred compensation plan, retirement
income plan, stock option or stock purchase plan, profit sharing plan,
bonus plan or policy, employee group insurance plan, hospitalization plan,
disability plan or other employee benefit plan, program, policy or
practice, formal or informal, with respect to any of the employees of the
business, other than the Canada Pension Plan and other similar plans
established pursuant to statute.
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|
Section
4.14
|
Corporate
Records.
|
The corporate records and minute books
of CMI as required to be maintained by CMI under the Laws of its jurisdiction of
incorporation are up-to-date, in all material respects, and contain complete and
accurate minutes of all meetings of shareholders and the board of directors and
any committees thereof and all resolutions consented to in writing.
Section
4.15 Contracts.
Other than as set forth in Schedule
“4.15” attached hereto, there are no material written or oral contracts,
agreements, guarantees, leases or executory commitments (each a “Material Contract”) to which
CMI is a party, and CMI is not in default or breach of any Material Contract and
to the knowledge of CMI no default or breach on the part of any other party to a
Material Contract exists.
Section
4.16 Compliance
with Laws; Permits.
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|
(a)
|
CMI
is in compliance, and at all times has complied, with all applicable Laws
other than non-compliance which would not, individually or in the
aggregate, have a Material Adverse Effect on CMI. No investigation or
review by any Governmental Entity with respect to CMI is pending or, to
the knowledge of CMI, is threatened, nor has any Governmental Entity
indicated in writing an intention to conduct the same, other than those
the outcome of which could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on
CMI.
|
|
|
(b)
|
CMI
is in possession of all franchises, grants, authorizations, licences,
permits, easements, variances, exemptions, consents, certificates,
approvals and orders necessary to own, lease and operate its properties
and to lawfully carry on its businesses as they are now being conducted
(collectively, the “CMI
Permits”), except where the failure to be in possession of such CMI
Permits would not, individually or in the aggregate, have a Material
Adverse Effect on CMI and there is no action, proceeding or investigation
pending or, to the knowledge of CMI, threatened regarding any of the CMI
Permits which would have a Material Adverse Effect on CMI. CMI is not in
conflict with, or in default or violation of any of the CMI Permits,
except for any such conflicts, defaults or violations which could not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on CMI.
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- -
|
Section
4.17
|
Restrictions
on Business Activities.
|
Other than its listing agreement with
the TSX, there is no agreement, judgment, injunction, order or decree binding
upon CMI that has or could be reasonably expected to have the effect of
prohibiting, restricting or materially impairing any business practice of CMI,
acquisition of property by CMI or the conduct of business by CMI as currently
conducted or proposed to be conducted in the Circular.
Section
4.18 Intellectual
Property.
CMI directly or indirectly, owns,
licenses or otherwise has legally enforceable rights to use, or can acquire on
reasonable terms and without material expense, all patents, patent rights,
trademarks, trade names, service marks, copyrights and any applications
therefor, technology, know-how, computer software and applications and tangible
or intangible proprietary information or materials, that are material to and
used in the business of CMI and its Subsidiaries as presently
conducted.
|
Section
4.19
|
Brokerage
and Finders’ Fees.
|
Neither CMI, nor any shareholder,
director, officer or employee thereof, has incurred or will incur on behalf of
CMI, any brokerage fees, finder’s fees, agent’s commissions or other similar
forms of compensation in connection with this Agreement or the transactions
contemplated hereby.
Section
4.20 Securities
Laws and Stock Exchanges.
|
|
(a)
|
CMI
is currently a “reporting issuer” in the provinces of Ontario and Quebec
and registered under the U.S. Securities Exchange Act of 1934 and is in
compliance with all of its obligations as a reporting issuer and as a
registrant. Since incorporation, CMI has not been the subject of any
investigation by any stock exchange or any other securities regulatory
authority or body, is current with all filings required to be made by it
under applicable securities and corporate Laws and is not aware of any
deficiencies in the filing of any documents or reports with any stock
exchange or securities regulatory authority or
body.
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|
|
(b)
|
The
CMI Shares are currently listed and posted for trading on the TSX and on
no other stock exchange.
|
|
|
(c)
|
CMI
is in compliance in all material respects with all of the rules, policies
and requirements of the TSX.
|
Section
4.21 Solvency
of CMI.
There are reasonable grounds for
believing that CMI is able to pay its liabilities as they become due and, at the
time of the consummation of the Amalgamation, will be able to pay its
liabilities as they become due. There are reasonable grounds for believing that
the realizable value of Amalco’s assets will, immediately after the consummation
of the Amalgamation, not be less than the aggregate of its liabilities and the
stated capital of all classes of shares.
- -
Section
4.22 Creditors
of CMI.
CMI has reasonable grounds for
believing that no creditor of CMI will be prejudiced by the
Amalgamation.
Section
4.23 Non-Arms
Length Contracts
Except as set out in the Circular, CMI
is not a party to any Contract or agreement with any officer, director,
shareholder or any Person not dealing at arm’s length (within the meaning of the
Tax Act) with CMI.
Section
4.24 CMI
Information
CMI has fully made available to
Genterra and its advisers all of the information that they have requested for
deciding whether to complete the transactions contemplated in this Agreement and
all information relating to CMI, which CMI reasonably believes is necessary to
enable Genterra to make such a decision. None of the foregoing representations,
warranties and statements of fact and no other statement furnished by or on
behalf of CMI to Genterra or its advisers in connection with the negotiation of
the transactions contemplated by this Agreement, including in the Circular,
contain any untrue statement of a material fact or omit to state any material
fact necessary to make such statement or representation not misleading to a
prospective purchaser of securities of CMI seeking full information as to CMI
and its properties, financial condition, prospects, businesses and
affairs.
Section
4.25 Survival
of Representations and Warranties.
The representations and warranties of
CMI contained in this Agreement shall be true at the Time of Closing as though
they were made by CMI at the Time of Closing and they shall survive the
completion of the transactions contemplated under this Agreement in full force
and effect for a period of two years. Notwithstanding the foregoing a claim for
any breach of any of the representations and warranties contained in this
Agreement involving fraud or a fraudulent misrepresentation by CMI may be made
at any time following the Time of Closing against CMI subject only to applicable
limitation periods imposed by law.
ARTICLE
5
REPRESENTATIONS
AND WARRANTIES OF GENTERRA
Genterra represents and warrants to and
in favour of CMI as follows:
Section
5.1 Organization
and Standing.
Genterra has been duly incorporated and
is a valid and subsisting corporation under the provisions of the Laws of its
jurisdiction of continuance or incorporation, 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 licensed or otherwise
qualified to carryon business in each jurisdiction in which the nature of the
business conducted by it or the ownership or leasing of its properties makes
such qualification necessary, except where, individually or in the aggregate,
the failure to be so licensed or qualified would not have a Material Adverse
Effect on Genterra.
- -
|
Section
5.2
|
Capitalization
of Genterra.
|
|
|
(a)
|
The
authorized share capital of Genterra consists of an unlimited number of
Genterra Common Shares, an unlimited number of Genterra Class A Preference
Shares issuable in series and an unlimited number of Genterra Class B
Preference Shares. As of the date hereof, 19,339,211 Genterra
Common Shares, 326,000 Genterra Class A Series 1 Preference Shares and
26,274,918 Genterra Class B Preference Shares were issued and
outstanding. All of such issued and outstanding shares are
fully-paid and non-assessable. All of the Genterra Shares were
offered, issued and sold in compliance with applicable securities laws,
and all notices and filings in respect of such distributions have been
made by Genterra within the time periods and in the manner required by
applicable securities laws.
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|
|
(b)
|
Genterra
does not have any outstanding agreements, subscriptions, warrants, options
or commitments (pre-emptive, contingent or otherwise), nor has Genterra
granted any rights or privileges capable of becoming an agreement,
subscription, warrant, option or commitment, obligating Genterra to offer,
issue, sell, repurchase or otherwise acquire, transfer, pledge or encumber
any shares in the capital of Genterra, or other securities, nor are there
outstanding any securities or obligations of any kind, other than the
Class A Series 1 Preference Shares, which are convertible into or
exercisable or exchangeable for any capital stock of Genterra. There are
no outstanding bonds, debentures or other evidences of indebtedness of
Genterra having the right to vote (or that are exchangeable or convertible
for or exercisable into securities having the right to vote) with the
Holders of Genterra Shares.
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|
|
(c)
|
Except
as set forth in Schedule 5.2(c) hereto, Genterra does not have any shares
or other interests in any company or Person. Genterra is not a party to
any agreement or arrangement to acquire any shares or other interests in
any other companies or Persons and is not a party to any agreement or
arrangements to acquire or lease any other business
operations.
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|
|
(d)
|
As
of the date hereof, there are no shareholder agreements, proxies, voting
trusts, rights to require registration under securities Laws or other
arrangements or commitments to which Genterra is a party or bound with
respect to the voting, disposition or registration of any outstanding
securities of Genterra.
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|
Section
5.3
|
Authority
and No Violation.
|
|
|
(a)
|
Genterra
has all requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance
of this Agreement and the agreements, documents and transactions
contemplated herein have been duly authorized by all necessary corporate
action of Genterra, other than the approval by the shareholders of
Genterra of the Genterra Amalgamation Resolution. This Agreement has been
duly executed and delivered by Genterra and constitutes a valid and
binding obligation of Genterra, enforceable in accordance with its terms
subject only to the following
qualifications:
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|
|
(i)
|
an
order of specific performance and an injunction are discretionary remedies
and, in particular, may not be available where damages are considered an
adequate remedy; and
|
|
|
(ii)
|
enforcement
may be limited by bankruptcy, insolvency, liquidation, reorganization,
reconstruction and other similar laws generally affecting the
enforceability of creditors’
rights.
|
|
|
(b)
|
None
of the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby or the fulfilment 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)
|
conflict
with any of the terms, conditions or provisions of the Charter Documents
of Genterra;
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|
|
(ii)
|
subject
to the consents, approvals, orders, authorizations, registrations,
declarations or filings referred to in Section 5.4 being made or obtained,
violate any provision of any Laws applicable to
Genterra;
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|
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(iii)
|
conflict
with, result in a breach of, constitute a default under, or accelerate or
permit the acceleration of the performance required by, any agreement,
covenant, undertaking, commitment, instrument, judgment, order, decree or
award to which Genterra is a party or by which it is bound or to which its
property is subject, all as of the Effective Date,
or
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|
(iv)
|
result
in the cancellation, suspension or alteration in the terms of any licence,
permit or authority held by Genterra, or in the creation of any lien,
charge, security interest or encumbrance upon any of the assets of
Genterra under any such agreement, covenant, undertaking, commitment,
instrument, judgment, order, decree or award or give to any other Person
any interest or rights, including rights of purchase, termination,
cancellation or acceleration;
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|
|
except
in the case of clauses (ii) through (iv) for any of the foregoing that
would not, individually or in the aggregate, have a Material Adverse
Effect on Genterra or impair the ability of Genterra to perform its
obligations hereunder or prevent or delay the consummation of any of the
transactions contemplated hereby;
and
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(c)
|
The
board of directors of Genterra at a meeting duly called and held or by
written resolution has determined by unanimous approval that the
transactions contemplated by this Agreement are fair to the Holders of
Genterra Shares and in the best interests of Genterra and recommends that
such Holders of Genterra Shares vote in favour of the transactions
contemplated by this Agreement.
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|
Section
5.4
|
Consents,
Approvals.
|
No consent, approval, order or
authorization of, or registration, declaration or filing with, any third party
or Governmental Entity is required by or with respect to Genterra in connection
with the execution and delivery of this Agreement by Genterra, the performance
of its obligations hereunder or the consummation by Genterra of the transactions
contemplated hereby other than (a) such registrations and other actions required
under federal, state, provincial, and territorial securities Laws as are
contemplated by this Agreement, (b) any filings with the Director, (c) the
approval of the TSXV, (d) the approval by the shareholders of Genterra of the
Genterra Amalgamation Resolution, and (e) any other consents, approvals, orders,
authorizations, registrations, declarations or filings which, if not obtained or
made, would not, individually or in the aggregate, have a Material Adverse
Effect on Genterra or prevent or delay the consummation of any of the
transactions contemplated hereby or impair the ability of Genterra to perform
its obligations hereunder.
Section
5.5 Public
Disclosure.
Since January 1, 2007, Genterra has filed
any and all required forms, reports and documents (collectively, the “Genterra Public Disclosure”)
with the applicable Canadian securities regulatory authorities having
jurisdiction. None of the Genterra Public Disclosure filed by Genterra with the
applicable Canadian securities regulatory authorities having jurisdiction, at
the time filed or as subsequently amended, contained any misrepresentation or
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
Section
5.6 Financial Statements,
Reports.
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|
(a)
|
The
audited financial statements of Genterra as at and for the twelve months
ended September 30, 2008 and interim unaudited finaincial statements of
Genterra as at and for the three months ended December 31, 2009 (including
any related notes thereto) (i) have been prepared in accordance with
Canadian generally accepted accounting principles applied on a consistent
basis during the period involved, (ii) complied in all material respects
with the requirements of applicable securities Laws, and (iii) fairly
present, the consolidated financial position, results of operations, the
changes in its financial position and cash flows of Genterra as of the
respective dates thereof and for the respective periods covered thereby.
No information has come to the attention of Genterra since the date that
such financial statements were issued that would or would reasonably be
expected to require any restatement or revision of such financial
statements.
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(b)
|
Except
as set forth in the Genterra Public Disclosure, from September 30, 2008,
to the date of this Agreement, there has been no change by Genterra in its
accounting policies, methods, practices or
principles.
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|
Section
5.7
|
Property,
Assets.
|
Genterra is the legal and beneficial
owner of the properties and assets described as being owned by it in the
Genterra Public Disclosure with good and marketable title thereto free and clear
of material encumbrances, except as disclosed in the Genterra Public Disclosure,
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 other encumbrance of any kind or nature whatsoever, except as
disclosed in the Genterra Public Disclosure.
Section
5.8 Liabilities.
Except as disclosed or reflected in the
Genterra financial statements described in Section 5.6 or as reasonably incurred
in the ordinary course of Genterra’s business since September 30, 2008, Genterra
has no liabilities of any nature, whether accrued, contingent or otherwise (or
which would be required by Canadian generally accepted accounting principles to
be reflected on a balance sheet of Genterra) that have constituted or would be
reasonably likely to constitute a Material Adverse Effect. Without limiting the
generality of the foregoing provisions of this Section 5.8, Genterra has not
committed to make any capital expenditures, nor have any capital expenditures
been authorized by Genterra at any time since September 30, 2008.
Section
5.9 Litigation,
Etc.
There are no actions, suits,
proceedings, investigations or outstanding claims or demands, whether or not
purportedly on behalf of Genterra instituted, pending or, to the knowledge of
Genterra, threatened against or affecting Genterra at law or in equity or before
or by any Governmental Entity, or before any arbitrator, nor is there any
judgment, order, decree or award of any Governmental Entity having jurisdiction,
obtained, pending or, to the knowledge of Genterra, threatened, against
Genterra, and Genterra is not and its assets and properties are not, subject to
any outstanding judgment, order, writ, injunction or decree.
Section
5.10 Insurance.
Genterra has its assets insured against
loss or damages as is appropriate to its business and assets, in such amounts
and against such risks as are customarily carried and insured against by owners
of comparable businesses and assets, and such insurance coverages are and will
be continued in full force and effect to and including the Effective Date and no
notice of cancellation or termination has been received and there is no existing
default or event which, with the giving of notice or lapse of time or both,
would constitute a default thereunder.
Section
5.11 Absence
of Certain Changes or Events.
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|
(a)
|
Each
contract or agreement between Genterra and any other Person which is
material to the ownership, use or operation of a material portion of the
business, properties or assets of Genterra, is in full force and effect
and, to the knowledge of Genterra, is valid, binding and enforceable
against each of the parties thereto in accordance with its terms (subject
only to the qualifications set out in Subsections 5.3(a)(i) and (ii)
hereof) 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 except as disclosed in the Genterra Public
Disclosure.
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|
|
(b)
|
Since
September 30, 2008, Genterra has: (i) not declared or paid any dividends
or made any distribution of its properties or assets to its
shareholders and Genterra has
not disposed of any of its properties or assets or incurred any material
indebtedness except as disclosed in the Genterra Public Disclosure; or
(ii) made or suffered any change or changes in its financial condition,
assets, liabilities or business which, singularly or in the aggregate,
have a Material Adverse Effect or would have a Material Adverse Effect on
its financial condition, assets, liabilities or business as currently or
proposed to be conducted.
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|
|
(c)
|
Except
as disclosed in the Genterra Public Disclosure, since September 30, 2008,
Genterra has conducted its businesses only in the ordinary course in a
manner consistent with past
practice.
|
|
Section
5.12
|
Tax.
|
|
|
(a)
|
Genterra
has timely filed, or caused to be filed, all material Tax Returns required
to be filed by Genterra (all of which returns were correct and complete in
all material respects), have timely paid, or caused to be paid, all Taxes
due and payable by it, and have satisfied in full in all respects all Tax
withholding, deposit and remittance requirements imposed on or with
respect to Genterra and Genterra’s financial statements for the fiscal
period ended September 30, 2008 contain an adequate provision in
accordance with Canadian generally accepted accounting principles for all
material amounts of Taxes payable in respect of each period covered by
such financial statements and all prior periods to the extent such Taxes
have not been paid, whether or not due and whether or not shown as being
due on any Tax Returns. Genterra has made adequate provision in accordance
with Canadian generally accepted accounting principles in its books and
records for any amount of Taxes material to Genterra on a consolidated
basis and accruing in respect of any accounting period ending subsequent
to the period covered by such financial
statements.
|
|
|
(b)
|
Genterra
has not received any written notification that any issue involving an
amount of Taxes has been raised (and is currently pending) by the Canada
Customs and Revenue Agency, the United States Internal Revenue Service or
any other taxing authority, including any sales tax authority, and no
waivers of statutes of limitations or objections to any assessments or
reassessments involving an amount of Taxes have been given, filed or
requested with respect to Genterra. All liability of Genterra for Canadian
federal and provincial income and other Taxes has been assessed by the
Canada Customs and Revenue Agency and, where applicable, Canadian
provincial tax authorities for all fiscal years up to and including the
fiscal period ended September 30, 2008. Genterra has not received any
notice from any taxing authority to the effect that any Tax Return is
being examined, and Genterra has no knowledge of any Tax audit or issue.
There are no proposed (but unassessed) additional Taxes applicable to
Genterra and none has been asserted against Genterra. There are no Tax
liens on, or statutory trusts in respect of, any assets of Genterra except
for Taxes not yet due and payable. Genterra has not received a refund of
any Taxes to which it was not
entitled.
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|
|
(c)
|
Genterra
has withheld from each payment made to any present or former employees,
consultants, officers and directors and to all persons who are
non-residents of Canada for the purposes of the Tax Act all amounts
required by Law and have remitted such withheld amounts within the
prescribed periods to the appropriate federal or provincial taxing
authority. Genterra have each remitted all Canada Pension Plan
contributions, Employment Insurance premiums, Employer Health Taxes and
other Taxes payable by it and has or will have remitted such amounts to
the proper taxing authority within the time required by applicable Law.
Genterra has each charged, collected and remitted on a timely basis all
Taxes required by applicable Law (including, without limitation, Part IX
of the Excise Tax Act
(Canada) or the retail sales tax legislation of any province of
Canada) on any sale, supply or delivery whatsoever, made by
Genterra.
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Section
5.13
|
Employment
Matters.
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|
|
(a)
|
Except
as disclosed to CMI, Genterra is not a party to (i) any written or oral
policy, agreement, obligation or understanding providing for severance or
termination payments to any former or current director, officer, employee
or consultant, or (ii) any employment agreement with, any former or
current director, officer, employee or
consultant.
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|
|
(b)
|
Genterra
is not a party to written or oral employment agreements or consulting
agreements other than as has been disclosed to CMI in
writing.
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|
|
(c)
|
To
the knowledge of Genterra, there are no complaints against Genterra before
any employment standards branch or tribunal or human rights tribunal, nor,
to the knowledge of Genterra, any complaints or any occurrence which might
lead to a complaint under any human rights legislation or employment
standards legislation. There are no outstanding decisions or settlements
or pending settlements under applicable employment standards legislation
which place any obligation upon Genterra to do or refrain from doing any
act. Except for noncompliance that is not or would not result in a
Material Adverse Effect on Genterra, Genterra is currently in full
compliance with all workers’ compensation, occupational health and safety
and similar legislation, including payment in full of all amounts owing
thereunder, and there are no pending claims or outstanding orders against
either of them under applicable workers’ compensation legislation,
occupational health and safety or similar legislation nor has any event
occurred which may give rise to any such
claim.
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|
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(d)
|
Genterra
has complied in all material respects with all applicable Laws relating to
employment in their businesses, including those relating to wages, hours,
collective bargaining, occupational health and safety, employment
standards, pay equity and workers’ compensation. All salaries or wages,
vacation pay (including banked vacation pay), bonuses, commissions,
premiums for employment insurance, pension plan, premiums, and other
employee benefit payments are accurately reflected and have been accrued
in the books and records of Genterra and no salaries or wages are owing to
any employee of Genterra except for those salaries and wages accrued as of
the date hereof at each employee’s current salary level or wage amount
payable on the next scheduled pay
period.
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(e)
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To
the knowledge of Genterra, no employee or independent contractor of
Genterra is obligated under any contract (including licences, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would
interfere with the use of such employee’s or independent contractor’s best
efforts to promote the interests of Genterra. To the knowledge of
Genterra, no present or former employee or independent contractor of
Genterra has violated any term of any employment contract, non-competition
or non-solicitation agreement, patent or other proprietary information
agreement or similar contract with, or any fiduciary duty in favour of, a
former employer of such employee or independent contractor or any other
third party. Genterra has not received any notice from any third party
alleging that such a violation has
occurred.
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|
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(f)
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Genterra
has not, and is not, subject to any present or future obligation or
liability under any pension plan, deferred compensation plan, retirement
income plan, stock option or stock purchase plan, profit sharing plan,
bonus plan or policy, employee group insurance plan, hospitalization plan,
disability plan or other employee benefit plan, program, policy or
practice, formal or informal, with respect to any of the employees of the
business, other than the Canada Pension Plan and other similar plans
established pursuant to statute.
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Section
5.14
|
Corporate
Records.
|
The corporate records and minute books
of Genterra as required to be maintained by Genterra under the Laws of its
jurisdictions of incorporation are up-to-date, in all material respects, and
contain complete and accurate minutes of all meetings of shareholders and the
board of directors and any committees thereof and all resolutions consented to
in writing.
- -
Section
5.15 Contracts.
Other than as set forth in Schedule
“5.15” attached hereto, there are no material written or oral contracts,
agreements, guarantees, leases or executory commitments (each a “Material Contract”) to which
Genterra is a party, and Genterra is not in default or breach of any Material
Contract and to the knowledge of Genterra no default or breach on the part of
any other party to a Material Contract exists.
Section
5.16 Compliance
with Laws; Permits.
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|
(a)
|
Genterra
is in compliance, and at all times has complied, with all applicable Laws
other than non-compliance which would not, individually or in the
aggregate, have a Material Adverse Effect on Genterra. No investigation or
review by any Governmental Entity with respect to Genterra is pending or,
to the knowledge of Genterra are threatened, nor has any Governmental
Entity indicated in writing an intention to conduct the same, other than
those the outcome of which could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on
Genterra.
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(b)
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Genterra
is in possession of all franchises, grants, authorizations, licences,
permits, easements, variances, exemptions, consents, certificates,
approvals and orders necessary to own, lease and operate its properties
and to lawfully carry on its businesses as it is now being conducted
(collectively, the “Genterra Permits”),
except where the failure to be in possession of such Genterra
Permits would not, individually or in the aggregate, have a Material
Adverse Effect on Genterra, and there is no action, proceeding or
investigation pending or, to the knowledge of Genterra threatened
regarding any of the Genterra Permits which would have a Material Adverse
Effect on Genterra. Genterra is not in conflict with, or in default or
violation of any of the Genterra Permits, except for any such conflicts,
defaults or violations which could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on
Genterra.
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|
Section
5.17
|
Restrictions
on Business Activities.
|
Other than its listing agreement with
the TSXV, there is no agreement, judgment, injunction, order or decree binding
upon Genterra that has or could be reasonably expected to have the effect of
prohibiting, restricting or materially impairing any business practice of
Genterra, any acquisition of property by Genterra or the conduct of business by
Genterra as currently conducted or proposed to be conducted in the
Circular.
Section
5.18 Environmental.
Except as set forth in the
most recent JFM Environmental Limited Phase 1 Environmental Site Assessment
prepared for the various Genterra Properties (April 2007 to May 2008), to the
knowledge of Genterra:
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|
(a)
|
there
is no environmental liability, or any factor likely to give rise to any
environmental liability, affecting any of the properties of Genterra that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect upon Genterra;
and
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(b)
|
Genterra
has not violated or infringed any environmental Law now in effect nor has
it violated or infringed any environmental Law previously in effect as
applied at that time, other than such violations or infringements that,
individually or in the aggregate, have not had and could not reasonably be
expected to have a Material Adverse Effect upon
Genterra.
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Section
5.19
|
Intellectual
Property.
|
Genterra directly or indirectly, owns,
licenses or otherwise have legally enforceable rights to use, or can acquire on
reasonable terms and without material expense, all patents, patent rights,
trademarks, trade names, service marks, copyrights and any applications
therefor, technology, know-how, computer software and applications and tangible
or intangible proprietary information or materials, that are material to and
used in the business of Genterra and its Subsidiaries as presently
conducted.
Section
5.20 Brokerage
and Finders’ Fees.
Neither Genterra nor any shareholder,
director, officer or employee thereof, has incurred or will incur on behalf of
Genterra, any brokerage fees, finder’s fees, agent’s commissions or other
similar forms of compensation in connection with this Agreement or the
transactions contemplated hereby.
Section
5.21 Securities
Laws and Stock Exchanges.
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|
(a)
|
Genterra
is currently a “reporting issuer” in the provinces of British Columbia,
Alberta and Ontario and is in compliance with all of its obligations as a
reporting issuer. Since incorporation, Genterra has not been the subject
of any investigation by any stock exchange or any other securities
regulatory authority or body, is current with all filings required to be
made by it under applicable securities and corporate Laws and is not aware
of any deficiencies in the filing of any documents or reports with any
stock exchange or securities regulatory authority or
body.
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(b)
|
The
Genterra Common Shares are currently listed and posted for trading on the
TSXV and on no other stock
exchange.
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(c)
|
Genterra
is in compliance in all material respects with all of the rules, policies
and requirements of the TSXV.
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Section
5.22
|
Solvency
of Genterra.
|
There are reasonable grounds for
believing that Genterra is able to pay its liabilities as they become due and,
at the time of the consummation of the Amalgamation, will be able to pay its
liabilities as they become due. There are reasonable grounds for believing that
the realizable value of Amalco’s assets will, immediately after the consummation
of the Amalgamation, not be less than the aggregate of its liabilities and the
stated capital of all classes of shares.
Section
5.23 Creditors
of Genterra.
Genterra has reasonable grounds for
believing that no creditor of Genterra will be prejudiced by the
Amalgamation.
Section
5.24 Non-Arms
length Contracts
Except as set out in the Circular,
Genterra is not a party to any Contract or agreement with any officer, director,
shareholder or any Person not dealing at arm’s length (within the meaning of the
Tax Act) with Genterra.
Section
5.25 Genterra
Information
Genterra has fully made available to
CMI and its advisers all of the information that they have requested for
deciding whether to complete the transactions contemplated in this Agreement and
all information relating to Genterra which Genterra reasonably believes is
necessary to enable CMI to make such a decision. None of the foregoing
representations, warranties and statements of fact and no other statement
furnished by or on behalf of Genterra to CMI or its advisers in connection with
the negotiation of the transactions contemplated by this Agreement, including in
the Circular, contain any untrue statement of a material fact or omit to state
any material fact necessary to make such statement or representation not
misleading to a prospective purchaser of securities of Genterra seeking full
information as to Genterra and its properties, financial condition, prospects,
businesses and affairs.
Section
5.26 Survival
of Representations and Warranties.
The representations and warranties of
Genterra contained in this Agreement shall survive the completion of the
transactions contemplated under this Agreement and remain in full force and
effect thereafter for the benefit of CMI for a period of two years.
Notwithstanding the foregoing a claim for any breach of any of the
representations and warranties contained in this Agreement involving fraud or a
fraudulent misrepresentation by Genterra may be made at any time following the
Time of Closing against Genterra subject only to applicable limitation periods
imposed by law.
ARTICLE
6
COVENANTS
AND AGREEMENTS
Section
6.1 Mutual
Covenants.
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|
(a)
|
Each
of CMI and Genterra agrees as follows until the earlier of the Effective
Date or the termination of this Agreement in accordance with Article 9 in
each case except (i) with the consent of the other party to any deviation
therefrom or (ii) as expressly contemplated by this
Agreement:
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(i)
|
it
and its respective Subsidiaries
shall
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(A)
|
carry
on its businesses in the usual and ordinary course consistent with past
practices and in a manner consistent with industry
practice,
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(B)
|
use
reasonable best efforts to preserve intact its present business
organization and material rights and franchises, to keep available the
services of its current officers and employees, and to preserve its
relationships with customers, suppliers and others having business
dealings with it, and
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(C)
|
maintain
and keep its material properties and assets in as good repair and
condition as at the date hereof, subject to ordinary wear and tear, all to
the end that its goodwill and ongoing businesses shall not be impaired in
any material respect at the Effective
Time.
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(ii)
|
it
shall not, and it shall not permit any of its Subsidiaries
to:
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(A)
|
declare
or pay any dividends on, make other distributions or return capital in
respect of any of its capital stock or any other equity interests, except
for dividends, distributions or return of capital payable by a subsidiary
to such party or a wholly-owned subsidiary of such
party;
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(B)
|
split,
combine or reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or
in substitution for, shares of its capital
stock;
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(C)
|
issue,
sell, pledge, reserve, set aside, dispose of or encumber, repurchase,
redeem or otherwise acquire, any shares of its capital stock or any
securities or obligations convertible into, exercisable or exchangeable
for, or any rights, warrants, calls, subscriptions or options to acquire,
shares of its capital stock; or
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(D)
|
enter
into or announce any agreement or arrangement with respect to the sale,
voting, registration or repurchase of any shares of its capital stock or
any security convertible into or exchangeable for such
shares.
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(iii)
|
it
shall not, nor shall it permit any of its Subsidiaries
to,
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(A)
|
incur
any indebtedness for borrowed money or purchase money indebtedness or
assume, guarantee, endorse or enter into a “keepwell” or similar
arrangement with respect to, any indebtedness, other than indebtedness
between such party or any of its Subsidiaries and another of its
Subsidiaries, or
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(B)
|
enter
into any material operating lease or create any mortgages, liens, security
interests or other encumbrances on the property of such party or any of
its Subsidiaries in connection with any indebtedness, other than in the
ordinary course of business.
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(iv)
|
it
shall not, nor shall it permit any of its Subsidiaries
to:
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(A)
|
increase
the amount of (or accelerate the payment or vesting of) any benefit or
amount payable under, any employee benefit plan or any other contract,
agreement, commitment, arrangement, plan or policy providing for
compensation or benefits to any former, present or future director,
officer or employee of such party or any of its
subsidiaries;
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(B)
|
increase
(or enter into any commitment or arrangement to increase) the compensation
or benefits, or otherwise to extend, expand or enhance the engagement,
employment or any related rights, of any former, present or future
director, officer, employee or consultant of such party or any of its
subsidiaries;
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(C)
|
except
as agreed to by the parties, whether through its board of directors or
otherwise, accelerate the vesting of any unvested stock options or
accelerate the release of, or the expiry date of any hold period relating
to, as applicable, any CMI Shares or Genterra Shares, or otherwise amend,
vary or modify any plans or the terms of any stock option;
or
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(D)
|
adopt,
establish, enter into or implement any employee benefit plan, policy,
severance or termination agreement providing for any form of benefits or
other compensation to any former, present or future director, officer or
employee of such party or any of its subsidiaries or amend any employee
benefit plan, policy, severance or termination
agreement.
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(v)
|
it
shall not, nor shall it permit any of its Subsidiaries to, amend or
propose to amend its Charter
Documents.
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(vi)
|
it
shall not, nor shall it permit any of its Subsidiaries to, pay, discharge,
satisfy, compromise or settle any material claims or material liabilities
prior to the same being due.
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(vii)
|
except
as required by applicable Laws, it shall not, nor shall it permit any of
its Subsidiaries to, enter into, terminate or waive any provision of,
exercise any material option or relinquish any material contractual rights
under, or modify in any material respect any material contract, agreement,
guarantee, lease commitment or arrangement, other than in the ordinary
course of business.
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(viii)
|
it
shall not, nor shall it permit any of its Subsidiaries to, make any
changes to the existing accounting practices, methods and principles
relating to such party or any Subsidiary of such party except as required
by Law or by Canadian generally accepted accounting principles as advised
by such party’s or such Subsidiary’s regular independent accountants, as
the case may be.
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(ix)
|
it
shall not, nor shall it permit any of its Subsidiaries to, make or rescind
any material tax election.
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(x)
|
it
shall not nor shall it permit any Subsidiary to, (a) enter into any
confidentiality or standstill agreement or with the consent of the other
party hereto (other than in respect of confidentiality agreements entered
into in the ordinary course of business, or (b) amend or release any third
party from its obligations or grant any consent under, any confidentiality
or standstill provision or fail to fully enforce any such
provision.
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(xi)
|
it
shall not, nor shall it permit any of its Subsidiaries to, take or fail to
take any action which would cause any of such party’s representations or
warranties hereunder to be untrue or would be reasonably expected to
prevent or materially impede, interfere with or delay the
Amalgamation.
|
|
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(xii)
|
it
shall not, nor shall it permit any of its Subsidiaries to, agree in
writing or otherwise to take any of the actions as described above in
clauses (ii) through (xi).
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|
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(b)
|
Each
of CMI and Genterra shall promptly advise the other party in
writing:
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|
|
(i)
|
of
any event, condition or circumstance that might be reasonably expected to
cause any representation or warranty of such party contained in this
Agreement to be untrue or inaccurate on the Effective Date (or, in the
case of any representation or warranty made as of a specified date, as of
such specified date);
|
|
|
(ii)
|
of
any Material Adverse Effect on such party or any event, occurrence or
development which would be reasonably expected to have a Material Adverse
Effect on such party; and
|
|
|
(iii)
|
of
any material breach by such party of any covenant, obligation or agreement
contained in this Agreement.
|
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|
(c)
|
Each
of CMI and Genterra shall use its reasonable best efforts to, and shall
use its reasonable best efforts to cause its Subsidiaries to, perform all
obligations required to be performed by such party or any of its
Subsidiaries under this Agreement, cooperate with the other party hereto
in connection therewith, and do all such other acts and things as may be
necessary or desirable in order to consummate and make effective, as soon
as reasonably practicable, the transactions contemplated in this Agreement
and, without limiting the generality of the foregoing, each of CMI and
Genterra shall:
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|
(i)
|
use
reasonable best efforts to satisfy or cause to be satisfied as soon as
reasonably practicable all the conditions precedent that are set forth in
Article 8 hereof;
|
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|
(ii)
|
apply
for and use reasonable best efforts to obtain as promptly as practicable
all Appropriate Regulatory Approvals relating to such party or any of its
Subsidiaries and, in doing so, to keep the other party hereto reasonably
informed as to the status of the proceedings related to obtaining the
Appropriate Regulatory Approvals, including providing such other party
with copies of all related applications and notifications, in draft form,
in order for such other party to provide its reasonable
comments;
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|
|
(iii)
|
use
reasonable best efforts to comply promptly with all requirements which
applicable Laws may impose on such party or such party’s Subsidiaries with
respect to the transactions contemplated
hereby;
|
|
|
(iv)
|
use
reasonable best efforts to defend all lawsuits or other legal, regulatory
or other proceedings to which it is a party challenging or affecting this
Agreement or the consummation of the transactions contemplated
hereby;
|
|
|
(v)
|
use
reasonable best efforts to have lifted or rescinded any injunction or
restraining order or other order which may adversely affect the ability of
the parties to consummate the transactions contemplated
hereby;
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|
|
(vi)
|
effect
all necessary registrations, filings and submissions of information
required by Governmental Entities from such party or any of such party’s
Subsidiaries in connection with the transactions contemplated hereby;
and
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|
(vii)
|
use
reasonable best efforts to obtain all waivers, consents and approvals from
other parties to loan agreements, leases or other contracts required to be
obtained by such party or any of such party’s Subsidiaries to consummate
the transactions contemplated hereby which the failure to obtain would
materially and adversely affect the ability of such party or such party’s
Subsidiaries to consummate the transactions contemplated
hereby.
|
- -
|
|
Section
6.2
|
Covenants
of CMI.
|
|
|
(a)
|
The
board of directors of CMI shall recommend to the Holders of CMI Shares the
approval of the CMI Amalgamation
Resolution.
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|
|
(b)
|
CMI
shall, at the request of Genterra, solicit from the Holders of CMI Shares
proxies in favour of approval of the CMI Amalgamation
Resolution.
|
|
|
(c)
|
CMI
shall not adjourn, postpone or cancel (or propose adjournment,
postponement or cancellation of) the CMI Meeting without Genterra’s prior
written consent except as required by Laws or, in the case of adjournment,
as may be required by the Holders of CMI Shares as expressed by majority
resolution.
|
|
|
(d)
|
CMI
agrees until the earlier of the Effective Date and the termination of this
Agreement pursuant to Article 8 that CMI shall not to sell, pledge,
encumber, lease (whether such lease is an operating or capital lease) or
otherwise dispose of any assets.
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|
|
(e)
|
CMI
agrees until the earlier of the Effective Date and the termination of this
Agreement pursuant to Article 8 that CMI shall not make or commit to make
any capital expenditures (including capital lease obligations) without the
written consent of Genterra.
|
|
|
(f)
|
CMI
hereby agrees until the earlier of: (i) the Effective Date; and (ii) the
termination of this Agreement pursuant to Article 8; not to initiate,
propose, assist or participate in any activities or solicitations in
opposition to or in competition with the Amalgamation, and without
limiting the generality of the foregoing, not to induce or attempt to
induce any other person to initiate any shareholder proposal or “takeover
bid,” exempt or otherwise, within the meaning of the Securities Act, for
securities of CMI, nor to undertake any transaction or negotiate any
transaction which would be or potentially could be in conflict with the
Amalgamation and not to take actions of any kind which may reduce the
likelihood of success of the Amalgamation, except as required by statutory
obligations.
|
|
|
(g)
|
CMI
hereby agrees to take all necessary action to redeem all of the issued and
outstanding CMI Class A Preference Shares prior to the Effective Time in
accordance with all applicable Laws, including but not limited to the
applicable terms and provisions of the constating documents of CMI
attaching to such shares.
|
Section
6.2A Covenants
of CMI Regarding Non-Solicitation.
|
|
(a)
|
CMI
shall not, and shall cause each of its Subsidiaries not to, directly or
indirectly, through any officer, director, employee, representative
(including for greater certainty any financial or other advisors) or agent
of CMI or any of its Subsidiaries:
|
|
|
(i)
|
solicit,
assist, initiate, encourage or otherwise facilitate (including, without
limitation, by way of furnishing non-public information, permitting any
visit to any facilities or properties of CMI or any Subsidiaries or
entering into any form of written or oral agreement, arrangement or
understanding) any inquiries, proposals or offers regarding an Acquisition
Proposal;
|
|
|
(ii)
|
engage
in or otherwise facilitate any discussions or negotiations regarding or
provide any confidential information with respect to any Acquisition
Proposal;
|
|
|
(iii)
|
withdraw,
modify or qualify in a manner adverse to Genterra, or propose publicly to
withdraw, modify or qualify in a manner adverse to Genterra, the approval
or recommendation by the Board of Directors of CMI or any committee
thereof with respect to this Agreement or the Amalgamation (it being
understood that publicly taking a neutral position or no position with
respect to an Acquisition Proposal shall be considered an adverse
modification, except that publicly taking a neutral position or no
position with respect to an Acquisition Proposal for a period of time not
in excess of 10 days after the first public announcement of such
Acquisition Proposal shall not be considered an adverse modification (such
time period, an “Acquisition Proposal Assessment Period”) unless such
position continues beyond the expiration of the Acquisition Proposal
Assessment Period);
|
|
|
(iv)
|
approve
or recommend, or propose publicly to approve or recommend, any Acquisition
Proposal; or
|
|
|
(v)
|
accept
or enter into or propose publicly to approve or recommend any letter of
intent, agreement in principle, agreement, arrangement or undertaking
related to any Acquisition
Proposal.
|
|
|
(b)
|
Subject
to Sections 6.2A(d), 6.2A(e) and 6.2B but notwithstanding Section 6.2A(a)
and any other provision of this Agreement, nothing shall prevent the Board
of Directors of CMI at any time prior to the approval of the CMI
Amalgamation Resolution by the shareholders of CMI from considering,
discussing or negotiating an unsolicited bona fide written
Acquisition Proposal received after the date of this Agreement that (i)
did not result from a breach of Section 6.2A(a) and (ii) the Board of
Directors of CMI determines in good faith (after consultation with its
financial advisors and outside counsel) is a Superior Proposal and only if
the Board of Directors of CMI determines in good faith, after consultation
with outside legal counsel, that the failure to take such action would be
inconsistent with its fiduciary
duties.
|
|
|
(c)
|
CMI
will immediately cease and cause to be terminated any existing
solicitation, discussion or negotiation with any Person (other than
Genterra) by CMI or any Subsidiaries or any of its or their officers,
directors, employees, representatives or agents with respect to any
potential Acquisition Proposal, whether or not initiated by CMI or any
Subsidiaries or any of its or their officers, directors, employees,
representatives or agents, and, in connection therewith, CMI will
discontinue access to any data rooms (virtual or
otherwise). CMI shall not release any third party from any
confidentiality agreement or standstill agreement. Within 15
days from the date hereof, CMI shall request the return or destruction of
all information provided to any third parties who have entered into a
confidentiality agreement with CMI relating to any potential Acquisition
Proposal and shall use all reasonable efforts to ensure that such requests
are honoured in accordance with the terms of such confidentiality
agreements.
|
|
|
(d)
|
CMI
shall promptly notify Genterra by telephone, followed by notice in
writing, of any proposal, inquiry, offer (or any amendment thereto) or
request relating to or constituting a bona fide Acquisition
Proposal received after the date hereof, or of any request received after
the date hereof for non-public information relating to CMI or any
Subsidiaries in connection with an Acquisition Proposal or for access to
the properties, books or records of CMI or any Subsidiaries by any Person,
and shall provide Genterra with copies of any such proposal, inquiry,
offer, request or Acquisition Proposal. Such notice shall
include a description of the material terms and conditions of any proposal
and provide such details of the proposal, inquiry or contact as Genterra
may reasonably request including the identity of the Person making such
proposal, inquiry or contact. CMI shall keep Genterra
reasonably informed of the status and the material terms and conditions
(including any amendment thereto) of any such Acquisition Proposal,
inquiry or request.
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|
|
(e)
|
If,
prior to the date of the Meeting, CMI receives a request for material
non-public information from a Person who proposes a bona fide Acquisition
Proposal (notice of which has been provided to Genterra in accordance with
Section 6.2A(d)) and is permitted, as contemplated by Section 6.2A(b), to
consider, discuss or negotiate, then, and only in such case, the Board of
Directors of CMI may, subject to the execution by such Person of a
confidentiality agreement, provide such Person with access to information
regarding CMI and its Subsidiaries which is no more favourable in form or
scope than provided to Genterra.
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(f)
|
Nothing
contained in this Section 6.2A shall prohibit the Board of Directors of
CMI at any time prior to approval of the CMI Amalgamation Resolution by
the shareholders of CMI from:
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|
|
(i)
|
making
any disclosure of an Acquisition Proposal to the shareholders of CMI prior
to the Effective Time if the Board of Directors of CMI determines in good
faith (after consultation with outside counsel) that such disclosure is
necessary for the Board of Directors of CMI to fulfill its fiduciary
duties or is otherwise required under applicable Laws;
and
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(ii)
|
responding
to a bona fide
request for information that could reasonably be expected to lead to an
Acquisition Proposal solely by advising that no information can be
provided unless a bona
fide written Acquisition Proposal is made and then only in
compliance with Section 6.2A(d).
|
Section
6.2B Notice
by CMI of Superior Proposal Determination.
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|
(a)
|
CMI
shall not accept, approve, recommend or enter into any agreement relating
to an Acquisition Proposal (other than a confidentiality agreement
contemplated by Section 6.2A(e)) on the basis that it would constitute a
Superior Proposal unless it has provided Genterra with a copy of the
Acquisition Proposal and five Business Days shall have elapsed from the
later of (i) the date Genterra received written notice of CMI’s proposed
determination to accept, approve, recommend or enter into any agreement
relating to such Acquisition Proposal, and (ii) the date Genterra received
a copy of the Acquisition Proposal.
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(b)
|
During
the five Business Day notice period referred to in Section 6.2B(a), CMI
acknowledges that Genterra shall have the opportunity, but not the
obligation, to offer to amend the terms of this Agreement. The Board of
Directors of CMI will review any offer by Genterra to amend the terms of
this Agreement in order to determine in good faith in the exercise of its
fiduciary duties (after consultation with its advisors and outside
counsel) whether Genterra’s offer to amend the terms of this Agreement
upon acceptance by CMI would result in the Acquisition Proposal ceasing to
be a Superior Proposal. If the Board of Directors of CMI so determines, it
will enter into an amended agreement with Genterra reflecting Genterra’s
amended proposal. If the Board of Directors of CMI, acting reasonably and
in good faith, continues to believe that the Acquisition Proposal remains
a Superior Proposal and therefore rejects Genterra’s amended proposal, CMI
must terminate this Agreement pursuant to Section 8.2(f) prior to entering
into a definitive agreement with the Person making the Superior Proposal.
For greater certainty, CMI shall be entitled to adjourn or postpone the
Meeting for a period of seven Business Days from the date of receipt of an
Acquisition Proposal referred to in Section 6.2B(a); provided, however,
that the Meeting shall not be adjourned or postponed to a date later than
December 31, 2009.
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(c)
|
CMI
acknowledges and agrees that each successive material modification of any
Acquisition Proposal shall constitute a new Acquisition Proposal for
purposes of Section 6.2B(a) to initiate an additional five Business Day
notice period.
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(d)
|
CMI’s
Board of Directors shall promptly reaffirm its recommendation of the
Amalgamation by press release after (i) any Acquisition Proposal (which is
determined not to be a Superior Proposal) is publicly announced or made;
or (ii) CMI’s Board of Directors determines that a proposed amendment to
the terms of this Agreement would result in the Acquisition Proposal not
being a Superior Proposal. Genterra and its counsel shall be
given a reasonable opportunity to review and comment on the form and
content of any such press release, recognizing that whether or not such
comments are appropriate will be determined by CMI, acting
reasonably. Such press release shall state that CMI’s Board of
Directors has determined that the Acquisition Proposal is not a Superior
Proposal.
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Section
6.3
|
Covenants
of Genterra.
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|
(a)
|
The
board of directors of Genterra shall recommend to the Holders of Genterra
Shares the approval of the Genterra Amalgamation
Resolution.
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(b)
|
Genterra
shall, at the request of CMI, solicit from the Holders of Genterra Shares
proxies in favour of approval of the Genterra Amalgamation
Resolution.
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(c)
|
Genterra
shall not adjourn, postpone or cancel (or propose adjournment,
postponement or cancellation of) the Genterra Meeting without CMI’s prior
written consent except as required by Laws or, in the case of adjournment,
as may be required by the Holders of Genterra Shares as expressed by
majority resolution.
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(d)
|
Genterra
agrees until the earlier of the Effective Date and the termination of this
Agreement pursuant to Article 8 that Genterra shall not, except for
existing encumbrances and leases, sell, pledge, encumber, lease (whether
such lease is an operating or capital lease) or otherwise dispose of any
assets.
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(e)
|
Genterra
agrees until the earlier of the Effective Date and the termination of this
Agreement pursuant to Article 8 that Genterra shall not or commit to make
any capital expenditures (including capital lease obligations) without the
written consent of CMI.
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(f)
|
Genterra
agrees until the earlier of: (i) the Effective Date; and (ii) the
termination of this Agreement pursuant to Article 8 not to, initiate,
propose, assist or participate in any activities or solicitations in
opposition to or in competition with the Amalgamation, and without
limiting the generality of the foregoing, not to induce or attempt to
induce any other person to initiate any shareholder proposal or “takeover
bid,” exempt or otherwise, within the meaning of the Securities Act, for
securities of Genterra, nor to undertake any transaction or negotiate any
transaction which would be or potentially could be in conflict with the
Amalgamation and not to take actions of any kind which may reduce the
likelihood of success of the Amalgamation, except as required by statutory
obligations.
|
Section
6.3A Covenants
of Genterra Regarding Non-Solicitation.
|
|
(a)
|
Genterra
shall not, and shall cause each of its Subsidiaries not to, directly or
indirectly, through any officer, director, employee, representative
(including for greater certainty any financial or other advisors) or agent
of Genterra or any of its
Subsidiaries:
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(i)
|
solicit,
assist, initiate, encourage or otherwise facilitate (including, without
limitation, by way of furnishing non-public information, permitting any
visit to any facilities or properties of Genterra or any Subsidiaries or
entering into any form of written or oral agreement, arrangement or
understanding) any inquiries, proposals or offers regarding an Acquisition
Proposal;
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|
(ii)
|
engage
in or otherwise facilitate any discussions or negotiations regarding or
provide any confidential information with respect to any Acquisition
Proposal;
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|
(iii)
|
withdraw,
modify or qualify in a manner adverse to CMI, or propose publicly to
withdraw, modify or qualify in a manner adverse to CMI, the approval or
recommendation by the Board of Directors of Genterra or any committee
thereof with respect to this Agreement or the Amalgamation (it being
understood that publicly taking a neutral position or no position with
respect to an Acquisition Proposal shall be considered an adverse
modification, except that publicly taking a neutral position or no
position with respect to an Acquisition Proposal for a period of time not
in excess of an Acquisition Proposal Assessment Period shall not be
considered an adverse modification unless such position continues beyond
the expiration of the Acquisition Proposal Assessment
Period);
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|
(iv)
|
approve
or recommend, or propose publicly to approve or recommend, any Acquisition
Proposal; or
|
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|
(v)
|
accept
or enter into or propose publicly to approve or recommend any letter of
intent, agreement in principle, agreement, arrangement or undertaking
related to any Acquisition
Proposal.
|
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(b)
|
Subject
to Sections 6.3A(d), 6.3A(e) and 6.3B but notwithstanding Section
6.3A(a)0 and any other provision of this
Agreement, nothing shall prevent the Board of Directors of Genterra at any
time prior to the approval of the Genterra Amalgamation Resolution by the
shareholders of Genterra from considering, discussing or negotiating an
unsolicited bona
fide written Acquisition Proposal received after the date of this
Agreement that (i) did not result from a breach of Section 6.3A(a) and
(ii) the Board of Directors of Genterra determines in good faith (after
consultation with its financial advisors and outside counsel) is a
Superior Proposal if and only if the Board of Directors of Genterra
determines in good faith, after consultation with outside legal counsel,
that the failure to take such action would be inconsistent with its
fiduciary duties.
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|
|
(c)
|
Genterra
will immediately cease and cause to be terminated any existing
solicitation, discussion or negotiation with any Person (other than CMI)
by Genterra or any Subsidiaries or any of its or their officers,
directors, employees, representatives or agents with respect to any
potential Acquisition Proposal, whether or not initiated by Genterra or
any Subsidiaries or any of its or their officers, directors, employees,
representatives or agents, and, in connection therewith, Genterra will
discontinue access to any data rooms (virtual or
otherwise). Genterra shall not release any third party from any
confidentiality agreement or standstill agreement. Within 15
days from the date hereof, Genterra shall request the return or
destruction of all information provided to any third parties who have
entered into a confidentiality agreement with Genterra relating to any
potential Acquisition Proposal and shall use all reasonable efforts to
ensure that such requests are honoured in accordance with the terms of
such confidentiality agreements.
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|
|
(d)
|
Genterra
shall promptly notify CMI by telephone, followed by notice in writing, of
any proposal, inquiry, offer (or any amendment thereto) or request
relating to or constituting a bona fide Acquisition
Proposal received after the date hereof, or of any request received after
the date hereof for non-public information relating to Genterra or any
Subsidiaries in connection with an Acquisition Proposal or for access to
the properties, books or records of Genterra or any Subsidiaries by any
Person, and shall provide CMI with copies of any such proposal, inquiry,
offer, request or Acquisition Proposal. Such notice shall
include a description of the material terms and conditions of any proposal
and provide such details of the proposal, inquiry or contact as CMI may
reasonably request including the identity of the Person making such
proposal, inquiry or contact. Genterra shall keep CMI
reasonably informed of the status and the material terms and conditions
(including any amendment thereto) of any such Acquisition Proposal,
inquiry or request.
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|
|
(e)
|
If,
prior to the date of the Meeting, Genterra receives a request for material
non-public information from a Person who proposes a bona fide Acquisition
Proposal (notice of which has been provided to CMI in accordance with
Section 6.3A(d)) and is permitted, as contemplated by Section 6.3A(b), to
consider, discuss or negotiate, then, and only in such case, the Board of
Directors of Genterra may, subject to the execution by such Person of a
confidentiality agreement, provide such Person with access to information
regarding Genterra and its Subsidiaries which is no more favourable in
form or scope than provided to CMI.
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|
|
(f)
|
Nothing
contained in this Section 6.3A shall prohibit the Board of Directors of
Genterra at any time prior to approval of the Genterra Amalgamation
Resolution by the shareholders of Genterra
from:
|
|
|
(i)
|
making
any disclosure of an Acquisition Proposal to the shareholders of Genterra
prior to the Effective Time if the Board of Directors of Genterra
determines in good faith (after consultation with outside counsel) that
such disclosure is necessary for the Board of Directors of Genterra to
fulfill its fiduciary duties or is otherwise required under applicable
Laws; and
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|
|
(ii)
|
responding
to a bona fide
request for information that could reasonably be expected to lead to an
Acquisition Proposal solely by advising that no information can be
provided unless a bona
fide written Acquisition Proposal is made and then only in
compliance with Section 6.3A(d).
|
Section
6.3B Notice
by Genterra of Superior Proposal Determination.
|
|
(a)
|
Genterra
shall not accept, approve, recommend or enter into any agreement relating
to an Acquisition Proposal (other than a confidentiality agreement
contemplated by Section 6.3A(e)) on the basis that it would constitute a
Superior Proposal unless it has provided CMI with a copy of the
Acquisition Proposal and five Business Days shall have elapsed from the
later of (i) the date CMI received written notice of Genterra’s proposed
determination to accept, approve, recommend or enter into any agreement
relating to such Acquisition Proposal, and (ii) the date CMI received a
copy of the Acquisition Proposal.
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|
|
(b)
|
During
the five Business Day notice period referred to in Section 6.3B(a),
Genterra acknowledges that CMI shall have the opportunity, but not the
obligation, to offer to amend the terms of this Agreement. The Board of
Directors of Genterra will review any offer by CMI to amend the terms of
this Agreement in order to determine in good faith in the exercise of its
fiduciary duties (after consultation with its advisors and outside
counsel) whether CMI’s offer to amend the terms of this Agreement upon
acceptance by Genterra would result in the Acquisition Proposal ceasing to
be a Superior Proposal. If the Board of Directors of Genterra so
determines, it will enter into an amended agreement with CMI reflecting
CMI’s amended proposal. If the Board of Directors of Genterra, acting
reasonably and in good faith, continues to believe that the Acquisition
Proposal remains a Superior Proposal and therefore rejects CMI’s amended
proposal, Genterra must terminate this Agreement pursuant to Section
8.2(g) prior to entering into a definitive agreement with the Person
making the Superior Proposal. For greater certainty, Genterra shall be
entitled to adjourn or postpone the Meeting for a period of seven Business
Days from the date of receipt of an Acquisition Proposal referred to in
Section 6.3B(a); provided, however, that the Meeting shall not be
adjourned or postponed to a date later than December 31,
2009.
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|
|
(c)
|
Genterra
acknowledges and agrees that each successive material modification of any
Acquisition Proposal shall constitute a new Acquisition Proposal for
purposes of Section 6.3B(a) to initiate an additional five Business Day
notice period.
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|
|
(d)
|
Genterra’s
Board of Directors shall promptly reaffirm its recommendation of the
Amalgamation by press release after (i) any Acquisition Proposal (which is
determined not to be a Superior Proposal) is publicly announced or made;
or (ii) Genterra’s Board of Directors determines that a proposed amendment
to the terms of this Agreement would result in the Acquisition Proposal
not being a Superior Proposal. CMI and its counsel shall be
given a reasonable opportunity to review and comment on the form and
content of any such press release, recognizing that whether or not such
comments are appropriate will be determined by Genterra acting
reasonably. Such press release shall state that Genterra’s
Board of Directors has determined that the Acquisition Proposal is not a
Superior Proposal.
|
|
Section
6.4
|
Access
to Information.
|
|
|
(a)
|
Subject
to Subsection 6.4(b) and applicable Laws, upon reasonable notice to an
officer of such party, each of CMI and Genterra shall (and shall cause
each of its Subsidiaries to) afford the officers, employees, counsel,
accountants and other authorized representatives and advisors (“Representatives”) of
the other party access, during normal business hours from the date hereof
and until the earlier of the Effective Date or the termination of this
Agreement, to its properties, books, contracts and records as well as to
its management personnel; provided that such access shall be provided on a
basis that minimizes the disruption to the operations of such party.
During such period, each of CMI and Genterra shall (and shall cause each
of its Subsidiaries to) furnish promptly to the other party all
information concerning such party’s business, properties and personnel as
the other party may reasonably
request.
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|
|
(b)
|
Genterra
and CMI acknowledge that certain information received pursuant to
Subsection 6.4(a) will be non-public or proprietary in nature and that,
except as provided for herein, such parties shall not disclose such
information to third parties without the prior written consent of the
other party unless required to do so by
Law.
|
|
Section
6.5
|
Closing
Matters.
|
|
|
(a)
|
The
completion of the transactions contemplated under this Agreement shall be
closed at the offices of Genterra’s counsel, ▇▇▇▇▇▇▇, Spring, Kichler
& ▇▇▇▇▇▇▇ LLP,
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, at 10:00
a.m. (Toronto Time) (the “Time of Closing”) on
July 31, 2009 or on such other date or at such other time and place as the
parties may agree.
|
|
|
(b)
|
Each
of Genterra and CMI shall deliver, at the Time of Closing, such customary
certificates, resolutions, legal opinions and other closing documents as
may be required by the other parties hereto, acting
reasonably.
|
|
|
ARTICLE
7
|
|
|
CONDITIONS
|
|
Section
7.1
|
Mutual
Conditions Precedent.
|
The respective obligations of Genterra
and CMI to complete the transactions contemplated by this Agreement and to file
the Articles of Amalgamation for acceptance by the Registrar to give effect to
the Amalgamation shall be subject to the satisfaction of each of the following
conditions at or prior to the Effective Date;
|
|
(a)
|
the
CMI Amalgamation Resolution shall have been approved at the CMI Meeting by
the requisite number of votes cast by Holders of CMI Shares, in accordance
with applicable Laws and this
Agreement;
|
|
|
(b)
|
the
Genterra Amalgamation Resolution shall have been approved at the Genterra
Meeting by the requisite number of votes cast by Holders of Genterra
Shares in accordance with applicable Laws and this
Agreement;
|
|
|
(c)
|
the
TSX or the TSXV shall have conditionally approved the listing thereon of
the Amalco Shares (i) to be issued pursuant to the Amalgamation as of the
Effective Date; and (ii) issuable pursuant to the Amalco Option
Plan;
|
|
|
(d)
|
all
other Appropriate Regulatory Approvals shall have been obtained or
received from the Persons having jurisdiction in the circumstances, and
all other applicable regulatory requirements and conditions, including but
not limited to preparation and delivery of formal valuations of each of
CMI and Genterra, shall have been complied with, the failure to obtain
which would, individually or in the aggregate, have a Material Adverse
Effect on Genterra, CMI or Amalco after the Effective
Time;
|
|
|
(e)
|
there
shall not be in force any order or decree restraining or enjoining the
consummation of the transactions contemplated under this Agreement and
there shall be no proceeding, whether of a judicial or administrative
nature or otherwise, in progress that relates to or results from the
transactions contemplated under this Agreement that would, if successful,
result in an order or ruling that would preclude completion of the
transactions contemplated under this Agreement in accordance with the
terms and conditions hereof or
thereof;
|
|
|
(f)
|
there
shall not exist any prohibition at Law against the completion of the
Amalgamation;
|
|
|
(g)
|
none
of the consents, orders, regulations or approvals contemplated herein
shall contain terms or conditions or require undertakings or security
deemed unsatisfactory or unacceptable by any of the parties hereto acting
reasonably;
|
|
|
(h)
|
this
Agreement shall not have been terminated under Article 8;
and.
|
|
(i)
|
no
holder of CMI Shares shall have exercised CMI Dissent Rights and no holder
of Genterra Shares shall have exercised Genterra Dissent
Rights.
|
The above conditions are for the mutual
benefit of Genterra and CMI and may be waived in writing, in whole or in part,
by Genterra and CMI at any time.
Section
7.2 Additional
Conditions Precedent to the Obligations of Genterra.
The obligations of Genterra to complete
the transactions contemplated hereby and the obligation of Genterra to file the
Articles of Amalgamation jointly with CMI and such other documents as are
required to be filed under the OBCA for acceptance by the Director appointed
under Section 278 of the OBCA to give effect to the Amalgamation shall also be
subject to the satisfaction of each of the following conditions at or prior to
the Effective Date or such other time as is specified below:
|
|
(a)
|
CMI
shall have performed or complied with, in all material respects, each of
its obligations, covenants and agreements hereunder to be performed and
complied with by it on or before the Effective
Time;
|
|
|
(b)
|
each
of the representations and warranties of CMI under this Agreement (which
for purposes of this clause (b) shall be read as though none of them
contained any Material Adverse Effect or other materiality qualification),
shall be true and correct in all respects on the date of this Agreement
and as of the Effective Date as if made on and as of such date except: (i)
for such representations and warranties made as of a specified date, which
shall be true and correct as of such specified date, (ii) as affected by
transactions contemplated or permitted by this Agreement; or (iii) where
the failure of such representations and warranties in the aggregate to be
true and correct in all respects would not be reasonably expected to have
a Material Adverse Effect on CMI;
|
|
|
(c)
|
except
as disclosed in writing to Genterra, since the date of this Agreement,
there shall have been no Material Adverse Effect with respect to CMI or
any event, occurrence or development, including the commencement of any
action, suit or other legal proceeding which would be reasonably expected
to have a Material Adverse Effect on
CMI;
|
|
|
(d)
|
Genterra
shall have received a certificate of CMI addressed to Genterra and dated
the Effective Date, signed on behalf of CMI by two senior executive
officers of CMI, confirming that the conditions in Subsections 7.2(a),
(b), (c) and (e) have been
satisfied;
|
|
|
(e)
|
since
the date of this Agreement, no action, suit or proceeding shall have been
taken before or by any Governmental Entity or by any private Person
(including, without limitation, any individual, corporation, firm, group
or other entity or by any elected or appointed public official in Canada
or elsewhere against CMI) (whether or not purportedly on behalf of CMI)
that would, if successful, have a Material Adverse Effect on CMI, in the
sole discretion of Genterra, acting
reasonably;
|
|
|
(f)
|
the
board of directors of Genterra shall have received the opinion of a
qualified independent valuator as to the fairness of the Amalgamation to
the shareholders of Genterra;
|
|
|
(g)
|
the
board of directors and shareholders of CMI shall have adopted all
necessary resolutions, and all other necessary corporate action shall have
been taken by CMI to permit the consummation of the Amalgamation and the
transactions contemplated herein;
and
|
|
|
(h)
|
all
consents and approvals under any agreements to which CMI may be a party or
bound which are required or necessary or desirable for the completion of
the transactions contemplated under this Agreement shall have been
obtained or received.
|
The above conditions are for the
benefit of Genterra and may be waived in writing, in whole or in part, by
Genterra at any time.
Section
7.3 Additional
Conditions Precedent to the Obligations of CMI.
The obligations of CMI to complete the
transactions contemplated hereby and the obligation of CMI to file Articles of
Amalgamation jointly with Genterra and such other documents as are required to
be filed under the OBCA for acceptance by the Director appointed under Section
278 of the OBCA to give effect to the Amalgamation shall also be subject to the
satisfaction of each of the following conditions at or prior to the Effective
Date or such other time as is specified below:
|
|
(a)
|
Genterra
shall have performed or complied with, in all material respects, each of
its obligations, covenants and agreements hereunder to be performed and
complied with by it on or before the Effective
Time;
|
|
|
(b)
|
each
of the representations and warranties of Genterra under this Agreement
(which for purposes of this clause (b) shall be read as though none of
them contained any Material Adverse Effect or other materiality
qualification), shall be true and correct in all respects on the date of
this Agreement and as of the Effective Date as if made on and as of such
date except: (i) for such representations and warranties made as of a
specified date, which shall be true and correct as of such specified date,
(ii) as affected by transactions contemplated or permitted by this
Agreement; or (iii) where the failure of such representations and
warranties in the aggregate to be true and correct in all respects would
not be reasonably expected to have a Material Adverse Effect on
Genterra;
|
|
|
(c)
|
since
the date of this Agreement, there shall have been no Material Adverse
Effect with respect to Genterra or any event, occurrence or development
which would be reasonably expected to have a Material Adverse Effect on
Genterra;
|
|
|
(d)
|
CMI
shall have received a certificate of Genterra addressed to CMI and dated
the Effective Date, signed on behalf of Genterra by two senior executive
officers of Genterra, confirming that the conditions in Subsections
7.3(a), (b), (c) and (e) have been
satisfied;
|
|
|
(e)
|
since
the date of this Agreement, no action, suit or proceeding shall have been
taken before or by any Governmental Entity or by any private Person
(including, without limitation, any individual, corporation, firm, group
or other entity) or by any elected or appointed public official in Canada
or elsewhere against Genterra (whether or not purportedly on behalf of
Genterra that would, if successful, have a Material Adverse Effect on
Genterra, in the sole discretion of CMI, acting
reasonably;
|
|
|
(f)
|
the
board of directors of CMI shall have received the opinion of a qualified
independent valuator as to the fairness of the Amalgamation to the
shareholders of CMI;
|
|
|
(g)
|
the
boards of directors of Genterra shall have adopted all necessary
resolutions, and all other necessary corporate action shall have been
taken by Genterra to permit the consummation of the Amalgamation;
and
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(h)
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all
consents and approvals under any agreements to which Genterra may be a
party or bound which are required or necessary or desirable for the
completion of the transactions contemplated under this Agreement shall
have been obtained or received.
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The above conditions are for the
benefit of CMI and may be waived in writing, in whole or in part, by CMI at any
time.
Section
7.4 Merger
of Conditions.
The conditions set out in Sections 7.1,
7.2 and 7.3 shall be conclusively deemed to have been satisfied, waived or
released on the filing by Genterra and CMI of the Articles of Amalgamation, and
such other documents as are required to be filed under the OBCA for acceptance
by the Director to give effect to the Amalgamation and the issuance by the
Director of a certificate of amalgamation.
ARTICLE
8
AMENDMENT
AND TERMINATION
Section
8.1 Amendment.
This Agreement may not be amended
except by mutual written agreement of the parties hereto; provided that after
approval by the: (i) Holders of CMI Shares, no amendment may be made that by Law
requires further approval or authorization by the Holders of CMI Shares without
such further approval or authorization; and (ii) Holder of Genterra Shares, no
amendment may be made that by Law requires further approval or authorization by
the Holders of Genterra Shares without such further approval or
authorization.
Section
8.2 Termination
This Agreement may be terminated and
the Amalgamation abandoned at any time prior to the Effective Time
(notwithstanding any approval of the CMI Amalgamation Resolution by the Holders
of CMI Shares or any approval of the Genterra Amalgamation Resolution by the
Holders of Genterra Shares):
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(a)
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by
the mutual written consent of Genterra and CMI (without further action on
the part of the Holders of CMI Shares if terminated after the CMI Meeting
and without further action on the part of the Holders of Genterra Shares
if terminated after the Genterra
Meeting;
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(b)
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by
either Genterra or CMI, if there shall be any Law that makes consummation
of the Amalgamation illegal or otherwise prohibited, or if any judgment,
injunction, order or decree of a competent Governmental Entity enjoining
Genterra or CMI from consummating the Amalgamation shall be entered and
such judgment, injunction, order or decree shall have become final and
non-appealable;
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(c)
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by
CMI if, (i) the board of directors of Genterra fails to recommend or
withdraws, modifies or changes its approval or recommendation of this
Agreement and in a manner adverse to CMI, (ii) the board of directors of
Genterra fails to affirm its approval or recommendation of this Agreement,
the Amalgamation and the Genterra Amalgamation Resolution within five (5)
Business Days of any written request to do so from CMI, (iii) the Genterra
Amalgamation Resolution is not submitted for approval at the Genterra
Meeting;
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(d)
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by
Genterra if, (i) the board of directors of CMI fails to recommend or
withdraws, modifies or changes its approval or recommendation of this
Agreement and the Amalgamation, in a manner adverse to Genterra, (ii) the
board of directors of CMI fails to affirm its approval or recommendation
of this Agreement, the Amalgamation and the CMI Amalgamation Resolution
within five (5) Business Days of any written request to do so from
Genterra, (iii) the CMI Amalgamation Resolution is not submitted for
approval at the CMI Meeting;
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(e)
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by
either Genterra or CMI, if at the CMI Meeting, the requisite vote of the
Holders of CMI Shares to approve the CMI Amalgamation Resolution shall not
be obtained or if at the Genterra Meeting, the requisite vote of the
Holders of Genterra Shares to approve the Genterra Amalgamation Resolution
shall not be obtained;
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(f)
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by
CMI in accordance with Section
6.2B(b);
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(g)
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by
Genterra in accordance with Section
6.3B(b);
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(h)
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by
either of Genterra or CMI, by written notice to the other parties, if any
of the conditions precedent set out in Section 7.1 hereof have not been
complied with or waived on or before the date required for performance
thereof; provided, however, that no party may rely on the failure to
satisfy any of the conditions set out in Section 7.1 if the condition
would have been satisfied but for a material failure by such party in
complying with its obligations
hereunder;
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(i)
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by
Genterra, by written notice to CMI, if any of the conditions precedent set
out in Section 7.2 hereof have not been complied with or waived on or
before the date required for performance thereof; provided, however,
Genterra may not rely on the failure to satisfy any of the conditions set
out in Section 7.2 if the condition would have been satisfied but for a
material failure by Genterra in complying with their obligations
hereunder;
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(j)
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by
Genterra, if CMI has breached any of its representations, warranties,
agreements or obligations herein which breach would result in the failure
to satisfy one or more conditions set forth in Subsections 7 .2(b) or (c)
and such breach is not curable or if curable, is not cured within 20 days
after notice thereof has been received by the party alleged to be in
breach;
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(k)
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by
CMI, by written notice to Genterra, if any of the conditions precedent set
out in Section 7.3 hereof have not been complied with or waived on or
before the date required for performance thereof; provided, however, that
CMI may not rely on the failure to satisfy any of the conditions set out
in Section 7.3 if the condition would have been satisfied but for a
material failure by CMI in complying with their obligations hereunder;
or
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(l)
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by
CMI, if Genterra has breached any of its representations, warranties,
agreements or obligations herein which breach would result in the failure
to satisfy one or more conditions set forth in Subsections 7.3(b) or (c)
and such breach is not curable or if curable, is not cured within 20 days
after notice thereof has been received by the party alleged to be in
breach.
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Section
8.3
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Effect
of Termination.
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(a)
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If
this Agreement is terminated in accordance with the provisions of Section
8.2, no party shall have any further liability to perform its obligations
hereunder except for the provisions of this Section 8.3 and Subsections
6.4(b) and Section 9.9; provided that neither the termination of this
Agreement nor anything contained in this Section 8.3 shall relieve any
party from any liability for any breach by it of this Agreement, including
from any inaccuracy in its representations and warranties and any
non-performance by it of its covenants and agreements made herein. If it
shall be judicially determined that termination of this Agreement under
Section 8.2 was caused by breach of this Agreement, then, in addition to
any other remedies at law or equity for breach of this Agreement, the
party so found to have breached this Agreement shall indemnify and hold
harmless the other parties for their out-of-pocket costs, including fees
and expenses of their counsel, accountants, financial advisors and other
experts and advisors, incident to the negotiation, preparation and
execution of this Agreement and related
documentation.
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ARTICLE
9
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GENERAL
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Section
9.1
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Investigation.
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Any investigation by a party hereto and
its advisors shall not mitigate, diminish or affect the representations and
warranties of any other party to this Agreement.
Section
9.2 Notices.
All notices which may or are required
to be given pursuant to any provision of this Agreement shall be in writing and
shall be deemed given when delivered personally, telecopied (which is confirmed)
or dispatched (postage prepaid) to a nationally recognized overnight courier
service with overnight delivery instructions, in each case addressed to the
particular party at:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
or at
such other address of which any party may, from time to time, advise the other
parties by notice in writing given in accordance with the
foregoing.
Section
9.3 Assignment.
No party may assign this Agreement or
any of its rights, interests or obligations under this Agreement or the
Amalgamation (whether by operation of law or otherwise) without the prior
written consent of the other parties.
Section
9.4 Binding
Effect.
This Agreement and the Amalgamation
shall be binding upon and shall enure to the benefit of Genterra and CMI and
their respective successors and permitted assigns.
Section
9.5 Third
Party Beneficiaries.
Nothing in this Agreement, express or
implied, shall be construed to create any third party
beneficiaries.
Section
9.6 Waiver
and Modification.
CMI and Genterra may waive or consent
to the modification of, in whole or in part, any inaccuracy of any
representation or warranty made to them hereunder or in any document to be
delivered pursuant hereto and may waive or consent to the modification of any of
the covenants or agreements herein contained for their respective benefit or
waive or consent to the modification of any of the obligations of the other
parties hereto. Any waiver or consent to the modification of any of the
provisions of this Agreement, to be effective, must be in writing executed by
the party granting such waiver or consent.
Section
9.7 No
Personal Liability.
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(a)
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No
director, officer, employee or agent of Genterra shall have any personal
liability whatsoever to CMI under this Agreement, or any other document
delivered in connection with the Amalgamation on behalf of
Genterra.
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(b)
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No
director, officer, employee or agent of CMI shall have any personal
liability whatsoever to Genterra under this Agreement, or any other
document delivered in connection with the Amalgamation on behalf of
CMI.
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Section
9.8
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Further
Assurances.
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Each party hereto shall, from time to
time, and at all times hereafter, at the request of the other parties hereto,
but without further consideration, do all such further acts and execute and
deliver all such further documents and instruments as shall be reasonably
required in order to fully perform and carry out the terms and intent
hereof.
Section
9.9 Expenses.
Each of CMI and Genterra shall pay
their own costs and expenses in connection with the Amalgamation including,
without limitation, legal, accounting and auditing fees, regulatory and exchange
fees, meeting and mailing costs and any fees or commissions of brokers, finders
or other third parties employed in connection with the
Amalgamation.
Section
9.10 Public
Announcements.
The initial press release concerning
the Amalgamation shall be a joint press release and thereafter Genterra and CMI
agree to consult with each other prior to issuing any news releases or public
statements with respect to this Agreement or the Amalgamation, and to use their
respective reasonable best efforts not to issue any news releases or public
statements inconsistent with the results of such consultations. Subject to
applicable Laws, each party shall use its reasonable best efforts to enable the
other parties to review and comment on all such news releases prior to the
release thereof. The parties agree to issue jointly a news release with respect
to this Amalgamation as soon as practicable following the execution of this
Agreement. Genterra and CMI also agree to consult with each other in preparing
and making any filings and communications in connection with any Appropriate
Regulatory Approvals.
Section
9.11 Governing
Law; Consent to Jurisdiction.
This Agreement shall be governed by and
be construed in accordance with the laws of the Province of Ontario and the
federal laws of Canada applicable therein and shall be treated in all respects
as an Ontario contract. Each party hereby irrevocably attorns to the
jurisdiction of the courts of the Province of Ontario in respect of all matters
arising under or in relation to this Agreement.
Section
9.12 Entire
Agreement.
This Agreement, and the other
agreements and other documents referred to herein, constitute the entire
agreement between Genterra and CMI pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, between Genterra and CMI with respect to the subject
matter hereof.
Section
9.13 Time
of Essence.
Time is of the essence of this
Agreement.
Section
9.14 Severability.
If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
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Section
9.15 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.
WITNESS WHEREOF the parties hereto have
executed this Agreement as of the date hereinbefore written.
Per:
President
CONSOLIDATED MERCANTILE
INCORPORATED
Per:
President
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SCHEDULE
"2.1(a)”
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RESOLUTIONS
OF THE SHAREHOLDERS OF CONSOLIDATED MERCANTILE
INC.
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AMALGAMATION
RESOLUTION
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BE
IT RESOLVED AS A SPECIAL RESOLUTION
THAT:
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1.
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the
amalgamation (the “Amalgamation”) of Consolidated Mercantile Incorporated
(“CMI”) and Genterra Inc. (“Genterra”) as provided for in and subject to
the terms and conditions set forth in the amalgamation agreement (the
“Amalgamation Agreement”) dated as of @, 2009 between CMI and Genterra, is
hereby approved and authorized, with such restrictions or conditions as
may be imposed by the Toronto Stock Exchange (the “Exchange”) and with
discretion to modify the terms of the transaction provided that such terms
are not material at any time prior to the completion thereof, subject to
the approval of the Exchange, all as more particularly described in the
joint management information circular of Genterra and CMI dated @, 2009
(the “Circular”);
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2.
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the
Amalgamation Agreement, substantially in the form attached to the Circular
as Schedule 1, be and is hereby approved and
ratified;
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3.
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notwithstanding
that this resolution has been passed (and the Amalgamation Agreement and
the Amalgamation adopted) by the CMI Shareholders, the directors of CMI
are hereby authorized and empowered without further notice to or approval
of the CMI Shareholders (i) to amend the Amalgamation Agreement to the
extent permitted by the Amalgamation Agreement, and (ii) subject to the
terms and conditions of the Amalgamation Agreement, not to proceed with
the Amalgamation; and
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4.
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any
director or officer of CMI be, and such director or officer of CMI hereby
is, authorized, instructed and empowered, acting for, in the name of and
on behalf of CMI, to do or to cause to be done all such other acts and
things in the opinion of such director or officer of CMI as may be
necessary or desirable in order to fulfill the intent of this resolution
and the matters authorized hereby.”
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SCHEDULE
"2.1(b)”
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RESOLUTIONS
OF THE SHAREHOLDERS OF GENTERRA
INC.
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AMALGAMATION
RESOLUTION
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BE
IT RESOLVED AS A SPECIAL RESOLUTION
THAT:
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1.
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the
amalgamation (the “Amalgamation”) of Genterra Inc. (“Genterra”) and
Consolidated Mercantile Incorporated (“CMI”) as provided for in and
subject to the terms and conditions set forth in the amalgamation
agreement (the “Amalgamation Agreement”) dated as of @, 2009 between
Genterra and CMI, is hereby approved and authorized, with such
restrictions or conditions as may be imposed by the Toronto Stock Exchange
(the “Exchange”) and with discretion to modify the terms of the
transaction provided that such terms are not material at any time prior to
the completion thereof, subject to the approval of the Exchange, all as
more particularly described in the joint management information circular
of Genterra dated @, 2009 (the
“Circular”);
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2.
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the
Amalgamation Agreement, substantially in the form attached to the Circular
as Schedule 1, be and is hereby approved and
ratified;
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3.
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notwithstanding
that this resolution has been passed (and the Amalgamation Agreement and
the Amalgamation adopted) by the Genterra Shareholders, the directors of
Genterra are hereby authorized and empowered without further notice to or
approval of the Genterra Shareholders (i) to amend the Amalgamation
Agreement to the extent permitted by the Amalgamation Agreement, and (ii)
subject to the terms and conditions of the Amalgamation Agreement, not to
proceed with the Amalgamation; and
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4.
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any
director or officer of Genterra be, and such director or officer of
Genterra hereby is, authorized, instructed and empowered, acting for, in
the name of and on behalf of Genterra, to do or to cause to be done all
such other acts and things in the opinion of such director or officer of
Genterra as may be necessary or desirable in order to fulfill the intent
of this resolution and the matters authorized
hereby.”
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SCHEDULE
“2.7(d)”
AMALCO
SHARE ATTRIBUTES
COMMON
SHARES
The
holders of the Common Shares shall be entitled:
1. to
vote at all meetings of shareholders of the Corporation, except meetings at
which only holders of a specified class of shares are entitled to vote, and at
all such meetings, each holder shall be entitled to one vote in respect of each
Common Share held.
2. to
receive, subject to the rights of the holders of any other class of shares of
the corporation, any dividend declared by the Corporation; and
3. to
receive, subject to the rights of the holders of any other class of shares of
the Corporation, the remaining property of the Corporation on the liquidation,
dissolution or winding up of the Corporation whether voluntary or
involuntary.
CLASS A PREFERENCE
SHARES
The Class A Preference Shares shall
carry and be subject to the following rights, privileges, restrictions and
conditions:
1. The
Class A Preference Shares may at any time and from time to time be issued in one
(1) or more series. Each series shall consist of such number of shares as may,
before the issue thereof, be fixed by resolution of the board of directors of
the Corporation.
2. The
board of directors of the Corporation shall by resolution duly passed before the
issue of any Class A Preference Shares of any series, determine the designation,
rights, privileges, restrictions and conditions to be attached to the Class A
Preference Shares of such series, including, but without in any way limiting or
restricting the generality of the foregoing, the rate or amount of preferential
dividends, the date or dates and place or places of payment thereof, the
consideration and the terms and conditions of any purchase for cancellation or
redemption thereof, conversion or exchange rights (if any), the terms and
conditions of any share purchase plan or sinking fund and the restrictions (if
any) respecting payment of dividends on any shares ranking Junior to the Class A
Preference Shares.
3. The
Class A Preference Shares of each series shall, with respect to priority in
payment of dividends and the distribution of assets in the event of liquidation,
dissolution or winding-up of the Corporation, whether voluntary or involuntary,
or any other distribution of the assets of the Corporation among its
shareholders for the purpose of winding-up its affairs be entitled to a
preference over the Class B Preference Shares and the Common Shares or any of
them, and over any other shares ranking Junior to the Class A Preference Shares
and the Class A Preference Shares of each series may also be given such other
preferences over the Class B Preference Shares and Common Shares or any of them,
and any other shares ranking Junior to the Class A Preference Shares as may be
determined as to the respective series authorized to be issued.
4. The
Class A Preference Shares of each series shall rank on a parity with the Class A
Preference Shares of every other series with respect to priority in payment of
dividends and in the distribution of assets in the event of the liquidation,
dissolution or winding-up of the Corporation, whether voluntary or involuntary,
or any other distribution of the assets of the Corporation among its
shareholders for the purpose of winding-up its affairs.
5. The
holders of the Class A Preference Shares of each series shall be entitled to
receive and the Corporation shall pay thereon as and when declared by the board
of directors out of the monies of the Corporation properly applicable to the
payment of dividends, preferential dividends, in respect of each Class A
Preference Share held, at a rate per share per annum of 8% of the Stated Value
of such shares as the directors may determine or may have determined by the
resolution provided for in clause 2 determining the rights, privileges,
restrictions and conditions attaching to the Class A Preference Shares of such
series, payable either in cash or in shares of such series, or partly in one and
partly in the other, and on such date all or dates as the directors may
determine or may have determined by such resolution. Cheques of the
Corporation payable at par at any branch of the Corporation's banker for the
time being in Canada shall be issued in respect of cash dividends.
6. In
the event of the liquidation, dissolution or winding-up of the Corporation or
any other distribution of assets of the Corporation among its shareholders for
the purpose of winding-up its affairs, the holders of the Class A Preference
Shares of each series shall be entitled to receive for each Class A Preference
Share held by them, respectively, a sum equivalent to (i) the result obtained
when the stated capital account for the Class A Preference Shares of such series
is divided by the number of issued and outstanding Class A Preference Shares of
such series, together with (ii) all dividends (if any) unpaid thereon up to the
date of distribution, before any amount shall be paid or any property or assets
of the Corporation distributed to the holders of any Class B Preference Shares
and Common Shares or any of them, or shares of any other class ranking junior to
the Class A Preference Shares. After payment to holders of the Class A
Preference Shares of each series of the amount so payable to them, they shall
not be entitled to share in any further distribution of the property or assets
of the Corporation.
7. Subject
to the provisions of clause 6 and subject to the rights, privileges,
restrictions and conditions attaching to the Class A Preference Shares of any
series, the Corporation may at any time or times purchase (if obtainable) for
cancellation all or any part of the Class A Preference Shares of any series
outstanding from time to time in the market (including purchase through or from
an investment dealer or firm holding membership on a recognized stock exchange)
or by invitation for tenders addressed to all the holders of record of the Class
A Preference Shares of such series outstanding at the lowest price or prices at
which, in the opinion of the directors, such shares are obtainable but not
exceeding the price at which, at the date of purchase, such shares are
redeemable as provided in clause 8 without reference to the price payable by the
Corporation pursuant to any compulsory purchase or retirement obligation imposed
upon the Corporation (including accrued and unpaid preferential dividends as
provided in the said clause 8) and costs of purchase. If upon any invitation for
tenders under the provisions of this clause the Corporation receives tenders of
Class A Preference Shares of such series at the same lowest price which the
Corporation is willing to pay in an aggregate number greater than the number for
which the Corporation is prepared to accept tenders, the Class A Preference
Shares of such series so tendered which the Corporation determines to purchase
at such price shall be purchased at nearly as may be pro rata (disregarding
fractions) in proportion to the number of Class A Preference Shares of such
series so tendered by each of the holders of Class A Preference Shares of such
series who submitted tenders at the said same lowest price.
8. Subject
to the rights, privileges, restrictions and conditions attaching to the Class A
Preference Shares of any series, the Corporation may upon giving notice as
hereinafter provided redeem at any time the whole or from time to time any part
of the then outstanding Class A Preference Shares of any series on payment for
each shares to be redeemed of a sum equivalent to (i) the result obtained when
the stated capital account for the Class A Preference Shares of such series is
divided by the number of issued and outstanding shares of such series, together
with (ii) such premium (if any) as the directors may determine or may have
determined by the resolution provided for in clause 2 determining the rights,
privileges, restrictions and conditions attaching to the shares of such series,
together with (iii) all declared and unpaid dividends (if any) thereon up to the
date fixed for redemption.
9. In
any case of redemption of Class A Preference Shares of any series under the
provision of clause 8 the Corporation shall, at least ten (10) days before the
date specified for redemption, mail to each person who at the date of mailing is
a registered holder of Class A Preference Shares of such series to be redeemed,
a notice in writing of the intention of the Corporation to redeem such last
mentioned shares. Such notice shall be mailed in an envelope, postage prepaid,
addressed to each such shareholder at his address as it appears on the books of
the Corporation or in the event of the address of any such shareholder not so
appearing then to the last known address of such shareholder, provided, however,
that the accidental failure or omission to give any such notice to any one or
more of such shareholders shall not affect the validity of such redemption. Such
notice shall set out the redemption price and the date which redemption is to
take place and if part only of the Class A Preference Shares of such series held
by the persons to whom it is addressed is to be redeemed the number thereof so
to be redeemed. On or after the date so specified for redemption the Corporation
shall pay or cause to be paid to or to the order of the registered holders of
the Class A Preference Shares of such series to be redeemed the redemption price
thereof on presentation and surrender at the registered office of the
Corporation or any other place within Canada designated in such notice, of the
certificates representing the Class A Preference Shares of such series so called
for redemption. Such payment shall be made by cheques payable at par at any
branch of the Corporation's bankers for the time being in Canada. If a part only
of the Class A Preference Shares of such series represented by any certificate
shall be redeemed, a new certificate for the balance shall be issued at the
expense of the Corporation. On the date fixed for redemption, the Class A
Preference Shares of such series to be redeemed are thereupon redeemed and
cancelled as of the date so fixed for redemption and the holders thereof have no
rights whatsoever against the Corporation in respect of such shares other than
the right to receive upon the presentation of certificates representing the
Class A Preference Shares of such series to be redeemed, payment of the
redemption price therefor without interest.
10. Subject
to the Act, a holder of Class A Preference Shares of any series shall be
entitled to require the Corporation to redeem the whole or any part of the Class
A Preference Shares of such series registered in the name of the holder on the
books of the Corporation.
11. A
holder of Class A Preference Shares of any series who desires to require the
Corporation to redeem the whole or any part of such holder’s Class A Preference
Shares of such series shall tender to the Corporation at its registered office a
request in writing specifying (i) that the holder desires to have the whole or
any part of the Class A Preference Shares of such series registered in his name
redeemed by the Corporation, (ii) the number of Class A Preference Shares of
such series which the holder desires to have the Corporation redeem, and (iii)
the business day, which shall not be less than 30 days after the day on which
the request in writing is given to the Corporation, on which the holder desires
to have the Corporation redeem the shares (the "redemption date"), together with
the share certificates, if any, representing the Class A Preference Shares of
such series which the registered holder desires to have the Corporation
redeem.
12. The
Corporation shall, on receipt of a request and share certificates, on the
redemption date, redeem the shares by paying to the registered holder the amount
per share as the directors may determine or may have determined by the
resolution provided for in clause 2 determining the rights, privileges,
restrictions and conditions attaching to the shares of such series together with
all declared and unpaid dividends (if any) thereon up to the date fixed for
redemption. This payment shall be made by cheque payable at any
branch in Canada of one of the Corporation's bankers for the time
being. If a part only of the Class A Preference Shares of such series
represented by any certificates is redeemed, a new certificate for the balance
shall be issued by the Corporation.
13. The
Class A Preference shares of such series shall be redeemed on the redemption
date and from that date the shares shall cease to be entitled to dividends and
their holders shall not be entitled to exercise any of the rights of
shareholders in respect of the shares, unless payment of the redemption price is
not made on the redemption date, in which case the rights of the holders of the
shares shall remain unaffected.
14. The
holders of Class A Preference Shares shall be entitled to receive copies of the
annual financial statements of the Corporation and the auditors' report thereon
to be submitted to the shareholders of the Corporation at annual meetings but
the holders of Class A Preference Shares shall not be entitled as such, except
as hereinafter provided and in the Business Corporations Act, Ontario,
specifically provided, to receive notice of or to attend any meeting of the
shareholders of the Corporation or to vote at any such meeting but shall be
entitled to receive notice of meetings of shareholders of the Corporation called
for the purpose of authorizing the dissolution of the Corporation or the sale of
its undertaking or a substantial part thereof.
15. The
approval of the holders of the Class A Preference Shares to delete or vary any
rights, privilege, restriction or condition attaching to the Class A Preference
Shares as a class or any other matter requiring the approval or consent of the
holders of Class A Preference Shares, as a class, may be given by at least two
thirds (2/3) of the votes cast at a meeting of the holders of the Class A
Preference Shares duly called for that purpose and held upon at least twenty-one
(21) days' notice.
- -
Class A Preference Series 1
Shares
The first
series of Class A Preference Shares designated as Non-Voting, Non-Participating,
Redeemable, Retractable, Convertible, Cumulative, Preference Shares, Series 1
(the "Class A Preference Series 1 Shares") shall consist of an unlimited number
of shares with a stated value of $15.00 each (the “Stated Value”) and, in
addition to the rights, privileges, restrictions and conditions attached to the
Preferred Shares as a class, shall have attached thereto rights, privileges,
restrictions and conditions substantially as hereinafter set forth, that is to
say:
1. DIVIDENDS
1.1 Payment of Dividends:
The holders of the Class A Preference Series 1 Shares shall be entitled to
receive, and the Corporation shall pay thereon, as and when declared by the
Board of Directors of the Corporation out of monies of the Corporation properly
applicable to the payment of dividends, cumulative preferential cash dividends
in lawful money of Canada at the rate of 8% of the Stated Value per share, per
annum, on dates to be fixed from time to time by resolution of the Board of
Directors, before any dividend is paid on or set apart for the Class B
Preference Shares or the Common Shares or any of them or shares of any other
class or series ranking junior to the Class A Preference Series 1
Shares.
1.2 Method of
Payment: Cheques payable in lawful money of Canada at par at
any branch in Canada of the Corporation's bankers for the time being shall be
issued in respect of the dividends on the Class A Preference Series 1 Shares,
(less any tax required to be withheld by the Corporation). The mailing from the
Corporation's head office of such cheque to a holder of Class A Preference
Series 1 Shares shall be deemed to be payment of the dividends represented by a
cheque which has not been presented to the Corporation's bankers for payment or
that otherwise remain unclaimed for a period of six years from the date on which
they were declared to be payable shall be forfeited to the Corporation.
Notwithstanding the foregoing, the amount of the said dividends (less any tax
required to be withheld by the Corporation) may be deposited directly into an
account with a deposit-taking institution designated by the holder of Class A
Preference Series 1 Shares, provided that the Corporation has received a written
direction to make such deposit at least ten days prior to the record date for
such dividend, in such form as the Corporation may prescribe from time to time
and provided that such direction has not been revoked by a subsequent written
notice received not less than ten days prior to the record date for the next
dividend payment.
1.3 Cumulative Payment of
Dividends: If on any dividend payment date the dividends
accrued to such date are not paid in full on all of the Class A Preference
Series 1 Shares then outstanding, such dividends, or the unpaid part thereof
shall be paid on a subsequent date or dates determined by the Board of Directors
of the Corporation on which the Corporation shall have sufficient monies
properly applicable to the payment of such dividends. The holders of the Class A
Preference Series 1 Shares shall not be entitled to any dividends other than or
in excess of the cumulative preferential cash dividends herein provided
for.
- -
2. REDEMPTION
2.1 Redemption
Privilege: The Corporation may redeem at any time the whole or
from time to time any part of the then outstanding Class A Preference Series 1
Shares on payment for each share to be redeemed of the sum of $15.00 per Class A
Preference Series 1 Shares together in each case with all cumulative
preferential dividends accrued and unpaid thereon up to the date of redemption
(the "Redemption Price").
2.2 Partial
Redemption: In case a part only of the Class A Preference
Series 1 Shares is at any time to be redeemed, the shares so to be redeemed
shall be redeemed on a pro rata basis, disregarding fractions, according to the
number of Class A Preference Series 1 Shares held by each of the registered
holders thereof. If a part only of the Class A Preference Series 1 Shares
represented by any certificate shall be redeemed, a new certificate representing
the balance of such shares shall be issued to the holder thereof at the expense
of the Corporation upon presentation and surrender of the first mentioned
certificate.
3. PURCHASE BY THE
CORPORATION
3.1 Purchase for
Cancellation: The Corporation may, at any time or from time to
time, purchase for cancellation all or any part of the outstanding Class A
Preference Series 1 Shares for a price not exceeding the sum of $15.00 per Class
A Preference Series 1 Shares, together with unpaid accrued cumulative
preferential dividends.
4. RETRACTION
4.1 Subject
to the Act, a holder of Class A Preference Series 1 Shares shall be entitled to
require the Corporation to redeem the whole or any part of the Class A
Preference Series 1 Shares registered in the name of the holder on the books of
the Corporation.
4.2 A
holder of Class A Preference Series 1 Shares to be redeemed shall tender to the
Corporation at its registered office a request in writing specifying (i) that
the holder desires to have the whole or any part of the Class A Preference
Series 1 Shares registered in his name redeemed by the Corporation, (ii) the
number of Class A Preference Series 1 Shares which the holder desires to have
the Corporation redeem, and (iii) the business day, which shall not be less than
30 days after the day on which the request in writing is given to the
Corporation, on which the holder desires to have the Corporation redeem the
shares (the "retraction date"), together with the share certificates, if any,
representing the Class A Preference Series 1 Shares which the registered holder
desires to have the Corporation redeem.
4.3 The
Corporation shall, on receipt of a request and share certificates, on the
retraction date, redeem the shares by paying to the registered holder $15.00 per
Class A Preference Series 1 Share together with all declared and unpaid
dividends (if any) thereon up to the date fixed for redemption. This
payment shall be made by cheque payable at any branch in Canada of one of the
Corporation's bankers for the time being. If a part only of the Class
A Preference Series 1 Shares represented by any certificates is redeemed, a new
certificate for the balance shall be issued by the Corporation.
4.4 The
Class A Preference Series 1 Shares shall be redeemed on the retraction date and
from that date the shares shall cease to be entitled to dividends and their
holders shall not be entitled to exercise any of the rights of shareholders in
respect of the shares, unless payment of the redemption price is not made on the
retraction date, in which case the rights of the holders of the shares shall
remain unaffected.
5. CONVERSION
PRIVILEGES
5.1 Rights of
Conversion: The Class A Preference Series 1 Shares or any of
them, may, upon and subject to the terms and conditions hereinafter set forth,
be converted at any time by the holder or holders thereof into fully paid Common
Shares or Class B Preference shares of the Corporation as the same shall be
constituted at the time of conversion, on the basis of five and fifty-six one
hundredths (5.56) Common Shares for each one (1) Class A Preference Series 1
Share or three hundred (300) Class B Preference shares for each one (1) Class A
Preference Series 1 Shares issued, provided however, that, in the event of
liquidation, dissolution or winding-up of the Corporation, such right of
conversion shall cease and expire at noon on the business day next preceding the
date of such liquidation, dissolution or winding-up.
5.2 Conversion
Procedure: A holder of Class A Preference Series 1 Shares
desiring to convert his Class A Preference Series 1 Shares into Common Shares or
Class B Preference Shares in accordance with the foregoing shall surrender the
certificate or certificates representing his Class A Preference Series 1 Shares
so to be converted to the registered office of the Corporation or to the
transfer agent for the time being of such Class A Preference Series 1 Shares
accompanied by a request in writing for such conversion (specifying the class or
classes of shares into which he desires his Class A Preference Series 1 Shares
to be converted) with his signature thereon verified, as the directors of the
Corporation may from time to time require, and thereupon there shall be issued
to such holder by the Corporation, as fully paid and non-assessable, the number
of Common Shares or Class B Preference Shares to which he shall be entitled upon
such conversion. If a part only of the Class A Preference Series 1
Shares represented by any certificate is converted, a new certificate for the
balance shall be issued by the Corporation.
5.3 Loss of
Dividend: Payment in cash or adjustment in respect of unpaid
cumulative dividends on Class A Preference Series 1 Shares so converted (at the
option of the Corporation) shall be made upon any such conversion.
5.4 Anti-Dilution: If,
prior to the exercise by the holder of any Class A Preference Series 1 Shares of
his aforesaid conversion right, the number of outstanding Class A Preference
Series 1 Shares or Common Shares or Class B Preference Shares shall be
subdivided or consolidated, the number of Common Shares or Class B Preference
Shares into which such holder may convert his Class A Preference Series 1 Shares
shall be proportionately increased or reduced, as the case maybe.
5.5 Continuing Right to Alter
Capital: Nothing contained in the foregoing provisions
regarding the conversion of Class A Preference Series 1 Shares into Common
Shares or Class B Preference Shares shall be deemed in any way to limit or
restrict the rights of the Corporation from time to time to take such lawful
proceedings as it may deem advisable for the increase or reduction in its Class
A Preference Series 1 Shares or Common Shares or Class B Preference Shares, or
to otherwise in any other manner change or deal with the capital of the
Corporation or the shares thereof.
- -
6. LIQUIDATION, DISSOLUTION OR
WINDING-UP
6.1 In
the event of any liquidation, dissolution or winding up of the Corporation,
voluntary or involuntary, or in the event of any other distribution of assets of
the Corporation among its shareholders for the purpose of winding up its
affairs, the holders of the Class A Preference Series 1 Shares shall be entitled
to receive from the property and assets of the Corporation, a sum equal to
$15.00 plus an amount equal to all dividends accrued and unpaid thereon to the
date of payment, the whole before any amount shall be paid by the Corporation or
any property or assets of the Corporation shall be distributed to holders of
junior shares. After payment to the holders of the Class A Preference
Series 1 Shares of the amounts so payable to them, they shall not be entitled to
share in any further distribution of the property or assets of the
Corporation.
7. APPROVAL OF
MODIFICATION
7.1 The
approval or consent of the holders of Class A Preference Series 1 Shares with
respect to any matters referred to herein may be given, and (subject to the
rights of holders of Class A Preference Series 1 Shares as a class) the rights,
restrictions, conditions and limitations attaching to the Class A Preference
Series 1 Shares may be modified, varied, dealt with or affected, by a resolution
passed at a meeting of the holders of Class A Preference Series 1 Shares, by not
less than 66-2/3% of the votes cast at such meeting. To call such a meeting, all
of the provisions of the by-laws or the Articles of Incorporation of the
Corporation or as may be required by law relating in any manner to the holding
of general meetings of the Corporation or to proceedings thereat or to the
rights of members at or in connection therewith shall mutatis mutandis apply,
except that only holders of Class A Preference Series 1 Shares shall be entitled
to notice of or to vote at such meetings.
8. NOTICE
PROVISION
8.1 General: In
any case where the provisions attached to the Class A Preference Series 1 Shares
requires notice to be given by the Corporation to the holders of such shares,
accidental failure or omission to give such notice to one or more holders shall
not affect the validity of the action with respect to which notice is being
given, but upon such failure or omission being discovered notice shall be given
forthwith to such holder or holders and shall have the same force and effect as
if given in due time.
9. INTERPRETATION
9.1 In
the event that any date on which any dividend on the Class A Preference Series 1
Shares is payable by the Corporation, or on or by which any other action is
required to be taken by the Corporation hereunder, is not a business day, then
such dividend shall be payable, or such other action shall be required to be
taken, on or by the next succeeding date that is a Business Day.
CLASS B PREFERENCE
SHARES
The Class B Preference Shares shall
carry and be subject to the following rights, privileges, restrictions and
conditions:
- -
1. DIVIDENDS
1.1 Payment of
Dividends: The holders of the Class B Preference Shares shall
be entitled to receive and the Corporation shall pay thereon as and when
declared by the Board of Directors out of the monies of the Corporation properly
applicable to the payment of dividends, fixed preferential non-cumulative cash
dividends at the rate of $0.0024 per Class B Preference Share, payable annually
on dates in each fiscal year of the Corporation to be fixed from time to time by
resolution of the Board of Directors. The holders of the Class B Preference
Shares shall not be entitled to any dividend other than or in excess of the said
dividends herein provided. The Board of Directors of the Corporation shall be
entitled from time to time to declare part of the said fixed preferential
non-cumulative dividend for any fiscal year notwithstanding that such dividend
for such fiscal year shall not be declared in full. If within (4) months after
the expiration of any fiscal year of the Corporation the Board of Directors in
its discretion shall not have declared the said dividend or any part thereof on
the Class B Preference Shares for such fiscal year, then the rights of the
holders of the Class B Preference Shares to such dividend or to any undeclared
part thereof for such fiscal year shall be forever extinguished.
1.2 Preferential Non-Cumulative
Dividend: No dividends shall at any time be declared or paid
on or set apart for the Common Shares or any other class ranking junior to the
Class B Preference Shares unless all dividends up to and including the dividend
payable for the last completed full year of the Corporation on the Class B
Preference Shares then issued and outstanding shall have been declared and paid
or provided for at the date of such declaration, payment or setting
apart.
2. LIQUIDATION, DISSOLUTION OR
WINDING-UP
2.1 In
the event of liquidation, dissolution or winding-up of the Corporation among its
shareholders for the purpose of winding-up its affairs, the holders of the Class
B Preference Shares shall be entitled to receive for each such share a sum
equivalent to the result obtained when the stated capital account for the Class
B Preference Shares is divided by the number of issued and outstanding Class B
Preference Shares, together with all declared but unpaid dividends, before any
amount shall be paid or any property or assets of the Corporation distributed to
the holders of Common Shares, or shares of any other class ranking junior to the
Class B Preference Shares. After payment to the holders of the Class B
Preference Shares of the amount so payable to them as above provided they shall
not be entitled to share in any further distribution of the property or assets
of the Corporation.
3. PURCHASE FOR
CANCELLATION
3.1 The
Corporation may at any time or times purchase for cancellation out of capital
pursuant to the provisions of the Business Corporations Act, Ontario, the whole
or any part of the Class B Preference Shares, at the lowest price at which, in
the opinion of the directors, such shares are obtainable, but not exceeding the
redemption price of the Class B Preference Shares as hereinafter
specified.
- -
4. REDEMPTION
4.1 The
Corporation may, upon giving notice as hereinafter provided, redeem at any time
the whole or part of the outstanding Class B Preference Shares out of capital
pursuant to the Business Corporations Act, Ontario, on payment for each share to
be redeemed of the sum of $0.05 per Class B Preference Share, together with all
declared but unpaid dividends thereon up to the date fixed for redemption. Not
less than thirty day's notice in writing of such redemption shall be given by
the Corporation by mailing such notice to the registered holders of the shares
to be redeemed, specifying the date and place or places of redemption. On or
after the dates so specified for redemption, the Corporation shall pay or cause
to be paid to or to the order of the registered holders of the Class B
Preference Shares to be redeemed the redemption price thereof on presentation
and surrender at the head office of the Corporation, or any other place
designated in such notice, of the certificates representing the Class B
Preference Shares called for redemption. If a part only of the shares
represented by any certificate be redeemed, a new certificate for the balance
shall be issued at the expense of the Corporation. From and after the date
specified for redemption in any such notice, the Class B Preference Shares
called for redemption shall cease to be entitled to dividends and the holders
thereof shall not be entitled to exercise any of the rights of shareholders in
respect thereof unless payment of the redemption price shall not be made upon
presentation of certificates in accordance with the foregoing provisions, in
which case the rights of the shareholders shall remain unaffected. The
Corporation shall have the right at any time after the mailing of notice of its
intention to redeem any Class B Preference Shares to deposit the redemption
price of the shares so called for redemption or of such of the said shares
represented by certificates as have not at the date of such deposit been
surrendered by the holders thereof in connection with such redemption to a
special account in any chartered bank or any trust company in Canada, named in
such notice, to be paid without interest to or to the order of the respective
holders of such Class B Preference Shares called for redemption upon
presentation and surrender to such bank or trust company of the certificates
representing the same, and upon such deposit being made or upon the date
specified for redemption in such notice, whichever is the later, the Class B
Preference Shares in respect whereof such deposit shall have been made shall be
redeemed and the rights of the holders thereof after such redemption date, as
the case may be, shall be limited to receiving without interest their
proportionate part of the total redemption price so deposited against
presentation and surrender of the said certificates held by them,
respectively.
In the
event that only part of the Class B Preference Shares is at any time to be
redeemed, the shares so to be redeemed shall be selected pro rata (disregarding
fractions) from among the holders of record thereof as at the date of the notice
of redemption or in such other manner as the board of directors of the
Corporation in its sole discretion may deem equitable.
5. NOTICE AND
VOTING
5.1 The
holders of the Class B Preference Shares shall not be entitled as such (except
as hereinafter specifically provided) to receive notice of or to attend any
meeting of the shareholders of the Corporation and shall not be entitled to vote
at any such meeting. The holders of the Class B Preference Shares shall,
however, be entitled to notice of meetings of the shareholders called for the
purpose of authorizing the dissolution of the Corporation or the sale of its
undertaking or a substantial part thereof.
6. PREFERENTIAL
RIGHTS
6.1 The
Common Shares of the Corporation shall rank junior to the Class B Preference
Shares and shall be subject in all respects, to the rights, privileges,
restrictions and limitations attaching to the Class B Preference
Shares.
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SCHEDULE
"2.7(m)”
GENTERRA
CAPITAL INC.
STOCK OPTION
PLAN
ARTICLE
ONE
PURPOSE
AND INTERPRETATION
Section 1.01 Purpose. The purpose of this Plan is
to advance the interests of the Corporation by encouraging equity participation
in the Corporation by its directors, senior officers and employees through the
acquisition of Common Shares of the Corporation and to enable the Corporation to
attract and maintain highly qualified directors, senior officers and
employees.
Section 1.02 Definitions.
In this Plan, the following capitalized words and terms shall have the following
meanings:
"Act" means the Business Corporations Act (Ontario),
and any Act that may be substituted therefor, as from time to time
amended.
"Affiliate" shall have the
meaning ascribed thereto in the Securities Act.
"Associate" shall have the
meaning ascribed thereto in the Securities Act.
"Board of Directors" means the
board of directors of the Corporation as constituted from time to
time.
"Common Shares" means the
common shares of the Corporation as constituted on the date hereof.
"Compensation Committee" means
the Compensation Committee of the Board of Directors as constituted from time to
time.
"Corporation" means Genterra
Capital Inc., a corporation amalgamated under the Act, and its successors from
time to time.
"Designated Affiliate" means
the Affiliates of the Corporation designated by the Board of Directors for
purposes of this Plan from time to time.
"Exchange" means The Toronto
Stock Exchange or such other stock exchange or quotation system upon which the
Common Shares are listed and posted or quoted for trading.
"Insider" shall have the
meaning ascribed thereto in the Securities Act, other than a person who is an
Insider solely by virtue of being a director or senior officer of a subsidiary
of the Corporation and any Associate or Affiliate of an Insider.
"Issuer Bid" shall have the
meaning ascribed thereto in the Securities Act.
"Option Period" means the
period of time an option may be exercised as specified in Subsection 2.07(a) of
this Plan.
"Participant" means a
participant under this Plan under Sections 2.01 and 2.02.
"Plan" means the stock option
plan provided for herein.
"Securities Act" means the
Securities Act (Ontario)
or its successor, as amended from time to time.
"Securities Laws" means,
collectively, the applicable securities laws, regulations, rules, schedules,
prescribed forms, policy statements, notices, blanket rulings and other similar
instruments of each of the jurisdictions in which the Corporation is or becomes
a reporting issuer or equivalent and also includes, as the context so requires,
the by-laws, rules, regulations and policies of the Exchange.
"Share Compensation
Arrangement" means a stock option, stock option plan, employee stock
purchase plan or any other compensation or incentive mechanism involving the
issuance or potential issuance of securities of the Corporation to one or more
service providers, including a share purchase from treasury which is financially
assisted by the Corporation by way of a loan, guarantee or
otherwise.
"Take-over Bid" shall have the
meaning ascribed thereto in the Securities Act.
ARTICLE
TWO
STOCK
OPTION PLAN
Section 2.01 The
Plan. The Plan is
hereby established for the directors, senior officers and employees of the
Corporation and its Designated Affiliates, and for such other persons who are
eligible to participate in the Plan from time to time under the Securities
Laws.
Section 2.02 Participants. Participants in the Plan
shall be directors, senior officers or employees of the Corporation and
consultants to the Corporation (to the extent permitted under the Securities
Laws) or any of its Designated Affiliates (including officers thereof, whether
or not directors) who, by the nature of their positions or duties are, in the
opinion of the Board of Directors, upon the recommendation of the Compensation
Committee, in a position to contribute to the success of the
Corporation.
Section 2.03 Amount of
Options. The
determination regarding the aggregate number of Common Shares subject to options
in favour of any Participant will take into consideration the Participant's
present and potential contribution to the success of the Corporation and shall
be determined from time to time by the Board of Directors upon the
recommendation of the Compensation Committee. The aggregate number of Common
Shares reserved for issuance upon the exercise of options pursuant to this Plan
and any other Share Compensation Arrangements, subject to adjustment or increase
of such number pursuant to Section 2.10 hereof, shall be Two Million (2,000,000)
Common Shares of the Corporation or such other number or percentage of Common
Shares as the directors may determine from time to time and, to the extent
required under applicable Securities Laws or the requirements of any Exchange on
which the Common Shares may then be listed and posted for trading, as the
shareholders of the Corporation shall approve. The maximum number of Common
Shares reserved for issuance to anyone Participant upon the exercise of options
shall not exceed 5% of the total number of Common Shares outstanding immediately
prior to such issuance. All options previously issued by the Corporation to its
directors, senior officers and employees that are outstanding as at the date of
this Plan, to acquire Common Shares of the Corporation, shall be deemed, as of
the Effective Date of this Plan, to have been granted and issued under this
Plan, shall constitute options to acquire Common Shares, shall have the same
terms and conditions as to exercise price and vesting period as are currently
applicable to such options, and shall otherwise be governed by the terms and
conditions of this Plan. The form of option agreement for options granted from
time to time under this Plan after the date hereof shall be in the form of
Schedule "A" hereto or such other form of agreement as is adopted by the Board
of Directors from time to time in substitution therefor.
Section
2.04 Limits with
Respect to Insiders.
(a) The
aggregate number of Common Shares issuable to all Insiders pursuant to options
granted under this Plan, together with Common Shares issuable to Insiders under
any other Share Compensation Arrangement of the Corporation, shall
not:
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(i)
|
exceed
10% of the number of Common Shares outstanding immediately prior to the
grant of any such option; or
|
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(ii)
|
result
in the issuance to Insiders, within a one year period, of in excess of 10%
of the number of Common Shares outstanding immediately prior to the grant
of any such option.
|
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(b)
|
The
number of Common Shares issuable to any Insider and such Insider's
Associates pursuant to options granted under this Plan, together with
Common Shares issuable to such Insider or such Insider's Associates under
any other Share Compensation Arrangement of the Corporation shall not,
within a one year period, exceed 5% of the number of Common Shares
outstanding immediately prior to the grant of any such
option.
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(c)
|
Any
Common Shares issuable pursuant to an option granted to a Participant
prior to the Participant becoming an Insider shall be excluded for the
purposes of the limits set out in Subsections 2.04(a) and 2.04(b)
hereof.
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- -
Section 2.05 Price. The exercise price per
Common Share with respect to any option shall be determined by the Board of
Directors at the time the option is granted, but such price shall not be less
than the closing price of the Common Shares on the Exchange, on the day prior to
the day on which the grant of the option is approved by the Board of Directors
or, if the Common Shares were not traded on such day, then an amount equal to
the weighted average trading price for shares traded on the Exchange for the
five trading days immediately preceding such day on which shares did trade, or,
if the requirements of the Exchange specify a different amount, then such amount
determined in accordance with the requirements of the Exchange in effect on the
date upon which the option is granted.
Section 2.06 Lapsed
Options. In the
event that options granted under this Plan are surrendered, terminate or expire
without being exercised or vested in whole or in part, the Common Shares
reserved for issuance but not purchased under such lapsed options shall again be
available for issuance for the purpose of this Plan.
Section
2.07 Consideration.
Option Period and Payment.
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(a)
|
The
period during which options may be exercised shall be determined by the
Board of Directors upon the recommendation of the Compensation Committee,
in its discretion, to a maximum of five (5) years from the date the option
is granted (the "Option Period"), except as the same may be reduced with
respect to any option as provided in Sections 2.08 and 2.09 hereof
respecting termination of employment or death of the
Participant.
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(b)
|
Subject
to any other provision of this Plan, or to any vesting requirement or
limitation imposed with respect to such option at the time of grant
thereof, an option may be exercised from time to time during the Option
Period by delivery to the Corporation at its registered office of a
written notice of exercise addressed to the Secretary of the Corporation
specifying the number of Common Shares with respect to which the option is
being exercised and accompanied by payment in full of the exercise price
therefor. Certificates for such Common Shares shall be issued and
delivered to the Participant as soon as practicable following receipt of
such notice and payment.
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(c)
|
Except
as set forth in Sections 2.08 and 2.09 hereof, no option may be exercised
unless the Participant is, at the time of such exercise, a director,
senior officer, consultant of or in the employ of the Corporation or any
of its Designated Affiliates and shall have been continuously a director,
or senior officer, or so employed since the grant of his or her option.
Absence on leave with the approval of the Corporation or a Designated
Affiliate shall not be considered an interruption of employment for
purposes of this Plan.
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(d)
|
The
exercise of any option will be contingent upon receipt by the Corporation
of cash payment of the full exercise price of the Common Shares which are
the subject of the exercised option. No Participant or his or her legal
representatives, legatees or distributees will be, or will be deemed to
be, a holder of any Common Shares with respect to which he or she was
granted an option under this Plan, unless and until certificates for such
Common Shares are issued to him or her under the terms of this
Plan.
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(e)
|
Notwithstanding
any other provision of this Plan or in any option granted to a
Participant, the Corporation's obligation to issue Common Shares to a
Participant pursuant to the exercise of an option shall be subject
to:
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|
(i)
|
completion
of such registration or other qualification of such Common Shares or
obtaining approval of such regulatory authorities as the Corporation shall
determine to be necessary or advisable in connection with the
authorization, issuance or sale
thereof;
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(ii)
|
the
admission of such Common Shares for quotation or listing and posting for
trading, as the case may be, on the Exchange;
and
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(iii)
|
the
receipt from the Participant of such representations, warranties,
agreements and undertakings, including as to future dealings in such
Common Shares, as the Corporation or its counsel determines to be
necessary or advisable in order to ensure compliance with the Securities
Laws.
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(f)
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If
there is a Take-over Bid or Issuer Bid made for all or any of the issued
and outstanding Common Shares, then the Board of Directors may, by
resolution, permit all options outstanding under the Plan to become
immediately exercisable in order to permit Common Shares issuable under
such options to be tendered to such
bid.
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Section 2.08 Termination
of Employment. If
a Participant shall:
(a) cease
to be a director or senior officer of the Corporation or any of its Designated
Affiliates (and is not or does not continue to be an employee thereof);
or
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(b)
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cease
to be employed by the Corporation or any of its Designated Affiliates (and
is not or does not continue to be a director or senior officer thereof)
for any reason (other than death) or shall receive notice from the
Corporation or any of its Designated Affiliates of the termination of his
or her employment;
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(collectively,
"Termination") he or she may, but only within 90 days next succeeding such
Termination, exercise his or her options to the extent that he or she was
entitled to exercise such options at the date of such Termination; provided that
in no event shall such right extend beyond the Option Period. This section is
subject to any agreement with any director or senior officer of the Corporation
or any of its Designated Affiliates with respect to the rights of such director
or senior officer upon Termination or change in control of the
Corporation.
Section 2.09 Death of
Participant. In
the event of the death of a Participant who is a director or senior officer of
the Corporation or any of its Designated Affiliates or who is an employee having
been continuously in the employ of or retained by (as the case may be) the
Corporation or any of its Designated Affiliates for one year from and after the
date of the granting of his or her option, the option theretofore granted to him
or her shall be exercisable within the six months next succeeding such death and
then only:
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(a)
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by
the person or persons to whom the Participant's rights under the option
shall pass by the Participant's will or the laws of descent and
distribution; and
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(b)
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to
the extent that he or she was entitled to exercise the option at the date
of his or her death, provided that in no event shall such right extend
beyond the Option Period.
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Section 2.10 Adjustment
in Shares Subject to the Plan. In the event
that:
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(a)
|
there
is any change in the Common Shares of the Corporation through subdivisions
or consolidations of the share capital of the Corporation, or
otherwise;
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(b)
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the
Corporation declares a dividend on Common Shares payable in Common Shares
or securities convertible into or exchangeable for Common Shares;
or
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(c)
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the
Corporation issues Common Shares, or securities convertible into or
exchangeable for Common Shares, in respect of, in lieu of, or in exchange
for, existing Common Shares,
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the
number of Common Shares available for option, the Common Shares subject to any
option, and the option price thereof, shall be adjusted appropriately by the
Board of Directors and such adjustment shall be effective and binding for all
purposes of this Plan, subject to the prior consent of the
Exchange.
Section 2.11 Record
Keeping. The
Corporation shall maintain a register in which shall be recorded:
(a) the
name and address of each Participant in this Plan; and
(b) the
number of options granted to a Participant and the number of options
outstanding.
ARTICLE
THREE
GENERAL
Section 3.01 Transferability. The benefits, rights and
options accruing to any Participant in accordance with the terms and conditions
of this Plan shall not be transferable or assignable by the Participant except
as otherwise specifically provided herein, During the lifetime of a Participant,
all benefits, rights and options shall only be exercised by the Participant or
by his or her guardian or legal representative.
Section 3.02 Employment. Nothing contained in this
Plan shall confer upon any Participant any right with respect to employment or
continuance of employment with the Corporation or any Affiliate, or interfere in
any way with the right of the Corporation or any Affiliate to terminate the
Participant's employment at any time, Participation in this Plan by a
Participant shall be voluntary.
Section 3.03 Delegation
to Compensation Committee. All of the powers
exercisable by the Board of Directors under this Plan may, to the extent
permitted by applicable law and authorized by resolution of the Board of
Directors of the Corporation, be exercised by a Compensation Committee of the
Board of Directors. The composition of the Compensation Committee
shall be as determined by the Board of Directors from time to time subject to
the requirements (if any) of the Securities Laws.
Section 3.04 Administration
of the Plan. This
Plan shall be administered by the Board of Directors of the Corporation, The
Board of Directors shall be authorized to interpret and construe this Plan and
may, from time to time, establish, amend or rescind rules and regulations
required for carrying out the purposes, provisions and administration of this
Plan and determine the Participants to be granted options, the number of Common
Shares covered thereby, the exercise price therefor and the time or times when
they may be exercised, Any such interpretation or construction of this Plan
shall be final and conclusive, All administrative costs of this Plan shall be
paid by the Corporation, The directors and senior officers of the Corporation
are hereby authorized and directed to do all things and execute and deliver all
instruments, undertakings and applications and writings as they, in their
absolute discretion, consider necessary for the implementation of this Plan and
of the rules and regulations established for administering this
Plan.
Section 3.05 Amendment.
Modification or Termination of the Plan. The Board of Directors
reserves the right to amend, modify or terminate this Plan at any time if and
when it is advisable in the discretion of the Board of Directors without
shareholder approval. However, shareholder approval shall be required in respect
of:
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(a)
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any
amendments to the number of Common Shares (or other securities) issuable
under this Plan;
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(b) any
amendment which reduces the exercise price of an option;
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(c)
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any
amendment to the transferability or assignability of an option except as
otherwise permitted by this Plan;
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(d) amendments
required to be approved by shareholders under applicable law.
Where
shareholder approval is sought for amendments under subsections (b) and (d)
above, the votes attached to Common Shares held directly or indirectly by
Insiders benefiting from the amendment will be excluded.
Other
than as specified above, the Board of Directors may approve all other amendments
to this Plan or options granted under this Plan without shareholder
approval. Without limiting the generality of the foregoing, the
following types of amendments would not require shareholder
approval:
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(e)
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amendments
of a "housekeeping" or ministerial nature including any amendment for the
purpose of curing any ambiguity, error or omission in this Plan or to
correct or supplement any provision of this Plan that is inconsistent with
any other provision of this Plan;
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(f)
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amendments
necessary to comply with the provisions of applicable law (including
without limitation the rules, regulations and policies of the
Exchange);
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(g) an
amendment which increases the exercise price of an option;
(h) an
expansion of the scope of persons eligible to participate in this
Plan;
(i) amendments
respecting administration of this Plan;
(j) any
amendment to the vesting provisions of this Plan or any option;
(k) any
amendment to the early termination provisions of this Plan or any option whether
or not such option is held by an Insider, provided such amendment does not
entail an extension beyond the original expiry date; and
(l) amendments
necessary to suspend or terminate this Plan.
Section 3.06 Consolidation,
Merger, etc. If there is a consolidation, merger or statutory
amalgamation or arrangement of the Corporation with or into another corporation,
a separation of the business of the Corporation into two or more entities or a
transfer of all or substantially all of the assets of the Corporation to another
entity, upon the exercise of an option under this Plan, the holder thereof shall
be entitled to receive the securities, property or cash which the holder would
have received upon such consolidation, merger, amalgamation, arrangement,
separation or transfer if the holder had exercised the option immediately prior
to such event, unless the directors of the Corporation otherwise determine the
basis upon which such option shall be exercisable, subject to Exchange
approval.
Section 3.07 No
Representation or Warranty. The Corporation
makes no representation or warranty as to the future market value of any Common
Shares issued in accordance with the provisions of this Plan.
Section 3.08 Interpretation. This Plan shall be governed
by and construed in accordance with the laws of the Province of
Ontario.
Section 3.09 Approval
of the Plan. This
Plan shall only become effective after the issue of Articles of Amalgamation
amalgamating Genterra Inc. and Consolidated Mercantile
Incorporated. The obligations of the Corporation to sell and deliver
Shares in accordance with this Plan shall be subject to the prior approval of
any governmental or other regulatory authority having jurisdiction over the
securities of the Corporation.
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SCHEDULE
“A”
FORM
OF OPTION AGREEMENT
OPTION
AGREEMENT
THIS AGREEMENT is made as of
the ____ day of ________________, 20___ by GENTERRA CAPITAL INC., a
corporation existing under the laws of the Province of Ontario (hereinafter
referred to as the “Corporation”), in favour of ______________________________,
an individual residing in the _______________ of ___________________, in the
____________________ of _________________ (hereinafter referred to as the
“Optionee”).
WHEREAS:
A. The
Optionee is a [director, officer or employee] of the Corporation or any
Designated Affiliate, and will render faithful and efficient service to the
Corporation, or any Designated Affiliate, as the case may be;
B. The
Corporation, or any Designated Affiliate, as the case may be, desires to
continue to receive the benefit of the services of the Optionee and to more
fully identify the interest of the Optionee with the Corporation’s or any
Designated Affiliate’s future and success; and
C. The
Corporation has adopted a stock option plan (as such stock option plan may be
amended or superseded from time to time, the “Plan”) which became effective upon
the date of its formation as a result of the amalgamation of Genterra Inc. and
Consolidated Mercantile Incorporated;
D. The
board of directors of the Corporation has approved the granting of a stock
option to the Optionee to purchase common shares in the capital of the
Corporation upon and subject to the provisions of the Plan and to the terms and
conditions hereinafter provided;
E.
Capitalized terms not defined herein have the meaning ascribed to them in the
Plan.
NOW THEREFORE in consideration
of the sum of $2.00 and the mutual covenants herein contained, the sufficiency
and receipt of which are hereby acknowledged, the Corporation hereto agrees as
follows:
1. Option to Purchase. The
Corporation hereby grants to the Optionee the irrevocable right and option to
purchase from the Corporation that number of authorized and unissued common
shares without nominal or par value in the capital of the Corporation as are
specified in Exhibit “1” hereto (the “Shares”), at the exercise price per Share
specified in Exhibit “1” hereto. Such option shall at all times be and remain
subject to the provisions of the Plan and to the terms and conditions contained
herein.
2. Basic Term of Option.
Notwithstanding any other provisions of this Agreement, this option shall
be exercisable, in whole or in part, at any time during the period (the “Term”)
commencing the date hereof and expiring on the date specified in Exhibit “1”
hereto, at which time this option shall be void and of no further force or
effect. However such option shall only be exercisable, at any time, to acquire
those Shares in respect of which the Optionee has satisfied the vesting
requirements, if any, specified in Exhibit “1” hereto.
3. Manner of Exercise of Option.
The Optionee, subject to the qualifications and exceptions contained in
paragraph 5, may exercise this option to purchase on a cumulative basis, to the
extent hereinafter provided, all or any part of the number of Shares subject to
this option, and such right shall be a continuing and cumulative one during the
Term until the number of Shares subject to the option stated in paragraph 1 has
been purchased.
4. Death of Optionee.
Notwithstanding paragraph 3, upon the death of the Optionee while an
employee of the Corporation or any Designated Affiliate, this option shall, then
and for a period of six months after the date of death or prior to the
expiration of the Term, whichever is sooner, be exercisable in full, and may be
exercised in whole or in part by the estate of the Optionee or by such person or
persons to whom this option shall be transferred by the will of the Optionee, or
by the applicable laws of descent and distribution.
5. Termination as Employee. Upon
the Optionee ceasing to be employed by the Corporation or a Designated Affiliate
for any reason (other than death), the Optionee may, but only for a period of
ninety (90) days next succeeding such cessation of employment or prior to the
expiration of the Term, whichever is sooner, thereafter exercise this option in
whole or in part, but only in respect of such number of remaining Shares
originally covered by this option as the Optionee may purchase at such time as
specified in paragraph 3.
6. Notice of Exercise of Option.
This option shall be exercised in whole or in part upon providing notice
in writing to the Corporation addressed to the President of the Corporation at
such place as the Corporation’s executive office may then be located (the
“Notice”).
7. Right of a Shareholder. After
receipt of the Notice and payment in full of the option price for the total
number of Shares to be purchased, the Corporation shall cause to be issued and
delivered such certificates in such denominations as the Optionee may in the
Notice direct, representing the number of fully paid, non-assessable Shares so
purchased, registered in the name of the Optionee, but the Optionee shall have
no right as a shareholder with respect to any Shares covered by this option
until the issuance of such share certificates, and no adjustment shall be made
for dividends or other rights for which the record date is prior to the time
such share certificates are issued. The Corporation agrees to issue all Shares
so purchased (including share certificates in respect thereof) within twenty
(20) business days after such receipt of Notice and payment in full of the
option price for the total number of Shares to be purchased.
8. Transfer or Assignment of Option.
The option granted pursuant to this Agreement shall not be transferable
or assignable by the Optionee.
9. Adjustment in Shares Subject to the
Option. In the event there is any change in the common shares of the
Corporation through the declaration of stock dividends or consolidations,
subdivisions or reclassifications of the common shares of the Corporation, or
otherwise, the number of Shares subject to this option, and the option price
thereof, shall be adjusted appropriately by the board of directors of the
Corporation and such adjustment shall be effective and binding for all purposes
of this Agreement.
10. Effect of Takeover Bid. If a
bona fide offer (the “Offer”) is made during the Term of this option to the
Optionee or to shareholders generally or to a class of shareholders which
includes the Optionee for Shares, which Offer, if accepted in whole or in part,
would result in the offeror exercising control over the Corporation within the
meaning of the Securities Act (Ontario) (as amended from time to time), then the
Corporation shall, immediately upon receipt of notice of the Offer notify the
Optionee of the Offer, with full particulars thereof; whereupon, notwithstanding
paragraph 3 hereof, this option may be exercised in whole or in part by the
Optionee so as to permit the Optionee to tender the Shares received upon such
exercise (the “Optioned Shares”) pursuant to the Offer. If the Offer is not
completed within the time specified therein the Optioned Shares shall be
returned by the Optionee to the Corporation and reinstated as authorized but
unissued Shares and the terms of this option as set forth in paragraph 3 shall
again apply to this option.
11. Regulatory Approval. This
Agreement and the obligations of the Corporation to sell and deliver Shares
under the option granted hereunder shall be subject to the prior approval of any
governmental or other regulatory authority having jurisdiction over the
securities of the Corporation.
12. Governing Law. This Agreement
and the options granted hereunder shall be governed by and construed in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein.
IN WITNESS WHEREOF the
Corporation has duly executed this Agreement as of the day, month and year first
above written and the Optionee has duly executed this Agreement and accepted the
terms hereof as set forth below.
GENTERRA
CAPITAL INC.
Per:
Authorized Signing
Officer
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Accepted
and agreed to this ____ day of ____________________, 20___.
______________________________ _____________________________
Signature
of
Optionee Witness
______________________________
Name of
Optionee
_______________________________
_______________________________
Address
of Optionee
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Exhibit
“1”
Particulars
of Option
Name of
Optionee: __________________________
Number of
Shares
subject
to
Option: ___________________________
common shares
Exercise
Price
per
Share: $_____________
per common share
Term of
Option: ____________________________
[maximum 5 years]
Vesting
Period
(if
applicable): as
to ______________ Shares after _______ months from the date hereof;
as to
______________ Shares after _______ months from the date hereof;
as to
______________ Shares after _______ months from the date hereof;
and
as to
______________ Shares after _______ months from the date hereof
- -
SCHEDULE
"4.2(c)”
CMI
SUBSIDIARIES
CMI owns
100% of the issued and outstanding shares of, 2041804 Ontario Inc., an Ontario
corporation which holds investments in marketable securities.
CMI also
holds a 1.44% equity interest in Genterra.
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SCHEDULE
"4.15”
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CMI MATERIAL
CONTRACTS
CMI is
party to a management contract with Forum Financial Corporation whereby Forum
has agreed to provide administration, management and consulting services for an
annual fee of $240,000. These services include office, administrative
and clerical services, including bookkeeping and accounting
services.
Effective
December 28, 2007, pursuant to a purchase and sale agreement, CMI sold its
shares and debt owed by Distinctive to 337572 Ontario Limited, Distinctive’s
other major shareholder. CMI received $834,010.80 in cash
representing 100% of the price attributable to the debt and the delivery of a $1
million promissory note payable in ten equal consecutive instalments of $100,000
with the first instalment due on January 15, 2009 and each anniversary
thereafter. There is no interest on the note unless a default occurs
and the note only remains payable if Distinctive remains in
business. There is provision to accelerate the payment of the note in
certain circumstances. The security for the note is a pledge of all
of the shares owned by the purchaser in the capital of Distinctive, representing
a majority of the issued and outstanding shares of Distinctive.
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SCHEDULE
"5.2(c)”
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GENTERRA
SUBSIDIARIES
Genterra
has four wholly-owned subsidiaries through which it hold its portfolio of real
estate investments: Rallets Realty Inc., 127627 Ontario Limited, 767705 Ontario
Limited and Ninety Ontario Street Inc., each of which was incorporated pursuant
to the laws of the Province of Ontario, Canada. Genterra also has one
wholly-owned subsidiary which is completely inactive, First Ontario Properties
Inc., which was incorporated pursuant to the laws of the Province of Ontario,
Canada.
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SCHEDULE
"5.15”
|
GENTERRA MATERIAL
CONTRACTS
Genterra
is party to a management contract with Forum Financial Corporation whereby Forum
has agreed to provide administration, management and consulting services for an
annual fee of $200,000. These services include office, administrative
and clerical services, including bookkeeping and accounting
services.
Genterra
is party to a management services contract with First Ontario Investments Inc.,
whereby FirstOnt has agreed to provide property management services for an
annual fee of $206,000.
Genterra
is the mortgagor under a First Mortgage on its property located at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇. The mortgage bears interest at prime
plus 1.75% and is repayable in monthly instalments of $5,217 plus interest and
matures on August 1, 2011.
Genterra
is the mortgagor under a First Mortgage on its property located at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇. The mortgage bears interest at 4.63% and is
repayable in blended monthly instalments of $25,005 and matures on July 1,
2010.
Genterra
is the mortgagor under a First Mortgage on its property located at ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇. The mortgage bears interest at the
lender’s base rate plus 0.2% and is repayable in monthly instalments of $4,453
plus interest and matures on September 1, 2022.
Genterra
leases 96,613 square feet at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ to Sleep
Country Corporation at rates increasing from $4.50 per square foot to $6.25 per
square foot. The Company also leases 16,819 square feet at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ to Sleep Country Corporation at rates
increasing from $6.50 per square foot to $8.25 per square foot. Both
leases expire on April 15, 2016.
Genterra
leases its properties at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ to The Cambridge Towel Corporation for annual
rental of $640,175. The leases for these properties expire on January
31, 2011.
f:\users\cilia\forum
financial\genterra\amalgamation\amalgamation agreement\amalgamation agreement -
execution copy - rev cln oct 21 09.doc