EXHIBIT 1
TO PRE-MERGER AGREEMENT
PLAN OF ARRANGEMENT
UNDER SECTION 192
OF THE CANADA BUSINESS CORPORATIONS ACT (CANADA)
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Plan of Arrangement unless there is something in the subject matter
or context inconsistent therewith, the following terms shall have the respective
meanings set out below and grammatical variations of such terms shall have
corresponding meanings:
"AMALCO" means the corporation resulting from the Amalgamation.
"AMALCO CLASS A SHARES" has the meaning ascribed thereto in paragraph
2.1(a)(x)(b).
"AMALCO COMMON SHARES" means common shares in the capital of Amalco.
"AMALCO REDEEMABLE SHARES" has the meaning ascribed thereto in paragraph
2.1(a)(x)(b).
"AMALGAMATION" means the amalgamation of SC and RR pursuant
to subsection 2.1(a).
"ARRANGEMENT" means the arrangement under Section 192 of the CBCA on the
terms and subject to the conditions set out in this Plan of Arrangement, subject
to any amendments thereto made in accordance with section 5.1 of this Plan of
Arrangement or made at the direction of the Court in the Final Order.
"BUSINESS DAY" means a day which is not a Saturday, Sunday or statutory
holiday within the meaning of the INTERPRETATION ACT (Canada) or the
INTERPRETATION ACT (Quebec).
"CA" means the COMPETITION ACT (Canada).
"CBCA" means the CANADA BUSINESS CORPORATIONS ACT (Canada).
"CIRCULAR" means the joint management proxy circular of SC and RR to be
prepared and sent to the RR Common Shareholders, the RR Equity Shareholder, the
RR Debentureholders, the SC Shareholders and the SC Debentureholders, in each
case as shown in the applicable registers on the record date determined for such
purpose, in connection with the Special Meetings.
"COURT" means the Superior Court of Quebec, District of Montreal.
"DEPOSITARY" means Montreal Trust Company at its principal office in
Montreal, Quebec or any subdepositary appointed thereby.
"DIRECTOR" means the Director appointed under Section 260 of the CBCA.
"DISSENT PROCEDURES" has the meaning set out in section 3.1.
"DISSENTING SHAREHOLDER" means a holder of SC Common Shares or RR Common
Shares ("DISSENTING SHARES") who dissents in respect of the Arrangement in
strict compliance with the Dissent Procedures.
"EFFECTIVE DATE" means the date shown on the certificate of amendment
issued by the Director giving effect to the Arrangement.
"ELECTED RR COMMON SHARE" means any RR Common Share in respect of which the
holder thereof shall have elected in accordance with section 4.5 to receive
Amalco Redeemable Shares on the Amalgamation.
"FINAL ORDER" means the final order of the Court made in connection with
the approval of the Arrangement, providing, among other things, for the coming
into effect of the Arrangement.
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"INTERIM ORDER" means the interim order of the Court made in connection
with the approval of the Arrangement.
"OBCA" means the BUSINESS CORPORATIONS ACT (Ontario).
"PLAN OF ARRANGEMENT", "HEREOF", "HEREUNDER" and similar expressions mean
this Plan of Arrangement, including Appendices hereto, and not any particular
article, section or other portion hereof and includes any instrument
supplementary or ancillary hereto.
"RR" means Rainy River Forest Products Inc., a corporation incorporated
under the laws of Ontario.
"RR COMMON SHAREHOLDERS" means the holders of RR Common Shares.
"RR COMMON SHAREHOLDERS MEETING" means the meeting of RR Common
Shareholders to be held to consider and, if deemed advisable, to approve the
Arrangement by way of special resolution.
"RR COMMON SHARES" means the common shares in the capital of RR.
"RR DEBENTUREHOLDERS" at any time means the holders of RR Debentures at
such time.
"RR DEBENTUREHOLDERS MEETING" means the meeting of RR Debentureholders to
be held to consider and, if deemed advisable, to approve Parts C and E of the
Arrangement by way of extraordinary resolution.
"RR DEBENTURES" means the 8% Convertible Unsecured Subordinated Debentures
issued by RR under the RR Trust Indenture.
"RR EQUITY SHAREHOLDERS" means the holder of RR Equity Shares.
"RR EQUITY SHARES" means the non-voting equity shares in the capital of RR.
"RR STOCK OPTIONS" means the rights (whether or not vested) to purchase RR
Common Shares which are from time to time outstanding under the RR Stock Option
Plan.
"RR STOCK OPTION PLAN" means the stock option plan established by RR on
April 12, 1994, as amended.
"RR SUPPLEMENTAL TRUST INDENTURE" means the supplemental trust indenture to
be entered into between Amalco and The R-M Trust Company, as trustee,
evidencing, among other things, the RR Trust Indenture Amendment.
"RR TRUST INDENTURE" means a trust indenture dated as of October 13, 1994
between RR and The R-M Trust Company, as trustee.
"RR TRUST INDENTURE AMENDMENT" means the amendments to, deletions from and
other modifications of the RR Trust Indenture to be made as part of the
Arrangement, including those more particularly described in Appendix A.
"SC" means Stone-Consolidated Corporation, a corporation incorporated under
the laws of Canada.
"SC COMMON SHARES" means the common shares in the capital of SC.
"SC DEBENTUREHOLDERS" means the holders of SC Debentures.
"SC DEBENTUREHOLDERS MEETING" means the meeting of SC Debentureholders to
be held to consider and, if deemed advisable, to approve Parts B and D of the
Arrangement by way of extraordinary resolution.
"SC DEBENTURES" means the 8% Convertible Unsecured Subordinated Debentures
issued by SC under the SC Trust Indenture.
"SC SHAREHOLDERS" means the holders of SC Common Shares.
"SC SHAREHOLDERS MEETING" means the meeting of SC Shareholders to be held
to consider and, if deemed advisable, to approve the Arrangement by way of
special resolution.
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"SC SUPPLEMENTAL TRUST INDENTURE" means the Supplemental Trust Indenture to
be entered into between Amalco and Montreal Trust Company, as trustee, providing
for, among other things, the SC Trust Indenture Amendment.
"SC TRUST INDENTURE" means the trust indenture dated as of December 17,
1993 between SC and Montreal Trust Company, as trustee.
"SC TRUST INDENTURE AMENDMENT" means the amendments to, deletions from and
other modifications of the SC Trust Indenture to be made as part of the
Arrangement, including those more particularly described in Appendix B.
"SC STOCK OPTIONS" means the rights (whether or not vested) to purchase SC
Common Shares which are from time to time outstanding under the SC Stock Option
Plan.
"SC STOCK OPTION PLAN" means the Amended 1993 Share Option and Share Award
Plan established by SC on December 6, 1993, as amended on May 23, 1995.
"SENIOR NOTE INDENTURES" means, collectively: (a) the Indenture dated as of
December 17, 1993 between SC and Norwest Bank Minnesota, National Association,
as trustee, relating to SC's US $225,000,000 10.25% Senior Secured Notes due
2000; and (b) the Indenture dated as of October 1, 1994 between RR and First
Trust of New York, National Association, as trustee, relating to RR's US
$110,000,000 10 3/4% Senior Secured Notes due 2001.
"SPECIAL MEETINGS" means the RR Common Shareholders Meeting, the RR
Debentureholders Meeting, the SC Shareholders Meeting and the SC
Debentureholders Meeting.
1.2 NUMBER, GENDER AND PERSONS
In this Plan of Arrangement, unless the context otherwise requires, words
importing the singular number include the plural and VICE VERSA, words importing
any gender include all genders and words importing persons include individuals,
corporations, partnerships, associations, trusts, unincorporated organizations,
governmental bodies and other legal or business entities of any kind.
1.3 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC.
The division of this Plan of Arrangement into Articles, sections and other
parts and the insertion of headings are for convenience of reference only and
shall not affect the construction or interpretation of this Plan of Arrangement.
1.4 DATE FOR ANY ACTION
In the event that any date on or by which any action is required or
permitted to be taken hereunder is not a Business Day, such action shall be
required or permitted to be taken on or by the next succeeding day which is a
Business Day.
1.5 TIME
All times expressed herein or in any letters of transmittal and election
forms are local time (Montreal, Quebec) unless otherwise stipulated herein or
therein.
1.6 CURRENCY
All references to currency in this Plan of Arrangement are to Canadian
dollars, being lawful money of Canada, and the sign "$" without more shall mean
Canadian dollars.
1.7 STATUTORY REFERENCES
Any reference in this Plan of Arrangement to a statute includes all
regulations made thereunder, all amendments to such statute or regulations in
force from time to time, and any statute or regulation that supplements or
supersedes such statute or regulations.
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1.8 APPENDICES
The following are the Appendices to this Plan of Arrangement, which form an
integral part hereof:
Appendix A: RR Trust Indenture Amendment
Appendix B: SC Trust Indenture Amendment
Appendix C: Amalco Share Provisions
ARTICLE 2
ARRANGEMENT
2.1 THE ARRANGEMENT
On the Effective Date, the following shall occur and shall be deemed to
occur in the following order and at the respective times referred to below
without any further act or formality:
PART A
(a) At the time which is the earliest moment on the Effective Date, SC and
RR shall amalgamate to form Amalco and shall continue as one corporation under
the CBCA with the effect described below and, unless and until otherwise
determined in the manner required by law, by Amalco, its directors or
shareholders, the following provisions shall apply:
(i) The effect of the Amalgamation shall be as if RR were (A)
continued under the CBCA in accordance with Section 187 of the
CBCA and (B) amalgamated with SC in accordance with Section 186
of the CBCA, all of the foregoing in accordance with Section
192(8) of the CBCA.
(ii) The property of each of RR and SC (including any rights that may
arise under any permit or agreement) immediately before Part A
of the Arrangement becomes effective shall continue to be the
property of Amalco.
(iii) Amalco shall continue to be liable for the obligations of RR and
SC (including any obligations that may arise under any permit or
agreement) are immediately before Part A of the Arrangement
becomes effective.
(iv) Any existing cause of action, claim or liability to prosection
of or affecting RR or SC shall be unaffected by Part A of the
Arrangement becoming effective.
(v) A civil, criminal or administrative action or proceeding pending
by or against RR or SC immediately before Part A of the
Arrangement becomes effective may continue to be prosecuted by
or against Amalco.
(vi) A conviction against RR or SC immediately before Part A of the
Arrangement becomes effective may be enforced against Amalco or
a ruling, order or judgment in favor of or against RR or SC
immediately before Part A of the Arrangement became effective
may be enforced by or against Amalco.
(vii) NAME. The name of Amalco shall be Stone-Consolidated
Corporation and, in French, Corporation Stone-Consolidated.
(viii) REGISTERED OFFICE. The registered office of Amalco shall be
located in the Montreal Urban Community in the Province of
Quebec. The address of the registered office of Amalco shall be
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(ix) BUSINESS AND POWERS. There shall be no restrictions on the
business Amalco may carry on or on the powers it may exercise.
(x) AUTHORIZED SHARE CAPITAL. Amalco shall be authorized to issue:
(a) an unlimited number of Amalco Common Shares; and
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(b) an unlimited number of class A preferred shares, issuable
in series (the "AMALCO CLASS A SHARES"), of which one
series will be authorized, being the Class A Preferred
Shares, $21.50 Series 1 Redeemable (the "AMALCO REDEEMABLE
SHARES").
(xi) SHARE PROVISIONS. Amalco Common Shares, Amalco Class A Shares
and Amalco Redeemable Shares shall have attached thereto the
rights, privileges, restrictions and conditions respectively set
out in Appendix C hereto.
(xii) SHARE RESTRICTIONS. There shall be no restrictions on the
issue, transfer or ownership of shares of Amalco other than the
provisions relating to the Amalco Redeemable Shares which limit
the maximum number of shares of such series that are authorized.
(xiii) NUMBER OF DIRECTORS. The number of directors of Amalco shall be
seven and thereafter shall be such number not less than three
and not more than 21 as the shareholders of Amalco may from time
to time determine. The directors of Amalco may appoint one or
more directors, who shall hold office for a term expiring not
later than the close of the next annual meeting of shareholders,
but the total number of directors so appointed may not exceed
one third of the number of directors elected at the previous
annual meeting of shareholders; PROVIDED, HOWEVER, that
(i) until the first annual meeting of shareholders of Amalco,
the total number of directors so appointed may not exceed one
third of the number of directors of Amalco at the time Part A of
the Arrangement becomes effective and (ii) the total number of
directors at any time may not exceed the maximum number of
directors authorized by the articles of Amalco.
(xiv) INITIAL DIRECTORS. The directors shall be those directors of SC
in office immediately before Part A of the Arrangement becomes
effective, until their respective successors have been duly
elected or appointed.
(xv) BY-LAWS. The by-laws of Amalco shall be the by-laws of SC
immediately before Part A of the Arrangement becomes effective.
(xvi) FINANCIAL YEAR. The financial year of Amalco shall end on
December 31 of each year.
(xvii) AUDITORS. The auditors of Amalco shall be Price Waterhouse,
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▇▇▇▇▇▇ ▇▇▇ ▇▇▇.
(b) Upon the Amalgamation, each SC Common Share outstanding immediately
prior to the Amalgamation, other than those held by Dissenting Shareholders,
shall be converted into one Amalco Common Share and, subject to section 4.4,
each certificate representing such SC Common Shares shall represent the Amalco
Common Shares into which such SC Common Shares were converted.
(c) Upon the Amalgamation, each RR Common Share outstanding immediately
prior to the Amalgamation, other than those held by Dissenting Shareholders and
Elected RR Common Shares, shall be converted into 1.04 Amalco Common Shares and,
subject to section 4.4, each certificate representing such RR Common Shares
shall represent the Amalco Common Shares into which the RR Common Shares
formerly represented by such certificate were converted, until a replacement
certificate representing such Amalco Common Shares is delivered in accordance
with section 4.1.
(d) Subject to paragraph (f), upon the Amalgamation, each RR Equity Share
outstanding immediately prior to the Amalgamation shall be converted into one
Amalco Redeemable Share and, subject to section 4.4, each certificate
representing such RR Equity Shares shall represent the Amalco Redeemable Shares
into which the RR Equity Shares formerly represented by such certificate were
converted, until a replacement certificate representing such Amalco Redeemable
Shares is delivered in accordance with section 4.1.
(e) Subject to paragraph (f), upon the Amalgamation, each Elected RR
Common Share, other than those held by Dissenting Shareholders, outstanding
immediately prior to the Amalgamation shall be converted into Amalco Redeemable
Share and, subject to section 4.4, each certificate representing such
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Elected RR Common Shares shall represent the Amalco Redeemable Shares into which
such Elected RR Common Shares were converted, until a replacement certificate
representing such Amalco Redeemable Shares is delivered in accordance with
section 4.1.
(f) In the event that the aggregate number of Amalco Redeemable Shares
issuable pursuant to paragraph 2.1(d) and 2.1(e) but for this paragraph (f)
exceeds 23,255,814 Amalco Redeemable Shares, each holder of Elected RR Common
Shares or RR Equity Shares shall receive such number of Amalco Redeemable Shares
as is obtained by multiplying (i) 23,255,814 by (ii) a fraction (A) the
numerator of which is the number of Elected RR Common Shares and RR Equity
Shares held by such holder and (B) the denominator of which is the total number
of Elected RR Common Shares and outstanding RR Equity Shares. The Amalco
Redeemable Shares received in accordance with the preceding sentence by any
holder who holds both Elected RR Common Shares and RR Equity Shares shall be
received in respect of the conversion of:
(i) first, that number of the Elected RR Common Shares held by such
holder, up to the number of Amalco Redeemable Shares received by
such holder; and
(ii) second, to the extent the number of Amalco Redeemable Shares
received by such holder exceeds the number of Elected RR Common
Shares held by such holder (the "EXCESS REDEEMABLE SHARES"),
that number of the RR Equity Shares held by such holder up to
the number of Excess Redeemable Shares received by such holder.
Each Elected RR Common Share (other than Dissenting Shares) or RR Equity Share
not converted into Amalco Redeemable Shares shall be converted into 1.04 Amalco
Common Shares and, subject to section 4.4, each certificate representing such
Elected RR Common Shares or RR Equity Shares shall represent Amalco Common
Shares and/or Amalco Redeemable Shares in the appropriate proportions, until a
replacement certificate representing such Amalco Common Shares and/or Amalco
Redeemable Shares is delivered in accordance with section 4.1.
PART B
(g) At 12:01 a.m. on the Effective Date, in order to restructure the SC
Debentures, and without any further act or formality, but as evidenced prior
thereto by the execution and delivery by SC for Amalco of the SC Supplemental
Trust Indenture and such other agreements, documents and instruments as may be
necessary therefor, the SC Trust Indenture Amendment shall become effective, and
Amalco shall make such payments in connection therewith as may be required by
the SC Supplemental Trust Indenture.
PART C
(h) At 12:01 a.m. on the Effective Date, in order to restructure the RR
Debentures and without any further act or formality, but as evidenced prior
thereto by the execution and delivery by RR for Amalco of the RR Supplemental
Trust Indenture and such other agreements, documents and instruments as may be
necessary therefor, the RR Trust Indenture Amendment shall become effective, and
Amalco shall make such payments in connection therewith as may be required by
the RR Supplemental Trust Indenture.
PART D
(i) At 12:02 a.m. on the Effective Date, and without any further act or
formality, SC Debentureholders having exercised their right pursuant to the SC
Supplemental Trust Indenture to exchange the outstanding SC Debentures held by
them for Amalco Common Shares shall be deemed to have given such notices as may
be required by the SC Trust Indenture and the SC Supplemental Trust Indenture,
and Amalco shall be deemed to have issued such number of Amalco Common Shares as
may be required by the SC Supplemental Trust Indenture, all in accordance with
the SC Supplemental Trust Indenture. Immediately thereafter, and without any
further act or formality, Amalco shall exercise its right pursuant to the SC
Supplemental Trust Indenture to acquire by conversion any remaining outstanding
SC Debentures into Amalco Common Shares, to be deemed to have given such notices
as may be required by the SC Trust Indenture and the SC Supplemental Trust
Indenture, and to have issued such number of Amalco Common Shares as may be
required by the SC Supplement Trust Indenture, all in accordance with the SC
Supplemental Trust Indenture. Subject to
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section 4.4, each certificate representing SC Debentures shall, after any
exchange or acquisition by conversion of such SC Debentures referred to above,
represent the appropriate number of Amalco Common Shares as determined in
accordance with the SC Supplemental Trust Indenture, until a replacement
certificate representing such Amalco Common Shares is delivered in accordance
with section 4.1.
PART E
(j) At 12:02 a.m. on the Effective Date, and without any further act or
formality, RR Debentureholders having exercised their right pursuant to the RR
Supplemental Trust Indenture to exchange the outstanding RR Debentures held by
them for Amalco Common Shares shall be deemed to have given such notices as may
be required by the RR Trust Indenture and the RR Supplemental Trust Indenture,
and Amalco shall be deemed to have issued such number of Amalco Common Shares as
may be required by the RR Supplemental Trust Indenture, all in accordance with
the RR Supplemental Trust Indenture. Immediately thereafter, and without any
further act or formality, Amalco shall exercise its right pursuant to the RR
Supplemental Trust Indenture to acquire by conversion any remaining outstanding
RR Debentures into Amalco Common Shares, to be deemed to have given such notices
as may be required by the RR Trust Indenture and the RR Supplemental Trust
Indenture, and to have issued such number of Amalco Common Shares as may be
required by the RR Supplemental Trust Indenture, all in accordance with the RR
Supplemental Trust Indenture. Subject to section 4.4, each certificate
representing RR Debentures shall, after any exchange or acquisition by
conversion of such RR Debentures referred to above, represent the appropriate
number of Amalco Common Shares as determined in accordance with the RR
Supplemental Trust Indenture, until a replacement certificate representing such
Amalco Common Shares is delivered in accordance with section 4.1.
PART F
(k) At 4:01 p.m. on the Effective Date, and without any further act or
formality, Amalco shall be deemed to have redeemed 18,604,651 Amalco Redeemable
Shares for a redemption price per Amalco Redeemable Share of $21.50, payable in
cash in accordance with the provisions attaching to such shares and with
sections 4.2, 4.3 and 4.4 hereof, and upon the redemption thereof, each Amalco
Redeemable Share so redeemed shall be deemed to have been cancelled. For the
purposes of such redemption, where a holder of Amalco Redeemable Shares held
both Elected RR Common Shares and RR Equity Shares, Amalco Redeemable Shares
received by such holder pursuant to paragraph 2.1(f)(i) shall be redeemed before
any Amalco Redeemable Shares received by such holder pursuant to paragraph
2.1(f)(ii) are redeemed.
2.2 STATED CAPITAL
For purposes of the CBCA:
(a) the stated capital attributable to the Amalco Redeemable Shares
issued on the conversions described in paragraphs 2.1(d) and 2.1(e) will be
the result obtained by multiplying the total number of such shares so
issued by $21.50;
(b) the stated capital attributable to the Amalco Common Shares
issued on the exchanges or acquisitions by conversion described in
paragraph 2.1(i) will be the principal amount of the SC Debentures
converted into such shares;
(c) the stated capital attributable to the Amalco Common Shares
issued on the conversion described in paragraph 2.1(j) will be the
principal amount of the RR Debentures converted into such shares; and
(d) the stated capital attributable to the Amalco Common Shares
issued on the conversions described in paragraphs 2.1(b), 2.1(c) and 2.1(f)
will be the aggregate paid up capital for the purposes of the INCOME TAX
ACT (Canada) ("PUC") of the RR Common Shares, the RR Equity Shares and the
SC Common Shares immediately prior to the Amalgamation, less the aggregate
stated capital of the Amalco Redeemable Shares as computed in accordance
with paragraph 2.2(a), and for greater certainty it is understood that the
PUC of the RR Common Shares and SC Common Shares immediately prior to the
Amalgamation will not include PUC attributable to Dissenting Shares that
are ultimately transferred and cancelled in accordance with paragraphs
3.1(a) and 3.1(b).
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2.3 SENIOR NOTE INDENTURES
While any Amalco Redeemable Shares are outstanding, Amalco shall not
(i) make or agree to make any amendment or modification of any nature to the
terms of the Senior Note Indentures (including any indentures supplemental
thereto) that would have the effect of changing the definition of "Restricted
Payments" therein contained in a manner that is adverse to a holder of Amalco
Redeemable Shares, or (ii) take any action or enter into any undertaking,
commitment or transaction outside of the ordinary course of business consistent
with the past practice of RR and SC that would, individually or in the
aggregate, have the effect of materially reducing the aggregate amount of
Restricted Payments that Amalco would be permitted by the Senior Note Indentures
to make, as compared with the aggregate amount of Restricted Payments that
Amalco would be so permitted to make in the absence of such action, undertaking,
commitment or transaction.
The stipulations of Amalco in this section 2.3 have been made for the
benefit of any holder from time to time on or after the Effective Date of Amalco
Redeemable Shares, each of which holder is deemed to have accepted the benefit
thereof.
ARTICLE 3
RIGHTS OF DISSENT
3.1 RIGHTS OF DISSENT
(a) Holders of SC Common Shares may exercise rights of dissent with
respect to such shares pursuant to and in the manner set forth in Section 190 of
the CBCA (the "DISSENT PROCEDURES") in connection with the Arrangement, as the
same may be modified by the Interim Order or the Final Order, and holders who
duly exercise such rights of dissent and who are ultimately not entitled, for
any reason, to be paid fair value for their SC Common Shares shall be deemed to
have participated in the Arrangement on the same basis as any non-dissenting
holder of SC Common Shares and shall receive Amalco Common Shares on the basis
determined in accordance with paragraph 2.1(b).
(b) Holders of RR Common Shares may exercise rights of dissent with
respect to such shares pursuant to and in the manner set forth in Section 185 of
the OBCA (which manner is for the purposes of this Agreement included in the
expression "DISSENT PROCEDURES") in connection with the Arrangement, and holders
who duly exercise such rights of dissent and who are ultimately not entitled,
for any reason, to be paid fair value for their RR Common Shares shall be deemed
to have participated in the Arrangement on the same basis as any non-dissenting
holder of RR Common Shares, other than a holder of Elected RR Common Shares, and
shall receive Amalco Common Shares on the basis determined in accordance with
paragraph 2.1(c).
ARTICLE 4
CERTIFICATES, ETC.
4.1 DELIVERY OF CERTIFICATES
Subject to the provisions of section 4.4, as soon as practicable after the
Effective Date, Amalco shall deliver to the Depositary such number of
certificates representing in the aggregate the Amalco Common Shares and Amalco
Redeemable Shares outstanding at such time pursuant to the Arrangement as are
required and the Depositary shall deliver to each registered shareholder a
certificate representing the number of Amalco Common Shares and Amalco
Redeemable Shares (disregarding fractions) to which such shareholder is entitled
upon the delivery by such shareholder to the Depositary at its principal stock
and bond offices in Montreal and Toronto for cancellation of the certificates
(formally of RR and SC) formerly representing his or her RR Common Shares, RR
Equity Shares, RR Debentures or SC Debentures, together with all other required
documents.
4.2 DISTRIBUTIONS
All dividends or other amounts paid or distributions made on or after the
Effective Date on or in respect of any Amalco Common Shares, Amalco Redeemable
Shares, RR Debentures or SC Debentures to a holder
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thereof before the delivery by such holder for cancellation of the certificate
(formerly of RR or SC) then representing the same in accordance with section 4.1
shall be paid or made to the Depositary to be held by it in trust for such
holder. In addition, any proceeds to which any such holder may be entitled
under section 4.4 before the delivery of such certificate shall be held by the
Depositary in trust for such shareholder. All monies so held in trust by the
Depositary shall be invested by it in interest bearing trust accounts upon such
terms as the Depositary may deem appropriate. Subject to the provisions of
section 4.3, the Depositary shall pay and deliver to any such holder, as soon as
reasonably practicable after the delivery to the Depositary for cancellation of
the certificates (formerly of RR or SC) formerly representing the shares or
debentures of such shareholder together with all other required documents in
accordance with section 4.1 and the delivery of the replacement certificates
referred to in such section, all dividends, amounts, distributions, redemption
prices, sale proceeds and accrued interest, net of any applicable withholding or
other taxes, held by the Depositary in trust for such holder pursuant to this
section 4.2. Notwithstanding the foregoing, no interest shall be payable in
respect of Amalco Redeemable Shares redeemed on the Effective Date or in respect
of any amount payable in respect of the RR Debentures or SC Debentures and in
respect of which the Depositary shall have made available at its principal stock
and bond offices in Montreal or Toronto, as designated by the holder thereof, or
shall have mailed to the relevant holder, cheques to such holder in payment of
amounts due to such holder.
4.3 UNCLAIMED CERTIFICATES
If any holder of Amalco Common Shares or Amalco Redeemable Shares fails for
any reason to deliver to the Depositary for cancellation the certificates
(formerly of RR or SC) formerly representing RR Common Shares, RR Equity Shares,
RR Debentures or SC Debentures, together with all other required documents in
accordance with section 4.1 on or before the fifth anniversary of the Effective
Date, such holder shall be deemed to have donated and forfeited to Amalco the
Amalco Common Shares and Amalco Redeemable Shares, and any amounts remaining
payable in respect of RR Debentures or SC Debentures formerly held by such
holder, to which such holder was otherwise entitled pursuant to the Arrangement
together with all dividends, distributions, sale proceeds and accrued interest,
net of any applicable withholding or other taxes, held by the Depositary in
trust for such holder pursuant to section 4.2.
4.4 NO FRACTIONAL SHARES
Notwithstanding paragraphs 2.1(b), (c), (d), (e), (f), (i) and (j), no
certificates or scrip representing fractional Amalco Common Shares or Amalco
Redeemable Shares shall be issued upon the surrender for exchange of
certificates pursuant to section 4.1 and, subject to the last sentence of this
section 4.4, no dividend, stock split or other change in the capital structure
of Amalco shall relate to any such fractional security and such fractional
interests shall not entitle the owner thereof to vote or to exercise any rights
as a security holder. In lieu of any such fractional securities, (i) each
fractional interest in an Amalco Common Share will entitle the holder thereof to
receive from Amalco an amount of cash (rounded to the nearest whole cent),
without interest, equal to the product of (A) such fraction, multiplied by (B)
$20.67, and (ii) each fractional interest in an Amalco Redeemable Share will
entitle the holder thereof to receive from Amalco an amount of cash (rounded to
the nearest whole cent), without interest, equal to the product of (A) such
fraction, multiplied by (B) $21.50.
4.5 ELECTIONS
(a) Subject to paragraph 2.1(f), each holder of record of RR Common Shares
will be entitled to elect to receive Amalco Redeemable Shares for all of such
shares (an "ELECTION"). All such Elections shall be made on a letter of
transmittal as described in the Circular. Record holders of RR Common Shares
who hold RR Common Shares as nominees, trustee or in other representative
capacities (a "REPRESENTATIVE") may submit multiple letters of transmittal;
provided that such Representative certifies that each such letter of transmittal
covers all the RR Common Shares held by each Representative for a particular
beneficial owner.
(b) TIMELY ELECTIONS, ETC. Elections shall be made by holders of record
of RR Common Shares by depositing with the Depositary a letter of transmittal as
described in the circular. To be effective, a letter of transmittal must be
properly completed, signed and submitted to the Depositary. The Depositary on
behalf of SC will have the discretion to determine whether letters of
transmittal have been properly completed, signed
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and submitted or revoked and to disregard immaterial defects in letters of
transmittal. The decision of the Depositary in such matters shall be conclusive
and binding. The Depositary will not be under any obligation to notify any
person of any defect in a letter of transmittal submitted to the Depositary. If
the Depositary on behalf of SC shall determine that any purported election was
not properly made, such purported election shall be deemed to be of no force and
effect.
(c) DEEMED ELECTION. For the purposes hereof, a holder of record of RR
Common Shares who does not submit a letter of transmittal which is received by
the Depositary prior to the Election Deadline (as hereinafter defined) shall be
deemed to have made an election to receive Amalco Common Shares upon the
Amalgamation (except with respect to Dissenting Shares).
(d) ELECTION DEADLINE. A letter of transmittal must be received by the
Depositary by 5:00 p.m. on the Business Day immediately prior to the day of the
Special Meetings (the "ELECTION DEADLINE") in order to be effective. A letter
of transmittal may not be revoked after receipt thereof by the Depositary.
ARTICLE 5
AMENDMENT
5.1 PLAN OF ARRANGEMENT AMENDMENT
SC and RR reserve the right to amend, modify and/or supplement this Plan of
Arrangement at any time and from time to time provided that any such amendment,
modification, or supplement must be contained in a written document which is
filed with the Court and, if made following the Special Meetings, approved by
the Court and communicated to holders of SC Common Shares, RR Common Shares, RR
Equity Shares, RR Debentures and SC Debentures in the manner required by the
Court (if so required).
Any amendment, modification or supplement to this Plan of Arrangement may
be proposed by SC and RR at any time prior to or at the Special Meetings with or
without any other prior notice or communication and, is so proposed and accepted
by the persons voting at the Special Meetings, shall become part of this Plan
for all purposes.
Any amendment, modification or supplement to this Plan of Arrangement which
is approved or directed by the Court following the Special Meetings shall be
effective only if it is consented to by SC and RR.
Any amendment, modification or supplement to this Plan of Arrangement may
be made following the Effective Date unilaterally by Amalco, provided that it
concerns a matter which, in the reasonable opinion of Amalco, is of an
administrative nature required to better give effect to the implementation of
this Plan of Arrangement and is not adverse to the financial or economic
interests of any holder of Amalco Common Shares or Amalco Redeemable Shares.
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APPENDIX A
TO PLAN OF ARRANGEMENT
RR TRUST INDENTURE AMENDMENTS
The trust indenture relating to the 8% Convertible Unsecured Subordinated
Debentures due October 15, 2004 (the "DEBENTURES") made between Rainy River
Forest Products Inc. ("RAINY RIVER" or "AMALCO") and The R-M Trust Company (the
"TRUSTEE") shall be amended:
(a) to provide that Amalco shall have the right, but not the obligation,
at any time to acquire by conversion forthwith upon notice to the
Trustee each Debenture into fully-paid and non-assessable Common
Shares of Amalco ("COMMON SHARES") at a rate of 60.465 Common Shares
for each $1,000 principal amount of Debentures (prorated for lesser
principal amounts) with no fractional shares being issuable;
(b) to provide, in consideration of the grant by the debentureholder to
Amalco of the right to acquire by conversion as described in paragraph
(a) above, that each holder of Debentures shall have the right,
exercisable as described in the Joint Management Proxy Circular of
Rainy River and Stone-Consolidated Corporation dated September 28,
1995, to exchange each Debenture into Common Shares at a rate of
60.465 Common Shares for each $1,000 principal amount of Debentures
(prorated for lesser principal amounts) with no fractional shares
being issuable;
(c) to provide that Amalco shall pay to the Trustee on behalf of holders
of Debentures on the date the Supplemental Trust Indenture (as defined
below) becomes effective (the "EFFECTIVE DATE") $160.00 in respect of
each $1,000 principal amount of Debentures (prorated for lesser
principal amounts) (the "RAINY RIVER DEBENTURE PAYMENT"), such amount
representing (i) any accrued and unpaid interest on the Debentures to
the effective date of the Arrangement, and (ii) as to the balance,
consideration for the grant by the debentureholder to Amalco of a
right to acquire by conversion as described in paragraph (a) above;
and
(d) to provide that each holder of Debentures shall have the option,
exercisable by 5:00 p.m. (Toronto time) on the business day prior to
the meeting at which Part C of the Arrangement (as defined below) is
approved by the holders, to cause the amounts authorized by paragraph
(c) above and any cash payable in lieu of a fractional Common Share
(the "AGGREGATE RAINY RIVER DEBENTURE PAYMENTS") with respect to the
Debentures held by such holder to be paid to Montreal Trust Company at
its principal office in Montreal (the "DEPOSITARY"), as trustee on
behalf of the Electing Holders (as defined below), who shall, as soon
as practicable after the Effective date (as defined in the
Arrangement), using the aggregate of all Aggregate Rainy River
Debenture Payments payable to Electing Holders and corresponding
payments that may be payable to holders of 8% convertible unsecured
subordinated debentures of Stone-Consolidated Corporation ("STONE-
CONSOLIDATED DEBENTURES") who are Electing Holders ("AGGREGATE STONE-
CONSOLIDATED DEBENTURE PAYMENTS") received by the depositary, acquire
Common Shares, through a dealer to be designated by Amalco and without
any commission or brokerage fee being payable by holders of Debentures
or Stone-Consolidated Debentures who have so exercised such option (or
any similar option relating to Stone-Consolidated Debentures) (the
"ELECTING HOLDERS"), on such date(s) as may be determined by the
dealer by open market purchases, in the sole discretion of the dealer.
Rainy River Electing Holders and Stone-Consolidated Electing Holders
will be entitled, pro rata to their respective contributions to the
total combined amount of Rainy River Debenture Payments and Stone-
Consolidated Debenture Payments, to receive Amalco Common Shares so
acquired by the dealer. Fractional entitlements to Amalco Common
Shares will be satisfied by cash payments made from the remaining cash
held by the depositary as trustee for Rainy River Electing Holders and
Stone-Consolidated Electing Holders, with each such holder's payment
being pro rata to its fractional entitlement in relation to all such
fractional entitlements. The Depositary's ability to acquire Common
Shares at any time, and the price(s) paid therefor, are dependent on
market conditions, all of which without liability for failure to
acquire Common Shares at any particular price(s).
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TO PLAN OF ARRANGEMENT
SC TRUST INDENTURE AMENDMENTS
The trust indenture relating to the 8% Convertible Unsecured Subordinated
Debentures due December 31, 2003 (the "DEBENTURES") made between Stone-
Consolidated Corporation ("STONE-CONSOLIDATED" or "AMALCO") and Montreal Trust
Company (the "TRUSTEE") shall be amended:
(a) to provide that Amalco shall have the right, but not the obligation,
at any time to acquire by conversion forthwith upon notice to the
Trustee each Debenture into fully-paid and non-assessable Common
Shares of Amalco ("COMMON SHARES") at a rate of 62.111 Common Shares
for each $1,000 principal amount of Debentures (prorated for lesser
principal amounts) with no fractional shares being issuable;
(b) to provide that each holder of Debentures shall have the right,
exercisable as described in the Joint Management Proxy Circular of
Stone-Consolidated and Rainy River Forest Products Inc. dated
September 28, 1995, to exchange each Debenture into Common Shares of
Amalco at a rate of 62.111 Common Shares for each $1,000 principal
amount of Debentures (prorated for lesser principal amounts) with no
fractional shares being issuable;
(c) to provide that Amalco shall pay to the Trustee on behalf of the
holders of Debentures on the date the Supplemental Trust Indenture (as
defined below) becomes effective (the "EFFECTIVE DATE") $160.00 in
respect of each $1,000 principal amount of Debentures (prorated for
lesser principal amounts) (the "STONE-CONSOLIDATED DEBENTURE
PAYMENT"), such amount representing (i) any accrued and unpaid
interest on the Debentures to the effective date of the Arrangement,
and (ii) as to the balance, consideration for the grant by the
debentureholder to Amalco of a right to acquire by conversion as
described in paragraph (a) above; and
(d) to provide that each holder of Debentures shall have the option,
exercisable by 5:00 p.m. (Montreal time) on the business day prior to
the meeting at which Part B of the Arrangement (as defined below) is
approved by the holders, to cause the amounts authorized by paragraph
(c) above and any cash payable in lieu of a fractional Common Share
(the "AGGREGATE STONE-CONSOLIDATED DEBENTURE PAYMENTS") with respect
to the Debentures held by such holder to be paid to Montreal Trust
Company at its principal office in Montreal (the "DEPOSITARY"), as
trustee on behalf of the Electing Holders (as defined below), who
shall, as soon as practicable after the Effective Date (as defined in
the Arrangement), using the aggregate of all Aggregate Stone-
Consolidated Debenture Payments payable to electing Holders and
corresponding payments that may be payable to holders of 8%
convertible unsecured subordinated debentures of Rainy River Forest
Products Inc. ("RAINY RIVER DEBENTURES") who are electing Holders
(with respect to each holder of Rainy River Debentures, being "RAINY
RIVER DEBENTURE PAYMENTS") received by the Depositary, acquire Common
Shares, through a dealer to be designated by Amalco and without any
commission or brokerage fee being payable by holders of Debentures or
Rainy River Debentures who have so exercised such option (or any
similar option relating to Rainy River Debentures)(the "ELECTING
HOLDERS"), on such date(s) as determined by the dealer by open market
purchases, in the sole discretion of the dealer. Rainy River Electing
Holders and Stone-Consolidated Electing Holders will be entitled, pro
rata to their respective contributions to the total combined amount of
Rainy River Debenture Payments and Stone-Consolidated Debenture
Payments, to receive Amalco Common Shares so acquired by the dealer.
Fractional entitlements to Amalco Common Shares will be satisfied by
cash payments made from the remaining cash held by the Depositary as
trustee for Rainy River Electing Holders and Stone-Consolidated
Electing Holders, with each such holder's payment being pro rata to
its fractional entitlement in relation to all such fractional
entitlements. The Depositary's ability to acquire Common Shares at
any time, and the price(s) paid therefor, are dependent on market
conditions, all of which without liability for failure to acquire
Common Shares at any particular price(s).
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TO PLAN OF ARRANGEMENT
AMALCO SHARE PROVISIONS
The rights, privileges, restrictions and conditions attaching to the
authorized shares in the capital of Amalco shall be as follows:
1. PROVISIONS ATTACHING TO COMMON SHARES
The common shares of the Corporation (the "COMMON SHARES") shall have
attached thereto the following rights, privileges, restrictions and conditions:
1.1 DIVIDENDS
Subject to the prior rights of the holders of the Class A Preferred Shares
and any other shares ranking senior to the Common Shares with respect to
priority in the payment of dividends, the holders of Common Shares shall be
entitled to receive dividends and the Corporation shall pay dividends thereon,
as and when declared by the board of directors of the Corporation, out of moneys
properly applicable to the payment of dividends, in money or in property or by
issuing fully paid shares of the Corporation, in such amount and in such form as
the board of directors of the Corporation may from time to time determine and
all dividends which the board of directors of the Corporation may declare on the
Common Shares shall be declared and paid in equal amounts per share on all
Common Shares at the time outstanding.
1.2 DISSOLUTION
In the event of the dissolution, liquidation or winding-up of the
Corporation, whether voluntary or involuntary, or any other distribution of
assets of the Corporation among its shareholders for the purpose of winding up
its affairs, subject to the prior rights of the holders of the Class A Preferred
Shares and any other shares ranking senior to the Common Shares with respect to
priority in the distribution of assets upon dissolution, liquidation, winding-up
or distribution for the purpose of winding-up, the holders of the Common Shares
shall be entitled to receive the remaining property and assets of the
Corporation.
1.3 VOTING RIGHTS
The holders of the Common Shares shall be entitled to receive notice of and
to attend all meetings of the shareholders of the Corporation and shall have one
vote for each common share held at all meetings of the shareholders of the
Corporation, except meetings at which only holders of another specified class or
series of shares of the Corporation are entitled to vote separately as a class
of series.
2. PROVISIONS ATTACHING TO THE CLASS A PREFERRED SHARES
The Class A Preferred Shares of the Corporation (the "CLASS A PREFERRED
SHARES"), as a class, shall have attached thereto the following rights,
privileges, restrictions and conditions:
2.1 DIRECTORS' AUTHORITY TO ISSUE IN ONE OR MORE SERIES
The board of directors of the Corporation may issue the Class A Preferred
Shares at any time and from time to time in one or more series. Class A
Preferred Shares, $21.50 Series 1 Redeemable are created by and in accordance
with Article 3 of these provisions. Before the first shares of a particular
series are issued (other than the Class A Preferred Shares, $21.50 Series 1
Redeemable), the board of directors of the Corporation shall fix the number of
shares in such series and shall determine, subject to the limitations set out in
the articles, the designation, rights, privileges, restrictions and conditions
to be attached to the shares of such series including, without limitation, the
rate or rates, amount or method or methods of calculation of dividends thereon,
the time (or means of calculating the same) and place or places of payment of
dividends, whether cumulative or non-cumulative or partially cumulative, the
date or dates from which such dividends shall accrue, if they are to accrue, and
whether such rate, amount or method of calculation shall be subject to change or
adjustment in the future, the currency or currencies of payment of dividends,
the consideration and the terms and conditions of any purchase for cancellation,
retraction or redemption rights (if any), the conversion or exchange rights
attached thereto (if any), the voting rights attached thereto (if any), and the
terms and conditions of any share purchase plan or sinking fund with respect
thereto. Before the issue of the
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first shares of a series (other than the Class A Preferred Shares, $21.50 Series
1 Redeemable), the board of directors of the Corporation shall send to the
Director (as defined in the CANADA BUSINESS CORPORATIONS ACT (as from time to
time amended, varied or replaced) (the "ACT")) articles of amendment containing
a description of such series including the designation, rights, privileges,
restrictions and conditions determined by the board of directors of the
Corporation.
2.2 RANKING OF CLASS A SHARES
No rights, privileges, restrictions or conditions attached to a series of
Class A Preferred Shares shall confer upon a series a priority in respect of
dividends or return of capital over any other series of Class A Preferred Shares
then outstanding. The Class A Preferred Shares shall be entitled to priority
over the Common Shares of the Corporation and over any other shares of the
Corporation ranking junior to the Class A Preferred Shares with respect to
priority in the payment of dividends and 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.
If any cumulative dividends or amounts payable on a return of capital in respect
of a series of Class A Preferred Shares are not paid in full, the Class A
Preferred Shares of all series shall participate rateably in respect of such
dividends, including accumulations, if any, in accordance with the sums that
would be payable on such shares if all such dividends were declared and paid in
full, and in respect of any repayment of capital in accordance with the sums
that would be payable on such repayment of capital if all sums so payable were
paid in full; provided however, that in the event of there being insufficient
assets to satisfy in full all such claims to dividends and return of capital,
the claims of the holders of the Class A Preferred Shares with respect to
repayment of capital shall first be paid and satisfied and any assets remaining
thereafter shall be applied towards the payment and satisfaction of claims in
respect of dividends. The Class A Preferred Shares of any series may also be
given such other preferences, not inconsistent with sections 2.1 to 2.6 hereof,
over the Common Shares and over any other shares ranking junior to the Class A
Preferred Shares as may be determined in the case of such series of Class A
Preferred Shares.
2.3 DISTRIBUTIONS ON JUNIOR CLASSES
No dividends shall at any time be declared or paid on or set apart for
payment on any shares of the Corporation ranking junior to the Class A Preferred
Shares, unless all dividends up to and including the dividend payable for the
last completed period for which such dividends shall be payable on each series
of Class A Preferred Shares then issued and outstanding shall have been declared
and paid or set apart for payment at the date of such declaration or payment or
setting apart for payment on such shares of the Corporation ranking junior to
the Class A Preferred Shares, nor shall the Corporation at any such time call
for redemption or redeem or purchase for cancellation or reduce or otherwise pay
off any shares of the Corporation ranking junior to the Class A Preferred
Shares, unless all dividends up to and including the dividend payable for the
last completed period for which such dividend shall be payable on each series of
the Class A Preferred Shares then issued and outstanding shall have been
declared and paid or set apart for payment at the date of such call for
redemption, purchase, reduction or other payment.
2.4 VOTING RIGHTS
Except as hereinafter referred to or as otherwise required by law or in
accordance with any voting rights which may from time to time be attached to any
series of Class A Preferred Shares, the holders of the Class A Preferred Shares
as a class shall not be entitled as such to receive notice of, to attend or to
vote at, any meeting of the shareholders of the Corporation.
2.5 RESTRICTIONS ON ISSUANCES OF SENIOR SHARES
No class of shares equal or senior to the Class A Preferred Shares may be
created or issued without the approval of the holders of each series of Class A
Preferred Shares, voting as a class and (so long as there are any Series 1
Shares (as defined below) outstanding) separately as a series.
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2.6 APPROVAL OF HOLDERS OF CLASS A PREFERRED SHARES
The rights, privileges, restrictions and conditions attaching to the Class
A Preferred Shares as a class may be added to, changed or removed but only with
the approval of the holders of the Class A Preferred Shares given as hereinafter
specified.
The approval of the holders of Class A Preferred Shares to add to, change
or remove any right, privilege, restriction or condition attaching to the Class
A Preferred Shares as a class or to any other matter requiring the consent of
the holders of the Class A Preferred Shares as a class may be given in such
manner as may then be required by law, subject to a minimum requirement that
such approval shall be given by resolution passed by the affirmative vote of at
least two-thirds of the votes cast at a meeting of the holders of Class A
Preferred Shares duly called for that purpose. The formalities to be observed
in respect of the giving of notice of any such meeting or any adjourned meeting
and the conduct thereof shall be those from time to time required by the Act and
prescribed in any applicable by-laws of the Corporation with respect to meetings
of shareholders. On every poll taken at a meeting of holders of Class A
Preferred Shares as a class, each holder entitled to vote thereat shall have one
vote in respect of each $1.00 of the redemption price (or, if there is no
determinable redemption price for Class A Preferred Shares of any series, the
issue price per Class A Preferred Share of such series or, if there is no
determinable issue price for Class A Preferred Shares of such series, the dollar
amount determined by the directors of the Corporation for this purpose before
the issuance of Class A Preferred Shares of such series) in respect of each
Class A Preferred Share held by such holder.
3. PROVISIONS ATTACHING TO CLASS A PREFERRED SHARES, $21.50 SERIES 1
REDEEMABLE
3.1 CLASS A PREFERRED SHARES, $21.50 SERIES 1 REDEEMABLE
The first series of the Class A Preferred Shares shall consist of a limited
number of 23,255,814 shares which are hereby created, which shall be designated
Class A Preferred Shares, $21.50 Series 1 Redeemable (the "SERIES 1 SHARES") and
which shall have attached thereto the rights, privileges, restrictions and
conditions set forth in this Article 3 in addition to the rights, privileges,
restrictions and conditions attaching to the Class A Preferred Shares as a
class.
3.2 DEFINITIONS
As used herein, the following words or expressions shall have the meanings
specified below:
"ARRANGEMENT" means the arrangement under the provisions of Section 192 of
the Act relating to the Corporation and made effective on the date shown in the
articles of arrangement of the Corporation.
"BUSINESS DAY" means a day which is not a Saturday, Sunday or statutory
holiday within the meaning of the INTERPRETATION ACT (Canada) or the
INTERPRETATION ACT (Quebec).
"DIVIDEND PAYMENT DATE" means the 60th day following the end of each
calendar quarter, beginning with the quarter ending December 31, 1995.
"EFFECTIVE TIME" means the time at which Part F of the Arrangement takes
effect in accordance with its terms.
"MANDATORY REDEMPTION DATE" means the 60th day following the end of each
calendar quarter, beginning with the quarter ending December 31, 1995.
"SENIOR NOTE INDENTURES" means, collectively: (i) the Indenture dated as of
December 17, 1993 between Stone-Consolidated Corporation and Norwest Bank
Minnesota, National Association, as trustee, relating to the Corporation's US
$225,000,000 10.25% Senior Secured Notes due 2000; and (ii) the Indenture dated
as of October 1, 1994 between Rainy River Forest Products Inc. and First Trust
of New York, National Association, as trustee, relating to the Corporation's US
$110,000,000 10 3/4% Senior Secured Notes due 2001.
"SERIES 1 ALLOTMENT AMOUNT" shall be $21.50 per Series 1 Share.
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"SERIES 1 REDEMPTION AMOUNT" in respect of a Series 1 Share means, on any
given date, the Series 1 Allotment Amount plus all accrued and unpaid cumulative
dividends on such Series 1 Share to but excluding such date (without duplication
with any dividends declared and to be paid in respect of the same period).
3.3 VOTING
Subject to the provisions of the Act or as otherwise expressly provided
herein, the holders of the Series 1 Shares shall not be entitled as such to
receive notice of, or to attend or vote at, any meetings of the shareholders of
the Corporation.
3.4 DIVIDENDS
The holders of the Series 1 Shares shall be entitled to receive and the
Corporation shall pay thereon on each Dividend Payment Date upon declaration by
the board of directors, but always in preference and priority to any payment of
dividends on the Common Shares or any other shares ranking junior to the Series
1 Shares, cumulative preferential cash dividends at a rate of eight percent (8%)
per annum until February 28, 1997 and at a rate of eight and one-half percent
(8.5%) thereafter, calculated daily on the Series 1 Allotment Amount of each
such share. The holders of the Series 1 Shares shall not be entitled as such to
any dividend in excess of the dividend hereinbefore provided for.
3.5 CALCULATION OF DIVIDENDS
(a) In the event that at any time or from time to time the cumulative
dividends on the Series 1 Shares provided for in section 3.4 hereof and payable
on any Dividend Payment Date have not been declared and paid in full by the
Corporation on such Dividend Payment Date, then until such dividends have been
declared and paid in full, for the purpose of calculating the amount of such
cumulative dividends thereafter accruing on the Series 1 Shares (and for no
other purpose), such unpaid or undeclared dividends shall be added to the Series
1 Allotment Amount.
(b) For greater certainty, for the purpose of calculating the amount of
the cumulative dividends on the Series 1 Shares provided for in section 3.4
hereof, dividends shall be deemed to accrue from day to day.
3.6 PRIORITY
In the event of the liquidation, dissolution or winding-up of the
Corporation, whether voluntary or involuntary, or other distribution of assets
of the Corporation among shareholders for the purpose of winding-up its affairs,
the holder of each Series 1 Share shall be entitled to receive, in preference
and priority to any distribution of the property or assets of the Corporation to
the holders of the Common Shares or to any other shares ranking junior to the
Series 1 Shares, an amount equal to the Series 1 Allotment Amount plus all
accrued and unpaid cumulative dividends thereon to but excluding the applicable
payment date, but shall not be entitled to share any further in the distribution
of the property or assets of the Corporation.
3.7 EFFECTIVE TIME REDEMPTION
At the Effective Time, the Corporation shall redeem pursuant to the
Arrangement, without further act or formality on the part of the holders thereof
or, except as specified hereafter in this section 3.7 and notwithstanding
section 3.9, 18,604,651 Series 1 Shares for an amount per share in cash equal to
the Series 1 Allotment Amount. At the Effective Time, the Corporation shall pay
or cause to be paid the Series 1 Allotment Amount to the registered holders of
the Series 1 Shares to be redeemed on presentation and surrender of the
certificates for the Common Shares or non-voting equity shares of Rainy River
Forest Products Inc. ("RR") which were exchanged for Series 1 Shares pursuant to
the Arrangement at such places as may be specified in the information circular
and ancillary documents prepared and distributed to shareholders of RR in
connection with the Arrangement. From and after the Effective Time, the holders
of the Series 1 Shares redeemed pursuant to this section 3.7 shall cease to be
entitled to dividends in respect of such shares and shall not be entitled to
exercise any of the rights of the holders thereof, except the right to receive
the Series 1 Allotment Amount, unless payment of the Series 1 Allotment Amount
is not made by the Corporation in accordance with the foregoing provisions and
the Arrangement, in which case the rights of the holders of
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such shares shall remain unaffected. The Series 1 Shares to be redeemed
pursuant to this section 3.7 shall be redeemed PRO RATA, disregarding fractions.
A certificate for the Series 1 Shares not redeemed pursuant to this section 3.7
shall be issued to each holder thereof.
3.8 MANDATORY DATE REDEMPTIONS
On each Mandatory Redemption Date, the Corporation shall redeem, in the
manner hereinafter provided, such number of Series 1 Shares (or such lesser
number as may constitute all Series 1 Shares that then remain outstanding) as is
equal to the quotient obtained when (i) seventy percent (70%) of the amount
available to the Corporation to make "Restricted Payments" pursuant to section
1010 of each of the Senior Note Indentures, rounded down to the nearest multiple
of $1,000,000 is divided by (ii) $21.50, upon payment for each Series 1 Share to
be redeemed of the Series 1 Redemption Amount. Notwithstanding the foregoing,
the Corporation may, at its option, refrain from redeeming any Series 1 Share if
the amount otherwise available to it for such purpose under the Senior Note
Indentures is less than $10 million at any one time, except with respect to the
redemption of the last tranche of such shares, which may be for less than such
amount.
3.9 REDEMPTION PROCEDURES
(a) The Corporation may, in the manner hereinafter provided, redeem at any
time after the Effective Time all, or from time to time any part, of the
outstanding Series 1 Shares on payment for each Series 1 Share to be redeemed of
the Series 1 Redemption Amount.
(b) Before redeeming any Series 1 Shares other than pursuant to section
3.7, the Corporation shall mail or deliver to each person who, at the date of
such mailing or delivery, shall be a registered holder of Series 1 Shares to be
redeemed, notice of the intention of the Corporation to redeem such shares held
by such registered holder; such notice shall be delivered to, or mailed by
ordinary prepaid cost addressed to, the last address of such holder as it
appears on the records of the Corporation or, in the event of the address of
any such holder not appearing on the records of the Corporation, then to the
last address of such holder known to the Corporation, at least ten (10) days
before the date specified for redemption; such notice shall set out the
redemption amount, the date on which the redemption is to take place and, if
part only of the Series 1 Shares held by the person 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 (if it occurs after the date on which the Effective
Time occurs), the Corporation shall pay or cause to be paid the Series 1
Redemption Amount to the registered holders of the Series 1 Shares to be
redeemed on presentation and surrender of the certificates for the Series 1
Shares so called for redemption at the registered office of the Corporation or
at such other place or places as may be specified in such notice, and the
certificates for such Series 1 Shares shall thereupon be cancelled, and the
Series 1 Shares represented thereby shall thereupon be redeemed. From and after
the date specified for redemption (if it occurs after the date on which the
Effective Time occurs) in such notice, the holders of the Series 1 Shares called
for redemption shall cease to be entitled to dividends in respect of such shares
and shall not be entitled to exercise any of the rights of the holders thereof,
except the right to receive the Series 1 Redemption Amount, unless payment of
the Series 1 Redemption Amount is not made by the Corporation in accordance with
the foregoing provisions, in which case the rights of the holders of such shares
of such shares shall remain unaffected. On or before the date specified for
redemption, the Corporation shall have the right to deposit the redemption
amount of the Series 1 Shares called for redemption in a special account with
any chartered bank or trust company in Canada named in the notice of redemption,
to be paid, without interest, to or to the order of the respective holders of
such Series 1 Shares called for redemption, upon presentation and surrender of
the certificates representing the same. On or after the redemption date, the
rights of the respective holders thereof shall be limited to receiving, out of
the moneys so deposited, without interest, the Series 1 Redemption Amount
applicable to their respective Series 1 Shares against presentation and
surrender of the certificates representing such Series 1 Shares, if less than
all of the Series 1 Shares are to be redeemed the shares to be redeemed PRO
RATA, disregarding fractions. If less than all of the Series 1 Shares
represented by any certificate are redeemed, a new certificate for the balance
shall be issued.
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3.10 PURCHASE BY CORPORATION
The Corporation may purchase for cancellation at any time all, or from time
to time any part, of the Series 1 Shares outstanding, by private contract at any
price, with the unanimous consent of the holders of the Series 1 Shares then
outstanding, or by invitation for tenders addressed to all the holders of the
Series 1 Shares at the lowest price at which, in the opinion of the directors,
such shares are obtainable but not exceeding the Series 1 Redemption Amount per
Series 1 Share. If less than all of the Series 1 Shares represented by any
certificate be purchased for cancellation, a new certificate for the balance
shall be issued.
3.11 CONVERSION
A holder of Series 1 Shares shall be entitled, in the manner hereinafter
provided, to convert at any time after February 28, 1997 all of the Series 1
Shares registered in the name of such holder into Common Shares on the
Conversion Basis (as hereinafter defined) (the "CONVERSION RIGHT"). Any holder
of Series 1 Shares desiring to exercise the Conversion Right shall tender to the
Corporation at its registered office or to the transfer agent and registrar of
the Corporation, the share certificate(s) representing the Series 1 Shares which
the registered holder desires to have the Corporation convert, together with a
request in writing specifying the relevant number of Series 1 Shares which the
registered holder desires to have converted by the Corporation. Upon receipt by
the Corporation of the share certificate(s) representing the Series 1 Shares
which the registered holder desires to have the Corporation convert, together
with such a request (the date of such receipt being the "CONVERSION DATE"), the
registered holder thereof shall be deemed for all purposes to be the holder of
the appropriate number of fully paid Common Shares and such person shall be
entitled to delivery by the Corporation of certificates representing its Common
Shares promptly after such date. Upon conversion of any Series 1 Shares into
Common Shares, the Series 1 Shares so converted shall no longer be deemed to be
issued and outstanding and the holders thereof shall cease to be entitled to
dividends thereon and shall not be entitled to exercise any of the rights of the
holders of Series 1 Shares in respect thereof.
For the purpose of this section 3.11, the "CONVERSION BASIS" means that for
each $1 of Series 1 Redemption Amount associated with the Series 1 Shares
converted, the holder thereof shall be entitled to $1 of Common Shares based on
the weighted average trading price per share for Common Shares for the 20
consecutive trading days ending on February 28, 1997 on The Montreal Exchange
and on The Toronto Stock Exchange.
3.12 BUSINESS DAYS
In the event that any date on which any dividend on the Series 1 Shares is
payable by the Corporation, or on or by which any other action is required to be
taken by the Corporation or any holder hereunder, is not a Business Day, then
such dividend shall be payable, or such other action shall be required to be
taken, on the next following Business Day.
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