EXHIBIT 3.1
Page 88
Industry Canada Industrie Canada
Certificate Certificat
of Amalgamation de fusion
Canada Business Loi canadienne sur
Corporations Act les societes par actions
NEWBRIDGE NETWORKS CORPORATION
SOCIETE PAR ACTIONS DE REGIME FEDERAL
DE RESEAUX NEWBRIDGE 299165-9
Name of corporation-Denomination de la societe Corporation
number-Numero de la societe
I hereby certify that the above-named Je certifie que la societe
susmentionnee
corporation resulted from an amalgamation, est issue d'une fusion, en
vertu de
under section 185 of the Canada Business l'article 185 de la Loi
Canadienne sur
Corporations Act, of the corporations set les societes par actions,
out in des societes
the attached articles of amalgamation. Les statuts de fusion ci-
joints.
Director - Directeur January 6, 1994/le 6 janvier
1994
Date of Amalgamation - Date
de fusion
Page 89
Industry Canada Industrie Canada FORM 9
FORMULE 9
Canada Business Loi regissant les societes ARTICLES OF AMALGAMATION
STATUTS DE FUSION
Corporations Act par actions de regime federal (SECTION 185)
(ARTICLE 185)
1 - Name of amalgamated corporation Denomination de la
societe issue de la fusion
NEWBRIDGE NETWORKS CORPORATION
SOCIETE PAR ACTIONS DE REGIME FEDERAL DE RESEAUX NEWBRIDGE
2 - The place in Canada where the registered office is to Lieu au Canada ou
doit etre situe le siege social
be situated
Regional Municipality of Ottawa-Carleton
3 - The classes and any maximum number of shares that the Categories et tout
nombre maximal d'actions que la societe est
corporation is authorized to issue autorisee a ernettre
See attached Schedule A
4 - Restrictions, if any, on share transfers Restrictions sur le
transfert des actions, s'il y alieu
None
5 - Number (or minimum and maximum number) of directors Nombre (ou nombre
minimal et maximal) d'administrateurs
Minimum of one (1) - maximum of fifteen (15)
6 - Restricitions, if any, on business the corporation may carry on Limites
imposees a l'activite commerciale de la societe, s'il y
lieu
None
7 - Other provisions, if any Autres dispositions, s'il y a lieu
See attached Schedule B
8 - The amalgamation has been approved pursuant to that section La fusion a ete
Page 90
approuvee en accord avec l'article ou le
or subsection of the Act which is indicated as follows: paragraphe de la Loi
indique ci-apres.
183
X 184(1)
184(2)
9 - Name of the amalgamating corporations Corporation No. Signature
Date Title
Denomination des societes fusionnantes No de la societe Titre
NEWBRIDGE NETWORKS CORPORATION 270281-9 James C. Avis
Jan. 6/94 Secretary
ELCOMBE SYSTEMS LIMITED 268981-2 James C. Avis Jan. 6/94
Secretary
For Departmental Use Only - A L'Usage du ministrie seulement Filed - Deposee
Corporation No. - No de la societe
299165-9 January 10, 1994
SCHEDULE "A"
3. The classes and any maximum number of shares that the Corporation is
authorized to issue:
COMMON SHARES
- -------------
(a) an unlimited number of Common Shares without nominal or par value (the
"Common Shares"), the holders of which are entitled:
(i) to one vote per share at all meetings of shareholders, except
meetings at which only holders of a specified class of shares are
entitled to vote;
(ii) subject to the rights, privileges, restrictions and conditions
attaching to any other class or series of shares of the Corporation,
to receive any dividends declared and payable by the Corporation on
the Common Shares; and
(iii) subject to the rights, privileges, restrictions and conditions
attaching to any other class or series of shares of the Corporation,
to receive the remaining property of the Corporation upon a
liquidation, dissolution or winding-up of the Corporation;
Page 91
PREFERRED SHARES
(b) an unlimited number of Preferred Shares without nominal or par value (the
"Preferred Shares") which, as a class, have attached thereto the following
rights, privileges, restrictions and conditions:
(i) the directors of the Corporation may, at any time and from time to
time, issue the Preferred Shares in one or more series, each series
to consist of such number of shares as may before issuance thereof
be fixed by the directors;
(ii) the directors of the Corporation may (subject as hereinafter
provided) from time to time before issuance determine the
designation, rights, privileges, restrictions and conditions to
attach to the Preferred Shares of each series including, without
limiting the generality of the foregoing, the rate, amount or method
of calculation of dividends, whether cumulative or non-cumulative or
partially cumulative, 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, the date or dates and place
or places of payment thereof, the rights of retraction, if any,
vested in the holder of Preferred Shares of such series, and the
prices and the other terms and conditions of any rights of
retraction and whether any additional rights of retraction may be
vested in such holders in the future, voting rights (if any) and
conversion rights (if any) and any sinking fund, purchase fund or
other provisions attaching to the Preferred Shares of such series,
the whole subject to the issue by the Director, Corporations Branch,
Department of Consumer and Corporate Affairs, of a certificate of
amendment in respect of articles of amendment in prescribed form to
designate a series of shares;
(iii) when any fixed cumulative dividends or amounts payable on a return
of capital are not paid in full, the Preferred Shares of all series
shall participate rateably in respect of such dividends including
accumulations, if any, in accordance with amounts which would be
payable on the Preferred Shares if all such dividends were declared
and paid in full, and on any return of capital in accordance with
sums which would be payable on such return of capital if all amounts
so payable were paid in full;
(iv) the Preferred Shares of each series shall rank on a parity with the
Preferred Shares of every other series with respect to priority in
payment of dividends and in the distribution of assets in the event
of liquidation, dissolution or winding-up of the Corporation,
whether voluntary or
Page 92
involuntary;
(v) in the event of the liquidation, dissolution or winding-up of the
Corporation or other distribution of assets of the Corporation among
shareholders for the purpose of winding-up its affairs, the holders
of the Preferred Shares shall, before any amount shall be paid to or
any property or assets of the Corporation shall be distributed among
the holders of the Common Shares or any other shares of the
Corporation ranking junior to the Preferred Shares, be entitled to
receive (a) an amount equal to the amount of the redemption price
specified therefor, together with, in the case of cumulative
Preferred Shares all unpaid cumulative dividends (which for such
purpose shall be calculated as if such cumulative dividends were
accruing from day to day for the period from the expiration of the
last period for which cumulative dividends have been paid up to and
including the date of distribution) and in the case of non-
cumulative dividends, all declared and unpaid non-cumulative
dividends, and (b) if such liquidation, dissolution, winding-up or
distribution shall be voluntary, an additional amount equal to the
premium, if any, which would have been payable on the redemption of
the said Preferred Shares if they had been called for redemption by
the Corporation on the date of liquidation, dissolution, winding-up
or distribution and, if said Preferred Shares couldnot be redeemed
on such date, then an additional amount equal to the greatest
premium, if any, which would have been payable on the redemption of
said Preferred Shares;
(vi) no dividends shall at any time be declared or paid on or set apart
for payment on the Common Shares or any other shares of the
Corporation ranking junior to the 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 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 the Common
Shares or such other shares of the Corporation ranking junior to the
Preferred Shares nor shall the Corporation call for redemption or
redeem or purchase for cancellation or reduce or otherwise pay off
any of the Preferred Shares (less than the total amount then
outstanding) or any Common Shares or any other shares of the
Corporation ranking junior to the 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 the 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;
(vii) the Preferred Shares of any series may be purchased for cancellation
or
Page 93
made subject to redemption by the Corporation at such times and at
such prices and upon such other terms and conditions as may be
specified in the rights, privileges, restrictions and conditions
attaching to the Preferred Shares of such series as set forth in the
resolution of the board of directors of the Corporation and
certificate of amendment relating to such series;
(viii) the approval of the holders of the Preferred Shares, given in the
manner described in paragraph (ix) below, shall be required for the
creation of any new shares ranking prior to or on a parity with the
Preferred Shares; and
(ix) the provisions of paragraph (i) to (viii), inclusive, and of this
paragraph (ix) may be repealed, altered, modified, amended or varied
in whole or in part only with the prior approval of the holders of
the Preferred Shares given in the manner hereinafter specified in
addition to any other approval required by the Canada Business
Corporations Act or any other applicable statutory provision of like
or similar effect, from time to time in force. The approval of the
holders of the Preferred Shares with respect to any and all matters
hereinbefore referred to may be given by at least 66-2/3% of the
votes cast at a meeting of the holders of the Preferred Shares duly
called for that purpose and held upon at least 21 days' notice at
which the holders of a majority of the outstanding Preferred Shares
are present or represented by proxy. If at any such meeting the
holders of a majority of the outstanding Preferred Shares are not
present or represented by proxy within-one-half an hour after the
time appointed for such meeting, then the meeting shall be adjourned
to such date being not less than 30 days later and to sucb time and
place as may be appointed by the chairman of the meeting and not
less than 21 days' notice shall be given of such adjourned meeting
but it shall be necessary in such notice to specify the purpose for
which the meeting was originally called. At such adjourned meeting
the holders of the Preferred Shares present or represented by proxy
may transact the business for which the meeting was originally
called and resolution passed thereat by not less than 66-2/3% of the
votes cast at such adjourned meeting and the conduct thereof shall
be from time to time prescribed by the by-laws of the Corporation
with respect to meetings of shareholders. On every poll taken at
every such meeting or adjourned meeting every holder of Preferred
Shares shall be entitled to one vote in respect of each Preferred
Share held by him.
SERIES A PREFERRED SHARES
- -------------------------
(c) The directors of the Corporation hereby fix the number of shares for the
first series of the Preferred Shares at 3,846,155 shares;
Page 94
(d) The directors of the Corporation hereby determine that the designation of
the first series of Preferred Shares is Series A Convertible Preferred Shares
(hereinafter called the "Series A Preferred Shares") and that the rights,
privileges, restrictions and conditions attaching to the Series A Preferred
Shares (in addition to the rights, privileges, restrictions and conditions
attaching to the Preferred Shares as a class) shall be as follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions In these Articles:
-----------
(a) "Businass Day" in respect of any specified place means any day other than a
------------
Saturday, a Sunday or any other day that is a statutory or civic holiday in such
place;
(b) "close of business," means the normal closing hour of the principal office
------------------
of the Transfer Agent;
(c) "Common Shares" means the common shares of the Corporation;
-------------
(d) "Conversion Price" as at any particular time, means the conversion price
----------------
at which the Series A Preferred Shares are convertible into Common Shares in
accordance with Article 3;
(e) "Conversion Privilege" means the right to convert any of the Series A
--------------------
Preferred Shares into Common Shares in accordance with Article 3;
(f) "Directors" means the board of directors of the Corporation and reference
---------
without more to action by the Directors shall mean action by the Directors as a
board or by any authorized committee thereof;
(g) "herein", "hereto", "hereunder", "hereof", "hereby" and similar expressions
------ ------ --------- ------ ------
mean or refer to these Series A Preferred Share provisions and not to any
particular Section, subsection, subdivision or portion hereof, and the
expressions "Article", "Section" and "subsection", followed by a number and/or
------- ------- ----------
letter mean and refer to the specified Article, Section or subsection hereof;
Page 95
(h) "holder", in respect of any share of a specified class or series means the
-----
registered holder thereof; and
(i) "Transfer Agent" means the Company or such person or persons from time to
--------------
time appointed by the Directors as the transfer agent and registrar for the
Series A Preferred Shares and includes any agent of such transfer agent.
1.2 Interpretation
--------------
(a) Words importing the singular number only include the plural and vice versa
and words importing any gender include all genders.
(b) All dollar amounts referred to herein shall be in lawful money of the
United States and on any date, the Canadian dollar equivalent thereto shall be
based on the Bank of Canada noon rate of exchange in effect on the third
Business Day prior to such date.
(c) The division of these Series A Preferred Share provisions into Articles,
Sections, subsections, clauses, subclauses or other subdivisions and insertion
of headings are for convenience of reference only and shall not affect the
construction or interpretation hereof.
(d) In the event that any date upon or by which any action is required to be
taken by the Corporation hereunder is not a Business Day, then such action shall
be required to be taken on or by the next succeeding day which is a Business
Day.
ARTICLE 2
DIVIDENDS
2.1 Payments of Dividends
---------------------
The holders shall have the right to receive such dividends (if any) as the
Directors in their discretion may declare, provided that the Series A Preferred
Shares and the Common Shares shall rank equally as to dividends and all
dividends declared in any fiscal year shall be declared and paid in equal or
equivalent amounts per share on all the Series A Preferred Shares and all the
Common Shares outstanding at the time without preference or distinction.
ARTICLE 3
CONVERSION PRIVILEGE
Page 96
3.1 Conversion into Common Shares
-----------------------------
The holder of Series A Preferred Shares shall have the right, at such
holder's option, at any time, to convert any or all of such shares into fully
paid and non-assessable Common Shares at a Conversion Price of $2.60 per Common
Share, such Conversion Price being subject to adjustment from time time as
provided in Section 3.4. The number of Common Shares issuable upon conversion of
any Series A Preferred Shares shall, subject to the exception as to fractions
contained in Section 3.2, be computed by multiplying the number of Series A
Preferred Shares to be converted by $2.60 and dividing the product by the
Conversion Price.
3.2 Conversion Procedure
--------------------
(1) The right to convert any Series A Preferred Shares into Common Shares
may be exercised by surrendering, at any office of the Transfer Agent
at which the Series A Preferred Shares are transferable, the
certificate representing such shares and a notice in writing (which
notice shall be and be deemed to be irrevocable) specifying the
election to convert such Series A Preferred Shares, the number of
Series A Preferred Shares desired to be converted and the name or
names in which the Common Shares resulting from such conversion are
to-be registered. Such notice shall be signed by the holder of such
shares or such holder's agent duly appointed by an instrument in
writing satisfactory to the Transfer Agent. If any of the Common
Shares are to be issued to a person or persons other than the holder
of Series A Preferred Shares, the signature of the holder of such
notice of conversion shall be guaranteed in a manner satisfactory to
the Transfer Agent.
(2) If less than all of the Series A Preferred Shares represented by any
certificate surrendered pursuant to Section 3.2(l) are to be
converted, the holder shall be entitled to receive, at the expense of
the Corporation, a new certificate representing the Series A Preferred
Shares comprised in the certificate so surrendered which are not to be
converted.
(3) Upon the conversion of any Series A Preferred Shares, there shall be
no payment or adjustment by the Corporation or by the holder of such
Series A Preferred Shares on account of any dividend either on the
shares so converted or on the Common Shares resulting from such
conversion.
(4) The share certificates representing the Common Shares resulting from
any conversion of Series A Preferred Shares shall be issued as
promptly as practicable in the name of the holder of the Series A
Preferred Shares so converted, or subject to payment by such holder of
any stock transfer or other applicable taxes, in such name or names as
such holder may direct
Page 97
in writing (either in the notice referred to in Section 3.2(l) or
otherwise).
(5) The Conversion Privilege shall be deemed to have been exercised, and
the holder of the Series A Preferred Shares so converted (or any
person or persons in whose name or names such holder shall have
directed certificates representing Common Shares to be issued) shall
be deemed to become a holder of Common Shares of record for all
purposes, on the date of surrender of the certificates representing
the Series A Preferred Shares so converted accompanied by the notice
referred to in Section 3.2(l), notwithstanding any delay in the
delivery of the certificates representing the Common Shares into which
such Series A Preferred Shares have been converted, provided, however,
that in the event the share transfer registers for Common Shares shall
be closed on such date, the surrender of the Series A Preferred Shares
and the conversion thereof to Common Shares shall be effective on the
next succeeding day on which such share transfer registers are open.
3.3 Avoidance of Fractional Shares
------------------------------
In any case where a fraction of a Common Share would otherwise be issuable
upon conversion of one or more Series A Preferred Shares:
(a) the Conversion Privilege shall be deemed to have been exercised only with
respect to that number of Series A Preferred Shares as can be converted into a
whole number of Common Shares; and
(b) the Corporation shall adjust such fractional interest in a Common Share by
the payment by cheque of an amount equal to the product of such fractional
interest and the Conversion Price applicable to the conversion of such Series A
Preferred Shares.
3.4 Adjustment of Conversion Privilege
----------------------------------
(1) Definitions
-----------
In this Section 3.4:
(a) "Additional Common Shares" mean all Common Shares issued by the
------------------------
Corporation after the Original Issue Date and all Common Shares
issuable by the Corporation on the conversion of Convertible
Securities after the Original issue Date, other than Common Shares
issued or issuable:
(i) upon conversion of any Series A Preferred Shares;
Page 98
(ii) to officers, directors or employees of, or consultants to,
the Corporation pursuant to a stock option or option plan
or other employee stock incentive programs contemplated by
the Corporation on the Original Issue Date;
(iii) as consideration for the-purchase of intellectual property
rights and technology pursuant to an agreement dated June
9, 1986 between Mr. Terence H. Matthews, Newbridge
Communication Networks Corp. and the Corporation; and
(iv) by way of stock dividend declared pursuant to Section 2.1;
(b) "Convertible Securities" mean any evidences of indebtedness, shares or
---------------------
other securities directly or indirectly convertible into or
exchangeable for Common Shares;
(c) "current market value" of the Common Shares at any date means a price
--------------------
per share equal to the last board lot sale price on The Toronto Stock
Exchange, on the trading day next preceding such date, or, if the
Common Shares are not then listed on The Toronto Stock Exchange, on
such other stock exchange on which such shares are listed as may be
selected for such purpose by the Directors, or,
the Common Shares are not listed on any stock exchange, the current
market value as determined in good faith by the Directors;
(d) "Original Issue date" means October 14, 1987; and
(e) "Option" shall mean any right, option or warrant to subscribe for,
------
purchase or otherwise acquire either Common Shares or Convertible
Securities.
(2) Share Reorganization
--------------------
If and whenever the Corporation shall:
(i) subdivide the outstanding Common Shares into a greater number of
shares; or
(ii) consolidate the outstanding Common Shares into a smaller number of
shares;
(any of such event being herein called "Sharp Reorganization"), the conversion
--------------------
Price shall be adjusted, effective immediately after the record date at which
the holders of Common Shares are determined for the purposes of the Share
Reorganization, or, if no record date is fixed the effective date of the Share
Reorganization, by multiplying the
Page 99
Conversion Price in effect on such record or effective date by a fraction of
which:
(A) the numerator shall be the number of Common Shares outstanding on such
record or effective date; and
(B) the denominator shall be the number of Common Shares outstanding after
giving effect to such Share Reorganization, including, in the case of
securities exchangeable for or convertible into Common Shares, the number
of Common Shares that would have been outstanding if such securities had
been exchanged for or converted into Common Shares on such record or
effective date.
(3) Capital Reorganization
----------------------
If and whenever there shall occur a reclassification or redesignation of the
Common Shares or any change of the Common Shares into other shares, otherwise
than in a Share Reorganization (any such event being herein called "Capital
-------
Reorganization"), the holder of any Series A Preferred Shares who exercises the
- --------------
Conversion Privilege after the effective date of Capital Reorganization shall be
entitled to receive and shall accept, upon the exercise of such right, in lieu
of the number of Common Shares to which such holder was theretofore entitled
upon exercise of the Conversion Privilege , the aggregate number of shares Or
other securities or property of the Corporation or of the body corporate
resulting from such Capital Reorganization that such holder would have been
entitled to receive as a result of such Capital Reorganization if, on the
effective date thereof, such holder had been the holder of the number of Common
Shares to which such holder was theretofore entitled upon conversion; provided,
--------
however, that no Capital Reorganization shall bet carried into effect unless all
necessary steps shall have been taken so that the holders of Series A Preferred
Shares shall thereafter be entitled to receive such number of shares or other
securities of the Corporation or of the body corporate resulting from such
Capital Reorganization, subject to adjustment thereafter in accordance with the
provisions of the same, as nearly as may be possible, as those contained in this
Section 3.4 and Section 3.5.
(4) Conversion Price Adjustment
---------------------------
If and whenever the Corporation shall issue Additional Common Shares without
consideration or for a consideration per share less than $2.60 or the market
price of the Series A Preferred Shares, whichever is greater and if such
issuance does not constitute a Share Reorganization or Special Distribution (any
such event being herein called an "Additional Distribution"), the Conversion
-----------------------
Price shall be adjusted concurrently with such issue or deemed issue by
multiplying the Conversion Price by a fraction of which:
(A) the numerator shall be the number of Common Shares outstanding
Page 100
immediately prior to such issue excluding any Common Shares which were
issued as a result of any exclusion enumerated in Section 3.4(l)(a) but
including the number of Common Shares which could be purchased based on the
aggregate consideration received by the Corporation for the total number of
Additional Common Shares so issued at the then Conversion Price, and
(B) the denominator shall be the number of Common Shares outstanding
immediately prior to such issue excluding any Common Shares which were
issued as a result of any exclusion enumerated in Section 3.4(l)(a) but
including the number of such Additional Common Shares so issued.
For purposes of this Section 3.4(4), the consideration received by the
Corporation for the issue of any Additional Common Shares shall be computed as
follows:
(X) insofar as it consists of cash, be computed at the aggregate amount of
cash received by the Corporation excluding amounts paid or payable for
accrued interest or accrued dividends;
(Y) insofar as it consists of property other than cash, be computed at the
fair market value thereof at the time of such issue, as determined in
good faith by the directors; and
(Z) in the event Additional Common Shares are issued together with other
shares or securities or other assets of the Corporation for
consideration which covers both, be the proportion of such
consideration so received for the Additional Common Shares, computed
as provided in clauses (M) and (Y) above, as determined in good faith
by the Directors.
(5) Special Distribution
--------------------
If and whenever the Corporation shall issue or distribute to holders of
Common Shares:
(a) shares of the Corporation of any class other than Common Shares;
(b) Options or Convertible Securities;
(c) evidences of indebtedness; or
(d) any other assets (excluding cash dividends);
for less than fair consideration (as determined by the Board of Directors) and
if such issuance or distribution does not constitute a Share Reorganization (any
such event being herein called "Special Distribution "), the Conversion Price
--------------------
shall be adjusted,
Page 101
effective immediately after the record date at which the holders of Common
Shares are determined for purposes of the Special Distribution, by multiplying
the Conversion Price in effect on such record date by a fraction of which:
(i) the numerator shall be the difference between:
(A) the product of the number of Common Shares outstanding on such record
date and - the current market value of the Common Shares on such date;
and
(B) the fair market value to the holders of Common Shares, as determined
by the Directors (whose determination shall be conclusive) of the
shares, rights, options, warrants, evidences of indebtedness or other
assets issued or distributed in the Special Distribution, and
(ii) the denominator shall be the product of the number of Common Shares
outstanding on such record date and the current market value of the Common
Shares on such date.
3.5 Adjustment Rules
----------------
The following rules and procedures shall be applicable to adjustments of
the Conversion Privilege made pursuant to Section 3.4:
(a) no adjustment in the Conversion Price shall be required unless such
adjustment would result in a change of at least $0.01 in the
Conversion Price then in effect, provided, however, that any
adjustments which, but for the provisions of this Section 3.5(a) would
otherwise have been required to be made, shall be carried forward and
taken into account in any subsequent adjustments;
(b) no adjustment in the Conversion Price shall be made in respect of any
event described in Section 3.4 (other than an event described in
Section 3.4 (2) (i) or (ii) and in Section 3. 4 (3) ) if the holders
of the Series A Preferred Shares are entitled to participate in such
event on the same terms mutatis mutandis as if they had converted
----------------
their Series A Preferred Shares prior to the effective date of such
event;
(c) no adjustment in the Conversion Price shall be made pursuant to
Section 3.4 in respect of the issue from time to time of Common Shares
to holders of Common Shares who exercise an option to receive
substantially equivalent dividends in Common Shares in lieu of
receiving cash dividends or pursuant to any dividend reinvestment plan
of the
Page 102
Corporation;
(d) if a dispute shall at any time arise with respect to any adjustment of
the Conversion Privilege, such dispute shall be conclusively
determined by the auditor of the Corporation or, if they are unable or
unwilling to act, by a firm of independent chartered accountants
selected by the Directors and in any such determination, shall be
binding upon the Corporation and all transfer agents and shareholder's
of the Corporation; and
(e) forthwith after any adjustment of the Conversion Privilege pursuant to
Section 3.4, the Corporation:
(i) file with the Transfer Agent a certificate certifying as to the
particulars of such adjustment and, in reasonable detail, the
event requiring and the manner of determining such adjustment;
and
(ii) give written notice to the holders of Series A Preferred Shares
of the Conversion Privilege following such adjustment.
3.6 Mandatory Conversion
--------------------
After receiving a receipt for a final prospectus for and prior to the
closing of an underwritten public offering of the Common Shares of the
Corporation, the Corporation may at its option, by notice in writing to each of
the holders, require the holders to convert all of the issued and outstanding
Series A Preferred Shares held by such holders into Common Shares at the
Conversion Price. A notice of conversion shall be given by the Corporation not
less than 10 days prior to and shall be subject to the closing of the
underwritten public offering of the Common Shares of the Corporation and shall
specify therein the date fixed for closing such offering and the date upon which
the Series A Preferred Shares will be deemed to be converted into Common Shares
at the Conversion Price.
3.7 Cancellation
------------
All Series A Preferred Shares surrendered upon the exercise of the
conversion right shall be cancelled by the Transfer Agent and the number thereof
shall not be restored to the status of authorized but unissued shares.
3.8 Reservation of Common Shares
----------------------------
So long as any of the Series A Preferred Shares are outstanding and
entitled to the Conversion Privilege and at any time that the authorized number
of Common Shares is not unlimited, the Corporation shall reserve and at all
times hold out of its
Page 103
unissued Common Shares, against the Conversion Privilege herein conferred upon
the holders of the Series A Preferred Shares, a sufficient number of unissued
Common Shares to be converted upon the basis and upon the terms and conditions
provided in this Article 3.
3.9 Compliance with Laws
--------------------
If any Common Shares reserved or to be reserved for the purpose of
conversion of the Series A Preferred Shares hereunder, require registration with
or approval of any governmental authority under any Canadian or Provincial law
before such shares may be validly issued upon conversion, the Corporation will
take such action as may be necessary to secure such registration or approval, as
the case may be.
ARTICLE 4
VOTING RIGHTS
4.1 Voting Rights
-------------
Each holder shall be entitled to receive notice of and to attend any annual
or special meeting of the shareholders of the Corporation and shall be entitled
to one vote for each Series A Preferred Share held by such holder.
ARTICLE 5
LIQUIDATION
5.1 Liquidation
-----------
In the event of the liquidation, dissolution 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, the holders of the Series A Preferred Shares shall be entitled to
receive, before any distribution of any part of the assets of the Corporation
among the holders of any other shares, an amount equal to $2.60 plus an amount
equal to any dividends declared thereon and unpaid and no more. For the purposes
of this Section 5.1, liquidation includes a disposition of substantially all of
the assets of the Corporation whether by sale, merger or other reorganization.
Upon payment of the amounts so payable to them, the holders of the Series A
Preferred Shares shall not be entitled to share in any further distribution of
assets of the Corporation.
ARTICLE 6
PURCHASE
6.1 Purchase
--------
Page 104
Subject to the provisions of applicable law, the Corporation may purchase
at any time all or from time to time any number of the outstanding Series A
Preferred Shares in the open market or pursuant to tenders received by the
Corporation upon invitation for tenders addressed to all holders at the lowest
price or prices which in the opinion of the Directors such shares are obtainable
but not exceeding $2.60 per Series A Preferred Share. If upon any invitation for
tenders, the Corporation receives tenders for Series A Preferred Shares at the
same price in an aggregate number greater than the number for which the
Corporation is prepared to accept tenders, the shares to be purchased shall be
selected from the shares offered at such price as nearly as may be pro rata,
disregarding fractions, according to the number of Series A Preferred Shares
offered in each such tender, in such manner as the Directors in their sole
discretion shall determine.
ARTICLE 7
FURTHER SERIES OF PREFERRED SHARES
7.1 Further Series of Preferred Shares
----------------------------------
So long as the Series A Preferred Shares are outstanding, the Corporation
shall not, without the approval of the holders of the Series A Preferred Shares,
issue any further series of Preferred Shares.
ARTICLE 8
MISCELLANEOUS
8.1 Modification
------------
The rights, privileges, restrictions and conditions attaching to the Series
A Preferred Shares may be repealed, altered, modified, amended or varied in
whole or in part only with the prior approval of the holders of the Series A
Preferred Shares given in the manner provided in Section 8.2 in addition to any
other approval required by the Canada Business Corporations Act or any other
applicable statutory provision of like or similar effect, from time to time in
force.
8.2 Approval
--------
The approval of the holders of the Series A Preferred Shares with respect
to any and all matters hereinbefore referred to may be given by at least 66 2/3%
of the votes cast at a meeting of the holders duly called for that purpose and
held upon at least 21 days notice, at which the holders of a majority of the
outstanding Series A Preferred Shares are present or represented by proxy. If at
any such meeting the holders of a majority of the outstanding Series A Preferred
Shares are not present or represented by proxy within one-half an hour after the
time appointed for such meeting, then the meeting shall be adjourned to such
date being less than 30 days later and to such time and place as may be
appointed the chairman of the meeting and not less than 21 days notice shall be
given for such adjourned meeting but it shall not be necessary in such
Page 105
notice to specify the purpose for which the meeting was originally called. At
such adjourned meeting the holders present or represented by proxy shall
constitute a quorum and may transact the business for which the meeting was
originally called and resolution passed thereat by not less than 66 2/3% of the
votes cast at such adjourned meeting shall be effective notwithstanding that the
holders of a majority of the Series A Preferred Shares are not present or
represented by proxy and the conduct thereof shall be from time to time
prescribed by the by-laws of the Corporation with respect to meetings of
shareholders. On every poll taken at every such meeting or adjourned meeting
every holder shall be entitled to one vote in respect of each Series A Preferred
Share held by him.
8.3 Notices
-------
Any notice required or permitted to be given to a holder shall be mailed by
letter, postage prepaid, or delivered to such holder at his address as it
appears on the records of the Corporation or in the event of the address of any
such holder not so appearing then to the last known address of such holder. The
accidental failure to give notice to one or more of such shareholders shall not
affect the validity of any action requiring the giving of notice by the
Corporation. Any notice given as aforesaid shall be deemed to be given on the
date upon which it is mailed or delivered.
Page 106
SCHEDULE "B"
(a) Without in any way limiting the borrowing powers of the directors under the
Canada Business Corporations Act, as amended from time to time, the Board
of Directors may from time to time, in such amounts and on such terms as it
deem expedient:
(i) borrow money on the credit of the Corporation;
(ii) limit or increase the amount to be borrowed;
(iii) issue debentures or other securities of the Corporation;
(iv) pledge or sell such debentures or other securities for such sums and
at such prices as may be deemed expedient;
(v) secure any such debentures, or other securities, or any other
present or future borrowing or liability of the Corporation, by
mortgage, hypothec, charge or pledge of all or any currently owned
or subsequently acquired real and personal, moveable and immoveable,
property of the Corporation, and the undertaking and rights of the
Corporation.
Nothing in this paragraph limits or restricts the borrowing of money by the
Corporation on bills of exchange or promissory notes made, drawn, accepted or
endorsed by or on behalf of the Corporation.
The Board of Directors may from time to time delegate to such one or more
of the directors and officers of the Corporation or persons as may be
designated by the Board all or any of the powers conferred on the Board
above -to such extent and in such manner as the Board shall determine at
the time of such delegation.
For greater certainty the foregoing powers conferred on the directors shall
be deemed to include the powers conferred on a company by Division VII of
the Special Corporate Powers Act, being Chapter P-16 of the Revised
Statutes of Quebec, 1977 and every statutory provision that may be
substituted therefor or for any provision therein.
Page 107
STATUTORY DECLARATION
PROVINCE OF ONTARIO ) IN THE MATTER OF the
Canada ) Canada Business Corporations
) Act and in the Articles of
) Amalgamation of Newbridge
) Networks Corporation and
) Elcombe Systems Limited
I, James C. Avis, of the City of Ottawa, in the Province of Ontario do
solemnly declare that:
1. I am the Secretary of Elcombe Systems Limited, one of the amalgamating
corporations (the "Corporation") and as such have personal knowledge of the
matters in this declaration.
2. I have conducted such examinations of the books and records of the
Corporation and have made such inquiries and investigations as are necessary to
enable me to make this declaration.
3. I have satisfied myself that there are reasonable grounds for believing
that:
(a) the Corporation is and the amalgamated corporation Will be able to pay
its liabilities as they become due;
(b) the realizable value of the assets of the amalgamated corporation will
not be less than the aggregate of its liabilities and stated capital of all
classes;
(c) no creditor of the Corporation will be prejudiced by the amalgamation.
And I make this solemn declaration conscientiously believing the same to be
true and knowing that it is of the same force and effect as if made under oath
by virtue of the Canada Evidence Act.
DECLARED before me at the City )
of Ottawa, in the )
Province of Ontario, this 29/th/ )
day of December, 1993. ) /s/ James C. Avis
-----------------
______________________
A Commissioner, etc.
Page 108