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Exhibit 3.2
ASPREVA PHARMACEUTICALS CORPORATION
(the "Company")
The Company has as its articles the following articles.
FULL NAME AND SIGNATURE OF A DIRECTOR DATE OF SIGNING
- ------------------------------------- ---------------
/s/ RICHARD GLICKMAN
- ------------------------------------- ---------------------
Richard Glickman February 8, 2005
Incorporation number:
ASPREVA PHARMACEUTICALS CORPORATION
(THE "COMPANY")
ARTICLES
1. INTERPRETATION...........................................................................................1
1.1 Definitions.....................................................................................1
1.2 Business Corporations Act and Interpretation Act Definitions Applicable.........................1
2. SHARES AND SHARE CERTIFICATES............................................................................1
2.1 Authorized Share Structure......................................................................1
2.2 Form of Share Certificate.......................................................................1
2.3 Shareholder Entitled to Share Certificate or Acknowledgement....................................1
2.4 Delivery by Mail................................................................................2
2.5 Replacement of Worn Out or Defaced Share Certificate or Acknowledgement.........................2
2.6 Replacement of Lost, Stolen or Destroyed Share Certificate or
Acknowledgement.................................................................................2
2.7 Splitting Share Certificates....................................................................2
2.8 Share Certificate Fee...........................................................................2
2.9 Recognition of Trusts...........................................................................2
3. ISSUE OF SHARES..........................................................................................3
3.1 Directors Authorized............................................................................3
3.2 Commissions and Discounts.......................................................................3
3.3 Brokerage.......................................................................................3
3.4 Conditions of Issue.............................................................................3
3.5 Share Purchase Warrants and Rights..............................................................3
4. SHARE REGISTERS..........................................................................................4
4.1 Central Securities Register.....................................................................4
4.2 Closing Register................................................................................4
5. SHARE TRANSFERS..........................................................................................4
5.1 Registering Transfers...........................................................................4
5.2 Form of Instrument of Transfer..................................................................4
5.3 Transferor Remains Shareholder..................................................................4
5.4 Signing of Instrument of Transfer...............................................................4
5.5 Enquiry as to Title Not Required................................................................5
5.6 Transfer Fee....................................................................................5
6. TRANSMISSION OF SHARES...................................................................................5
6.1 Legal Personal Representative Recognized on Death...............................................5
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6.2 Rights of Legal Personal Representative.........................................................5
7. PURCHASE OF SHARES.......................................................................................5
7.1 Company Authorized to Purchase Shares...........................................................5
7.2 Purchase When Insolvent.........................................................................5
7.3 Sale and Voting of Purchased Shares.............................................................6
8. BORROWING POWERS.........................................................................................6
9. ALTERATIONS..............................................................................................6
9.1 Increase or Reduction in Authorized Share Structure.............................................6
9.2 Alteration of Authorized Share Structure........................................................6
9.3 Special Rights and Restrictions.................................................................7
9.4 Change of Name..................................................................................7
9.5 Other Alterations...............................................................................7
10. MEETINGS OF SHAREHOLDERS.................................................................................7
10.1 Annual General Meetings.........................................................................7
10.2 Resolution Instead of Annual General Meeting....................................................7
10.3 Calling of Meetings of Shareholders.............................................................8
10.4 Notice for Meetings of Shareholders.............................................................8
10.5 Location of Meeting.............................................................................8
10.6 Record Date for Notice..........................................................................8
10.7 Record Date for Voting..........................................................................8
10.8 Failure to Give Notice and Waiver of Notice.....................................................8
10.9 Notice of Special Business at Meetings of Shareholders..........................................9
10.10 Class Meetings and Series Meetings of Shareholders..............................................9
11. PROCEEDINGS AT MEETINGS OF SHAREHOLDERS..................................................................9
11.1 Special Business................................................................................9
11.2 Special Majority...............................................................................10
11.3 Quorum.........................................................................................10
11.4 One Shareholder May Constitute Quorum..........................................................10
11.5 Other Persons May Attend.......................................................................10
11.6 Requirement of Quorum..........................................................................10
11.7 Lack of Quorum.................................................................................10
11.8 Lack of Quorum at Succeeding Meeting...........................................................10
11.9 Chair..........................................................................................11
11.10 Selection of Alternate Chair...................................................................11
11.11 Adjournments...................................................................................11
11.12 Notice of Adjourned Meeting....................................................................11
11.13 Decisions by Show of Hands or Poll.............................................................11
11.14 Declaration of Result..........................................................................11
11.15 Motion Need Not be Seconded....................................................................12
11.16 Casting Vote...................................................................................12
11.17 Manner of Taking Poll..........................................................................12
11.18 Demand for Poll on Adjournment.................................................................12
11.19 Chair Must Resolve Dispute.....................................................................12
11.20 Casting of Votes...............................................................................12
11.21 Demand for Poll................................................................................12
11.22 Demand for Poll Not to Prevent Continuance of Meeting..........................................12
11.23 Retention of Ballots and Proxies...............................................................13
11.24 Ordinary Resolution............................................................................13
12. VOTES OF SHAREHOLDERS...................................................................................13
12.1 Number of Votes by Shareholder or by Shares....................................................13
12.2 Votes of Persons in Representative Capacity....................................................13
12.3 Votes by Joint Holders.........................................................................13
12.4 Legal Personal Representatives as Joint Shareholders...........................................13
12.5 Representative of a Corporate Shareholder......................................................14
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12.6 Proxy Provisions Do Not Apply to all Companies.................................................14
12.7 Appointment of Proxy Holders...................................................................14
12.8 Alternate Proxy Holders........................................................................14
12.9 When Proxy Holder Need Not Be Shareholder......................................................15
12.10 Deposit of Proxy...............................................................................15
12.11 Validity of Proxy Vote.........................................................................15
12.12 Form of Proxy..................................................................................15
12.13 Revocation of Proxy............................................................................16
12.14 Revocation of Proxy Must Be Signed.............................................................16
12.15 Production of Evidence of Authority to Vote....................................................16
13. DIRECTORS...............................................................................................16
13.1 First Directors; Number of Directors...........................................................16
13.2 Change in Number of Directors..................................................................17
13.3 Directors' Acts Valid Despite Vacancy..........................................................17
13.4 Qualifications of Directors....................................................................17
13.5 Remuneration of Directors......................................................................17
13.6 Reimbursement of Expenses of Directors.........................................................17
13.7 Special Remuneration for Directors.............................................................18
13.8 Gratuity, Pension or Allowance on Retirement of Director.......................................18
14. ELECTION AND REMOVAL OF DIRECTORS.......................................................................18
14.1 Election at Annual General Meeting.............................................................18
14.2 Consent to be a Director.......................................................................18
14.3 Failure to Elect or Appoint Directors..........................................................18
14.4 Places of Retiring Directors Not Filled........................................................19
14.5 Directors May Fill Casual Vacancies,...........................................................19
14.6 Remaining Directors Power to Act...............................................................19
14.7 Shareholders May Fill Vacancies................................................................19
14.8 Additional Directors...........................................................................19
14.9 Ceasing to be a Director.......................................................................20
14.10 Removal of Director by Shareholders............................................................20
14.11 Removal of Director by Directors...............................................................20
15. ALTERNATE DIRECTORS.....................................................................................20
15.1 Appointment of Alternate Director..............................................................20
15.2 Notice of Meetings.............................................................................20
15.3 Alternate for More Than One Director Attending Meetings........................................20
15.4 Consent Resolutions............................................................................21
15.5 Alternate Director Not an Agent................................................................21
15.6 Revocation of Appointment of Alternate Director................................................21
15.7 Ceasing to be an Alternate Director............................................................21
15.8 Remuneration and Expenses of Alternate Director................................................21
16. POWERS AND DUTIES OF DIRECTORS..........................................................................22
16.1 Powers of Management...........................................................................22
16.2 Appointment of Attorney of Company.............................................................22
16.3 Remuneration of Auditor........................................................................22
17. INTERESTS OF DIRECTORS AND OFFICERS.....................................................................22
17.1 Obligation to Account for Profits..............................................................22
17.2 Restrictions on Voting by Reason of Interest...................................................22
17.3 Interested Director Counted in Quorum..........................................................22
17.4 Disclosure of Conflict of Interest or Property.................................................22
17.5 Director Holding Other Office in the Company...................................................23
17.6 No Disqualification............................................................................23
17.7 Professional Services by Director or Officer...................................................23
17.8 Director or Officer in Other Corporations......................................................23
18. PROCEEDINGS OF DIRECTORS................................................................................23
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18.1 Meetings of Directors..........................................................................23
18.2 Voting at Meetings.............................................................................23
18.3 Chair of Meetings..............................................................................23
18.4 Meetings by Telephone or Other Communications Medium...........................................24
18.5 Calling of Meetings............................................................................24
18.6 Notice of Meetings,............................................................................24
18.7 When Notice Not Required.......................................................................24
18.8 Meeting Valid Despite Failure to Give Notice...................................................24
18.9 Waiver of Notice of Meetings...................................................................25
18.10 Quorum.........................................................................................25
18.11 Validity of Acts Where Appointment Defective...................................................25
18.12 Consent Resolutions in Writing.................................................................25
19. EXECUTIVE AND OTHER COMMITTEES..........................................................................25
19.1 Appointment and Powers of Executive Committee..................................................25
19.2 Appointment and Powers of Other Committees.....................................................26
19.3 Obligations of Committees......................................................................26
19.4 Powers of Board................................................................................26
19.5 Committee Meetings.............................................................................26
20. OFFICERS................................................................................................27
20.1 Directors May Appoint Officers.................................................................27
20.2 Functions, Duties and Powers of Officers.......................................................27
20.3 Qualifications.................................................................................27
20.4 Remuneration and Terms of Appointment..........................................................27
21. INDEMNIFICATION.........................................................................................27
21.1 Definitions....................................................................................27
21.2 Mandatory Indemnification of Directors and Former Directors....................................28
21.3 Indemnification of Other Persons...............................................................28
21.4 Non-Compliance with Business Corporations Act..................................................28
21.5 Company May Purchase Insurance.................................................................28
22. DIVIDENDS...............................................................................................29
22.1 Payment of Dividends Subject to Special Rights.................................................29
22.2 Declaration of Dividends.......................................................................29
22.3 No Notice Required.............................................................................29
22.4 Record Date....................................................................................29
22.5 Manner of Paying Dividend......................................................................29
22.6 Settlement of Difficulties.....................................................................29
22.7 When Dividend Payable..........................................................................29
22.8 Dividends to be Paid in Accordance with Number of Shares.......................................29
22.9 Receipt by Joint Shareholders..................................................................30
22.10 Dividend Bears No Interest.....................................................................30
22.11 Fractional Dividends...........................................................................30
22.12 Payment of Dividends...........................................................................30
22.13 Capitalization of Surplus......................................................................30
22.14 Set Aside Funds................................................................................30
23. ACCOUNTING RECORDS......................................................................................30
23.1 Recording of Financial Affairs.................................................................30
23.2 Inspection of Accounting Records...............................................................30
24. NOTICES.................................................................................................31
24.1 Method of Giving Notice........................................................................31
24.2 Deemed Receipt of Mailing......................................................................31
24.3 Certificate of Sending.........................................................................31
24.4 Notice to Joint Shareholders...................................................................32
24.5 Notice to Trustees.............................................................................32
25. SEAL....................................................................................................32
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25.1 Who May Attest Seal............................................................................32
25.2 Sealing Copies.................................................................................32
25.3 Mechanical Reproduction of Seal................................................................32
26. PROHIBITIONS............................................................................................33
26.1 Definitions....................................................................................33
26.2 Application....................................................................................33
26.3 Consent Required for Transfer of Shares or Designated Securities...............................33
27. SPECIAL RIGHTS AND RESTRICTIONS ATTACHING TO THE COMMON SHARES WITHOUT PAR VALUE........................33
27.1 Voting.........................................................................................34
27.2 Dividends......................................................................................34
27.3 Liquidation, Dissolution or Winding-Up.........................................................34
28. SPECIAL RIGHTS AND RESTRICTIONS ATTACHING TO THE PREFERRED SHARES WITHOUT PAR VALUE.....................34
28.1 Issuable in Series.............................................................................34
28.2 Preference over Junior Shares..................................................................34
28.3 Parity Among Series............................................................................34
28.4 Restriction on Creating New Shares.............................................................35
28.5 Non-Voting.....................................................................................35
28.6 Amendments.....................................................................................35
28.7 Meetings of Registered Holders of Preferred Shares.............................................35
29. SPECIAL RIGHTS AND RESTRICTIONS ATTACHING TO THE PREFERRED SHARES, SERIES A
WITHOUT PAR VALUE.......................................................................................35
29.1 Definitions....................................................................................35
29.2 Dividends......................................................................................38
29.3 Liquidation Rights.............................................................................38
29.4 Conversion.....................................................................................40
29.5 Voting.........................................................................................47
29.6 Redemption Rights of the Series A Holders......................................................47
29.7 Election of Directors..........................................................................50
29.8 Protective Provisions..........................................................................50
29.9 Pre-Emptive Rights.............................................................................50
29.10 Status of Converted Series A Preferred Shares..................................................50
29.11 Notices........................................................................................51
29.12 Transfer Agents................................................................................51
1. INTERPRETATION
1.1 DEFINITIONS
In these Articles, unless the context otherwise requires:
(1) "board of directors", "directors" and "board" mean the
directors or sole director of the Company for the time being;
(2) "Business Corporations Act" means the Business Corporations
Act (British Columbia) from time to time in force and all
amendments thereto and includes all regulations and amendments
thereto made pursuant to that Act;
(3) "Interpretation Act" means the Interpretation Act (British
Columbia) from time to time in force and all amendments
thereto and includes all regulations and amendments thereto
made pursuant to that Act;
(4) "legal personal representative" means the personal or other
legal representative of the shareholder;
(5) "registered address" of a shareholder means the shareholder's
address as recorded in the central securities register; and
(6) "seal" means the seal of the Company, if any.
1.2 BUSINESS CORPORATIONS ACT AND INTERPRETATION ACT DEFINITIONS APPLICABLE
The definitions in the Business Corporations Act and the definitions and rules
of construction in the Interpretation Act, with the necessary changes, so far as
applicable, and unless the context requires otherwise, apply to these Articles
as if they were an enactment. If there is a conflict between a definition in the
Business Corporations Act and a definition or rule in the Interpretation Act
relating to a term used in these Articles, the definition in the Business
Corporations Act will prevail in relation to the use of the term in these
Articles. If there is a conflict between these Articles and the Business
Corporations Act, the Business Corporations Act will prevail.
2. SHARES AND SHARE CERTIFICATES
2.1 AUTHORIZED SHARE STRUCTURE
The authorized share structure of the Company consists of shares of the class or
classes and series, if any, described in the Notice of Articles of the Company.
2.2 FORM OF SHARE CERTIFICATE
Each share certificate issued by the Company must comply with, and be signed as
required by, the Business Corporations Act.
2.3 SHAREHOLDER ENTITLED TO SHARE CERTIFICATE OR ACKNOWLEDGEMENT
Each shareholder is entitled, without charge, to (a) one share certificate
representing the shares of each class or series of shares registered in the
shareholder's name or (b) a non-transferable written acknowledgement of the
shareholder's right to obtain such a share certificate, provided that in respect
of a
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share held jointly by several persons, the Company is not bound to issue more
than one share certificate or acknowledgement and delivery of a share
certificate or acknowledgement for a share to one of several joint shareholders
or to one of the shareholders' duly authorized agents will be sufficient
delivery to all.
2.4 DELIVERY BY MAIL
Any share certificate or non-transferable written acknowledgement of a
shareholder's right to obtain a share certificate may be sent to the shareholder
by mail at the shareholder's registered address and neither the Company nor any
director, officer or agent of the Company is liable for any loss to the
shareholder because the share certificate or acknowledgement is lost in the mail
or stolen.
2.5 REPLACEMENT OF WORN OUT OR DEFACED SHARE CERTIFICATE OR ACKNOWLEDGEMENT
If the directors are satisfied that a share certificate or a non-transferable
written acknowledgement of the shareholder's right to obtain a share certificate
is worn out or defaced, they must, on production to them of the share
certificate or acknowledgement, as the case may be, and on such other terms, if
any, as they think fit:
(1) order the share certificate or acknowledgement, as the case
may be, to be cancelled; and
(2) issue a replacement share certificate or acknowledgement, as
the case may be.
2.6 REPLACEMENT OF LOST, STOLEN OR DESTROYED SHARE CERTIFICATE OR
ACKNOWLEDGEMENT
If a share certificate or a non-transferable written acknowledgement of a
shareholder's right to obtain a share certificate is lost, stolen or destroyed,
a replacement share certificate or acknowledgement, as the case may be, must be
issued to the person entitled to that share certificate or acknowledgement, as
the case may be, if the directors receive:
(1) proof satisfactory to them that the share certificate or
acknowledgement is lost, stolen or destroyed; and
(2) any indemnity the directors consider adequate.
2.7 SPLITTING SHARE CERTIFICATES
If a shareholder surrenders a share certificate to the Company with a written
request that the Company issue in the shareholder's name two or more share
certificates, each representing a specified number of shares and in the
aggregate representing the same number of shares as the share certificate so
surrendered, the Company must cancel the surrendered share certificate and issue
replacement share certificates in accordance with that request.
2.8 SHARE CERTIFICATE FEE
There must be paid to the Company, in relation to the issue of any share
certificate under Articles 2.5, 2.6 or 2.7, the amount, if any and which must
not exceed the amount prescribed under the Business Corporations Act, determined
by the directors.
2.9 RECOGNITION OF TRUSTS
Except as required by law or statute or these Articles, no person will be
recognized by the Company as holding any share upon any trust, and the Company
is not bound by or compelled in any way to recognize (even when having notice
thereof) any equitable, contingent, future or partial interest in any share or
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fraction of a share or (except as by law or statute or these Articles provided
or as ordered by a court of competent jurisdiction) any other rights in respect
of any share except an absolute right to the entirety thereof in the
shareholder.
3. ISSUE OF SHARES
3.1 DIRECTORS AUTHORIZED
Subject to the Business Corporations Act and the rights of the holders of issued
shares of the Company, the Company may issue, allot, sell or otherwise dispose
of the unissued shares, and issued shares held by the Company, at the times, to
the persons, including directors, in the manner, on the terms and conditions and
for the issue prices (including any premium at which shares with par value may
be issued) that the directors may determine. The issue price for a share with
par value must be equal to or greater than the par value of the share.
3.2 COMMISSIONS AND DISCOUNTS
The Company may at any time pay a reasonable commission or allow a reasonable
discount to any person in consideration of that person purchasing or agreeing to
purchase shares of the Company from the Company or any other person or procuring
or agreeing to procure purchasers for shares of the Company.
3.3 BROKERAGE
The Company may pay such brokerage fee or other consideration as may be lawful
for or in connection with the sale or placement of its securities.
3.4 CONDITIONS OF ISSUE
Except as provided for by the Business Corporations Act, no share may be issued
until it is fully paid. A share is fully paid when:
(1) consideration is provided to the Company for the issue of the
share by one or more of the following:
(a) past services performed for the Company;
(b) property; or
(c) money; and
(2) the value of the consideration received by the Company equals
or exceeds the issue price set for the share under Article
3.1.
3.5 SHARE PURCHASE WARRANTS AND RIGHTS
Subject to the Business Corporations Act, the Company may issue share purchase
warrants, options and rights upon such terms and conditions as the directors
determine, which share purchase warrants, options and rights may be issued alone
or in conjunction with debentures, bonds, shares or any other securities issued
or created by the Company from time to time.
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4. SHARE REGISTERS
4.1 CENTRAL SECURITIES REGISTER
As required by and subject to the Business Corporations Act, the Company must
maintain in British Columbia a central securities register. The directors may,
subject to the Business Corporations Act, appoint an agent to maintain the
central securities register. The directors may also appoint one or more agents,
including the agent which keeps the central securities register, as transfer
agent for its shares or any class or series of its shares, as the case may be,
and the same or another agent as registrar for its shares or such class or
series of its shares, as the case may be. The directors may terminate such
appointment of any agent at any time and may appoint another agent in its place.
4.2 CLOSING REGISTER
The Company must not at any time close its central securities register.
5. SHARE TRANSFERS
5.1 REGISTERING TRANSFERS
A transfer of a share of the Company must not be registered unless:
(1) a duly signed instrument of transfer in respect of the share
has been received by the Company;
(2) if a share certificate has been issued by the Company in
respect of the share to be transferred, that share certificate
has been surrendered to the Company; and
(3) if a non-transferable written acknowledgement of the
shareholder's right to obtain a share certificate has been
issued by the Company in respect of the share to be
transferred, that acknowledgement has been surrendered to the
Company.
5.2 FORM OF INSTRUMENT OF TRANSFER
The instrument of transfer in respect of any share of the Company must be either
in the form, if any, on the back of the Company's share certificates or in any
other form that may be approved by the directors from time to time.
5.3 TRANSFEROR REMAINS SHAREHOLDER
Except to the extent that the Business Corporations Act otherwise provides, the
transferor of shares is deemed to remain the holder of the shares until the name
of the transferee is entered in a securities register of the Company in respect
of the transfer.
5.4 SIGNING OF INSTRUMENT OF TRANSFER
If a shareholder, or his or her duly authorized attorney, signs an instrument of
transfer in respect of shares registered in the name of the shareholder, the
signed instrument of transfer constitutes a complete and sufficient authority to
the Company and its directors, officers and agents to register the number of
shares specified in the instrument of transfer or specified in any other manner,
or, if no number is specified, all the shares represented by the share
certificates or set out in the written acknowledgements deposited with the
instrument of transfer:
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(1) in the name of the person named as transferee in that
instrument of transfer; or
(2) if no person is named as transferee in that instrument of
transfer, in the name of the person on whose behalf the
instrument is deposited for the purpose of having the transfer
registered.
5.5 ENQUIRY AS TO TITLE NOT REQUIRED
Neither the Company nor any director, officer or agent of the Company is bound
to inquire into the title of the person named in the instrument of transfer as
transferee or, if no person is named as transferee in the instrument of
transfer, of the person on whose behalf the instrument is deposited for the
purpose of having the transfer registered or is liable for any claim related to
registering the transfer by the shareholder or by any intermediate owner or
holder of the shares, of any interest in the shares, of any share certificate
representing such shares or of any written acknowledgement of a right to obtain
a share certificate for such shares.
5.6 TRANSFER FEE
There must be paid to the Company, in relation to the registration of any
transfer, the amount, if any, determined by the directors.
6. TRANSMISSION OF SHARES
6.1 LEGAL PERSONAL REPRESENTATIVE RECOGNIZED ON DEATH
In case of the death of a shareholder, the legal personal representative, or if
the shareholder was a joint holder, the surviving joint holder, will be the only
person recognized by the Company as having any title to the shareholder's
interest in the shares. Before recognizing a person as a legal personal
representative, the directors may require proof of appointment by a court of
competent jurisdiction, a grant of letters probate, letters of administration or
such other evidence or documents as the directors consider appropriate.
6.2 RIGHTS OF LEGAL PERSONAL REPRESENTATIVE
The legal personal representative has the same rights, privileges and
obligations that attach to the shares held by the shareholder, including the
right to transfer the shares in accordance with these Articles, provided the
documents required by the Business Corporations Act and the directors have been
deposited with the Company.
7. PURCHASE OF SHARES
7.1 COMPANY AUTHORIZED TO PURCHASE SHARES
Subject to Article 7.2, the special rights and restrictions attached to the
shares of any class or series and the Business Corporations Act, the Company
may, if authorized by the directors, purchase or otherwise acquire any of its
shares at the price and upon the terms specified in such resolution.
7.2 PURCHASE WHEN INSOLVENT
The Company must not make a payment or provide any other consideration to
purchase or otherwise acquire any of its shares if there are reasonable grounds
for believing that:
(1) the Company is insolvent; or
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(2) making the payment or providing the consideration would render
the Company insolvent.
7.3 SALE AND VOTING OF PURCHASED SHARES
If the Company retains a share redeemed, purchased or otherwise acquired by it,
the Company may sell, gift or otherwise dispose of the share, but, while such
share is held by the Company, it:
(1) is not entitled to vote the share at a meeting of its
shareholders;
(2) must not pay a dividend in respect of the share; and
(3) must not make any other distribution in respect of the share.
8. BORROWING POWERS
The Company, if authorized by the directors, may:
(1) borrow money in the manner and amount, on the security, from
the sources and on the terms and conditions that they consider
appropriate;
(2) issue bonds, debentures and other debt obligations either
outright or as security for any liability or obligation of the
Company or any other person and at such discounts or premiums
and on such other terms as they consider appropriate;
(3) guarantee the repayment of money by any other person or the
performance of any obligation of any other person; and
(4) mortgage, charge, whether by way of specific or floating
charge, grant a security interest in, or give other security
on, the whole or any part of the present and future assets and
undertaking of the Company.
9. ALTERATIONS
9.1 INCREASE OR REDUCTION IN AUTHORIZED SHARE STRUCTURE
Subject to the Business Corporations Act, the Company may by resolution of the
directors increase, reduce or eliminate the maximum number of shares that the
Company is authorized to issue out of any class or series of shares or establish
a maximum number of shares that the Company is authorized to issue out of any
class or series of shares for which no maximum is established.
9.2 ALTERATION OF AUTHORIZED SHARE STRUCTURE
Subject to Article 9.3 and the Business Corporations Act, the Company may by:
(1) directors' resolution subdivide or consolidate all or any of
its unissued, or fully paid issued, shares;
(2) ordinary resolution:
(a) create one or more classes or series of shares or, if
none of the shares of a class or series of shares are
allotted or issued, eliminate that class or series of
shares;
(b) if the Company is authorized to issue shares of a
class of shares with par value:
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(i) decrease the par value of those shares; or
(ii) if none of the shares of that class of
shares are allotted or issued, increase the
par value of those shares; or
(3) special resolution:
(a) change all or any of its unissued, or fully paid
issued, shares with par value into shares without par
value or any of its unissued shares without par value
into shares with par value;
(b) alter the identifying name of any of its shares; or
(c) otherwise alter its shares or authorized share
structure when required or permitted to do so by the
Business Corporations Act.
9.3 SPECIAL RIGHTS AND RESTRICTIONS
Subject to the Business Corporations Act, the Company may by special resolution:
(1) create special rights or restrictions for, and attach those
special rights or restrictions to, the shares of any class or
series of shares, whether or not any or all of those shares
have been issued; or
(2) vary or delete any special rights or restrictions attached to
the shares of any class or series of shares, whether or not
any or all of those shares have been issued.
9.4 CHANGE OF NAME
The Company may by resolution of the directors authorize an alteration of its
Notice of Articles in order to change its name or adopt or change any
translation of that name.
9.5 OTHER ALTERATIONS
If the Business Corporations Act does not specify the type of resolution and
these Articles do not specify another type of resolution, the Company may by
special resolution alter these Articles.
10. MEETINGS OF SHAREHOLDERS
10.1 ANNUAL GENERAL MEETINGS
Unless an annual general meeting is deferred or waived in accordance with the
Business Corporations Act, the Company must hold its first annual general
meeting within 18 months after the date on which it was incorporated or
otherwise recognized, and after that must hold an annual general meeting at
least once in each calendar year and not more than 15 months after the last
annual reference date at such time and place as may be determined by the
directors.
10.2 RESOLUTION INSTEAD OF ANNUAL GENERAL MEETING
If all the shareholders who are entitled to vote at an annual general meeting
consent by a unanimous resolution under the Business Corporations Act to all of
the business that is required to be transacted at that annual general meeting,
the annual general meeting is deemed to have been held on the date of the
unanimous resolution. The shareholders must, in any unanimous resolution passed
under this Article
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10.2, select as the Company's annual reference date a date that would be
appropriate for the holding of the applicable annual general meeting.
10.3 CALLING OF MEETINGS OF SHAREHOLDERS
The directors may, whenever they think fit, call a meeting of shareholders.
10.4 NOTICE FOR MEETINGS OF SHAREHOLDERS
The Company must send notice of the date, time and location of any meeting of
shareholders, in the manner provided in these Articles, or in such other manner,
if any, as may be prescribed by ordinary resolution (whether previous notice of
the resolution has been given or not), to each shareholder entitled to attend
the meeting, to each director and to the auditor of the Company, unless these
Articles otherwise provide, at least the following number of days before the
meeting:
(1) if and for so long as the Company is a public company, 21
days;
(2) otherwise, 10 days.
10.5 LOCATION OF MEETING
A meeting of the shareholders may be held anywhere in North America as
determined by the directors.
10.6 RECORD DATE FOR NOTICE
The directors may set a date as the record date for the purpose of determining
shareholders entitled to notice of any meeting of shareholders. The record date
must not precede the date on which the meeting is to be held by more than two
months or, in the case of a general meeting requisitioned by shareholders under
the Business Corporations Act, by more than four months. The record date must
not precede the date on which the meeting is held by fewer than:
(1) if and for so long as the Company is a public company, 21
days;
(2) otherwise, 10 days.
If no record date is set, the record date is 5 p.m. on the day immediately
preceding the first date on which the notice is sent or, if no notice is sent,
the beginning of the meeting.
10.7 RECORD DATE FOR VOTING
The directors may set a date as the record date for the purpose of determining
shareholders entitled to vote at any meeting of shareholders. The record date
must not precede the date on which the meeting is to be held by more than two
months or, in the case of a general meeting requisitioned by shareholders under
the Business Corporations Act, by more than four months. If no record date is
set, the record date is 5 p.m. on the day immediately preceding the first date
on which the notice is sent or, if no notice is sent, the beginning of the
meeting.
10.8 FAILURE TO GIVE NOTICE AND WAIVER OF NOTICE
The accidental omission to send notice of any meeting of shareholders to, or the
non-receipt of any notice by, any of the persons entitled to notice does not
invalidate any proceedings at that meeting. Any person entitled to notice of a
meeting of shareholders may, in writing or otherwise, waive or reduce the period
of notice of such meeting.
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10.9 NOTICE OF SPECIAL BUSINESS AT MEETINGS OF SHAREHOLDERS
If a meeting of shareholders is to consider special business within the meaning
of Article 11.1, the notice of meeting must:
(1) state the general nature of the special business; and
(2) if the special business includes considering, approving,
ratifying, adopting or authorizing any document or the signing
of or giving of effect to any document, have attached to it a
copy of the document or state that a copy of the document will
be available for inspection by shareholders:
(a) at the meeting; or
(b) at the Company's records office, or at such other
reasonably accessible location in British Columbia as
is specified in the notice, during statutory business
hours on any one or more specified days before the
day set for the holding of the meeting.
10.10 CLASS MEETINGS AND SERIES MEETINGS OF SHAREHOLDERS
Unless otherwise specified in these Articles, the provisions of these Articles
relating to a meeting of shareholders will apply, with the necessary changes and
so far as they are applicable, to a class meeting or series meeting of
shareholders holding a particular class or series of shares.
11. PROCEEDINGS AT MEETINGS OF SHAREHOLDERS
11.1 SPECIAL BUSINESS
At a meeting of shareholders, the following business is special business:
(1) at a meeting of shareholders that is not an annual general
meeting, all business is special business except business
relating to the conduct of or voting at the meeting;
(2) at an annual general meeting, all business is special business
except for the following:
(a) business relating to the conduct of or voting at the
meeting;
(b) consideration of any financial statements of the
Company presented to the meeting;
(c) consideration of any reports of the directors or
auditor;
(d) the setting or changing of the number of directors;
(e) the election or appointment of directors;
(f) the appointment of an auditor;
(g) the setting of the remuneration of an auditor;
(h) business arising out of a report of the directors not
requiring the passing of a special resolution or an
exceptional resolution;
10
(i) any other business which, under these Articles or the
Business Corporations Act, may be transacted at a
meeting of shareholders without prior notice of the
business being given to the shareholders.
11.2 SPECIAL MAJORITY
The majority of votes required for the Company to pass a special resolution at a
meeting of shareholders is two-thirds of the votes cast on the resolution.
11.3 QUORUM
Subject to the special rights and restrictions attached to the shares of any
class or series of shares, the quorum for the transaction of business at a
meeting of shareholders is two persons who are, or who represent by proxy,
shareholders who, in the aggregate, hold at least 20% of the issued shares
entitled to be voted at the meeting.
11.4 ONE SHAREHOLDER MAY CONSTITUTE QUORUM
If there is only one shareholder entitled to vote at a meeting of shareholders:
(1) the quorum is one person who is, or who represents by proxy,
that shareholder, and
(2) that shareholder, present in person or by proxy, may
constitute the meeting.
11.5 OTHER PERSONS MAY ATTEND
The directors, the president (if any), the secretary (if any), the assistant
secretary (if any), any lawyer for the Company, the auditor of the Company and
any other persons invited by the directors are entitled to attend any meeting of
shareholders, but if any of those persons does attend a meeting of shareholders,
that person is not to be counted in the quorum and is not entitled to vote at
the meeting unless that person is a shareholder or proxy holder entitled to vote
at the meeting.
11.6 REQUIREMENT OF QUORUM
No business, other than the election of a chair of the meeting and the
adjournment of the meeting, may be transacted at any meeting of shareholders
unless a quorum of shareholders entitled to vote is present at the commencement
of the meeting, but such quorum need not be present throughout the meeting.
11.7 LACK OF QUORUM
If, within one-half hour from the time set for the holding of a meeting of
shareholders, a quorum is not present:
(1) in the case of a general meeting requisitioned by
shareholders, the meeting is dissolved, and
(2) in the case of any other meeting of shareholders, the meeting
stands adjourned to the same day in the next week at the same
time and place.
11.8 LACK OF QUORUM AT SUCCEEDING MEETING
If, at the meeting to which the meeting referred to in Article 11.7(2) was
adjourned, a quorum is not present within one-half hour from the time set for
the holding of the meeting, the person or persons
11
present and being, or representing by proxy, one or more shareholders entitled
to attend and vote at the meeting constitute a quorum.
11.9 CHAIR
The following individual is entitled to preside as chair at a meeting of
shareholders:
(1) the chair of the board, if any; or
(2) if the chair of the board is absent or unwilling to act as
chair of the meeting, the president, if any.
11.10 SELECTION OF ALTERNATE CHAIR
If, at any meeting of shareholders, there is no chair of the board or president
present within 15 minutes after the time set for holding the meeting, or if the
chair of the board and the president are unwilling to act as chair of the
meeting, or if the chair of the board and the president have advised the
secretary, if any, or any director present at the meeting, that they will not be
present at the meeting, the directors present must choose one of their number to
be chair of the meeting or if all of the directors present decline to take the
chair or fail to so choose or if no director is present, the shareholders
entitled to vote at the meeting who are present in person or by proxy may choose
any person present at the meeting to chair the meeting.
11.11 ADJOURNMENTS
The chair of a meeting of shareholders may, and if so directed by the meeting
must, adjourn the meeting from time to time and from place to place, but no
business may be transacted at any adjourned meeting other than the business left
unfinished at the meeting from which the adjournment took place.
11.12 NOTICE OF ADJOURNED MEETING
It is not necessary to give any notice of an adjourned meeting or of the
business to be transacted at an adjourned meeting of shareholders except that,
when a meeting is adjourned for 30 days or more, notice of the adjourned meeting
must be given as in the case of the original meeting.
11.13 DECISIONS BY SHOW OF HANDS OR POLL
Subject to the Business Corporations Act, every motion put to a vote at a
meeting of shareholders will be decided on a show of hands unless a poll, before
or on the declaration of the result of the vote by show of hands, is directed by
the chair of the meeting or demanded by at least one shareholder entitled to
vote who is present in person or by proxy.
11.14 DECLARATION OF RESULT
The chair of a meeting of shareholders must declare to the meeting the decision
on every question in accordance with the result of the show of hands or the
poll, as the case may be, and that decision must be entered in the minutes of
the meeting. A declaration of the chair that a resolution is carried by the
necessary majority or is defeated is, unless a poll is directed by the chair or
demanded under Article 11.13, conclusive evidence without proof of the number or
proportion of the votes recorded in favour of or against the resolution.
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11.15 MOTION NEED NOT BE SECONDED
No motion proposed at a meeting of shareholders need be seconded unless the
chair of the meeting rules otherwise, and the chair of any meeting of
shareholders is entitled to propose or second a motion.
11.16 CASTING VOTE
In case of an equality of votes, the chair of a meeting of shareholders does
not, either on a show of hands or on a poll, have a second or casting vote in
addition to the vote or votes to which the chair may be entitled as a
shareholder.
11.17 MANNER OF TAKING POLL
Subject to Article 11.18, if a poll is duly demanded at a meeting of
shareholders:
(1) the poll must be taken:
(a) at the meeting, or within seven days after the date
of the meeting, as the chair of the meeting directs;
and
(b) in the manner, at the time and at the place that the
chair of the meeting directs;
(2) the result of the poll is deemed to be the decision of the
meeting at which the poll is demanded; and
(3) the demand for the poll may be withdrawn by the person who
demanded it.
11.18 DEMAND FOR POLL ON ADJOURNMENT
A poll demanded at a meeting of shareholders on a question of adjournment must
be taken immediately at the meeting.
11.19 CHAIR MUST RESOLVE DISPUTE
In the case of any dispute as to the admission or rejection of a vote given on a
poll, the chair of the meeting must determine the dispute, and his or her
determination made in good faith is final and conclusive.
11.20 CASTING OF VOTES
On a poll, a shareholder entitled to more than one vote need not cast all the
votes in the same way.
11.21 DEMAND FOR POLL
No poll may be demanded in respect of the vote by which a chair of a meeting of
shareholders is elected.
11.22 DEMAND FOR POLL NOT TO PREVENT CONTINUANCE OF MEETING
The demand for a poll at a meeting of shareholders does not, unless the chair of
the meeting so rules, prevent the continuation of a meeting for the transaction
of any business other than the question on which a poll has been demanded.
13
11.23 RETENTION OF BALLOTS AND PROXIES
The Company must, for at least three months after a meeting of shareholders,
keep each ballot cast on a poll and each proxy voted at the meeting, and, during
that period, make them available for inspection during normal business hours by
any shareholder or proxyholder entitled to vote at the meeting. At the end of
such three month period, the Company may destroy such ballots and proxies.
11.24 ORDINARY RESOLUTION
Unless the Business Corporations Act or these Articles otherwise provide, any
action that must or may be taken or authorized by the shareholders may be taken
or authorized by an ordinary resolution.
12. VOTES OF SHAREHOLDERS
12.1 NUMBER OF VOTES BY SHAREHOLDER OR BY SHARES
Subject to any special rights or restrictions attached to any shares and to the
restrictions imposed on joint shareholders under Article 12.3:
(1) on a vote by show of hands, every person present who is a
shareholder or proxy holder and entitled to vote on the matter
has one vote; and
(2) on a poll, every shareholder entitled to vote on the matter
has one vote in respect of each share entitled to be voted on
the matter and held by that shareholder and may exercise that
vote either in person or by proxy.
12.2 VOTES OF PERSONS IN REPRESENTATIVE CAPACITY
A person who is not a shareholder may vote at a meeting of shareholders, whether
on a show of hands or on a poll, and may appoint a proxy holder to act at the
meeting, if, before doing so, the person satisfies the chair of the meeting, or
the directors, that the person is a legal personal representative or a trustee
in bankruptcy for a shareholder who is entitled to vote at the meeting.
12.3 VOTES BY JOINT HOLDERS
If there are joint shareholders registered in respect of any share:
(1) any one of the joint shareholders may vote at any meeting of
shareholders, either personally or by proxy, in respect of the
share as if that joint shareholder were solely entitled to it;
or
(2) if more than one of the joint shareholders is present at any
meeting of shareholders, personally or by proxy, and more than
one of the joint shareholders votes in respect of that share,
then only the vote of the joint shareholder present whose name
stands first on the central securities register in respect of
the share will be counted.
12.4 LEGAL PERSONAL REPRESENTATIVES AS JOINT SHAREHOLDERS
Two or more legal personal representatives of a shareholder in whose sole name
any share is registered are, for the purposes of Article 12.3, deemed to be
joint shareholders.
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12.5 REPRESENTATIVE OF A CORPORATE SHAREHOLDER
If a corporation, that is not a subsidiary of the Company, is a shareholder,
that corporation may appoint a person to act as its representative at any
meeting of shareholders of the Company, and:
(1) for that purpose, the instrument appointing a representative
must:
(a) be received at the registered office of the Company
or at any other place specified, in the notice
calling the meeting, for the receipt of proxies, at
least the number of business days specified in the
notice for the receipt of proxies, or if no number of
days is specified, two business days before the day
set for the holding of the meeting; or
(b) be provided, at the meeting, to the chair of the
meeting or to a person designated by the chair of the
meeting;
(2) if a representative is appointed under this Article 12.5:
(a) the representative is entitled to exercise in respect
of and at that meeting the same rights on behalf of
the corporation that the representative represents as
that corporation could exercise if it were a
shareholder who is an individual, including, without
limitation, the right to appoint a proxy holder; and
(b) the representative, if present at the meeting, is to
be counted for the purpose of forming a quorum and is
deemed to be a shareholder present in person at the
meeting.
Evidence of the appointment of any such representative may be sent to the
Company by written instrument, fax or any other method of transmitting legibly
recorded messages.
12.6 PROXY PROVISIONS DO NOT APPLY TO ALL COMPANIES
If and for so long as the Company is a public company or a pre-existing
reporting company which has the Statutory Reporting Company Provisions as part
of its Articles or to which the Statutory Reporting Company Provisions apply,
Articles 12.7 to 12.15 apply only insofar as they are not inconsistent with any
securities legislation in any province or territory of Canada or in the federal
jurisdiction of the United States or in any states of the United States that is
applicable to the Company and insofar as they are not inconsistent with the
regulations and rules made and promulgated under that legislation and all
administrative policy statements, blanket orders and rulings, notices and other
administrative directions issued by securities commissions or similar
authorities appointed under that legislation.
12.7 APPOINTMENT OF PROXY HOLDERS
Every shareholder of the Company, including a corporation that is a shareholder
but not a subsidiary of the Company, entitled to vote at a meeting of
shareholders of the Company may, by proxy, appoint one or more (but not more
than five) proxy holders to attend and act at the meeting in the manner, to the
extent and with the powers conferred by the proxy.
12.8 ALTERNATE PROXY HOLDERS
A shareholder may appoint one or more alternate proxy holders to act in the
place of an absent proxy holder.
15
12.9 WHEN PROXY HOLDER NEED NOT BE SHAREHOLDER
A person must not be appointed as a proxy holder unless the person is a
shareholder, although a person who is not a shareholder may be appointed as a
proxy holder if:
(1) the Company is a public company;
(2) the person appointing the proxy holder is a corporation or a
representative of a corporation appointed under Article 12.5;
(3) the Company has at the time of the meeting for which the proxy
holder is to be appointed only one shareholder entitled to
vote at the meeting; or
(4) the shareholders present in person or by proxy at and entitled
to vote at the meeting for which the proxy holder is to be
appointed, by a resolution on which the proxy holder is not
entitled to vote but in respect of which the proxy holder is
to be counted in the quorum, permit the proxy holder to attend
and vote at the meeting.
12.10 DEPOSIT OF PROXY
A proxy for a meeting of shareholders must:
(1) be received at the registered office of the Company or at any
other place specified, in the notice calling the meeting, for
the receipt of proxies, at least the number of business days
specified in the notice, or if no number of days is specified,
two business days before the day set for the holding of the
meeting; or
(2) unless the notice provides otherwise, be provided, at the
meeting, to the chair of the meeting or to a person designated
by the chair of the meeting.
A proxy may be sent to the Company by written instrument, fax or any other
method of transmitting legibly recorded messages.
12.11 VALIDITY OF PROXY VOTE
A vote given in accordance with the terms of a proxy is valid notwithstanding
the death or incapacity of the shareholder giving the proxy and despite the
revocation of the proxy or the revocation of the authority under which the proxy
is given, unless notice in writing of that death, incapacity or revocation is
received:
(1) at the registered office of the Company, at any time up to and
including the last business day before the day set for the
holding of the meeting at which the proxy is to be used; or
(2) by the chair of the meeting, before the vote is taken.
12.12 FORM OF PROXY
A proxy, whether for a specified meeting or otherwise, must be either in the
following form or in any other form approved by the directors or the chair of
the meeting:
[name of company]
(the "Company")
16
The undersigned, being a shareholder of the Company, hereby appoints
[name] or, failing that person, [name], as proxy holder for the
undersigned to attend, act and vote for and on behalf of the
undersigned at the meeting of shareholders of the Company to be held on
[month, day, year] and at any adjournment of that meeting.
Number of shares in respect of which this proxy is given (if no number
is specified, then this proxy if given in respect of all shares
registered in the name of the shareholder):______________.
Signed [month, day, year]
___________________________________
[Signature of shareholder]
___________________________________
[Name of shareholder- printed]
12.13 REVOCATION OF PROXY
Subject to Article 12.14, every proxy may be revoked by an instrument in writing
that is:
(1) received at the registered office of the Company at any time
up to and including the last business day before the day set
for the holding of the meeting at which the proxy is to be
used; or
(2) provided at the meeting to the chair of the meeting.
12.14 REVOCATION OF PROXY MUST BE SIGNED
An instrument referred to in Article 12.13 must be signed as follows:
(1) if the shareholder for whom the proxy holder is appointed is
an individual, the instrument must be signed by the
shareholder or his or her legal personal representative or
trustee in bankruptcy; or
(2) if the shareholder for whom the proxy holder is appointed is a
corporation, the instrument must be signed by the corporation
or by a representative appointed for the corporation under
Article 12.5.
12.15 PRODUCTION OF EVIDENCE OF AUTHORITY TO VOTE
The chair of any meeting of shareholders may, but need not, inquire into the
authority of any person to vote at the meeting and may, but need not, demand
from that person production of evidence as to the existence of the authority to
vote.
13. DIRECTORS
13.1 First Directors; Number of Directors
The first directors are the persons designated as directors of the
Company in the Notice of Articles that applies to the Company when it
is recognized under the Business Corporations Act. The number of
directors, excluding additional directors appointed under Article 14.8,
is set at:
17
(1) subject to paragraphs (2) and (3), the number of
directors that is equal to the number of the
Company's first directors;
(2) if the Company is a public company, the greater of
three and the most recently set of:
(a) the number of directors set by directors'
resolution; and
(b) the number of directors set under Article
14.4; or
(3) if the Company is not a public company, the most
recently set of:
(a) the number of directors set by directors'
resolution; and
(b) the number of directors set under Article
14.4.
13.2 CHANGE IN NUMBER OF DIRECTORS
If the number of directors is set under Articles 13.1(2)(a) or 13.1(3)(a):
(1) the shareholders may elect or appoint the directors needed to
fill any vacancies in the board of directors up to that
number; or
(2) if the shareholders do not elect or appoint the directors
needed to fill any vacancies in the board of directors up to
that number contemporaneously with the setting of that number,
then the directors may appoint, or the shareholders may elect
or appoint, directors to fill those vacancies.
13.3 DIRECTORS' ACTS VALID DESPITE VACANCY
An act or proceeding of the directors is not invalid merely because fewer than
the number of directors set or otherwise required under these Articles is in
office.
13.4 QUALIFICATIONS OF DIRECTORS
A director is not required to hold a share in the capital of the Company as
qualification for his or her office but must be qualified as required by the
Business Corporations Act to become, act or continue to act as a director.
13.5 REMUNERATION OF DIRECTORS
The directors are entitled to the remuneration for acting as directors, if any,
as the directors may from time to time determine. If the directors so decide,
the remuneration of the directors, if any, will be determined by the
shareholders. That remuneration may be in addition to any salary or other
remuneration paid to any officer or employee of the Company as such, who is also
a director.
13.6 REIMBURSEMENT OF EXPENSES OF DIRECTORS
The Company must reimburse each director for the reasonable expenses that he or
she may incur in and about the business of the Company.
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13.7 SPECIAL REMUNERATION FOR DIRECTORS
If any director performs any professional or other services for the Company that
in the opinion of the directors are outside the ordinary duties of a director,
or if any director is otherwise specially occupied in or about the Company's
business, he or she may be paid remuneration fixed by the directors, or, at the
option of that director, fixed by ordinary resolution, and such remuneration may
be either in addition to, or in substitution for, any other remuneration that he
or she may be entitled to receive.
13.8 GRATUITY, PENSION OR ALLOWANCE ON RETIREMENT OF DIRECTOR
Unless otherwise determined by ordinary resolution, the directors on behalf of
the Company may pay a gratuity or pension or allowance on retirement to any
director who has held any salaried office or place of profit with the Company or
to his or her spouse or dependants and may make contributions to any fund and
pay premiums for the purchase or provision of any such gratuity, pension or
allowance.
14. ELECTION AND REMOVAL OF DIRECTORS
14.1 ELECTION AT ANNUAL GENERAL MEETING
At every annual general meeting and in every unanimous resolution contemplated
by Article 10.2:
(1) the shareholders entitled to vote at the annual general
meeting for the election of directors must elect, or in the
unanimous resolution appoint, a board of directors consisting
of the number of directors for the time being set under these
Articles; and
(2) all the directors cease to hold office immediately before the
election or appointment of directors under paragraph (1), but
are eligible for re-election or re-appointment.
14.2 CONSENT TO BE A DIRECTOR
No election, appointment or designation of an individual as a director is valid
unless:
(1) that individual consents to be a director in the manner
provided for in the Business Corporations Act;
(2) that individual is elected or appointed at a meeting at which
the individual is present and the individual does not refuse,
at the meeting, to be a director; or
(3) with respect to first directors, the designation is otherwise
valid under the Business Corporations Act.
14.3 FAILURE TO ELECT OR APPOINT DIRECTORS
If:
(1) the Company fails to hold an annual general meeting, and all
the shareholders who are entitled to vote at an annual general
meeting fail to pass the unanimous resolution contemplated by
Article 10.2, on or before the date by which the annual
general meeting is required to be held under the Business
Corporations Act; or
(2) the shareholders fail, at the annual general meeting or in the
unanimous resolution contemplated by Article 10.2, to elect or
appoint any directors;
19
then each director then in office continues to hold office until the earlier of:
(3) when his or her successor is elected or appointed; and
(4) when he or she otherwise ceases to hold office under the
Business Corporations Act or these Articles.
14.4 PLACES OF RETIRING DIRECTORS NOT FILLED
If, at any meeting of shareholders at which there should be an election of
directors, the places of any of the retiring directors are not filled by that
election, those retiring directors who are not re-elected and who are asked by
the newly elected directors to continue in office will, if willing to do so,
continue in office to complete the number of directors for the time being set
pursuant to these Articles until further new directors are elected at a meeting
of shareholders convened for that purpose. If any such election or continuance
of directors does not result in the election or continuance of the number of
directors for the time being set pursuant to these Articles, the number of
directors of the Company is deemed to be set at the number of directors actually
elected or continued in office.
14.5 DIRECTORS MAY FILL CASUAL VACANCIES,
Any casual vacancy occurring in the board of directors may be filled by the
directors.
14.6 REMAINING DIRECTORS POWER TO ACT
The directors may act notwithstanding any vacancy in the board of directors, but
if the Company has fewer directors in office than the number set pursuant to
these Articles as the quorum of directors, the directors may only act for the
purpose of appointing directors up to that number or of summoning a meeting of
shareholders for the purpose of filling any vacancies on the board of directors
or, subject to the Business Corporations Act, for any other purpose.
14.7 SHAREHOLDERS MAY FILL VACANCIES
If the Company has no directors or fewer directors in office than the number set
pursuant to these Articles as the quorum of directors, the shareholders may
elect or appoint directors to fill any vacancies on the board of directors.
14.8 ADDITIONAL DIRECTORS
Notwithstanding Articles 13.1 and 13.2, between annual general meetings or
unanimous resolutions contemplated by Article 10.2, the directors may appoint
one or more additional directors, but the number of additional directors
appointed under this Article 14.8 must not at any time exceed:
(1) one-third of the number of first directors, if, at the time of
the appointments, one or more of the first directors have not
yet completed their first term of office; or
(2) in any other case, one-third of the number of the current
directors who were elected or appointed as directors other
than under this Article 14.8.
Any director so appointed ceases to hold office immediately before the next
election or appointment of directors under Article 14.1(1), but is eligible for
re-election or re-appointment.
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14.9 CEASING TO BE A DIRECTOR
A director ceases to be a director when:
(1) the term of office of the director expires;
(2) the director dies;
(3) the director resigns as a director by notice in writing
provided to the Company or a lawyer for the Company; or
(4) the director is removed from office pursuant to Articles 14.10
or 14.11.
14.10 REMOVAL OF DIRECTOR BY SHAREHOLDERS
The Company may remove any director before the expiration of his or her term of
office by special resolution. In that event, the shareholders may elect, or
appoint by ordinary resolution, a director to fill the resulting vacancy. If the
shareholders do not elect or appoint a director to fill the resulting vacancy
contemporaneously with the removal, then the directors may appoint or the
shareholders may elect, or appoint by ordinary resolution, a director to fill
that vacancy.
14.11 REMOVAL OF DIRECTOR BY DIRECTORS
The directors may remove any director before the expiration of his or her term
of office if the director is convicted of an indictable offence, or if the
director ceases to be qualified to act as a director of a company and does not
promptly resign, and the directors may appoint a director to fill the resulting
vacancy.
15. ALTERNATE DIRECTORS
15.1 APPOINTMENT OF ALTERNATE DIRECTOR
Any director (an "appointor") may by notice in writing received by the Company
appoint any person (an "appointee") who is qualified to act as a director to be
his or her alternate to act in his or her place at meetings of the directors or
committees of the directors at which the appointor is not present unless (in the
case of an appointee who is not a director) the directors have reasonably
disapproved the appointment of such person as an alternate director and have
given notice to that effect to his or her appointor within a reasonable time
after the notice of appointment is received by the Company.
15.2 NOTICE OF MEETINGS
Every alternate director so appointed is entitled to notice of meetings of the
directors and of committees of the directors of which his or her appointor is a
member and to attend and vote as a director at any such meetings at which his or
her appointor is not present.
15.3 ALTERNATE FOR MORE THAN ONE DIRECTOR ATTENDING MEETINGS
A person may be appointed as an alternate director by more than one director,
and an alternate director:
(1) will be counted in determining the quorum for a meeting of
directors once for each of his or her appointors and, in the
case of an appointee who is also a director, once more in that
capacity;
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(2) has a separate vote at a meeting of directors for each of his
or her appointors and, in the case of an appointee who is also
a director, an additional vote in that capacity;
(3) will be counted in determining the quorum for a meeting of a
committee of directors once for each of his or her appointors
who is a member of that committee and, in the case of an
appointee who is also a member of that committee as a
director, once more in that capacity; and
(4) has a separate vote at a meeting of a committee of directors
for each of his or her appointors who is a member of that
committee and, in the case of an appointee who is also a
member of that committee as a director, an additional vote in
that capacity.
15.4 CONSENT RESOLUTIONS
Every alternate director, if authorized by the notice appointing him or her, may
sign in place of his or her appointor any resolutions to be consented to in
writing.
15.5 ALTERNATE DIRECTOR NOT AN AGENT
Every alternate director is deemed not to be the agent of his or her appointor.
15.6 REVOCATION OF APPOINTMENT OF ALTERNATE DIRECTOR
An appointor may at any time, by notice in writing received by the Company,
revoke the appointment of an alternate director appointed by him or her.
15.7 CEASING TO BE AN ALTERNATE DIRECTOR
The appointment of an alternate director ceases when:
(1) his or her appointor ceases to be a director and is not
promptly re-elected or re-appointed;
(2) the alternate director dies;
(3) the alternate director resigns as an alternate director by
notice in writing provided to the Company or a lawyer for the
Company;
(4) the alternate director ceases to be qualified to act as a
director; or
(5) his or her appointor revokes the appointment of the alternate
director.
15.8 REMUNERATION AND EXPENSES OF ALTERNATE DIRECTOR
The Company may reimburse an alternate director for the reasonable expenses that
would be properly reimbursed if he or she were a director, and the alternate
director is entitled to receive from the Company such proportion, if any, of the
remuneration otherwise payable to the appointor as the appointor may from time
to time direct.
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16. POWERS AND DUTIES OF DIRECTORS
16.1 POWERS OF MANAGEMENT
The directors must, subject to the Business Corporations Act and these Articles,
manage or supervise the management of the business and affairs of the Company
and have the authority to exercise all such powers of the Company as are not, by
the Business Corporations Act or by these Articles, required to be exercised by
the shareholders of the Company.
16.2 APPOINTMENT OF ATTORNEY OF COMPANY
The directors may from time to time, by power of attorney or other instrument,
under seal if so required by law, appoint any person to be the attorney of the
Company for such purposes, and with such powers, authorities and discretions
(not exceeding those vested in or exercisable by the directors under these
Articles and excepting the power to fill vacancies in the board of directors, to
remove a director, to change the membership of, or fill vacancies in, any
committee of the directors, to appoint or remove officers appointed by the
directors and to declare dividends) and for such period, and with such
remuneration and subject to such conditions as the directors may think fit. Any
such power of attorney may contain such provisions for the protection or
convenience of persons dealing with such attorney as the directors think fit.
Any such attorney may be authorized by the directors to sub-delegate all or any
of the powers, authorities and discretions for the time being vested in him or
her.
16.3 REMUNERATION OF AUDITOR
The directors may set the remuneration of the auditor of the Company.
17. INTERESTS OF DIRECTORS AND OFFICERS
17.1 OBLIGATION TO ACCOUNT FOR PROFITS
A director or senior officer who holds a disclosable interest (as that term is
used in the Business Corporations Act) in a contract or transaction into which
the Company has entered or proposes to enter is liable to account to the Company
for any profit that accrues to the director or senior officer under or as a
result of the contract or transaction only if and to the extent provided in the
Business Corporations Act.
17.2 RESTRICTIONS ON VOTING BY REASON OF INTEREST
A director who holds a disclosable interest in a contract or transaction into
which the Company has entered or proposes to enter is not entitled to vote on
any directors' resolution to approve that contract or transaction, unless all
the directors have a disclosable interest in that contract or transaction, in
which case any or all of those directors may vote on such resolution.
17.3 INTERESTED DIRECTOR COUNTED IN QUORUM
A director who holds a disclosable interest in a contract or transaction into
which the Company has entered or proposes to enter and who is present at the
meeting of directors at which the contract or transaction is considered for
approval may be counted in the quorum at the meeting whether or not the director
votes on any of the resolutions considered at the meeting.
17.4 DISCLOSURE OF CONFLICT OF INTEREST OR PROPERTY
A director or senior officer who holds any office or possesses any property,
right or interest that could result, directly or indirectly, in the creation of
a duty or interest that materially conflicts with that
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individual's duty or interest as a director or senior officer, must disclose the
nature and extent of the conflict as required by the Business Corporations Act.
17.5 DIRECTOR HOLDING OTHER OFFICE IN THE COMPANY
A director may hold any office or place of profit with the Company, other than
the office of auditor of the Company, in addition to his or her office of
director for the period and on the terms (as to remuneration or otherwise) that
the directors may determine.
17.6 NO DISQUALIFICATION
No director or intended director is disqualified by his or her office from
contracting with the Company either with regard to the holding of any office or
place of profit the director holds with the Company or as vendor, purchaser or
otherwise, and no contract or transaction entered into by or on behalf of the
Company in which a director is in any way interested is liable to be voided for
that reason.
17.7 PROFESSIONAL SERVICES BY DIRECTOR OR OFFICER
Subject to the Business Corporations Act, a director or officer, or any person
in which a director or officer has an interest, may act in a professional
capacity for the Company, except as auditor of the Company, and the director or
officer or such person is entitled to remuneration for professional services as
if that director or officer were not a director or officer.
17.8 DIRECTOR OR OFFICER IN OTHER CORPORATIONS
A director or officer may be or become a director, officer or employee of, or
otherwise interested in, any person in which the Company may be interested as a
shareholder or otherwise, and, subject to the Business Corporations Act, the
director or officer is not accountable to the Company for any remuneration or
other benefits received by him or her as director, officer or employee of, or
from his or her interest in, such other person.
18. PROCEEDINGS OF DIRECTORS
18.1 MEETINGS OF DIRECTORS
The directors may meet together for the conduct of business, adjourn and
otherwise regulate their meetings as they think fit, and meetings of the
directors held at regular intervals may be held at the place, at the time and on
the notice, if any, as the directors may from time to time determine.
18.2 VOTING AT MEETINGS
Questions arising at any meeting of directors are to be decided by a majority of
votes and, in the case of an equality of votes, the chair of the meeting does
not have a second or casting vote.
18.3 CHAIR OF MEETINGS
The following individual is entitled to preside as chair at a meeting of
directors:
(1) the chair of the board, if any;
(2) in the absence of the chair of the board, the president, if
any, if the president is a director; or
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(3) any other director chosen by the directors if:
(a) neither the chair of the board nor the president, if
a director, is present at the meeting within 15
minutes after the time set for holding the meeting;
(b) neither the chair of the board nor the president, if
a director, is willing to chair the meeting; or
(c) the chair of the board and the president, if a
director, have advised the secretary, if any, or any
other director, that they will not be present at the
meeting.
18.4 MEETINGS BY TELEPHONE OR OTHER COMMUNICATIONS MEDIUM
A director may participate in a meeting of the directors or of any committee of
the directors in person or by telephone if all directors participating in the
meeting, whether in person or by telephone or other communications medium, are
able to communicate with each other. A director may participate in a meeting of
the directors or of any committee of the directors by a communications medium
other than telephone if all directors participating in the meeting, whether in
person or by telephone or other communications medium, are able to communicate
with each other and if all directors who wish to participate in the meeting
agree to such participation. A director who participates in a meeting in a
manner contemplated by this Article 18.4 is deemed for all purposes of the
Business Corporations Act and these Articles to be present at the meeting and to
have agreed to participate in that manner.
18.5 CALLING OF MEETINGS
A director may, and the secretary or an assistant secretary of the Company, if
any, on the request of a director must, call a meeting of the directors at any
time.
18.6 NOTICE OF MEETINGS,
Other than for meetings held at regular intervals as determined by the directors
pursuant to Article 18.1, reasonable notice of each meeting of the directors,
specifying the place, day and time of that meeting must be given to each of the
directors and the alternate directors by any method set out in Article 24.1 or
orally or by telephone.
18.7 WHEN NOTICE NOT REQUIRED
It is not necessary to give notice of a meeting of the directors to a director
or an alternate director if:
(1) the meeting is to be held immediately following a meeting of
shareholders at which that director was elected or appointed,
or is the meeting of the directors at which that director is
appointed; or
(2) the director or alternate director, as the case may be, has
waived notice of the meeting.
18.8 MEETING VALID DESPITE FAILURE TO GIVE NOTICE
The accidental omission to give notice of any meeting of directors to, or the
non-receipt of any notice by, any director or alternate director, does not
invalidate any proceedings at that meeting.
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18.9 WAIVER OF NOTICE OF MEETINGS
Any director or alternate director may send to the Company a document signed by
him or her waiving notice of any past, present or future meeting or meetings of
the directors and may at any time withdraw that waiver with respect to meetings
held after that withdrawal. After sending a waiver with respect to all future
meetings and until that waiver is withdrawn, no notice of any meeting of the
directors need be given to that director and, unless the director otherwise
requires by notice in writing to the Company, to his or her alternate director,
and all meetings of the directors so held are deemed not to be improperly called
or constituted by reason of notice not having been given to such director or
alternate director.
18.10 QUORUM
The quorum necessary for the transaction of the business of the directors may be
set by the directors and, if not so set, is deemed to be set at two directors
or, if the number of directors is set at one, is deemed to be set at one
director, and that director may constitute a meeting.
18.11 VALIDITY OF ACTS WHERE APPOINTMENT DEFECTIVE
Subject to the Business Corporations Act, an act of a director or officer is not
invalid merely because of an irregularity in the election or appointment or a
defect in the qualification of that director or officer.
18.12 CONSENT RESOLUTIONS IN WRITING
A resolution of the directors or of any committee of the directors may be passed
without a meeting:
(1) in all cases, if each of the directors entitled to vote on the
resolution consents to it in writing; or
(2) in the case of a resolution to approve a contract or
transaction in respect of which a director has disclosed that
he or she has or may have a disclosable interest, if each of
the other directors who are entitled to vote on the resolution
consents to it in writing.
A consent in writing under this Article may be by signed document, fax, email or
any other method of transmitting legibly recorded messages. A consent in writing
may be in two or more counterparts which together are deemed to constitute one
consent in writing. A resolution of the directors or of any committee of the
directors passed in accordance with this Article 18.12 is effective on the date
stated in the consent in writing or on the latest date stated on any counterpart
and is deemed to be a proceeding at a meeting of directors or of the committee
of the directors and to be as valid and effective as if it had been passed at a
meeting of the directors or of the committee of the directors that satisfies all
the requirements of the Business Corporations Act and all the requirements of
these Articles relating to meetings of the directors or of a committee of the
directors.
19. EXECUTIVE AND OTHER COMMITTEES
19.1 APPOINTMENT AND POWERS OF EXECUTIVE COMMITTEE
The directors may, by resolution, appoint an executive committee consisting of
the director or directors that they consider appropriate, and this committee
has, during the intervals between meetings of the board of directors, all of the
directors' powers, except:
(1) the power to fill vacancies in the board of directors;
(2) the power to remove a director;
26
(3) the power to change the membership of, or fill vacancies in,
any committee of the directors; and
(4) such other powers, if any, as may be set out in the resolution
or any subsequent directors' resolution.
19.2 APPOINTMENT AND POWERS OF OTHER COMMITTEES
The directors may, by resolution:
(1) appoint one or more committees (other than the executive
committee) consisting of the director or directors that they
consider appropriate;
(2) delegate to a committee appointed under paragraph (1) any of
the directors' powers, except:
(a) the power to fill vacancies in the board of
directors;
(b) the power to remove a director;
(c) the power to change the membership of, or fill
vacancies in, any committee of the directors; and
(d) the power to appoint or remove officers appointed by
the directors; and
(3) make any delegation referred to in paragraph (2) subject to
the conditions set out in the resolution or any subsequent
directors' resolution.
19.3 OBLIGATIONS OF COMMITTEES
Any committee appointed under Articles 19.1 or 19.2, in the exercise of the
powers delegated to it, must:
(1) conform to any rules that may from time to time be imposed on
it by the directors; and
(2) report every act or thing done in exercise of those powers at
such times as the directors may require.
19.4 POWERS OF BOARD
The directors may, at any time, with respect to a committee appointed under
Articles 19.1 or 19.2:
(1) revoke or alter the authority given to the committee, or
override a decision made by the committee, except as to acts
done before such revocation, alteration or overriding;
(2) terminate the appointment of, or change the membership of, the
committee; and
(3) fill vacancies in the committee.
19.5 COMMITTEE MEETINGS
Subject to Article 19.3(1) and unless the directors otherwise provide in the
resolution appointing the committee or in any subsequent resolution, with
respect to a committee appointed under Articles 19.1 or 19.2:
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(1) the committee may meet and adjourn as it thinks proper;
(2) the committee may elect a chair of its meetings but, if no
chair of a meeting is elected, or if at a meeting the chair of
the meeting is not present within 15 minutes after the time
set for holding the meeting, the directors present who are
members of the committee may choose one of their number to
chair the meeting;
(3) a majority of the members of the committee constitutes a
quorum of the committee; and
(4) questions arising at any meeting of the committee are
determined by a majority of votes of the members present, and
in case of an equality of votes, the chair of the meeting does
not have a second or casting vote.
20. OFFICERS
20.1 DIRECTORS MAY APPOINT OFFICERS
The directors may, from time to time, appoint such officers, if any, as the
directors determine and the directors may, at any time, terminate any such
appointment.
20.2 FUNCTIONS, DUTIES AND POWERS OF OFFICERS
The directors may, for each officer:
(1) determine the functions and duties of the officer;
(2) entrust to and confer on the officer any of the powers
exercisable by the directors on such terms and conditions and
with such restrictions as the directors think fit; and
(3) revoke, withdraw, alter or vary all or any of the functions,
duties and powers of the officer.
20.3 QUALIFICATIONS
No officer may be appointed unless that officer is qualified in accordance with
the Business Corporations Act. One person may hold more than one position as an
officer of the Company. Any person appointed as the chair of the board or as a
managing director must be a director. Any other officer need not be a director.
20.4 REMUNERATION AND TERMS OF APPOINTMENT
All appointments of officers are to be made on the terms and conditions and at
the remuneration (whether by way of salary, fee, commission, participation in
profits or otherwise) that the directors thinks fit and are subject to
termination at the pleasure of the directors, and an officer may in addition to
such remuneration be entitled to receive, after he or she ceases to hold such
office or leaves the employment of the Company, a pension or gratuity.
21. INDEMNIFICATION
21.1 DEFINITIONS
In this Article 21:
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(1) "eligible penalty" means a judgment, penalty or fine awarded
or imposed in, or an amount paid in settlement of, an eligible
proceeding;
(2) "eligible proceeding" means a legal proceeding or
investigative action, whether current, threatened, pending or
completed, in which a director, former director or alternate
director of the Company (an "eligible party") or any of the
heirs and legal personal representatives of the eligible
party, by reason of the eligible party being or having been a
director or alternate director of the Company:
(a) is or may be joined as a party; or
(b) is or may be liable for or in respect of a judgment,
penalty or fine in, or expenses related to, the
proceeding; and
(3) "expenses" has the meaning set out in the Business
Corporations Act.
21.2 MANDATORY INDEMNIFICATION OF DIRECTORS AND FORMER DIRECTORS
Subject to the Business Corporations Act, the Company must indemnify a director,
former director or alternate director of the Company and his or her heirs and
legal personal representatives against all eligible penalties to which such
person is or may be liable, and the Company must, after the final disposition of
an eligible proceeding, pay the expenses actually and reasonably incurred by
such person in respect of that proceeding. Each director and alternate director
is deemed to have contracted with the Company on the terms of the indemnity
contained in this Article 21.2.
21.3 INDEMNIFICATION OF OTHER PERSONS
Subject to any restrictions in the Business Corporations Act, the Company may
indemnify any person.
21.4 NON-COMPLIANCE WITH BUSINESS CORPORATIONS ACT
The failure of a director, alternate director or officer of the Company, to
comply with the Business Corporations Act or these Articles does not invalidate
any indemnity to which he or she is entitled under this Article.
21.5 COMPANY MAY PURCHASE INSURANCE
The Company may purchase and maintain insurance for the benefit of any person
(or his or her heirs or legal personal representatives) who:
(1) is or was a director, alternate director, officer, employee or
agent of the Company;
(2) is or was a director, alternate director, officer, employee or
agent of a corporation at a time when the corporation is or
was an affiliate of the Company;
(3) at the request of the Company, is or was a director, alternate
director, officer, employee or agent of a corporation or of a
partnership, trust, joint venture or other unincorporated
entity; or
(4) at the request of the Company, holds or held a position
equivalent to that of a director, alternate director or
officer of a partnership, trust, joint venture or other
unincorporated entity;
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against any liability incurred by him or her as such director, alternate
director, officer, employee or agent or person who holds or held such equivalent
position.
22. DIVIDENDS
22.1 PAYMENT OF DIVIDENDS SUBJECT TO SPECIAL RIGHTS
The provisions of this Article 22 are subject to the rights, if any, of
shareholders holding shares with special rights as to dividends.
22.2 DECLARATION OF DIVIDENDS
Subject to the Business Corporations Act, the directors may from time to time
declare and authorize payment of such dividends as they may deem advisable.
22.3 NO NOTICE REQUIRED
The directors need not give notice to any shareholder of any declaration under
Article 22.2.
22.4 RECORD DATE
The directors may set a date as the record date for the purpose of determining
shareholders entitled to receive payment of a dividend. The record date must not
precede the date on which the dividend is to be paid by more than two months. If
no record date is set, the record date is 5 p.m. on the date on which the
directors pass the resolution declaring the dividend.
22.5 MANNER OF PAYING DIVIDEND
A resolution declaring a dividend may direct payment of the dividend wholly or
partly by the distribution of specific assets or of fully paid shares or of
bonds, debentures or other securities of the Company, or in any one or more of
those ways.
22.6 SETTLEMENT OF DIFFICULTIES
If any difficulty arises in regard to a distribution under Article 22.5, the
directors may settle the difficulty as they deem advisable, and, in particular,
may:
(1) set the value for distribution of specific assets;
(2) determine that cash payments in substitution for all or any
part of the specific assets to which any shareholders are
entitled may be made to any shareholders on the basis of the
value so fixed in order to adjust the rights of all parties;
and
(3) vest any such specific assets in trustees for the persons
entitled to the dividend.
22.7 WHEN DIVIDEND PAYABLE
Any dividend may be made payable on such date as is fixed by the directors.
22.8 DIVIDENDS TO BE PAID IN ACCORDANCE WITH NUMBER OF SHARES
All dividends on shares of any class or series of shares must be declared and
paid according to the number of such shares held.
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22.9 RECEIPT BY JOINT SHAREHOLDERS
If several persons are joint shareholders of any share, any one of them may give
an effective receipt for any dividend, bonus or other money payable in respect
of the share.
22.10 DIVIDEND BEARS NO INTEREST
No dividend bears interest against the Company.
22.11 FRACTIONAL DIVIDENDS
If a dividend to which a shareholder is entitled includes a fraction of the
smallest monetary unit of the currency of the dividend, that fraction may be
disregarded in making payment of the dividend and that payment represents full
payment of the dividend.
22.12 PAYMENT OF DIVIDENDS
Any dividend or other distribution payable in cash in respect of shares may be
paid by cheque, made payable to the order of the person to whom it is sent, and
mailed to the address of the shareholder, or in the case of joint shareholders,
to the address of the joint shareholder who is first named on the central
securities register, or to the person and to the address the shareholder or
joint shareholders may direct in writing. The mailing of such cheque will, to
the extent of the sum represented by the cheque (plus the amount of the tax
required by law to be deducted), discharge all liability for the dividend unless
such cheque is not paid on presentation or the amount of tax so deducted is not
paid to the appropriate taxing authority.
22.13 CAPITALIZATION OF SURPLUS
Notwithstanding anything contained in these Articles, the directors may from
time to time capitalize any surplus of the Company and may from time to time
issue, as fully paid, shares or any bonds, debentures or other securities of the
Company as a dividend representing the surplus or any part of the surplus.
22.14 SET ASIDE FUNDS
The directors may, before declaring any dividend, set aside such sums as they
think proper as a reserve or reserves, which shall, at the discretion of the
directors, be applicable for meeting contingencies, or for equalizing dividends,
or for any other purpose and pending such application may, at the discretion of
the directors, either be employed in the business of the Company or be invested
in such investments as the directors may from time to time determine. The
directors may also, without placing the same in reserve, carry forward such sums
which they think prudent not to divide.
23. ACCOUNTING RECORDS
23.1 RECORDING OF FINANCIAL AFFAIRS
The directors must cause adequate accounting records to be kept to record
properly the financial affairs and condition of the Company and to comply with
the Business Corporations Act.
23.2 INSPECTION OF ACCOUNTING RECORDS
Unless the directors determine otherwise, or unless otherwise determined by
ordinary resolution, no shareholder of the Company is entitled to inspect or
obtain a copy of any accounting records of the Company.
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24. NOTICES
24.1 METHOD OF GIVING NOTICE
Unless the Business Corporations Act or these Articles provides otherwise, a
notice, statement, report or other record required or permitted by the Business
Corporations Act or these Articles to be sent by or to a person may be sent by
any one of the following methods:
(1) mail addressed to the person at the applicable address for
that person as follows:
(a) for a record mailed to a shareholder, the
shareholder's registered address;
(b) for a record mailed to a director or officer, the
prescribed address for mailing shown for the director
or officer in the records kept by the Company or the
mailing address provided by the recipient for the
sending of that record or records of that class; or
(c) in any other case, the mailing address of the
intended recipient;
(2) delivery at the applicable address for that person as follows,
addressed to the person:
(a) for a record delivered to a shareholder, the
shareholder's registered address;
(b) for a record delivered to a director or officer, the
prescribed address for delivery shown for the
director or officer in the records kept by the
Company or the delivery address provided by the
recipient for the sending of that record or records
of that class; or
(c) in any other case, the delivery address of the
intended recipient;
(3) sending the record by fax to the fax number provided by the
intended recipient for the sending of that record or records
of that class;
(4) sending the record by email to the email address provided by
the intended recipient for the sending of that record or
records of that class; or
(5) physical delivery to the intended recipient.
24.2 DEEMED RECEIPT OF MAILING
A record that is mailed to a person by ordinary mail to the applicable address
for that person referred to in Article 24.1 is deemed to be received by the
person to whom it was mailed on the day, Saturdays, Sundays and holidays
excepted, following the date of mailing.
24.3 CERTIFICATE OF SENDING
A certificate signed by the secretary, if any, or other officer of the Company
or of any other corporation acting in that capacity on behalf of the Company
stating that a notice, statement, report or other record was sent in accordance
with Article 24.1 is conclusive evidence of that fact.
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24.4 NOTICE TO JOINT SHAREHOLDERS
A notice, statement, report or other record may be provided by the Company to
the joint shareholders of a share by providing the notice to the joint
shareholder first named in the central securities register in respect of the
share.
24.5 NOTICE TO TRUSTEES
A notice, statement, report or other record may be provided by the Company to
the persons entitled to a share in consequence of the death, bankruptcy or
incapacity of a shareholder by:
(1) mailing the record, addressed to them:
(a) by name, by the title of the legal personal
representative of the deceased or incapacitated
shareholder, by the title of trustee of the bankrupt
shareholder or by any similar description; and
(b) at the address, if any, supplied to the Company for
that purpose by the persons claiming to be so
entitled; or
(2) if an address referred to in paragraph (1)(b) has not been
supplied to the Company, by giving the notice in a manner in
which it might have been given if the death, bankruptcy or
incapacity had not occurred.
25. SEAL
25.1 WHO MAY ATTEST SEAL
Except as provided in Articles 25.2 and 25.3, the Company's seal, if any, must
not be impressed on any record except when that impression is attested by the
signatures of:
(1) any two directors;
(2) any officer, together with any director;
(3) if the Company only has one director, that director; or
(4) any one or more directors or officers or persons as may be
determined by the directors.
25.2 SEALING COPIES
For the purpose of certifying under seal a certificate of incumbency of the
directors or officers of the Company or a true copy of any resolution or other
document, despite Article 25.1, the impression of the seal may be attested by
the signature of any director, officer or other person as may be determined by
the directors.
25.3 MECHANICAL REPRODUCTION OF SEAL
The directors may authorize the seal to be impressed by third parties on share
certificates or bonds, debentures or other securities of the Company as they may
determine appropriate from time to time. To enable the seal to be impressed on
any share certificates or bonds, debentures or other securities of the Company,
whether in definitive or interim form, on which facsimiles of any of the
signatures of the directors or officers of the Company are, in accordance with
the Business Corporations Act or these
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Articles, printed or otherwise mechanically reproduced, there may be delivered
to the person employed to engrave, lithograph or print such definitive or
interim share certificates or bonds, debentures or other securities one or more
unmounted dies reproducing the seal and such persons as are authorized under
Article 25.1 to attest the Company's seal may in writing authorize such person
to cause the seal to be impressed on such definitive or interim share
certificates or bonds, debentures or other securities by the use of such dies.
Share certificates or bonds, debentures or other securities to which the seal
has been so impressed are for all purposes deemed to be under and to bear the
seal impressed on them.
26. PROHIBITIONS
26.1 DEFINITIONS
In this Article 26:
(1) "designated security" means:
(a) a voting security of the Company;
(b) a security of the Company that is not a debt security
and that carries a residual right to participate in
the earnings of the Company or, on the liquidation or
winding up of the Company, in its assets; or
(c) a security of the Company convertible, directly or
indirectly, into a security described in paragraph
(a) or (b);
(2) "security" has the meaning assigned in the Securities Act
(British Columbia); and
(3) "voting security" means a security of the Company that:
(a) is not a debt security, and
(b) carries a voting right either under all circumstances
or under some circumstances that have occurred and
are continuing.
26.2 APPLICATION
Article 26.3 does not apply to the Company if and for so long as it is a public
company or a pre-existing reporting company which has the Statutory Reporting
Company Provisions as part of its Articles or to which the Statutory Reporting
Company Provisions apply.
26.3 CONSENT REQUIRED FOR TRANSFER OF SHARES OR DESIGNATED SECURITIES
No share or designated security may be sold, transferred or otherwise disposed
of without the consent of the directors and the directors are not required to
give any reason for refusing to consent to any such sale, transfer or other
disposition.
27. SPECIAL RIGHTS AND RESTRICTIONS ATTACHING TO THE COMMON SHARES WITHOUT
PAR VALUE
The Common Shares without par value in the capital of the Company (the "Common
Shares") shall have attached thereto the following special rights and
restrictions:
34
27.1 VOTING
The holders of the Common Shares shall be entitled to one vote in respect of
each Common Share held at any meeting of the shareholders of the Company.
27.2 DIVIDENDS
Subject to the prior rights of the holders of the Preferred Shares, the holders
of the Common Shares, in the absolute discretion of the directors, shall be
entitled to receive, and the Company shall pay thereon, out of moneys of the
Company properly applicable to the payment of dividends, when declared by the
directors, only such dividends as may be declared from time to time in respect
of the Common Shares.
27.3 LIQUIDATION, DISSOLUTION OR WINDING-UP
Subject to the prior payment to the holders of the Preferred Shares as set out
in Article 28.2 in the event of the liquidation, dissolution or winding-up of
the Company or other distribution of the assets of the Company among its
shareholders, the holders of the Common Shares shall be entitled to share pro
rata in the distribution of the balance of the assets.
28. SPECIAL RIGHTS AND RESTRICTIONS ATTACHING TO THE PREFERRED SHARES
WITHOUT PAR VALUE
The Preferred Shares without par value in the capital of the Company (the
"Preferred Shares") shall have attached thereto the following special rights and
restrictions:
28.1 ISSUABLE IN SERIES
The Preferred Shares may be issued at any time or times in one or more series,
and the directors may, by resolution, alter the Notice of Articles and the
Articles of the Company to fix the number of Preferred Shares in, and to
determine the designation of the shares of, each series and to create, define
and attach special rights and restrictions to the shares of each series, subject
to the special rights and restrictions hereby attached to the Preferred Shares
as a class. A resolution under this Article 28.1 may only be passed prior to the
issue of Preferred Shares of the series to which the resolution relates.
28.2 PREFERENCE OVER JUNIOR SHARES
The Preferred Shares shall be entitled to preference over the Common Shares with
respect to the payment of dividends and the distribution of assets of the
Company, whether voluntary or involuntary, or in the event of any other
distribution of assets of the Company among its shareholders for the purpose of
winding up its affairs; and the Preferred Shares of each series may be given
such other preference not inconsistent herewith over the Common Shares
determined in the case of each series authorized to be issued.
28.3 PARITY AMONG SERIES
(1) Where cumulative dividends with respect to a series of
Preferred Shares are not paid in full, the shares of all
series of Preferred Shares shall participate rateably with
respect to accumulated dividends in accordance with the
amounts that would be payable on those shares if all the
accumulated dividends were paid in full.
(2) Where amounts payable on winding-up, or on the occurrence of
any other event as a result of which the holders of the shares
of all series of Preferred Shares are then entitled to a
return of capital, are not paid in full, the shares of all
series of Preferred Shares shall
35
participate rateably in a return of capital in respect of the
Preferred Shares as a class in accordance with the amounts
that would be payable on the return of capital if all amounts
so payable were paid in full.
28.4 RESTRICTION ON CREATING NEW SHARES
So long as any Preferred Shares are outstanding, the Company shall not at any
time without, in addition to any approval that may then be prescribed by
applicable law, the approval of the registered holders of the Preferred Shares
given in writing by the registered holders of two-thirds of the Preferred Shares
or given by a resolution passed at a meeting called and conducted in accordance
with Article 28.7 hereof and carried by the affirmative vote of not less than
two-thirds of the votes cast at such meeting, create or issue any shares ranking
prior to the Preferred Shares with respect to the payment of dividends or the
distribution of assets in the event of the liquidation, dissolution or
winding-up of the Company, whether voluntary or involuntary, or in the event of
any other distribution of assets of the Company among its shareholders for the
purpose of winding up its affairs.
28.5 NON-VOTING
Except as otherwise provided with respect to any particular series of Preferred
Shares and except as otherwise required by law, the registered holders of the
Preferred Shares shall not be entitled as a class to receive notice of or to
attend or to vote at any meetings of the Company.
28.6 AMENDMENTS
The special rights and restrictions attached to the Preferred Shares as a class
may be varied or abrogated at any time or from time to time with, in addition to
any approval that may then be prescribed by applicable law, the approval of the
registered holders of the Preferred Shares given in writing by the registered
holders of two-thirds of the Preferred Shares or given by a resolution passed at
a meeting called and conducted in accordance with Article 28.7 hereof and
carried by the affirmative vote of not less than two-thirds of the votes cast at
such meeting.
28.7 MEETINGS OF REGISTERED HOLDERS OF PREFERRED SHARES
The formalities to be observed with respect to giving notice of and voting at
any meeting of the registered holders of Preferred Shares, the quorum therefor
and the conduct thereof shall, with the necessary changes and so far as
applicable, be those from time to time prescribed by the Articles of the Company
with respect to meetings of shareholders.
29. SPECIAL RIGHTS AND RESTRICTIONS ATTACHING TO THE PREFERRED SHARES,
SERIES A WITHOUT PAR VALUE
The Preferred Shares, Series A of the Corporation (the "SERIES A PREFERRED
SHARES") shall consist of 12,677,192 shares. In addition and subject to the
special rights and restrictions attached to the Preferred Shares as a class, the
Series A Preferred Shares shall have attached thereto the following special
rights and restrictions:
29.1 DEFINITIONS
For purposes of the provisions of these articles relating to the Series A
Preferred Shares, the following definitions shall apply:
(a) "ADDITIONAL COMMON SHARES" shall have the meaning ascribed
thereto in Article 29.4(d)(1).
36
(b) "ADDITIONAL NOTICE" shall have the meaning ascribed thereto in
Article 29.6(g).
(c) "BOARD OF DIRECTORS" shall mean the board of directors of the
Company.
(d) "COMMON SHARES" shall mean the common shares in the capital of
the Company.
(e) "CONVERSION RATE" shall have the meaning ascribed thereto in
Article 29.4(a).
(f) "CONVERSION RIGHTS" shall have the meaning ascribed thereto in
Article 29.4.
(g) "CONVERTIBLE SECURITIES" shall mean any bonds, debentures,
notes or other evidences of indebtedness, and any warrants,
shares or any other securities (other than the Series A
Preferred Shares) convertible into, exercisable for, or
exchangeable for Common Shares.
(h) "COMPANY" shall mean Aspreva Pharmaceuticals Corporation.
(i) "COMPANY NOTICE" shall have the meaning ascribed thereto in
Article 29.6(b).
(j) "DELINQUENT HOLDERS" shall have the meaning ascribed thereto
in Article 29.6(d)(3).
(k) "DELINQUENT NOTICE" shall have the meaning ascribed thereto in
Article 29.6(d)(3).
(l) "DELINQUENT NOTICE PERIOD" shall have the meaning ascribed
thereto in Article 29.6(d)(3).
(m) "DILUTIVE ISSUANCE" shall have the meaning ascribed thereto in
Article 29.4(k)(1).
(n) "DISTRIBUTION" means the transfer of cash or property without
consideration, whether by way of dividend or otherwise (except
a dividend in shares of the Company) or the repurchase by the
Company of its shares (other than in connection with the
repurchase of any Common Shares issued to or held by
employees, consultants, officers or directors pursuant to
agreements providing for the right of such repurchase) for
cash or property.
(o) "INITIATOR" shall have the meaning ascribed thereto in Article
29.6(b).
(p) "LIQUIDATION" shall have the meaning ascribed thereto in
Article 29.3(a).
(q) "LIQUIDATION EVENT" shall have the meaning ascribed thereto in
Article 29.3(c).
(r) "LIQUIDATION PREFERENCE" shall have the meaning ascribed
thereto in Article 29.3(a).
(s) "OFFERED SHARES" shall have the meaning ascribed thereto in
Article 29.6(d)(3).
(t) "OPTIONS" shall mean rights, options or warrants to subscribe
for, purchase or otherwise acquire Common Shares or
Convertible Securities.
(u) "ORIGINAL ISSUE DATE" shall mean the date upon which Series A
Preferred Shares are first issued.
(v) "RESTATED PURCHASE PRICE" shall mean US$4.1807356396 for each
Series A Preferred Share, subject to equitable and
proportional adjustment in the event of stock splits, reverse
splits, recapitalization and similar events affecting the
Series A Preferred Shares.
37
(w) "PERMITTED SHARES" shall have the meaning ascribed thereto in
Article 29.6(f).
(x) "PREFERRED SHARES" shall mean the class of Preferred shares,
issuable in series, in the capital of the Company.
(y) "QUALIFIED IPO" shall mean a firmly underwritten public
offering pursuant to the United States Securities Act of 1933,
as amended, (the "SECURITIES ACT") on Form S-1 or Form F-1 (as
defined in the Securities Act), or an offering by way of
prospectus in Canada in the Provinces of British Columbia,
Ontario, and Alberta and a contemporaneous listing on the
Toronto Stock Exchange, which results in aggregate gross cash
proceeds to the Company of at least US$40,000,000 (net of
underwriting discounts and commissions) and at a price per
share to the public (prior to underwriter commissions and
expenses) of not less than two (2) times the Restated Purchase
Price (as adjusted to reflect any stock split, stock dividend,
reverse stock split and similar event after the Original Issue
Date); provided that to the extent that the price per share at
the time of the public offering is less than two (2) times the
Series A Conversion Price but greater than 1.5 times the
Series A Conversion Price, the Series A Conversion Price shall
be adjusted so that the Series A Preferred Shares will convert
into the number of Common Shares at the adjusted Series A
Conversion Price such that the price per share at the time of
the public offering shall be two (2) times the adjusted Series
A Conversion Price.
(z) "REDEEMABLE PREFERRED SHARES" shall have the meaning ascribed
thereto in Article 29.6(g).
(aa) "REDEEMING HOLDERS" shall have the meaning ascribed thereto in
Article 29.6(d)(3).
(bb) "REDEMPTION DATE" shall have the meaning ascribed thereto in
Article 29.6(b).
(cc) "REDEMPTION DIVIDEND" shall have the meaning ascribed thereto
in Article 29.6(f).
(dd) "REDEMPTION NOTICE" shall have the meaning ascribed thereto in
Article 29.6(b).
(ee) "REDEMPTION PRICE" shall have the meaning ascribed thereto in
Article 29.6(a).
(ff) "REDEMPTION RATE" shall have the meaning ascribed thereto in
Article 29.6(f).
(gg) "REDEMPTION REVOCATION NOTICE" shall have the meaning ascribed
thereto in Article 29.6(d)(3).
(hh) "REDEMPTION RIGHT" shall have the meaning ascribed thereto in
Article 29.6(a).
(ii) "SERIES A CONVERSION PRICE" shall have the meaning ascribed
thereto in Article 29.4(a).
(jj) "SERIES A DIRECTORS" shall mean the nominees to the Board of
Directors of the Series A Holders.
(kk) "SERIES A HOLDER" shall mean a holder of Series A Preferred
Shares.
(ll) "SERIES A PREFERRED SHARES" shall mean the Series A Preferred
Shares of the Company.
(mm) "SHAREHOLDERS' AGREEMENT" shall mean any shareholders
agreement between the Company and certain of its shareholders
to which a Series A Holder is a party, as amended from time to
time.
38
29.2 DIVIDENDS
(a) TREATMENT OF SERIES A PREFERRED SHARES. The Series A Holders
shall be entitled to receive annual dividends calculated at
the rate of eight percent (8%) of the Restated Purchase Price,
out of any assets at the time legally available therefor,
when, as and if declared by the Board of Directors. The Board
of Directors is under no obligation to declare dividends, no
rights shall accrue to the Series A Holders if dividends are
not declared, and any dividends declared shall be
non-cumulative. To the extent that the Company declares or
pays dividends on any of the Common Shares, the Company shall
declare and pay a participating dividend on each Series A
Preferred Share on an as-converted to a Common Share basis,
and no dividend shall be paid on the Common Shares at a rate
greater than the rate at which dividends are paid on the
Series A Preferred Shares. The number of Common Shares into
which Series A Preferred Shares are convertible shall be
determined as of the date on which the dividend is declared.
(b) PRIORITY OF DIVIDENDS. The Company shall make no Distribution
to the holders of any Common Shares except in accordance with
Article 29.2(a) above, and no Distributions shall be paid on
any Common Shares during any fiscal year of the Company until
dividends in the amount set forth in Article 29.2(a) above
have been paid to the holders of Series A Preferred Shares, or
declared and set apart for payment in respect of each
outstanding Series A Preferred Share, during that fiscal year.
(c) RANKING OF DIVIDENDS. The Series A Preferred Shares shall,
with respect to the payment of any dividends, rank on a parity
with respect to priority with the Preferred Shares of every
other series.
29.3 LIQUIDATION RIGHTS
(a) Liquidation Preference. In the event of any liquidation,
dissolution or winding up of the affairs of the Company (a
"Liquidation"), either voluntary or involuntary, the Series A
Holders shall be entitled, out of the assets of the Company
available for distribution to the holders of the Company's
capital stock, an amount equal to the Restated Purchase Price
plus an amount equal to all declared and unpaid dividends
thereon (the "Liquidation Preference"), if any, to the date
that payment is made, before any payment shall be made or any
assets distributed to the holders of Common Shares or any
other class of shares of the Company. If upon the liquidation,
dissolution or winding up of the affairs of the Company, the
assets to be distributed among the holders of the Preferred
Shares are insufficient to permit the payment to such holders
of the full amounts to be distributed to them, then the entire
assets of the Company legally available for distribution shall
be distributed rateably among the holders of the Preferred
Shares, pari passu, in proportion to the full preferential
amount each such holder is otherwise entitled to receive.
(b) NO FURTHER PREFERRED SHARES PARTICIPATION. After the payment
to the Series A Holders of the full amounts to be distributed
to them as set forth above, or funds necessary for such
payment have been set aside by the Company in trust for the
exclusive benefit of such holders so as to be available for
such payment, the Series A Holders shall have no further right
to share in any further distribution of the assets and
properties of the Company.
(c) DEEMED LIQUIDATION. For purposes of this Article 29.3, a
Liquidation shall be deemed to be occasioned by, or to
include: (i) the acquisition of the Company by another entity
by means of any transaction or series of related transactions
(including, without limitation, any reorganization, merger or
consolidation but excluding any merger effected
39
exclusively for the purpose of changing the domicile of the
Company); or (ii) a sale of all or substantially all of the
assets of the Company; provided, however, that, in each such
case, the applicable transaction shall not be deemed a
Liquidation if the Company's shareholders of record as
constituted immediately prior to such acquisition or sale hold
greater than fifty percent (50%) of the total combined voting
power of the surviving or acquiring entity immediately after
such acquisition or sale (by virtue of securities issued as
consideration for such transaction) in substantially the same
relative proportions (the "LIQUIDATION Event").
(d) SHARES NOT TREATED AS BOTH SERIES A PREFERRED SHARES AND
COMMON SHARES IN ANY Distribution. Series A Preferred Shares
shall not be entitled to be converted into Common Shares in
order to participate in any distribution, or series of
distributions, as Common Shares, without first foregoing
participation in the distribution, or series of distributions
described in this Article 29.3, as Series A Preferred Shares.
After conversion of any Series A Preferred Shares into Common
Shares, the holder of such shares participates rateably in any
distribution of the assets of the Company among the holders of
Common Shares, and is not entitled to receive any preferential
payments contemplated in this Article 29.3.
(e) NON-CASH CONSIDERATION. If any property distributed to
shareholders of the Company in connection with any Liquidation
is other than cash, then the value of such property shall be
its aggregate market value as determined in good faith by the
Board of Directors, except that any securities to be
distributed to shareholders in a Liquidation shall be valued
as follows:
(1) The method of valuation of securities not subject to
investment letter or other similar restrictions on
free marketability shall be as follows:
(A) if the securities are actively traded on The
Toronto Stock Exchange, a United Stated
securities exchange or the Nasdaq National
Market (or a similar quotation system), then
the value shall be deemed to be the average
of the closing prices of the securities on
such exchange or system over the 30-day
period ending three (3) days prior to the
distribution;
(B) if the securities are actively traded
over-the-counter, then the value shall be
deemed to be the average of the closing bid
or sale prices (whichever are applicable)
over the 30-day period ending three (3) days
prior to the distribution; and
(C) if there is no active public market for the
securities, then the value shall be the fair
market value thereof, as determined in good
faith by the Board of Directors.
(2) The method of valuation of securities subject to
investment letter or other restrictions on free
marketability shall be to make an appropriate
discount from the market value determined as above in
subparagraphs 29.3(e)(1)(A), 29.3(e)(1)(B) or
29.3(e)(1)(C) to reflect the approximate fair market
value thereof, as determined in good faith by the
Board of Directors.
40
29.4 CONVERSION
The Series A Preferred Shares shall have conversion rights as follows
(the "CONVERSION RIGHTS"):
(a) OPTIONAL CONVERSION. Each Series A Preferred Share shall be
convertible, at the option of the holder thereof, at any time
and from time to time after the date of issuance of such
share, by notice in writing delivered to the Company and
signed by such holder specifying the number of Series A
Preferred Shares such holder wishes to convert. Each Series A
Preferred Share shall be convertible into that number of
fully-paid and non-assessable Common Shares that is equal to
the Restated Purchase Price divided by the Series A Conversion
Price (the "CONVERSION RATE"). The "SERIES A CONVERSION PRICE"
shall initially be the Restated Purchase Price, and shall be
subject to adjustment as provided herein.
(b) AUTOMATIC CONVERSION. Each Series A Preferred Share shall
automatically convert into Common Shares at the then effective
Conversion Rate immediately upon the earlier of: (i) the
closing of a Qualified IPO; and (ii) the date specified by
written consent or agreement of the holders of not less than
three-quarters (75%) of the then outstanding Series A
Preferred Shares.
(c) MECHANICS OF CONVERSION. No fractional Common Shares shall be
issued upon conversion of the Series A Preferred Shares. In
lieu of any fractional shares to which the holder would
otherwise be entitled, the Company shall pay cash equal to
such fraction multiplied by the then fair market value of a
Common Share as determined in good faith by the Board of
Directors (as evidenced by certified resolutions). For such
purpose, all Series A Preferred Shares held by each holder
shall be aggregated, and any resulting fractional Common
Shares shall be paid in cash. Before any Series A Holder shall
be entitled to convert the same into full Common Shares, and
to receive certificates therefor, he shall surrender the
certificate or certificates therefor, duly endorsed, at the
office of the Company or of any transfer agent for the Series
A Preferred Shares, and shall give written notice to the
Company at such office that he elects to convert the same;
provided, however, that in the event of an automatic
conversion pursuant to Article 29.4(b) above, the outstanding
Series A Preferred Shares shall be converted automatically
without any further action by the holders of such shares and
whether or not the certificates representing such shares are
surrendered to the Company or its transfer agent; provided
further, however, that the Company shall not be obligated to
issue certificates evidencing the Common Shares issuable upon
such automatic conversion unless either the certificates
evidencing such Series A Preferred Shares are delivered to the
Company or its transfer agent as provided above, or the holder
notifies the Company or its transfer agent that such
certificates have been lost, stolen or destroyed and executes
an agreement satisfactory to the Company to indemnify the
Company from any loss incurred by it in connection with such
certificates.
The Company shall, as soon as practicable after such delivery,
or after such agreement and indemnification, issue and deliver
at the office of the Company to such Series A Holder, a
certificate or certificates for the number of Common Shares to
which such holder is entitled as aforesaid and a cheque
payable to the holder in the amount of any cash amounts
payable as the result of a conversion into fractional Common
Shares, plus any declared and unpaid dividends on the
converted Series A Preferred Shares. Any conversion pursuant
to Article 29.4(a) shall be deemed to have been made
immediately prior to the close of business on the date of such
surrender of the Series A Preferred Shares to be converted,
and the person or persons entitled to receive the Common
Shares
41
issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such Common Shares
on such date; provided, however, that if the conversion is in
connection with an underwritten offer of securities registered
pursuant to the Securities Act, the conversion may, at the
option of any holder tendering Series A Preferred Shares for
conversion, be conditioned upon the closing of the sale of
securities pursuant to such offering, in which event the
person(s) entitled to receive the Common Shares issuable upon
such conversion of the Series A Preferred Shares shall not be
deemed to have converted such Series A Preferred Shares until
immediately prior to the closing of the sale of securities
pursuant to such offering.
(d) ADJUSTMENTS TO CONVERSION PRICE FOR DILUTING ISSUES
(1) Special Definition. For purposes of this Article
29.4(d), "ADDITIONAL COMMON SHARES" shall mean any
Common Shares issued (or, pursuant to Article
29.4(d)(3), deemed to be issued) by the Company after
the Original Issue Date, other than:
(A) any Common Shares issued or issuable upon
conversion of any Preferred Shares;
(B) Options granted and any Common Shares issued
or issuable to officers, directors, or
employees of, or advisors or consultants to,
the Company upon the exercise of Options
granted pursuant to any stock option plan or
stock purchase plan or other employee stock
incentive program approved by the Board of
Directors;
(C) any Common Shares or other securities of the
Company issued or issuable to any bank,
equipment lessor or other similar financial
institution pursuant to any transaction or
arrangement approved by the Board of
Directors where the issuance of such Common
Shares or other securities of the Company is
not principally for the purpose of raising
additional equity capital for the Company;
(D) any Common Shares or other securities of the
Company issued or issuable as consideration
for the acquisition of any business entity
by the Company by merger, purchase of all or
substantially all of the assets or capital
stock of such entity, or other
reorganization, provided such issuance is
approved by the Board of Directors;
(E) any Common Shares or other securities of the
Company issued or issuable as consideration
for the acquisition of any technology,
provided such issuance is approved by the
Board of Directors;
(F) any Common Shares or other securities of the
Company issued or issuable to strategic
partners or strategic industry investors of
the Company or for strategic alliances,
provided such issuance is approved by the
Board of Directors;
(G) any Common Shares issued pursuant to the
conversion of the convertible promissory
notes (the "Notes") issued by the Company
dated September 18, 2003, October 24, 2003
and November 4, 2003 and any Common Shares
issued upon exercise of the warrants issued
in connection with the conversion of the
Notes;
42
(H) any Common Shares issued pursuant to a
Qualified IPO; and
(I) any Common Shares issued or issuable as a
dividend or distribution on Series A
Preferred Shares or pursuant to any event
for which an adjustment is made pursuant to
Articles 29.4(e) or 29.4(f).
(2) No Adjustment of Series A Conversion Price. No
adjustment in the Series A Conversion Price shall be
made in respect of the issuance of Additional Common
Shares unless the consideration per share for an
Additional Common Share issued or deemed to be issued
by the Company is less than the Series A Conversion
Price in effect on the date of, and immediately prior
to, such issue. No adjustment in the Series A
Conversion Price otherwise required by this Article
29.4 shall affect any Common Shares issued upon
conversion of Series A Preferred Shares prior to such
adjustment.
(3) Deemed Issue of Additional Common Shares. In the
event that the Company at any time or from time to
time after the Original Issue Date issues any Options
or Convertible Securities or fixes a record date for
the determination of holders of any class of
securities entitled to receive any such Options or
Convertible Securities, then the maximum number of
Common Shares (as set forth in the instrument
relating thereto without regard to any provisions
contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Options
or, in the case of Convertible Securities and
Options, the conversion or exchange of such
Convertible Securities or exercise of such Options,
shall be deemed to be Additional Common Shares (other
than as provided in subparagraphs (A) through (G) of
Article 29.4(d)(1)) issued as of the time of such
issue or, in the case of a record date having been
fixed, as of the close of business on such record
date, provided that Additional Common Shares shall
not be deemed to have been issued unless the
consideration per share (determined pursuant to
Article 29.4(d)(5)) of such Additional Common Shares
would be less than the Series A Conversion Price in
effect on the date of and immediately prior to such
issue or record date, as the case may be, and
provided further that in any such case in which
Additional Common Shares are deemed to be issued:
(A) no further adjustment in the Series A
Conversion Price shall be made upon the
subsequent issue of Convertible Securities
or Common Shares upon the exercise of
Options or conversion or exchange of such
Convertible Securities or upon the
subsequent issue of Options for Convertible
Securities or Common Shares;
(B) if such Options or Convertible Securities by
their terms provide, with the passage of
time or otherwise, for any increase in the
consideration payable to the Company, or any
decrease in the number of Common Shares
issuable, upon the exercise, conversion or
exchange thereof, the Series A Conversion
Price computed upon the original issue
thereof (or upon the occurrence of a record
date with respect thereto), and any
subsequent adjustments based thereon, shall,
upon any such increase or decrease becoming
effective, be recomputed to reflect such
increase or decrease insofar as it affects
such Options or the rights of conversion or
exchange under such Convertible Securities;
(C) no readjustment pursuant to Article
29.4(d)(3)(B) above shall have the effect of
increasing the Series A Conversion Price to
an amount which
43
exceeds the lower of: (1) the Series A
Conversion Price on the original adjustment
date; or (2) the Series A Conversion Price
that would have resulted from any issuance
of Additional Common Shares between the
original adjustment date and such
readjustment date;
(D) upon the expiration of any such Options or
any rights of conversion or exchange under
such Convertible Securities which have not
been exercised, the Series A Conversion
Price computed upon the original issue
thereof (or upon the occurrence of a record
date with respect thereto) and any
subsequent adjustments based thereon shall,
upon such expiration, be recomputed as if:
(i) in the case of Convertible
Securities or options to acquire
Common Shares, the only Additional
Common Shares issued were the
Common Shares, if any, actually
issued upon the exercise of such
Options or the conversion or
exchange of such Convertible
Securities and the consideration
received therefor was the
consideration actually received by
the Company for the issue of such
exercised Options plus the
consideration actually received by
the Company upon such exercise or
for the issue of all such
Convertible Securities which were
actually converted or exchanged,
plus the additional consideration,
if any, actually received by the
Company upon such conversion or
exchange, and
(ii) in the case of options to acquire
Convertible Securities, only the
Convertible Securities, if any,
actually issued upon the exercise
thereof were issued at the time of
issue of such Options, and the
consideration received by the
Company for the Additional Common
Shares deemed to have been then
issued was the consideration
actually received by the Company
for the issue of such exercised
Options, plus the consideration
deemed to have been received by the
Company (determined pursuant to
Article 29.4(d)(5)) upon the issue
of the Convertible Securities with
respect to which such Options were
actually exercised; and
(E) if such record date shall have been fixed
and such Options or Convertible Securities
are not issued on the date fixed therefor,
the adjustment previously made in the Series
A Conversion Price which became effective on
such record date shall be cancelled as of
the close of business on such record date,
and thereafter the Series A Conversion Price
shall be adjusted pursuant to this Article
29.4(d)(3)) as of the actual date of their
issuance.
(4) Adjustment of Series A Conversion Price Upon Issuance
of Additional Common Shares. In the event the
Company, at any time after the Original Issue Date,
issues Additional Common Shares (including Additional
Common Shares deemed to be issued pursuant to Article
29.4(d)(3)) without consideration or for a
consideration per share less than the Series A
Conversion Price in effect on the date of and
immediately prior to such issue, then and in such
event, the Series A Conversion Price shall be
reduced, concurrently with such issue, to the price
which is equal to the Series A Conversion Price in
effect on the date of and immediately prior to such
issue multiplied by a fraction, the numerator of
which
44
shall be the number of Common Shares outstanding
immediately prior to such issue, and all Common
Shares issuable upon conversion of all outstanding
Preferred Shares and exercise of all Options and
Convertible Securities outstanding immediately prior
to such issue plus the number of Common Shares which
the aggregate consideration received by the Company
for the total number of Additional Common Shares so
issued would purchase at the Series A Conversion
Price in effect on the date of and immediately prior
to such issue, and the denominator of which shall be
the number of Common Shares outstanding immediately
prior to such issue, and all Common Shares issuable
upon conversion of all outstanding Preferred Shares
and exercise of all Options and Convertible
Securities outstanding immediately prior to such
issue plus the number of such Additional Common
Shares so issued.
(5) Determination of Consideration. For purposes of this
Article 29.4(d), the consideration received by the
Company for the issue of any Additional Common Shares
shall be computed as follows:
(A) Cash and Property. Such consideration shall:
(i) insofar as it consists of cash, be
computed at the aggregate amount of
cash received by the Company
excluding amounts paid or payable
for accrued interest or accrued
dividends and excluding any
discounts, commissions or placement
fees payable by the Company to any
underwriter or placement agent in
connection with the issuance of any
Additional Common Shares;
(ii) insofar as it consists of property
other than cash, be computed at the
fair value thereof at the time of
such issue, as determined in good
faith by the Board of Directors;
and
(iii) in the event that the Additional
Common Shares are issued together
with other shares or securities or
other assets of the Company for
consideration which covers both
cash and property, be the
proportion of such consideration so
received, computed as provided in
Articles 29.4(d)(5)(A)(i) and
Article 29.4(d)(5)(A)(ii) above, as
reasonably determined in good faith
by the Board of Directors.
(B) Options and Convertible Securities. The
consideration per share received by the
Company for Additional Common Shares deemed
to have been issued pursuant to Article
29.4(d)(3), relating to Options and
Convertible Securities, shall be determined
by dividing:
(i) the total amount, if any, received
or receivable by the Company as
consideration for the issue of such
Options or Convertible Securities
(determined in the manner described
in Article 29.4(d)(5)(A) above),
plus the minimum aggregate amount
of additional consideration (as set
forth in the instruments relating
thereto, without regard to any
provision contained therein for a
subsequent adjustment of such
consideration) payable to the
Company upon the exercise of such
Options or the conversion or
exchange of such Convertible
Securities, or in the case of
options to acquire Convertible
Securities, the exercise of such
45
options to acquire Convertible
Securities and the conversion or
exchange of such Convertible
Securities by
(ii) the maximum number of Common Shares
(as set forth in the instruments
relating thereto, without regard to
any provision contained therein for
a subsequent adjustment of such
number) issuable upon the exercise
of such Options or the conversion
or exchange of such Convertible
Securities.
(e) ADJUSTMENTS FOR STOCK DIVIDENDS, SUBDIVISIONS OR COMBINATIONS
OF COMMON SHARES. In the event that the Company at any time
after the Original Issue Date declares or pays without
consideration any dividends on any Common Shares payable in
Common Shares or in any right to acquire Common Shares, or in
the event the outstanding Common Shares are subdivided (by
stock split or otherwise than by payment of a dividend in
Common Shares and without a corresponding adjustment to the
Series A Preferred Shares), into a greater number of Common
Shares, the Series A Conversion Price in effect immediately
prior to such subdivision shall, concurrently with the
effectiveness of such subdivision, be proportionately
decreased. In the event any of the outstanding Common Shares
are combined (by reclassification or otherwise) into a lesser
number of Common Shares and without a corresponding adjustment
to the Series A Preferred Shares, the Series A Conversion
Price in effect immediately prior to such combination shall,
concurrently with the effectiveness of such combination, be
proportionately increased.
(f) ADJUSTMENTS FOR RECLASSIFICATION, EXCHANGE AND SUBSTITUTION.
If the Common Shares issuable upon conversion of the Series A
Preferred Shares are changed into the same or a different
number of shares of any other class or classes of shares of
the Company, whether by capital reorganization,
reclassification or otherwise (other than a subdivision or
combination of shares provided for above or a transaction that
is otherwise subject to Article 29.4(d), then, concurrently
with the effectiveness of such reorganization or
reclassification, each of the Series A Preferred Shares shall
be convertible into, in lieu of the number of Common Shares
which the holders would otherwise have been entitled to
receive, a number of shares of such other class or classes of
shares of the Company which a holder of the number of Common
Shares deliverable upon conversion of the Series A Preferred
Shares immediately before that change would have been entitled
to receive in such reorganization or reclassification.
(g) CERTIFICATE OF ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Series A Conversion Price
pursuant to this Article 29.4, the Company, at its expense,
shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and furnish to each Series A
Holder a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Company shall, upon
the written request at any time of any Series A Holder,
furnish or cause to be furnished to such holder a like
certificate setting forth: (i) such adjustments and
readjustments; (ii) the Series A Conversion Price at the time
in effect; and (iii) the number of Common Shares and the
amount, if any, of other property which at the time would be
received upon the conversion of Series A Preferred Shares.
(h) NOTICES OF RECORD DATE. In the event that the Company proposes
at any time: (i) to declare any dividend or distribution upon
any of its Common Shares, whether in cash, property, shares or
other securities, whether or not a regular cash dividend and
whether or not out of earnings or earned surplus; (ii) to
offer for subscription pro rata to the holders of any class or
series of its capital stock any additional shares of any class
or series or
46
other rights; (iii) to effect any reclassification or
recapitalization of any of its Common Shares outstanding
involving a change in such Common Shares; or (iv) to merge
with or into any other company, or sell, lease or convey all
or substantially all its property or business, or to
liquidate, dissolve or wind up; then, in connection with each
such event, the Company shall send to the Series A Holders at
least 20 days prior written notice of the date on which a
record shall be taken for such dividend, distribution or
subscription rights (and specifying the date on which the
holders of Common Shares shall be entitled thereto) or for
determining rights to vote in respect of the matters referred
to in clauses (iii) and (iv) above. Each such written notice
shall be given by first class mail, postage prepaid, or
reputable overnight courier, or personally delivered,
addressed to the Series A Holders at the address for each such
holder as shown on the books of the Company (with the date
such notice is deemed given to be five days after such deposit
in the Canadian or U.S. Mail, the business day after deposit
with a reputable overnight courier and upon delivery in the
case of personal delivery).
(i) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Company
shall at all times reserve and keep available out of its
authorized but unissued Common Shares, solely for the purpose
of effecting the conversion of the Series A Preferred Shares,
such number of Common Shares as shall from time to time be
sufficient to effect the conversion of all then outstanding
Series A Preferred Shares. If at any time the number of
authorized but unissued Common Shares shall not be sufficient
to effect the conversion of all then outstanding Series A
Preferred Shares, the Company will take such corporate action
as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued Common Shares to such
number of shares as shall be sufficient for such purpose.
(j) NO IMPAIRMENT. The Company will not, by amendment of its
articles or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the
terms to be observed or performed hereunder by the Company,
but will at all times in good faith assist in the carrying out
of all the provisions of this Article 29.4 and in the taking
of all such action as may be necessary or appropriate in order
to protect the Conversion Rights of the Series A Holders
against impairment.
(k) PARTICIPATION BY SERIES HOLDERS.
(1) In the event that the Company, at any time after the
Original Issue Date, issues Additional Common Shares
as a result of which there is an adjustment in the
Series A Conversion Price pursuant to Article 29.4(d)
(a "DILUTIVE ISSUANCE"), a pro rata portion of the
Series A Preferred Shares held by any Series A Holder
that had a right as a Series A Holder to participate
in such Dilutive Issuance but did not participate in
such issuance by acquiring up to such holder's pro
rata portion thereof, shall, subject to Articles
29.4(k)(2) and 29.4(k)(3) below, be automatically
converted into Common Shares at the then effective
Conversion Rate immediately following such issuance.
Article 29.4(c) above shall apply mutatis mutandis to
the automatic conversion contemplated in this Article
29.4(k).
(2) The automatic conversion of a holder's Series A
Preferred Shares contemplated in Article 29.4(k)(1)
shall not occur unless: (A) such holder has been
given notice by the Company of the proposed Dilutive
Issuance; and (B) such holder is entitled, by
contract or otherwise by applicable law, to
participate in the Dilutive Issuance.
47
(3) For purposes of Article 29.4(k)(1), a holder's pro
rata portion shall be that number of the securities
proposed to be issued which such holder has a right,
as a Series A Holder under a contract among Series A
Holders and others; provided that in the case of a
financing led by a party which is not a current
shareholder of the Company, a holder's pro rata
portion otherwise determined shall be multiplied by a
fraction, the numerator of which is the aggregate
number of Additional Common Shares offered less the
Additional Common Shares offered to the lead investor
in such financing and the denominator of which is the
total Additional Common Shares purchased in such
financing.
29.5 VOTING
(a) Entitlement to Vote. Except as otherwise expressly provided in
these Series A Preferred Share provisions or as required by
applicable law:
(1) each Series A Holder is entitled to vote on all
matters submitted to a vote or consent of
shareholders of the Company; and
(2) the Series A Holders will vote together with the
holders of any other series of Preferred Shares and
the holders of Common Shares having voting rights, as
a single class, on all matters submitted to a vote or
consent of shareholders of the Company.
(b) NUMBER OF VOTES AND NOTICE OF MEETINGS. Each Series A Holder
shall be entitled to the number of votes equal to the number
of Common Shares into which such Series A Preferred Shares
held by such holder could then be converted. The Series A
Holders shall be entitled to notice of any shareholders'
meeting in accordance with the Articles of the Company.
Fractional votes shall not, however, be permitted and any
fractional voting rights resulting from the above formula
(after aggregating all shares into which Series A Preferred
Shares held by each holder could be converted) shall be
rounded up to the next highest whole number.
29.6 REDEMPTION RIGHTS OF THE SERIES A HOLDERS
The Series A Preferred Shares shall have the redemption rights as
follows:
(a) REDEMPTION CONDITIONS. Holders of not less than three quarters
(75%) of the Series A Preferred Shares shall have the right
(the "REDEMPTION RIGHT") at any time after March 15, 2009 to
require the Company to redeem, subject to the Business
Corporations Act and in accordance with this Article 29.6, all
or from time to time any part of such Series A Holder's Series
A Preferred Shares at a price (the "REDEMPTION PRICE") for
each Series A Preferred Share to be redeemed equal to the
Restated Purchase Price plus any declared and unpaid dividends
thereon.
(b) REDEMPTION NOTICE. If a Series A Holder (the "INITIATOR")
chooses to exercise the Redemption Right, then the Initiator
shall, at least 90 days before the date specified for
redemption, deliver to the Company a notice (the "REDEMPTION
NOTICE") in writing specifying that the Initiator is
exercising his Redemption Right, the number of the Series A
Preferred Shares to be redeemed, and the date (the "REDEMPTION
DATE") upon which the Company is to redeem the shares. Within
7 days of receiving the Redemption Notice, the Company shall
deliver a written notice (the "COMPANY NOTICE") to all other
Series A Holders of the Redemption Notice.
48
(c) RESPONSE TO COMPANY NOTICE. Provided that not less than three
quarters (75%) of the Series A Holders consent in writing,
then within 10 days after receiving the Company Notice, the
other Series A Preferred Holders shall have the right to
notify the Company in writing that they also wish to exercise
their Redemption Right to have Series A Shares redeemed on the
Redemption Date. If the Redemption Notice is in respect of all
of the Initiator's Series A Preferred Shares, the other Series
A Holders may also request redemption of all of their Series A
Preferred Shares on the Redemption Date. Otherwise, the other
Series A Holders may request redemption of the same proportion
of their Series A Preferred Shares as the Initiator has
requested.
(d) REDEMPTION OF SHARES.
(1) Payment. On the Redemption Date, the Company shall
pay or cause to be paid, to or to the order of each
Series A Holder so requesting redemption, the
applicable Redemption Price on presentation and
surrender to the Company of the certificate(s)
representing the Series A Preferred Shares being
redeemed. In all cases the Company shall pay for
shares redeemed hereunder by cash, certified cheque,
bank draft or solicitor's trust cheque.
(2) Pro rata redemption. If the Company cannot redeem all
of the shares requested to be redeemed in accordance
with the foregoing provisions of this Article 29.6
without causing a contravention of the Business
Corporations Act, then the Company shall redeem such
portion of the Series A Preferred Shares, on a pro
rata basis, as can be redeemed without causing such
contravention, and the Company shall redeem the
balance of such Series A Preferred Shares, on a pro
rata basis, as soon as it is lawfully permitted to do
so.
(3) Delinquent Holders. If the holders (the "DELINQUENT
HOLDERS") of any of the Series A Preferred Shares
specified for redemption (the "OFFERED SHARES") fail
to present the certificates representing such shares
on the Redemption Date, the Company shall, prior to
completing the redemption of any other Offered
Shares, provide each other holder of Offered Shares
who has presented their share certificates in
accordance with (i) (the "REDEEMING HOLDERS") with
notice of the fact that the Delinquent Holders have
not tendered their share certificates (the
"DELINQUENT NOTICE"). Each Redeeming Holder shall
have 7 days from the date of receipt of the
Delinquent Notice (the "DELINQUENT NOTICE PERIOD") to
notify the Company that it wishes to revoke the
redemption of its Offered Shares (the "REDEMPTION
REVOCATION NOTICE"). Upon receipt of a Redemption
Revocation Notice from a holder, the Company shall
immediately return to such holder the share
certificate or certificates which were delivered
pursuant to subparagraph (1) hereof. Within 3 days of
the expiry of the Delinquent Notice Period, the
Company shall proceed with the redemption of all
remaining Offered Shares for which share certificates
have been delivered and with respect to which it has
not received a Redemption Revocation Notice in the
manner set out in this Article 29.6.
(e) CERTIFICATE FOR REMAINING SHARES. If only part of the Series A
Preferred Shares represented by any certificate presented are
redeemed, then a new certificate for the unredeemed balance of
the Series A Preferred Shares represented by such
certificate(s) shall promptly be issued and delivered to the
registered holder thereof at the expense of the Company.
49
(f) FAILURE TO REDEEM. If the Company fails to redeem any Series A
Preferred Shares required to be redeemed pursuant to this
Article 29.6, then the holders of such Series A Preferred
Shares shall thereafter be entitled to receive and the Company
shall pay, in addition to the Redemption Price, a cumulative
dividend (the "REDEMPTION DIVIDEND") on the Redemption Price
equal to the sum of 10% per annum and the 90 day Canadian
treasury bill rate in effect from time to time (the
"REDEMPTION RATE") until such shares are redeemed in full,
accruing from the Redemption Date specified for the redemption
of such shares until the date such shares are redeemed in
full. However, if the Company did not redeem all or a portion
of Series A Preferred Shares to be redeemed pursuant to this
Article 29.6 because doing so would have caused a
contravention of the Business Corporations Act, then the
Company shall redeem such Series A Shares (the "PERMITTED
SHARES") in the manner outlined in Article 29.6(d)(2) at the
Redemption Price and without the Redemption Dividend, as soon
as it is lawfully permitted to do so. If, upon becoming
lawfully permitted to redeem Permitted Shares, the Company
does not promptly redeem such Permitted Shares, the Company
shall pay, in addition to the Redemption Price, the Redemption
Dividend for such Permitted Shares, being the Redemption Rate
accruing from the date such shares could have been lawfully
redeemed until the date all such Permitted Shares are redeemed
in full.
(g) ADDITIONAL NOTICE. If the Company issues a redemption notice
or receives a redemption notice (an "ADDITIONAL NOTICE") in
respect of a request by a holder for the redemption of any
share of any series or class of shares of the Company having a
right of redemption (other than Series A Preferred Shares)
then, provided that at the time of the Additional Notice, the
Series A Holders have the right to require the Company to
redeem all or part of the Series A Preferred Shares pursuant
to the provisions of Article 29.6(a), then the Company shall
promptly deliver a copy of the Additional Notice to each of
the Series A Holders. Each Series A Preferred Share which
gives rise to a Redemption Right (which, together with the
Series A Preferred Shares are the "REDEEMABLE PREFERRED
SHARES") shall entitle the holder thereof to require the
Company to redeem all or part of such Redeemable Preferred
Shares in preference and priority to any other class of shares
of the Company, on the same terms and conditions as set forth
in Articles 29.6(c) - 29.6(f) provided that for the purposes
of a redemption pursuant to this Article 29.6 the term
"COMPANY NOTICE" shall be taken to mean the term "ADDITIONAL
NOTICE", as defined above, and the term "REDEMPTION DATE"
shall be taken to mean the date for redemption applicable for
the redemption of the shares covered by the Additional Notice.
If the Company cannot redeem all of the shares requested to be
redeemed on such date for redemption without causing a
contravention of the Business Corporations Act, then the
Company shall, notwithstanding any other provision of these
Articles, redeem such portion of the Redeemable Preferred
Shares as can be redeemed without causing such contravention
and the Company shall redeem the balance of such Redeemable
Preferred Shares as soon as it is lawfully permitted to do so,
and after all such Redeemable Preferred Shares are redeemed in
accordance with the foregoing, the Company may redeem such
other shares of the Company having a right of redemption.
(h) MODIFICATION. Notwithstanding the foregoing, for any
particular redemption, the notice period, the right to receive
an Additional Notice, the procedure and the manner of payment
for the Redemption of any Series A Preferred Shares may be
modified by written agreement between the Company and the
holders of Series A Preferred Shares to be redeemed.
50
29.7 ELECTION OF DIRECTORS
The Series A Holders, voting together as a single class, shall be entitled to
elect three directors (the "SERIES A DIRECTORS").
29.8 PROTECTIVE PROVISIONS
In addition to any other class or series vote that may be required by law, the
Company shall not, so long as at least 1,000,000 Series A Preferred Shares are
outstanding, without first obtaining the approval (by vote or written consent,
as provided by law) of the holders of not less than a majority of the then
outstanding Series A Preferred Shares, voting together as a single series:
(a) amend or repeal any provisions of the Articles of the Company
to change the rights, preferences or privileges of the Series
A Preferred Shares or increase or decrease the authorized
number of Preferred Shares or any series thereof;
(b) create (by amendment of the Notice of Articles of the Company,
reclassification, redesignation or otherwise) any new class or
series of shares having rights, preferences or privilege
senior to or on a parity with the Series A Preferred Shares;
(c) amend the Notice of Articles or Articles of the Company;
(d) declare, pay or set apart for payment any dividend or make any
Distribution in respect of any Common Shares, except that the
Company may distribute shares as a dividend or distribution
pursuant to any event for which an adjustment is made pursuant
to Articles 29.4(e) or 29.4(f);
(e) authorize a Liquidation Event;
(f) change the number of directors or the number of Series A
Directors; or
(g) purchase, redeem, or otherwise acquire any equity securities
of the Company, including for greater certainty, any warrants,
options, and any other rights to acquire equity securities,
except in accordance with the Notice of Articles of the
Company or pursuant to a Shareholders' Agreement,
provided that any Series A Holder may appoint a proxy to exercise or
otherwise assign all of its rights to enforce such protective measures
with respect to some or all of the Series A Preferred Shares held by
such Series A Holder to one or more persons directly or indirectly
holding an equity interest in such Series A Holder for the purpose of
exercising any such rights.
29.9 PRE-EMPTIVE RIGHTS
The Series A Holders shall be entitled to subscribe for, purchase or receive any
part of any issue of equity securities of the Corporation, including for greater
certainty, any warrants, options, and any other rights to acquire equity
securities, in accordance with the terms of a Shareholders' Agreement.
29.10 STATUS OF CONVERTED SERIES A PREFERRED SHARES
In the event any Series A Preferred Shares shall be converted pursuant to
Article 29.4 above, the shares so converted shall be cancelled and shall not be
issuable by the Company. These articles may be amended at such time or times as
the Board of Directors (including the affirmative vote of the Series A
Directors)
51
deems reasonably practicable to effect the corresponding reduction in the
Company's authorized capital stock, subject to first having obtained all
shareholder approvals required by law for such reduction.
29.11 NOTICES
Any notice required by the provisions of these Articles to be given to the
Series A Holders shall be, and shall be deemed, given as provided above in
Article 29.4(h).
29.12 TRANSFER AGENTS
The Company may appoint, and from time to time discharge and change, a transfer
agent for the Series A Preferred Shares or any other class of shares of the
Company. Upon any such appointment, discharge or change of a transfer agent, the
Company will send a written notice of such appointment, discharge or change to
each Series A Holder.