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Exhibit 10.4
SHAREHOLDER AGREEMENT
THIS AGREEMENT effective as of the 22nd day of October, 1997,
AMONG:
SPARKLING SPRING WATER GROUP LIMITED, a corporation
incorporated under the laws of the Province of Nova
Scotia ("Holdco")
OF THE FIRST PART;
SPARKLING SPRING WATER LIMITED, a corporation continued
under the laws of the Province of Nova Scotia (the
"CORPORATION")
OF THE SECOND PART;
- and -
CLAIRVEST GROUP INC., a corporation incorporated
under the laws of the Province of Ontario
("CLAIRVEST")
OF THE THIRD PART;
- and -
GASPAR LIMITED, a corporation incorporated under the
laws of Barbados ("GASPAR")
OF THE FOURTH PART;
- and -
C. SEAN DAY, of Stamford, Connecticut, United States
of America ("DAY")
OF THE FIFTH PART;
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- and -
STEPHEN L. LARSON, of Darien, Connecticut, United
States of America ("LARSON")
OF THE SIXTH PART;
- and -
KEVIN NEWMAN, of Darien, Connecticut, United States
of America ("NEWMAN")
OF THE SEVENTH PART;
- and -
MARK STITZER, of Greenwich, Connecticut, United
States of America ("MARK")
OF THE EIGHTH PART;
- and -
LUCY STITZER, of Greenwich, Connecticut, United
States of America ("LUCY")
OF THE NINTH PART;
- and -
STEWART ALLEN, of Burnaby, British Columbia ("ALLEN")
OF THE TENTH PART;
THIS AGREEMENT WITNESSES that in consideration of the premises and the
mutual covenants and agreements herein contained, the parties hereto hereby
covenant and agree as follows:
RECITALS
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This Agreement recites the following circumstances:
1. Holdco was incorporated on October 22, 1997 under the Companies Act (Nova
Scotia) and is the registered and beneficial owner of all outstanding
shares in the capital stock of the Corporation.
2. The Corporation was continued on the 22nd day of February, 1994 under
the Companies Act (Nova Scotia).
3. The authorized capital of Holdco consists of:
3.1 One Million (1,000,000) Class A Common Shares with a par value of Cdn.
$0.0001 per share, 136,879 of which have been issued and are outstanding
as fully paid and non-assessable Class A Common Shares;
3.2 One Million (1,000,000) Class B Common Shares with a par value of Cdn.
$6.7790 per share, 118,209 of which have been issued and are outstanding
as fully paid and non-assessable Class B Common Shares;
3.3 One Million (1,000,000) Class C Common Shares with a par value of
Cdn.$13.4699 per share, 423,190 of which have been issued and are
outstanding as fully paid and non-assessable Class C Common Shares;
3.4 Ten Million (10,000,000) Class D Common Shares with no par value none of
which have been issued and are outstanding as fully paid and
non-assessable Class D Common Shares;
3.5 Ten Million (10,000,000) Class E non-voting Common Shares with no par
value none of which have been issued and are outstanding as fully paid and
non-assessable Class E Common Shares;
3.6 One Million (1,000,000) Class F Common Shares with a par value of
Cdn.$0.9401 per share, 705,050 of which have been issued and are
outstanding as fully paid and non-assessable Class F Common Shares;
3.7 Ten Million (10,000,000) Special Preferred Shares with a par value of Cdn.
$1.00, issuable in series, none of which have been issued and are
outstanding as fully paid and non-assessable Special Preferred Shares;
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3.8 Ten Million (10,000,000) Special Preferred Shares with no par value which
may be issued from time to time in one or more series, each series having
the designation, rights, privileges, restrictions and conditions
determined by the Board.
4. The authorized capital of the Corporation consists of ten million
(10,000,000) Common Shares without nominal or par value, ten million
(10,000,000) Class B Non-Voting Common Shares with no par value of which
one million, seven hundred and twenty thousand, seven hundred and
forty-six (1, 720,746) Common Shares are issued and outstanding as fully
paid and non-assessable.
5. The beneficial owners of all of the issued and outstanding Voting
Shares of Holdco are as follows:
Name of Shareholder Number of Common Shares
Gaspar 705,050
Clairvest 423,190
Mark and Lucy, as joint tenants 94,010
Larson 118,209
Newman 28,203
Day 8,994
Allen 5,672
ARTICLE II
RECITALS CORRECT
II.1 Recitals
Each of the parties hereto respectively acknowledges and declares that the
foregoing recitals, insofar as they relate to such party, are true and correct
both in substance and in fact.
ARTICLE III
DEFINITIONS AND INTERPRETATION
III.1 Definitions
In this Agreement, including the above recitals, the following terms have
the following meanings unless the context otherwise requires:
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"AFFILIATE" has the meaning attributed thereto in the Securities Act
(Ontario);
"AGREEMENT" means this agreement including the recitals and the following
schedules:
Schedule "A" - Assumption Agreement
Schedule "B" - Consolidated Sparkling Spring Water Income
Statement and EBTDAPS Projections
Schedule "C" - Registration Procedures
Schedule "D" - Fair Market Value Determination Procedures
Schedule "E" - Outstanding Options
Schedule "F" - Subscription Agreement
"ASSUMPTION AGREEMENT" means an agreement pursuant to which a Person who is not
a Shareholder agrees to be bound by this Agreement in the same manner as if it
had been an original party hereto and, in the case of Share transfers, to the
same extent as the transferor, which Assumption Agreement shall be in the form
attached hereto as Schedule "A";
"BOARD" means the board of directors of Holdco;
"BUSINESS DAY" means any day other than a Saturday, Sunday or statutory
holiday in the Province of Nova Scotia;
"CANADIAN SECURITIES LAWS" means statutes and regulations applicable to the
trading of securities in any province or territory of Canada including
applicable rules, policies, statements and blanket rulings and orders made by
Canadian securities regulatory authorities;
"CORPORATION BOARD" means the board of directors of the Corporation;
"CORPORATION DIRECTOR" means a director of the Corporation;
"CLASS E SHAREHOLDERS" means the following Shareholders who own the number of
Class E Shares set opposite their name and who have all signed the subscription
agreement in the form attached hereto as Schedule "F":
Stephen Larson 1,000 Class E Non-Voting Shares
Arthur Goodick 180 Class E Non-Voting Shares
John Stiles 3,500 Class E Non-Voting Shares
Tom Ferries 1,800 Class E Non-Voting Shares
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Helen Martin 1,700 Class E Non-Voting Shares
Tim Dougherty 1,000 Class E Non-Voting Shares
Larry Brookes 180 Class E Non-Voting Shares
"DIRECTOR" means a director of Holdco;
"EXCHANGE ACT" means the United States Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
SEC thereunder, all as the same shall be in effect from time to time;
"LIQUID PUBLIC MARKET" means an average daily volume of Shares traded over the
facilities of The Toronto Stock Exchange, The Montreal Exchange, the Vancouver
Stock Exchange, the New York Stock Exchange, the London Stock Exchange or the
NASDAQ over the preceding thirty (30) days equal to or greater than five (5%)
percent of the number of Clairvest's Shares;
"MANAGEMENT SHAREHOLDERS" means, at the date hereof, Gaspar and Larson, and
shall also include G. John Krediet ("KREDIET") at such time as Shares are
registered in the name of Krediet, collectively, and "Management Shareholder"
means any one of them;
"PERSON" includes an individual, partnership, association, body corporate,
trustee, executor, administrator or legal representative;
"PROPORTIONATE SHARE" means the fraction that results when the number of Shares
held by a Shareholder is divided by the total number of Shares excluding, in the
case of Section 5.3, the number of Shares owned by the Shareholder who delivers
a Refusal Right under Section 5.3 hereof;
"PUBLIC OFFERING" means an underwritten or best efforts public offering of
Shares pursuant to an effective prospectus or registration statement under the
Securities Laws;
"PUBLIC SALE" means a sale (i) pursuant to a Public Offering, or (ii) under Rule
144 of the Securities Act and its equivalent under Canadian Securities Laws;
"REGISTRATION EXPENSES" means (i) all registration and prospectus filing fees,
(ii) fees and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Shares), (iii) printing expenses, (iv) internal expenses
of Holdco (including, without limitation, all salaries and expenses
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of its officers performing legal or accounting duties), (v) reasonable fees and
disbursements for counsel for Holdco and customary fees and expenses for
independent certified public or chartered accountants retained by Holdco
(including the expenses of any comfort letters or costs associated with the
delivery by accountants of a comfort letter or comfort letters requested
pursuant to paragraph (g) of Schedule "C" hereto), (vi) the reasonable fees and
expenses of any special experts retained by Holdco in connection with such
registration or qualification, (vii) reasonable fees and expenses of one counsel
for Clairvest, in the case of an offering in which Clairvest participates or of
the Holders (as defined in Section 6.1), in any other case, (viii) fees and
expenses in connection with any review of underwriting arrangements by the
National Association of Securities Dealers, Inc. or any comparable Canadian
association including fees and expenses of any "qualified independent
underwriter", (ix) fees and expenses of listing the Shares on an exchange or
other trading system, and (x) fees and disbursements of underwriters customarily
paid by issuers or sellers of securities; but shall not include any underwriting
fees, discounts or commission attributable to the sale of Shares, or any
out-of-pocket expenses (except as set forth in clause (vii) above) of the
Shareholders (or the agents who manage their accounts) or any fees and expenses
of underwriter's counsel;
"RULE 144" means Rule 144 and Rule 144A (or any successor provisions under
the Securities Act;
"SEC" means the Securities and Exchange Commission;
"SECURITIES ACT" means the United States Securities Act of 1933, as amended, or
any similar federal statute and the rules and regulations of the SEC thereunder,
all as the same shall be in effect from time to time;
"SECURITIES LAW" shall mean the Securities Act, The Exchange Act and Canadian
Securities Laws;
"SHAREHOLDERS" means the Persons who are from time to time (i) shareholders of
Holdco and parties to this Agreement and for the time being Gaspar, Clairvest,
Day, Larson, Newman, Mark, Lucy and Allen and (ii) Persons who exercise options
after the date hereof pursuant to the Holdco stock option plan, as amended from
time to time, including the options set out in Schedule E hereto; but, for
greater certainty, shall not include the Class E Shareholders who have signed
the subscription agreement in the form attached as Schedule F hereto;
"SHARES" means shares in the capital stock of Holdco;
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"STITZER GROUP" means, collectively, Mark and Lucy and the survivor of them;
"VOTING SHARES" means all shares of the company that have the right to vote, for
the time being Class A Common Shares, Class B Common Shares, Class C Common
Shares, Class D Common Shares and Class F Common Shares;
III.2 Headings
The headings of the Sections and Articles of this Agreement are
inserted for convenience and reference only and shall not affect the
construction or interpretation of any provision of this Agreement.
III.3 Number and Gender
Words importing the singular shall include the plural and vice versa
and words importing the masculine gender shall include the feminine and neuter
and vice versa.
ARTICLE IV
TERM
IV.1 Term
This Agreement shall come into force and effect as of the date set out
above and shall continue in force, as may be amended from time to time in the
manner provided herein, until the earlier of the date on which only one
Shareholder holds Shares or the date on which Holdco makes a Public Offering.
IV.2 Termination of Prior Shareholder Agreement
This Agreement shall supersede and replace all other agreements whether
written or oral regarding the matters contained herein, including, without
limiting the generality of the foregoing, the Shareholders' Agreement made as of
the 12th day of January, 1996 among the Corporation, Clairvest, Gaspar,
MeesPierson Investeringsmaatschappij II BV, Larson, Newman, Mark, Lucy, Todd
Stitzer and Marenda Stitzer, and the assumption agreements dated May 23, 1996
and April 18, 1997, between the Corporation and Allen, and the Corporation and
Day, respectively, which Shareholder Agreement and assumption agreements shall
be terminated effective the date hereof.
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ARTICLE V
PRE-EMPTIVE RIGHT
V.1 Pre-Emptive Right
(a) Any Shares in the capital of Holdco of a class to be issued by Holdco,
or other securities, convertible into Shares, other than a Public Offering and
other than senior secured debt, such additional Shares or securities hereinafter
referred to as "ADDITIONAL SECURITIES", shall first be offered by Holdco to all
the then Shareholders holding shares of that class in their respective
Proportionate Share; provided, however, that the first issue by Holdco of any
class of its shares other than Voting Shares shall first be offered to all then
Shareholders holding Voting Shares in their respective Proportionate Share of
Voting Shares.
(b) In addition to its pre-emptive rights contained in Section 4.1(a),
Clairvest shall also have a right of first refusal, exercisable by Clairvest
within twenty (20) days from Clairvest's receipt of notice of Holdco's intention
to issue Additional Securities, to subscribe for, purchase or finance all such
Additional Securities that the Management Shareholders would otherwise be
entitled to subscribe for, purchase or finance pursuant to this Section 4.1
("MANAGEMENTS' ADDITIONAL SECURITIES"), provided however that Clairvest's right
of first refusal shall be exercisable upon the following terms:
(i) if at any time, Clairvest is a Shareholder and owns less than
30% of all Shares, on a fully diluted basis, it shall have the
right to subscribe for, purchase or finance, at Clairvest's
discretion, up to 75% of all Managements' Additional
Securities;
(ii) if at any time, Clairvest owns 30% or more of all outstanding
Shares on a fully diluted basis, and such Share ownership is
not more than 99% of all outstanding Shares owned by Gaspar
and Krediet in aggregate, on a fully diluted basis, Clairvest
shall have the right to subscribe for, purchase or finance, at
Clairvest's discretion, up to 50% of all of Managements'
Additional Securities.
(c) Within twenty (20) days of receipt of notice of Holdco's intention to
issue Additional Securities, any Shareholder who wishes to acquire its
Proportionate Share or less of Additional Securities shall submit a subscription
therefor to the secretary of Holdco. Such
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subscription shall specify the number, if any, of Additional Securities in
excess of its Proportionate Share the Shareholder desires to purchase. If any
Shareholder does not subscribe for its Proportionate Share, the unsubscribed
shares shall be used to satisfy the subscription of the Shareholders for shares
in excess of their Proportionate Share.
(d) If the subscriptions in excess are more than sufficient to exhaust the
unsubscribed shares, the unsubscribed shares shall be divided pro-rata among the
Shareholders desiring shares in excess of their Proportionate Share in
accordance with their Proportionate Share, but no Shareholder shall be bound to
take any shares in excess of the amount it so desires.
(e) If the Additional Securities are not fully subscribed by the then
Shareholders holding shares of the class of Additional Securities being offered,
Holdco shall then offer such unsubscribed Additional Securities to all the then
Shareholders holding Shares of any other class of capital stock of Holdco. Any
such offer shall be made to each class of Shareholders in the Proportionate
Share of value such class holds of Holdco's entire capital (excluding for
purposes of this calculation the class of Additional Securities being offered)
and to each Shareholder of each class in its respective Proportionate Share of
such class.
(f) Any Additional Securities not subscribed for in accordance with this
Section 4.1 may be offered by Holdco to Persons other than Shareholders. Every
issue of Additional Securities by Holdco shall be subject to the condition that
the subscriber therefor, shall, if not a party hereto, agree to be bound by the
terms of this Agreement and become a party hereto in accordance with the
provisions of Section 9.3 hereof by executing an Assumption Agreement.
(g) Notwithstanding anything to the contrary contained in this Section
4.1, the pre-emptive rights provided by this Section 4.1 shall not apply to
Shares issued by Holdco upon the exercise of the options granted by Holdco as
set out in Schedule "E" hereto, or upon the exercise of options hereafter
granted by the Holdco pursuant to Holdco's stock option plan; provided that the
optionee, shall, if not a party hereto, agree to be bound by the terms of this
Agreement and become a party hereto in accordance with the provisions of Section
9.4 hereof by executing an Assumption Agreement.
ARTICLE VI
DISPOSAL OF INTEREST
VI.1 Restrictions on Transfer
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Except as otherwise provided for herein or as specifically consented
to in writing by the Shareholders, the Shareholders shall not, and shall not
make any agreement to, directly or indirectly, sell, assign, transfer, give,
devise, bequeath, mortgage, charge, pledge, hypothecate or otherwise dispose of,
alienate or in anyway encumber or create a security interest in, or grant any
option on, any of the Shares. Any attempt to accomplish or effect any or all of
the acts prohibited hereby shall be null and void. For greater certainty, any
change or attempt to effect a change in the beneficial ownership of Shares by
any Shareholder (other than any transfer of shares of Clairvest) shall be deemed
to be a transfer or an attempt to transfer Shares by such Shareholder.
VI.2 Permitted Transfers
(a) Each of the Shareholders hereby agrees that, simultaneously with the
execution of this Agreement, it will execute and deliver to National Westminster
Bank Plc a mortgage, hypothecation and pledge of all of its Shares to National
Westminster Bank Plc as security for the debts and other obligations of the
Corporation to National Westminster Bank Plc.
(b) If at any time, or from time to time, the Board determines for any
reason that it is necessary or desirable that the Corporation change lenders,
each of the Shareholders hereby agrees that it will, at the request of such new
lender or lenders from time to time, execute and deliver in favour of such
lender or lenders a new mortgage, hypothecation and pledge of all its Shares as
security for the debts and other obligations of the Corporation in a form
approved by such lender or lenders provided, however, that such pledge shall be
limited in recourse to the Shares and shall contain substantially the same terms
and conditions, and shall be no more restrictive to the Shareholders than, the
pledge to National Westminster Bank Plc referred to in paragraph 5.2(a) and
further provided that no Shareholder will be required to grant such mortgage,
hypothecation and pledge unless all Shareholders are required to do so.
(c) It is agreed that no Shareholder shall be permitted to obtain a
release of any pledge of its Shares given pursuant to either paragraph 5.2(a) or
(b) hereof unless the pledges given by all Shareholders pursuant to paragraph
5.2(a) or (b), as the case may be, are released.
(d) Any Shareholder (herein referred to as the "BORROWING SHAREHOLDER")
may pledge (herein called the "SECOND PLEDGE") its Shares to another Shareholder
(herein referred to as the "LENDING SHAREHOLDER") as security for a loan made by
the Lending Shareholder to the Borrowing Shareholder provided always that such
Second Pledge is fully subordinated to any mortgage, pledge or charge of such
Shares in favour of National Westminster Bank Plc or a new lender as
contemplated in paragraphs 5.2(a) and (b) hereof.
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(e) Upon death, by gift or otherwise, a Shareholder (in this Section 5.2
called the "TRANSFEROR") may transfer all, but not less than all, of the Shares
held by the Transferor to a spouse or lineal descendant of a Transferor or to a
holding company all the shares of which are owned exclusively by the Transferor
or to a trust the primary beneficiary of which is the Transferor or the spouse
or lineal descendant of the Transferor (the spouse, lineal descendant, holding
company or trust, as the case may be, of the Transferor being in this Section
5.2 called the "TRANSFEREE") and nothing in this Agreement shall prohibit such
transfer of Shares, provided that no such transfer shall be made until such time
as the Transferee shall become a party to this Agreement in accordance with
Section 9.3 hereof by executing an Assumption Agreement and that the Transferor
shall continue to be bound by this Agreement thereafter.
(f) The legal personal representative or representatives of a deceased
Shareholder may become registered as a Shareholder or Shareholders in respect of
any Shares held by such deceased Shareholder at the time of his death provided
that no such transfer shall be registered until the proposed transferee has
become a party to this Agreement in accordance with Section 9.3 hereof by
executing an Assumption Agreement.
(g) Subject to paragraphs (a), (b), (c) and (d) of this Section 5.2, any
Shareholder may sell, sign, transfer, give, devise, bequest, mortgage, charge,
pledge, hypothecate or otherwise dispose of, alienate or encumber or create a
security interest or grant any option on, any of such Shareholder's Shares to
any Affiliate of such Shareholder, provided that no such transfer shall be
registered until the proposed transferee has become a party to this Agreement in
accordance with Section 9.3 hereof by executing an Assumption Agreement.
Notwithstanding the foregoing, the execution by such Affiliate transferee shall
not release the transferor Shareholder from its obligations hereunder.
(h) It is hereby acknowledged and agreed that a change of control of
Clairvest shall not be considered or deemed to be a transfer by Clairvest of any
Shares owned or held, directly or indirectly, by Clairvest.
VI.3 Right of First Refusal
(a) Any Shareholder (in this Section 5.3 called the "OFFEROR") may sell
all (but not less than all) of its Shares if the Offeror shall have received a
bona fide offer (in this Section 5.3 called the "OFFER") from a Person with whom
the Offeror is dealing at arm's length (as the term arm's length is construed
for purposes of the Income Tax Act (Canada) at the date hereof) to buy such
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Shares for a fixed price per Share (in this Section 5.3 called the "OFFER
PRICE") and the Offeror wishes to accept the Offer and complies with the
provisions of this Section 5.3.
(b) To comply with the provisions of this Section 5.3 the Offeror shall
deliver to each of the other Shareholders (in this Section 5.3 called the
"OFFEREES") an offer in writing (in this Section 5.3 called a "REFUSAL RIGHT")
offering to sell to the Offerees all of the Shares of the Offeror at the Offer
Price, which Refusal Right shall be irrevocable for twenty (20) days.
(c) Each of the Offerees shall be entitled to purchase at least his
Proportionate Share of the Shares of the Offeror at the Offer Price by giving
written notice to all of the Shareholders (including the Offeror) within twenty
(20) days of the receipt of the Refusal Right of the number of Shares of the
Offeror that such Offeree wishes to purchase. If any Offeree fails to give such
written notice within twenty (20) days as aforesaid, such Offeree shall be
deemed to have given notice that it wishes to buy none of such Shares; and
(d) If any of the Offerees wishes to purchase less than its respective
Proportionate Share, the unclaimed Shares shall be utilized to satisfy the
claims of other Offerees for Shares of the Offerees in excess of their
respective Proportionate Share and, if the claims in excess are more than
sufficient to exhaust such unclaimed Shares, the unclaimed Shares shall be
divided pro rata among the Offerees desiring excess Shares in the proportions
that the number of Shares in excess of their respective Proportionate Share
claimed by each such Offeree bears to the aggregate number of Shares claimed by
all of the Offerees in excess of their respective proportions, provided that no
Offeree shall be bound to take any Shares in excess of the number which it
desires.
(e) If one or more of the Offerees have agreed to purchase in the
aggregate all of the Shares owned by the Offeror in accordance with the
preceding subparagraphs of this Section 5.3 there shall thereupon be an
agreement of purchase and sale among the Offeror and such Offerees and each such
Offeree shall deliver to the Offeror, within sixty (60) days of the delivery of
the Refusal Right to the Offerees, its respective proportion of the purchase
price for the Shares by cash or certified cheque of the Offeree as the case may
be in accordance with the payment terms under the Offer.
(f) If fewer than all of the Shares of the Offeror are claimed by the
Offerees pursuant to either of subparagraphs (c) or (d) of this Section 5.3, or
if the Offerees who complied with subparagraph (c) have not complied with the
provisions of subparagraph (e) of this Section 5.3, the Offeror may then (but
only then) sell, all (but, except as provided in Section 5.4 hereof, not less
than all) of its Shares in accordance with the provisions of the Offer (but not
otherwise),
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provided that the purchaser under the Offer agrees to be bound by the terms of
this Agreement as a Shareholder in accordance with Section 9.3 hereof and
executes an Assumption Agreement.
VI.4 Sale by Controlling Shareholder or Management Shareholders - Drag Along
(a) Subject to the right of first refusal contained in Section 5.3 hereof,
if any Shareholder or group of Shareholders acting in concert (the "CONTROLLING
SHAREHOLDER") owning more than 50% of the Shares on a fully diluted basis
proposes to sell more than 50% of the Shares to a Third Party, or if the
Management Shareholders propose to sell all, but not less than all, of the
Shares owned, directly or indirectly, by them to a Third Party (as such term is
defined in Section 5.5), the Controlling Shareholder or Management Shareholders,
as the case may be, may, at their option, by written notice to the other
Shareholders, accompanied by an irrevocable offer (the "DRAG ALONG OFFER") from
the Third Party to the other Shareholders to purchase, for a consideration that
is the same as, or the cash equivalent of, the consideration per Share at which
the Controlling Shareholder or Management Shareholders, as the case may be,
propose to sell their Shares to the Third Party, require the other Shareholders
to sell to the Third Party, all (but not less than all) of the Shares owned by
such other Shareholders (the "DRAGGED SHARES") at the price specified in the
Drag Along Offer. Subject to paragraph (b), the delivery by the Controlling
Shareholder or the Management Shareholders, as the case may be, of an
irrevocable Drag Along Offer shall bind the other Shareholders to sell the
Dragged Shares. The date on which the sale is to close and the other closing
arrangements (which shall be the same as those for the purchase and sale between
the Third Party and the Controlling Shareholder or the Management Shareholders,
as the case may be) shall be as specified in the Drag Along Offer. Except as
specifically provided for above, the Drag Along Offer shall contain only such
terms and conditions, if any, as are identical to those pursuant to which the
Controlling Shareholder or Management Shareholders, as the case may be, propose
to sell their shares to the Third Party.
(b) Notwithstanding the foregoing paragraph (a), this Section 5.4 shall
not apply to Clairvest unless either (i) Clairvest's realized price per share
yields Clairvest a compounded annual rate of return of at least twelve (12%)
percent, or (ii) after eighteen (18) months from the date hereof, the
Corporation has achieved the fully-diluted per share earnings before tax,
depreciation and amortization ("EBTDAPS") projections as shown on Schedule "B"
hereto. The irrevocable Drag Along Offer given by the Management Shareholders to
Clairvest shall include a calculation of the compounded annual rate of return or
EBTDAPS, as the case may be, and shall be accompanied by a copy of the audited
or unaudited financial results upon which such calculation is based. The
delivery by the Management Shareholders to Clairvest of an irrevocable Drag
Along Offer shall bind Clairvest to sell its Shares, provided that the
compounded annual rate of
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return or EBTDAPS calculation, as the case may be, is approved by Clairvest,
such approval not to be unreasonably withheld.
VI.5 Sale by Controlling Shareholder or Management Shareholder -
Tag Along
Subject to the right of first refusal contained in Section 5.3
hereof and notwithstanding the provisions of Section 5.4 hereof, if any
Controlling Shareholder or Management Shareholder, alone or in concert, receives
a bona fide offer from a Person (other than a "related person" as defined in the
Income Tax Act (Canada)) or a series of offers from a group of such Persons
acting in concert (a "THIRD PARTY") to purchase some or all of the Shares owned,
directly or indirectly, by them, such Controlling Shareholder(s) or Management
Shareholder(s), as the case may be, shall not accept the offer unless the Third
Party shall make an offer to purchase the Third Party's desired number of Shares
pro rata from such Controlling Shareholder(s) or Management Shareholder(s),as
the case may be, and the other Shareholders, at the same price and on the same
terms and conditions as are contained in the offer made to the Controlling
Shareholder(s) or Management Shareholder(s), as the case may be.
VI.6 Sale by Clairvest - Tag Along
Subject to the right of first refusal contained in Section 5.3
hereof and notwithstanding the provisions of Section 5.4 hereof, provided that
Clairvest owns in excess of twenty-five (25%) percent of the Common Shares, on a
fully-diluted basis, if Clairvest receives a bona fide offer from a Third Party
to purchase some or all of such Shares owned, directly or indirectly, by it,
Clairvest shall not accept the offer unless the Third Party shall make an offer
to purchase the Third Party's desired number of Shares pro rata from each of the
Shareholders, including Clairvest, at the same price and on the same terms and
conditions as contained in the offer made to Clairvest. The tag along rights
provided by this Section 5.6 shall not apply in respect of any such offer for
Shares of a class in respect of which Clairvest does not own, directly or
indirectly, in excess of twenty-five (25%) percent of the outstanding Shares of
said class of Shares.
VI.7 Sale by Clairvest - Right of First Opportunity and Drag Along
Provided that there does not exist a Liquid Public Market for
Shares, if at any time after March 31, 2003, Clairvest desires to sell all (but
not less than all) of its Shares of Holdco, such Shares shall first be offered
by Clairvest to Holdco for repurchase, at a price per Share equal to the per
Share fair market value of the Shares, to be determined in accordance with the
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principles set out in Schedule "D" hereto.
The fair market value of the Shares shall then be negotiated in good
faith among Clairvest and Holdco in accordance with the principles set out in
Schedule "D" hereto. If Holdco does not advise Clairvest in writing of its
desire to repurchase from Clairvest all of Clairvest's Shares at the agreed upon
fair market value of the Shares, or if Clairvest and Holdco cannot agree upon
the fair market value of the Shares within thirty (30) days following receipt of
Clairvest's notice of its desire to sell its Shares, Holdco shall, within
fifteen (15) days thereafter, deliver to Clairvest a notice stating the per
Share consideration (the "BEST OFFER") at which Holdco would be willing to
repurchase all (but not less than all) of Clairvest's Shares, and Clairvest may
(i) within fifteen (15) days, accept the Best Offer, failing which the Best
Offers shall expire, or (ii) within one hundred and eighty (180) days, by
written notice to the other Shareholders accompanied by an irrevocable Drag
Along Offer from a Third Party to such Shareholders to purchase, for
consideration that is the same as, or the cash equivalent of, the consideration
per Share at which Clairvest proposes to sell its Shares to the Third Party,
require the other Shareholders to sell to the Third Party all (but not less than
all) of the Shares owned, directly or indirectly, by the other Shareholders, at
the price specified in the Drag Along Offer; provided that such consideration
shall not be less than the Best Offer. In the event that Clairvest accepts the
Best Offer, Holdco shall repurchase Clairvest's Shares within sixty (60) days
from the date of such acceptance.
The delivery by Clairvest of an irrevocable Drag Along Offer shall
bind the other Shareholders to sell all (but not less than all) of the Shares
owned, directly or indirectly, by such Shareholders to which the Drag Along
Offer relates.
ARTICLE VII
REGISTRATION RIGHTS
VII.1 Demand Registration
(a) Provided that Clairvest owns, directly or indirectly, in excess of
twenty (20%) percent of the Shares, on a fully-diluted basis, Clairvest may at
any time after January 12, 2001, upon written request that Holdco effect the
registration or qualification under the Securities Laws of Clairvest's Shares,
and specifying the intended method of disposition thereof, Holdco will promptly
give written notice of such requested registration (a "DEMAND REGISTRATION") at
least twenty (20) days prior to the anticipated filing date of the prospectus or
registration statement relating to such Demand Registration to all other
Shareholders, and thereupon will use its best
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efforts to effect, as expeditiously as possible, the registration under the
Securities Laws of:
(i) the Shares that Holdco has been so requested to
qualify or register by Clairvest, then held by
Clairvest; and
(ii) all other Shares that any other Shareholder (all such
Shareholders, together with Clairvest, the "HOLDERS")
has requested Holdco to qualify or register, subject to
Section 6.2 hereof, by written request received by
Holdco within ten (10) days after the receipt by such
Holders of such written notice given by Holdco,
all to the extent necessary to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Shares so to be registered;
provided that (i) Holdco shall not be obligated to effect more than one Demand
Registration in any six-month period, and (ii) Holdco shall not be obligated to
effect more than three (3) Demand Registrations for Clairvest pursuant to this
Section 6.1, unless Holdco shall be eligible to file a registration statement on
Form S-3 under the Securities Act (or other comparable short form, including a
short form prospectus under National Policy No. 47 of the Canadian Securities
Administrators), in which event there shall be no limit on the number of such
Demand Registrations pursuant to this Section 6.1; provided that the number of
Demand Registrations that Holdco shall be obligated to effect pursuant to this
Section 6.1 shall be reduced by one (1) in the event that Clairvest requests one
or more Incidental Registrations as defined in and pursuant to Section 6.2,
regardless of the number of Incidental Registrations requested by Clairvest.
Promptly after the expiration of the ten (10) day period referred to
in Section 6.1(a)(ii) hereof, Holdco will notify all the Holders to be included
in the Demand Registration of the other Holders and the number of Shares
requested to be included therein. Clairvest may, at any time prior to the
effective date of the prospectus or registration statement relating to such
registration, revoke such request, without liability to any of the other
Holders, by providing a written notice to Holdco and such other Holders revoking
such request, in which case such request, so revoked shall not be considered a
Demand Registration if any fees incurred by Holdco as a result of such revoked
request are paid by Clairvest.
(b) Subject to Section 6.1(c), Holdco will pay all Registration Expenses
in connection with any Demand Registration; provided that if Holdco is required
to undertake an audit of Holdco that it would not otherwise have been required
to undertake, the costs associated with such audit shall be for the account, pro
rata, of Clairvest and the other Holders, if any,
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participating in the Demand Registration.
(c) A qualification or registration requested pursuant to this Section 6.1
shall not be deemed to have been effected unless the prospectus or registration
statement relating thereto (i) has become effective under the Securities Laws,
and (ii) has remained effective for a period of at least ninety (90) days (or
such shorter period in which all Shares of the Holders included in such
registration has actually been sold thereunder); provided that if after any
prospectus or registration statement requested pursuant to this Section 6.1
becomes effective such prospectus or registration statement is interfered with
by any stop order, cease trade order, injunction or other order or requirement
of the SEC, the Canadian securities regulatory authorities or other governmental
agency or court solely due to the actions or omissions to act of Holdco, such
prospectus or registration statement shall be at the sole expense of Holdco and
shall not be considered a Demand Registration. In the event that less than
seventy-five (75%) percent of Clairvest's Shares initially proposed to be
included in such prospectus or registration have been sold thereunder and
Clairvest pays all Registration Expenses in connection with such prospectus or
registration, such requested qualification or registration shall be deemed not
be a Demand Registration pursuant to this Section 6.1.
(d) If a Demand Registration involves a Public Offering and the managing
underwriter shall advise Holdco and Holders that, in its view, (i) the number of
Shares requested to be included in such registration or qualification (including
Shares which Holdco proposes to be included), or (ii) the inclusion of some or
all of the Shares owned by the Holders, in either case, exceeds the largest
number of Shares which can be sold without having an adverse effect on such
offering, including the price at which such Shares can be sold (the "MAXIMUM
OFFERING SIZE"), Holdco will include in such registration or qualification, in
the priority listed below, up to the Maximum Offering Size:
(i) first, so much of the Shares requested to be included
in such registration or qualification by Clairvest,
as would not cause the offering to exceed the Maximum
Offering Size;
(ii) second, such number of Shares requested to be
included in such registration or qualification by the
other Holders (allocated, if necessary, for the
offering not to exceed the Maximum Offering Size, pro
rata among such other Holders on the basis of the
relative number of Shares requested by such other
Holders to be included in such registration or
qualification); and
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(iii) third, any Shares proposed to be registered or
qualified by Holdco.
(e) No Shareholder shall have the right to restrain or delay any
registration or qualification of Shares by Holdco on the basis of any dispute or
controversy concerning a Demand Registration.
VII.2 Incidental Registration
(a) If Holdco proposes to register any of its Shares under the Securities
Laws, it will each such time, subject to the provisions of Section 6.2(b)
hereof, give prompt written notice at least twenty (20) days prior to the
anticipated filing date of the prospectus or registration statement relating to
such registration to each Shareholder which notice shall set forth such
Shareholders' rights under this Section 6.2 and shall offer all Shareholders the
opportunity to include in such prospectus or registration statement such number
of Shares as each such Shareholder may request (an "INCIDENTAL REGISTRATION").
Upon the written request of any such Shareholder made within ten (10) days after
the receipt of notice from Holdco (which request shall specify the number of
Shares intended to be disposed of by such Shareholder), Holdco will use its best
efforts to effect the qualification or registration under the Securities Laws of
all Shares which Holdco has been so requested to quality or register by such
Shareholders, to the extent requisite to permit the disposition of the Shares so
to be qualified or registered; provided that (A) if such qualification or
registration involves a Public Offering, all such Shareholders requesting to be
included in Holdco's prospectus or registration must sell their Shares to the
underwriters of the Public Offering on the same terms and conditions as apply to
Holdco, and (B) if, at any time after giving written notice of its intention to
qualify or register any Shares pursuant to this Section 6.2(a) and prior to the
effective date of the prospectus or registration statement filed in connection
with such qualification or registration, Holdco shall determine for any reason
not to qualify or register such Shares, Holdco shall give written notice to all
such Shareholders and, thereupon, shall be relieved of its obligation to
register any Shares in connection with such qualification or registration
(without prejudice, however, to rights of any of the Shareholders under Section
6.1 hereof). No qualification or registration effected under this Section 6.2
shall relieve Holdco of its obligations to effect a Demand Registration to the
extent required by Section 6.1 hereof. Holdco will pay all Registration Expenses
in connection with each qualification or registration of Shares requested
pursuant to this Section 6.2.
(b) If a qualification or registration pursuant to this Section 6.2
involves a Public Offering (other than in the case of a Public Offering
requested by Clairvest, in a Demand
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Registration, in which case the provisions with respect to priority of inclusion
in such offering set forth in Section 6.1(d) shall apply) and the managing
underwriter advises Holdco that, in its view, the number of Shares that Holdco
and such Shareholders intend to include in such qualification or registration
exceeds the Maximum Offering Size, Holdco will include in such qualification or
registration the Maximum Offering Size:
(i) first, so much of the Shares proposed to be qualified
or registered by Holdco, not to exceed two-thirds (_)
of the Maximum Offering Size;
(ii) second, all Shares requested to be included in such
qualification or registration by any Shareholder
pursuant to this Section 6.2 (allocated, if necessary
for the offering not to exceed the Maximum Offering
Size, pro rata among such Shareholders on the basis of
the relative number of Shares so requested to be
included in such qualification or registration); and
(iii) so much of the remainder of the Shares proposed to be
qualified or registered by Holdco as would not cause the
offering to exceed the Maximum Offering Size.
VII.3 Holdback Agreements
If any qualification or registration of Shares shall be in
connection with a Public Offering, each Shareholder agrees not to effect any
Public Sale of any Shares or of any securities convertible into or exchangeable
or exercisable for any Shares (in each case, other than as part of such Public
Offering) except as the managing underwriter may advise reasonably.
ARTICLE VIII
CORPORATE GOVERNANCE
VIII.1 Voting and Replacement
Each of the Shareholders shall vote or cause to be voted the Shares
beneficially owned or controlled by it and exercise its influence so that:
(a) The Board shall consist of seven (7) Directors;
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(b) The Corporation Board shall consist of seven (7) Corporation
Directors, who shall be the same seven (7) individuals as comprise
the Board;
(c) Four (4) nominees of Gaspar, two (2) nominees of Clairvest and one
(1) nominee of the Stitzer Group, shall be elected and maintained in
office as Directors and as Corporation Directors;
(d) On the appointment or election of each Director, the secretary of
Holdco shall make note of the nominator of the Director in the
records of Holdco, and the nominator shall be entitled by direction
in writing, from time to time, to remove its nominee or nominees and
to nominate his successor or successors who shall promptly be
elected a Director as contemplated herein;
(e) On the appointment or election of each Corporation Director, the
secretary of the Corporation shall make note of the nominator of the
Corporation Director in the records of the Corporation, and the
nominator shall be entitled by direction in writing, from time to
time, to remove its nominee or nominees and to nominate his
successor or successors who shall promptly be elected a Corporation
Director as contemplated herein;
(f) The number of Directors from time to time constituting a quorum at
the meetings of the Board shall be a majority of the Directors,
provided that at least one (1) Director nominated by Clairvest must
be present;
(g) Notwithstanding Section 7.1(f) hereof, if notice of a meeting of the
Board has been duly given and on two consecutive occasions there is
no quorum by reason of the absence of the Clairvest nominee, a third
notice of meeting of the Board may be issued, a quorum for such
meeting constituted and the meeting held without the Clairvest
nominee being present;
(h) The number of Corporation Directors from time to time constituting a
quorum at the meetings of the Corporation Board shall be a majority
of the Corporation Directors, provided that at least one (1)
Director nominated by Clairvest must be present;
(i) Notwithstanding Section 7.1(h) hereof, if notice of a meeting of the
Corporation
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Board has been duly given and on two consecutive occasions there is
no quorum by reason of the absence of the Clairvest nominee, a third
notice of meeting of the Board may be issued, a quorum for such
meeting constituted and the meeting held without the Clairvest
nominee being present;
(j) Subject to Section 7.1(k) hereof, resolutions of the Directors
and the Corporation Directors shall be decided by a majority of
those voting;
(k) A resolution to amend any provision of the Management Agreement
among the Corporation, C.F. Capital Corporation, G. John Krediet
and Stephen L. Larson dated January 12, 1996, as amended from
time to time, may only be passed with the unanimous approval of
the Corporation Directors;
(l) A resolution authorizing or approving any of the following matters
in respect of Holdco may only be passed provided at least one (1) of
the Directors nominated by Clairvest approves the resolution, such
approval not to be unreasonably withheld:
(i) any acquisition over Five Million ($5,000,000)
Canadian Dollars;
(ii) capital expenditures which, in the aggregate, would
exceed the annual budget of Holdco by in excess of
ten (10%) percent thereof;
(iii) any issuance of debt or equity securities or options
to acquire such securities;
(iv) any sale or disposition of any material part of the
business of Holdco other than the sale of all or
substantially all of the assets of Holdco in
circumstances in which either Clairvest's realized
price per Share yields Clairvest a simple annual rate
of return of at least twelve (12%) percent, or after
eighteen (18) months from the date hereof, Holdco has
achieved the earnings before tax, depreciation and
amortization ("EBTDAPS") projections as shown on
Schedule "B";
(v) any winding-up, liquidation or dissolution of Holdco
or any of its subsidiaries;
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(vi) any merger, amalgamation or arrangement with any
other entity, corporate or otherwise, other than the
amalgamation contemplated in Section 11.1 hereof;
(vii) any approval of the annual budget of Holdco, or any
amendments or modifications thereof;
(viii) any transaction or course of action which may cause
Holdco to deviate materially from its annual budget;
(ix) any determination concerning compensation of the
Management Shareholders; and
(x) any declaration or payment of a dividend or other
distribution to any Shareholder.
provided, that such approval of at least one (1) of the Directors
nominated by Clairvest upon such matters need not be obtained if
there has been a change of control of Clairvest at any time after
the date of this Agreement;
(m) A resolution authorizing or approving any of the following matters
in respect of the Corporation may only be passed provided at least
one (1) of the Corporation Directors nominated by Clairvest approves
the resolution, such approval not to be unreasonably withheld
(i) any acquisition over Five Million ($5,000,000)
Canadian Dollars;
(ii) capital expenditures which, in the aggregate, would
exceed the annual budget of the Corporation by in
excess of ten (10%) percent thereof;
(iii) any issuance of debt or equity securities or options
to acquire such securities;
(iv) any sale or disposition of any material part of the
business of the Corporation other than the sale of
all or substantially all of the assets of the
Corporation in circumstances in which either
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Clairvest's realized price per Share yields Clairvest
a simple annual rate of return of at least twelve
(12%) percent, or after eighteen (18) months from the
date hereof, the Corporation has achieved the
earnings before tax, depreciation and amortization
("EBTDAPS") projections as shown on Schedule "B";
(v) any winding-up, liquidation or dissolution of the
Corporation or any of its subsidiaries;
(vi) any merger, amalgamation or arrangement with any
other entity, corporate or otherwise, other than the
amalgamation contemplated in Section 11.1 hereof;;
(vii) any approval of the annual budget of the Corporation,
or any amendments or modifications thereof;
(viii) any transaction or course of action which may cause
the Corporation to deviate materially from its annual
budget;
(ix) any determination concerning compensation of the
Management Shareholders; and
(x) any declaration or payment of a dividend or other
distribution to any Shareholder.
provided, that such approval of at least one (1) of the Directors
nominated by Clairvest upon such matters need not be obtained if
there has been a change of control of Clairvest at any time after
the date of this Agreement;
(n) The Chairman of a meeting of the Board or the Corporation
Board shall not have a second or casting vote;
(o) The Directors shall be paid such remuneration as may from
time to time be determined by the Board. Such remuneration
shall be in addition to any salary or professional fees
payable to a Director who services Holdco in any other
capacity. In addition, the Directors shall be reimbursed
for their out-of-pocket expenses incurred in attending
Board meetings or meetings
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of Shareholders or otherwise in the performance by them of
their duties as the Board may from time to time determine;
(p) The Corporation Directors shall be paid such remuneration
as may from time to time be determined by the Corporation
Board. Such remuneration shall be in addition to any
salary or professional fees payable to a Corporation
Director who services the Corporation in any other
capacity. In addition, the Corporation Directors shall be
reimbursed for their out-of-pocket expenses incurred in
attending Corporation Board meetings or meetings of
Shareholders or otherwise in the performance by them of
their duties as the Corporation Board may from time to time
determine;
(q) A meeting of the Board, in person or, if agreed unanimously by
the Board, by teleconference, shall, at a minimum, be held no
later than six (6) months from the date of the last meeting of
the Board.
(r) A meeting of the Corporation Board, in person or, if agreed
unanimously by the Corporation Board, by teleconference,
shall, at a minimum, be held no later than six (6) months from
the date of the last meeting of the Corporation Board.
VIII.2 Meetings with Management
Clairvest may request a meeting with management of Holdco, the date,
location, which members of senior management shall be in attendance, and the
agenda of which meeting shall be set by Clairvest, provided that senior
management of Holdco shall only be obliged to participate in two (2) such
meetings in any particular fiscal year.
ARTICLE IX
RESOLUTION OF DISPUTES
IX.1 Arbitration
Any dispute, difference or disagreement arising out of or relating
to this Agreement which cannot be settled by the Shareholders may be submitted
by any of the Shareholders to arbitration in Halifax pursuant to the provisions
of the Arbitration Act of Nova Scotia. There shall be a single arbitrator
jointly appointed by the Shareholders or, if they are
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unable to agree, pursuant to the provisions of the Arbitration Act of Nova
Scotia. The arbitrator may order the parties to produce any documents prior to
the arbitration or to submit any witness to pre-arbitration discovery.
IX.2 Arbitrator's Fees
The arbitrator's fees and disbursements and all other reasonable
fees and disbursements including legal fees, incurred by the Parties in
connection with the arbitration shall be borne by the unsuccessful party,
provided however, that if there is no clear unsuccessful party, the parties
agree to pay such fees and expenses in opposite proportion to how their
respective position is upheld by the arbitrator.
ARTICLE X
ENFORCEMENT OF SHAREHOLDERS' AGREEMENT
X.1 Voting Power - Holdco
The Shareholders shall at all times use their voting powers (whether
expressed by way of vote or written consent) in accordance with the provisions
of this Agreement for the purposes of giving effect to the same and to ensure
that the Directors shall exercise their powers as members of the Board
consistent with this Agreement and for the purposes of effectuating the same.
The Board shall ensure that the officers and employees of Holdco shall carry out
all duties which they are required to perform under the provisions of this
Agreement.
X.2 Voting Power - Corporation
Holdco shall at all times use its voting powers (whether expressed
by way of vote or written consent) in accordance with the provisions of this
Agreement for the purposes of giving effect to the same and to ensure that the
Corporation Directors shall exercise their powers as members of the Corporation
Board consistent with this Agreement and for the purposes of effectuating the
same. The Board shall ensure that the officers and employees of the Corporation
shall carry out all duties which they are required to perform under the
provisions of this Agreement.
X.3 Legend
Reference to and notice of this Agreement shall be endorsed on all
certificates
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issued by the Corporation and by Holdco representing Shares.
X.4 Additional Parties
Every issue and transfer of Shares shall be subject to the condition
that each subscriber or transferee, as the case may be, shall, if not a party
hereto execute an Assumption Agreement. The President and Secretary of Holdco
are hereby expressly authorized to execute Assumption Agreements from time to
time on behalf of the Shareholders. Any agreement to be bound hereby and any
other agreement in favour of the parties hereto shall be effectively delivered
to each party hereto by delivering to the secretary of Holdco a signed copy
thereof and the secretary shall thereupon forward a photocopy of such copy to
each party hereto.
X.5 Conflict with Memorandum and Articles of Association
In the event of a conflict or inconsistency between the terms of
this Agreement and the Memorandum and Articles of Association of Holdco or the
Corporation, the provisions of this Agreement shall prevail.
ARTICLE XI
BUSINESS OF HOLDCO AND CORPORATION
XI.1 Except with the written consent of Clairvest and the holders of not
less than 50% of the Shares, Holdco shall not engage in any business other the
holding of the shares of the Corporation, and the Corporation shall not engage
in any business other than the manufacturing, bottling, distribution and/or sale
of beverages of any nature or kind.
ARTICLE XII
FUTURE TRANSACTION
XII.1 The parties hereto acknowledge and agree that Holdco, the
Corporation and certain of its wholly owned Canadian subsidiaries shall
amalgamate in the future, and in any event prior to January 1, 1999, and that
following such amalgamation this shareholder's agreement shall continue to apply
to the amalgamated company, mutatis mutandis. For greater certainty and without
limiting the generality of the foregoing, it is acknowledged and agreed that
following such amalgamation, references herein to Holdco or the Corporation
shall be deemed to be references to the corporation continuing from such
amalgamation.
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XII.2 The parties further acknowledge and agree that the capital structure of
Holdco shall be reorganized on or prior to June 1, 1998, such that the holders
of Class A Common Shares, Class B Common Shares, Class C Common Shares and Class
F Common Shares of Holdco shall exchange such Shares on a one for one basis for
Class D Common Shares of Holdco, which Class D Common Shares shall have the same
rights and attributes as the Class A Common Shares of the Corporation.
Notwithstanding anything in this Agreement, until such capital reorganization
shall have been effected and so long as there remains outstanding more than one
class of shares, references in this Agreement to any one class of shares shall
be deemed to be references to all outstanding classes of shares, as if there
were only one class of shares outstanding at the relevant time.
ARTICLE XIII
COVENANTS, REPRESENTATIONS AND WARRANTIES
XIII.1 Holdco represents and warrants to the Shareholders that as of the date
hereof:
(a) Holdco has the necessary corporate power to own or lease its
property and to carry on its business as now being conducted by it
and is duly qualified as a corporation to do business in each
jurisdiction in which the nature of the business conducted by it
makes such qualification necessary; and
(b) No person, firm or corporation has any agreement or option or any
right or privilege capable of becoming an agreement, for the
purchase, subscription, allotment or issuance of any of the unissued
shares in the capital of Holdco.
XIII.2 The Corporation represents and warrants to the Shareholders that as of
the date hereof:
(a) The Corporation has the necessary corporate power to own or lease
its property and to carry on its business as now being conducted by
it and is duly qualified as a corporation to do business in each
jurisdiction in which the nature of the business conducted by it
makes such qualification necessary; and
(b) Other than the options set out in Schedule E, no person, firm or
corporation has any agreement or option or any right or privilege
capable of becoming an
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agreement, for the purchase, subscription, allotment or issuance of any
of the unissued shares in the capital of the Corporation.
XIII.3 Holdco covenants and agrees that it will deliver to each of the
Shareholders audited financial statements of Holdco within ninety (90) days of
each fiscal year end of Holdco. Holdco further covenants and agrees that it will
deliver to each of the Shareholders periodic financial statements for each of
its subsidiaries, and on a consolidated basis, within thirty (30) days after the
end of the period, which will include an income statement, a statement of cash
flows, balance sheet, and exhibits detailing net cooler placements and water
sales in units. For the purposes of this agreement, a "PERIOD" shall mean a
period of four (4) calendar weeks, of which there are thirteen (13) such periods
in a particular fiscal year.
XIII.4 Except as otherwise provided for herein or as specifically consented
to in writing by the Shareholders, Holdco shall not, and shall not make any
agreement to, directly or indirectly, sell, assign, transfer, give, devise,
bequeath, mortgage, charge, pledge, hypothecate or otherwise dispose of,
alienate or in anyway encumber or create a security interest in, or grant any
option on, any shares in the capital stock of the Corporation. Any attempt to
accomplish or effect any or all of the acts prohibited hereby shall be null and
void. For greater certainty, any change or attempt to effect a change in the
beneficial ownership of shares in the capital stock of the Corporation by Holdco
shall be deemed to be a transfer or an attempt to transfer shares in the capital
stock of the Corporation by Holdco.
ARTICLE XIV
MISCELLANEOUS
XIV.1 Amendments
This Agreement represents the entire agreement among the parties and
may be amended only in writing signed by all parties affected thereby.
XIV.2 Notices
All notices given pursuant to this Agreement shall be in writing and
given by mail, courier, fax or personal delivery to the parties as follows:
To Holdco and the Corporation: 19 Fielding Avenue
Dartmouth, Nova Scotia
B3B 1C9
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Fax No. 468-2751
Attention: President
To Clairvest: 22 St. Clair Avenue East
Suite 1700
Toronto, Ontario
M4T 2S3
Fax No. (416) 964-5828
Attention: Kenneth B. Rotman
To Gaspar: Cartrust Corporation Limited
White Park House
White Park Road
P.O. Box 806 E
Bridgetown, Barbados
Fax No. (246) 436-7867
Attention: Marry Ellen Bourque
To C. Sean Day: c/o Navios Corporation
Stamford Harbour Park
333 Ludlow Street
Stamford, CT 06902
Fax No. 203-961-0650
To Larson: c/o C.F. Capital Corporation
One Landmark Square
Eighteen Floor
Stamford, Connecticut
U.S.A. 06901
Fax No. 203-325-1057
To Newman: Kevin Newman
200 Park Avenue
Suite 2200
New York, New York 10166
Fax No. 212-297-4024
To Mark Stitzer: 290 Round Hill Road
Greenwich, Connecticut
USA 06831
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Fax No. 203-629-0939
To Lucy Stitzer: 290 Round Hill Road
Greenwich, Connecticut
USA 06831
Fax No. 203-629-0939
To Stewart Allen: c/o Canadian Springs Water Company
17-3771 North Fraser Way
Burnaby, BC V5J 5K6
Fax No. 604-437-4002
or to such other address, fax number or office of a party as that party may
notify all other parties from time to time.
XIV.3 Effective Time of Notice
Notices shall be deemed given upon the earlier of the following:
(a) If mailed, on the fifth Business Day following deposit in the
mails;
(b) If given by fax, on transmission;
(c) On receipt.
XIV.4 Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the Province of Nova Scotia and the federal laws of Canada
applicable therein.
XIV.5 Assigns
This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns.
XIV.6 Further Assurances
32
32
The parties hereto shall do such further acts, execute and deliver
such further documents and give such further assurances as may be necessary or
desirable to give full effect to this Agreement.
XIV.7 Time
Time is of the essence of this Agreement.
XIV.8 Counterparts
This Agreement may be executed in one or more counterparts each of
which shall be deemed to be an original and all of which taken together shall
constitute one and the same instrument.
IN WITNESS WHEREOF the parties hereto have properly executed this
Agreement on the date and at the place first written above.
SPARKLING SPRING WATER
GROUP LIMITED
Per: /s/Stephen Larson
-------------------------------
c/s
Per: /s/Art Goodick
-------------------------------
SPARKLING SPRING WATER LIMITED
Per: /s/Stephen Larson
-------------------------------
c/s
Per: /s/Art Goodick
-------------------------------
CLAIRVEST GROUP INC.
33
33
Per: /s/Ken Rotman
-------------------------------
c/s
Per: /s/Abby Strahl
-------------------------------
GASPAR LIMITED
Per: /s/Mary Ellen Bourque
-------------------------------
c/s
Per:
-------------------------------
34
34
/s/C. Sean Day
- -------------------------------- -------------------------------
Witness to C. Sean Day C. SEAN DAY
/s/Stephen Larson
- -------------------------------- -------------------------------
Witness to Stephen L. Larson STEPHEN L. LARSON
/s/Kevin Newman
- -------------------------------- -------------------------------
Witness to Kevin Newman KEVIN NEWMAN
/s/ Mark Stitzer
- -------------------------------- -------------------------------
Witness to Mark Stitzer MARK STITZER
/s/Lucy Stitzer
- -------------------------------- -------------------------------
Witness to Lucy Stitzer LUCY STITZER
/s/Stewart Allen
- -------------------------------- -------------------------------
Witness to Stewart Allen STEWART ALLEN
35
SCHEDULE "A"
THIS ASSUMPTION AGREEMENT made the day of 19 ;
B E T W E E N:
SPARKLING SPRING WATER GROUP LIMITED (hereinafter called
"Holdco")
- and -
, of , and , of
acting on behalf of themselves and the Shareholders
- and -
, of , and , of
acting on behalf of themselves and the Shareholders
(hereinafter the "NEW SHAREHOLDER")
WHEREAS Holdco and the Shareholders entered into an agreement dated
o , 1997 (hereinafter the "AGREEMENT"), a copy of which is attached hereto,
affecting the transfer or pledge of shares in Holdco and other rights of the
holders of shares.
AND WHEREAS the Agreement provides that no shares shall be issued to
any other party unless and until such party executes this Assumption Agreement;
AND WHEREAS the New Shareholder is desirous of having
( ) shares in Holdco registered in the name of the New Shareholder;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
mutual covenants and agreements herein contained and subject to the terms and
conditions hereinafter set out, the parties agree as follows:
1. All terms in this Assumption Agreement shall have the same meaning as in the
Agreement and this Assumption Agreement shall amend the Agreement as provided
herein and shall be read and construed therewith as if they constituted but one
document.
36
2. The New Shareholder agrees to be bound by the terms and conditions of the
Agreement as if the New Shareholder were one of the Shareholders named in such
Agreement.
3. Holdco and the Shareholders agree to accept the New Shareholder as a
shareholder in Holdco and to be bound to the New Shareholder as if the New
Shareholder had been one of the Shareholders originally named in the Agreement.
4. The New Shareholder agrees to assume all the rights and obligations of under
the Agreement so that as of the date hereof, the New Shareholder shall replace
as a Shareholder.
5. Any notices or other communications given pursuant to the Agreement to the
New Shareholder shall be given in accordance with Section 12.2 of the Agreement
to the New Shareholder, addressed as follows:
Name of Party
Address
Fax No.
Attention:____________________ (insert office such as President)
IN WITNESS WHEREOF the parties hereto have executed these presents
by affixing their hands and seals the day and year first above written.
SIGNED, SEALED AND DELIVERED ) SPARKLING SPRING WATER
in the presence of: ) GROUP LIMITED
)
)
) Per:____________________________________
)
)
) Per:____________________________________
)
)
) _____________________________________
) President
)
)
) _____________________________________
) Secretary
)
) The President and Secretary signing on their
) own behalf and on behalf of the Shareholders
)
)
)
______________________________________
37
SCHEDULE B - PAGE 1
(Shareholders Agreement)
CONSOLIDATED SPARKLING SPRING WATER INCOME STATEMENT
(C$ Thousands)
Revenue 1991 1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ---- ----
Buxton 5,770 7,440 7,876 8,902 11,436 13,151 14,729
Aquaporte 0 1,224 1,592 2,324 2,823 3,244 3,568
SSW 3,813 4,595 4,975 6,109 7,246 8,129 8,775
CS 5,419 6,461 8,079 10,179 12,138 13,331 14,853
--------------------------------------------------------------------------------------------
15,002 19,720 22,522 27,515 33,642 37,856 41,926
Growth 31.5% 14.2% 22.2% 22.3% 12.5% 10.8%
Cost of Sales and Operating Costs
Buxton 6,273 6,682 6,266 6,624 7,724 8,627 9,226
Aquaporte 0 1,146 1,224 1,763 1,874 1,945 2,030
SSW 2,908 3,873 3,925 4,728 5,440 5,938 6,346
CS 3,650 4,491 6,392 7,601 9,205 9,707 9,860
--------------------------------------------------------------------------------------------
12,831 16,172 17,808 20,713 24,243 26,217 27,463
Operating Cash Flow
Buxton (503) 778 1,609 2,278 3,711 4,524 5,503
Aquaporte 0 78 368 562 949 1,299 1,538
SSW 905 722 1,050 1,384 1,806 2,191 2,439
CS 1,769 1,970 1,687 2,578 2,933 3,624 4,993
--------------------------------------------------------------------------------------------
2,171 3,548 4,714 6,801 9,399 11,639 14,463
Margin % 14.5% 18.0% 20.9% 24.7% 27.9% 30.7% 34.5%
Growth % 63.4% 32.9% 44.3% 38.2% 23.8% 24.3%
Corporate Overhead, which includes
Larson & Krediet Compensation &
C.F. Capital expenses 1,367 1,469
----------------------------
EBITDA 10,272 12,994
Depreciation and Amort. 4,205 4,289
Interest Expense 3,059 2,852
Other Expense/(Income) 126 126
----------------------------
Pre-Tax Income 2,881 5,727
Income Tax 299 2,205
Dividends 0 0
----------------------------
Net Income Available to Common 2,582 3,522
Revenue 1998 1999 2000 2001 2002
---- ---- ---- ---- ----
Buxton 16,202 17,822 19,605 21,565 23,721
Aquaporte 3,925 4,318 4,750 5,225 5,747
SSW 9,464 10,208 11,013 11,882 12,823
CS 16,338 17,972 19,419 20,603 21,861
---------------------------------------------------------------
45,930 50,320 54,785 59,275 64,152
Growth 9.5% 9.6% 8.9% 8.25 8.2%
Cost of Sales and Operating Costs
Buxton 10,028 10,908 11,874 12,934 14,102
Aquaporte 2,229 2,392 2,588 2,760 2,970
SSW 6,787 7,262 7,775 8,330 8,930
CS 10,817 11,888 12,799 13,560 14,366
---------------------------------------------------------------
29,862 82,430 35,016 37,585 40,368
Operating Cash Flow
Buxton 6,174 6,914 7,731 8,631 9,619
Aquaporte 1,696 1,926 2,181 2,484 2,777
SSW 2,677 2,946 3,237 3,552 3,893
CS 5,521 6,104 6,620 7,043 7,494
---------------------------------------------------------------
16,068 17,890 19,769 21,690 23,783
Margin % 35.0% 35.6% 36.1% 36.6% 37.1%
Growth % 11.1% 11.3% 10.5% 9.7% 9.6%
Corporate Overhead, which includes
Larson & Krediet Compensation &
C.F. Capital expenses
1,569 1,679 1,790 1,903 2,024
----------------------------------------------------------------
EBITDA 14,499 16,211 17,979 19,788 21,759
Depreciation and Amort. 4,024 4,043 3,882 2,395 2,403
Interest Expense 2,404 1,840 1,153 379 (465)
Other Expense/(Income) 126 83 0 0 0
----------------------------------------------------------------
Pre-Tax Income 7,945 10,265 12,945 17,014 19,811
Income Tax 3,059 3,952 4,984 6,550 7,627
Dividends 0 0 0 0 0
----------------------------------------------------------------
Net Income Available to Common 4,886 6,313 7,961 10,463 12,184
Notes
(1) Prior to 1996 CS figures represent a March 31 Year-end. (The 3/31/95 year
is placed in the 1994 column.)
38
SCHEDULE B - PAGE 2
(Shareholders Agreement)
EBTDAPS PROJECTION
For the purposes of section 5.04(b) of the Shareholders Agreement and sections
2.02 and 2.04 of the Management Agreement EBTDAPS shall mean: Net Income plus
(i) Income Taxes, (ii) Depreciation, (iii) Amortization, and (iv) payments made
to Krediet, Larson and C.F. as described in sections 2.04(a) and (b) of the
Management Agreement, DIVIDED BY the number of fully diluted shares outstanding
at the time. The depreciation of assets and amortization of goodwill will
utilize the same accounting practices as in the December 31, 1995 audited
financials for the company as prepared by Ernst & Young. For greater clarity,
the calculation will be on an after interest expense basis.
EBTDAPS Target in Canadian Dollars
1996 $ 3.86
1977 $ 5.31
1998 $ 6.30
1999 $ 7.45
2000 $ 8.68
2001 $ 9.98
2002 $11.16
39
3
) [New Shareholder]
SCHEDULE "C"
REGISTRATION PROCEDURES
Whenever Shareholders request that any Shares be qualified or
registered pursuant to Section 6.1 or 6.2, Holdco will, subject to the
provisions of such Sections, use its best efforts to effect the qualification or
registration and the sale of such Shares in accordance with the intended method
of disposition thereof as quickly as practicable, and in connection with any
such request:
(a) Holdco will as expeditiously as possible prepare and file with the SEC
and/or with the relevant Canadian securities regulatory authority a prospectus
and/or registration statement on any form for which Holdco then qualifies or
which counsel for Holdco shall deem appropriate and which form shall be
available for the sale of the Shares to be qualified or registered thereunder in
accordance with the intended method of distribution thereof, and use its best
efforts to cause such filed prospectus and/or registration statement to become
and remain effective for a period of not less than ninety (90) days.
(b) Holdco will, if requested, prior to filing a registration statement or
prospectus or any amendment or supplement thereto, furnish to each Shareholder
and each underwriter, if any, of the Shares covered by such registration
statement copies of such registration statement as proposed to be filed, and
thereafter Holdco will furnish to such Shareholder and underwriter, if any, such
number of copies of such registration statement, each amendment and supplement
thereto (in each case including all exhibits thereto and documents incorporated
by reference therein), the prospectus included in such registration statement
(including each preliminary prospectus) and such other documents as such
Shareholder or underwriter may reasonably request in order to facilitate the
disposition of the Shares owned by such Shareholder.
(c) After the filing of the prospectus and/or registration statement,
Holdco will promptly notify each Shareholder holding Shares covered by such
prospectus and/or registration statement of any stop order or cease trade order
issued or threatened by the SEC or by any relevant Canadian securities
regulatory authority and take all reasonable actions required to prevent the
entry of such stop order or cease trade order or to remove or revoke it if
entered.
(d) Holdco will use its best efforts to (i) register or qualify the Shares
covered by such prospectus or registration statement under such other securities
or blue sky laws of such
40
3
jurisdictions in the United States and Canada as any Shareholder holding such
Shares reasonably (in light of such Shareholder's intended plan of distribution)
requests and (ii) cause such Shares to be qualified or registered with or
approved by such other governmental agencies or authorities as may be necessary
by virtue of the business and operations of Holdco and do any and all other acts
and things that may be reasonably necessary or advisable to enable such
Shareholder to consummate the disposition of the Shares owned by such
Shareholder; provided that Holdco will not be required to (A) qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this paragraph (d), (B) subject itself to taxation in any such
jurisdiction, or (C) consent to general service of process in any such
jurisdiction.
(e) Holdco will immediately notify each Shareholder holding such Shares,
at any time when a prospectus relating thereto is required to be delivered under
the Securities Laws, of the occurrence of an event requiring the preparation of
a supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Shares, such prospectus will contain full, true and plain
disclosure of all material facts relating to the securities covered thereby and
will not contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which they were made and
promptly prepare and make available to each such Shareholder any such supplement
or amendment.
(f) Upon the execution of confidentiality agreements in form and substance
satisfactory to Holdco, Holdco will make available for inspection by any
Shareholder and any underwriter participating in any disposition pursuant to a
prospectus or registration statement being filed by Holdco and any attorney,
accountant or other professional retained by any such Shareholder or underwriter
(collectively, the "INSPECTORS"), all financial and other records, pertinent
corporate documents and properties of Holdco (collectively, the "RECORDS") as
shall be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause Holdco's officers, directors and employees to supply
all information reasonably requested by any Inspectors in connection with such
prospectus or registration statement. Records that Holdco determines, in good
faith, to be confidential and that it notifies the Inspectors are confidential
shall not be disclosed by the Inspectors unless (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in such
prospectus or registration statement or (ii) the release of such Records is
ordered pursuant to a subpoena or other order from a court of competent
jurisdiction or from any Canadian securities regulatory authority.
(g) Holdco will furnish to each such Shareholder and to each such
underwriter, if any, a signed counterpart, addressed to such underwriter, of (i)
an opinion or opinions of counsel to Holdco and (ii) a comfort letter or comfort
letters from Holdco's independent public or chartered
41
4
accountants, each in customary form and covering such matters the type
customarily covered by opinions or comfort letters, the case may be, as the
Holders or managing underwriter therefor reasonably requests.
(h) Holdco will otherwise use its best efforts comply with all applicable
rules and regulations of the SEC and the relevant Canadian securities regulatory
authorities.
(i) Holdco may require each such Shareholder to promptly furnish in
writing to Holdco such information regarding the distribution of the Shares as
Holdco may from time to time reasonably request and such other information as
may be legally required in connection with such registration or qualification.
Each such Shareholder agrees that, upon receipt of a notice from
Holdco of the happening of any event of the kind described in paragraph (e)
above, such Shareholder will forthwith discontinue disposition of Shares
pursuant to the prospectus or registration statement covering such Shares until
such Shareholder's receipt of the copies of the supplemented or amended
prospectus contemplated by paragraph (e) above, and, so directed by Holdco, such
Shareholder will deliver to Holdco all copies, other than any permanent file
copies then in such Shareholder's possession, of the most recent prospectus
covering such Shares at the time of receipt of such notice. In the event that
Holdco shall give such notice, Holdco shall extend the period during which such
prospectus or registration statement shall be maintained effective (including
the period referred to in paragraph (a) above) by the number of days during the
period from and including the date of the giving of notice pursuant to paragraph
(e) above to the date when Holdco shall make available to such Shareholder a
prospectus supplemented or amended to conform with the requirements of paragraph
(e) above.
Holdco agrees to indemnify and hold harmless each Shareholder
holding Shares covered by a prospectus or registration statement, its officers,
directors and agents, and each person, if any, who controls such Shareholder
within the meaning of Section 15 of the Securities Act, Section 20 of the
Exchange Act or Section 1 of the Securities Act (Ontario) from and against any
and all losses, claims, damages and liabilities (including those resulting from
any order made or any inquiry, investigation or proceeding commenced or
threatened by any securities regulatory authority, stock exchange or by any
other competent authority) caused by any untrue statement or alleged untrue
statement of a material fact contained in any registration statement or
prospectus relating to the Shares (as amended or supplemented if Holdco shall
have furnished any amendments or supplements thereto) or any preliminary
prospectus, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were made,
42
5
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or omission or alleged untrue statement or omission based
upon information furnished in writing to Holdco by such Shareholder or on such
Shareholder's behalf expressly for use therein; provided that Holdco shall not
be liable for any untrue statement or omission contained in a preliminary
prospectus which untrue statement or omission was corrected in a final
prospectus or supplement which was furnished to such Shareholder. Holdco also
agrees to indemnify any underwriters of the Shares, their officers, directors,
employees and agents and each person who controls such underwriters (other than
in respect of loss of profit or information relating solely to the underwriters)
on substantially the same basis as that of the indemnification of the
Shareholders provided in this paragraph and which indemnification shall provide,
in addition, an indemnity in respect of any breach of representation or warranty
of Holdco contained in any underwriting agreement in respect of Shares.
43
SCHEDULE "D"
FAIR MARKET VALUE DETERMINATION PROCEDURES
For the purposes of Section 5.7, "FAIR MARKET VALUE" shall mean the greater of:
(ii) the potential public market value of the Shares being
valued;
(iii) the value at which a strategic buyer would pay for
all of the outstanding Shares of Holdco multiplied by
the relevant percentage of Holdco being appraised; and
(iv) the value at which a financial buyer would pay for all
of the outstanding Shares of Holdco multiplied by the
relevant percentage of Holdco being appraised.
Fair market value shall be determined on a per Share basis (based on the
aggregate fair market value of all Shares assuming that all conversion rights
attached thereto have been exercised). Fair market value shall be calculated:
(b) on the basis that the buyer is under no compulsion to
buy and the seller is under no compulsion to sell,
(c) on a going-concern basis,
(d) without any discount for minority interest or any
premium for control;
(e) assuming that all non-arm's length agreements are no
longer in place, including the Management Agreement; and
(f) there are no restrictions on transfer and that there are
no costs associated with determining the fair market
value.
44
SCHEDULE "E"
OUTSTANDING OPTION
45
SCHEDULE "F"
SUBSCRIPTION AGREEMENT
FOR
*
TO: SPARKLING SPRING WATER GROUP LIMITED (the "COMPANY")
WHEREAS the undersigned (the "SUBSCRIBER") is an employee of the Company
or one of its operating subsidiaries or affiliated companies, and the Company
deems it desirable to issue Class E non-voting common shares in the capital
stock of the Company;
AND WHEREAS the Subscriber has agreed to subscribe for Class E non-voting
common shares upon the terms and conditions contained in this Subscription
Agreement, and the Company has agreed to accept the subscription for Class E
non-voting common shares upon the terms and conditions contained in this
Subscription Agreement;
NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereby
covenant and agree as follows:
1. SUBSCRIPTION AND ACCEPTANCE
1.1 The Subscriber hereby subscribes for _ Class E non-voting common shares
(the "CLASS E SHARES") for an aggregate subscription price of U.S. $*
payable to the Company in cash within 30 days from the date hereof.
1.2 The Company hereby accepts the subscription for Class E Shares and agrees
to issue the Class E Shares provided that it receives an executed copy of
this Agreement and the subscription price payable to "Stewart McKelvey
Stirling Scales in trust" on or prior to January 15, 1998.
2. POWER OF ATTORNEY AND PROXY
2.1 The Subscriber hereby irrevocably constitutes and appoints the
Vice-Chairman of the Company, and failing which, the Chairman of the
Company:
46
(a) as proxyholder to attend and to vote on behalf of the Subscriber
or otherwise act as its proxy or representative at every meeting
of the Company at which the Subscriber as holder of Class E
Shares or any shares or securities into which such Class E Shares
shall have been converted or exchanged or any shares or other
securities resulting from a reclassification thereof (hereinafter
collectively referred to as the "SHARES"), is entitled to vote,
including without limitation, any meeting at which a class vote
is held in respect of non-voting shares of the Company; and
(b) as its attorney for the Subscriber and in the Subscriber's name
to vote and act in respect of the Shares (including signing
resolutions in writing in lieu of meetings), to execute a proxy
in respect of the Shares, to execute and deliver a pledge of the
Shares to the lenders of the Company to secure loans to the
Company, and to endorse and transfer to the Company, or its
nominee, any of the Shares which may require endorsements or
transfer, in order that full title to the Shares may be vested in
the Company or its nominee, all as fully and effectually as the
Subscriber could do.
2.2 The Subscriber declares that the power of attorney granted hereby is
irrevocable and is coupled with an interest and will survive the death,
incapacity and bankruptcy of the Subscriber and will extend to and be
binding upon the heirs, executors, administrators, and legal personal
representatives of the Subscriber.
3. REPRESENTATIONS AND WARRANTIES
3.1 By executing this Subscription Agreement, the Subscriber represents,
warrants and covenants to the Company (and acknowledges that the Company
is relying thereon) that:
(a) the Subscriber acknowledges that no market exists for the Shares and
none is expected to develop. The investment in the Shares is subject
to a number of risks and the Subscriber acknowledges that no
reliance has been made on any representation, express or implied;
(b) the Subscriber has been independently advised about and is aware of
the characteristics of the Shares, the risks relating to an
investment therein and the fact that the Subscriber may not sell or
transfer the Shares except in accordance with the provisions set out
in this Subscription Agreement, and the Subscriber confirms that no
representations have been made to the Subscriber by or on behalf of
the Company with respect to the Shares;
47
(c) the Subscriber is a resident of _ ;
(d) this Subscription Agreement constitutes a legal, valid, binding
and enforceable obligation of the Subscriber;
(e) the Subscriber is familiar with and understand the terms of this
Subscription Agreement and that the Subscriber has such knowledge
and experience in financial and business matters that the Subscriber
is capable of evaluating the merits and risks of the investment in
the Shares;
(f) the Subscriber is purchasing the Shares as principal for its own
account, not for the benefit of any other person, and not with a
view to the resale or distribution of all or any of the Shares;
(g) no offering memorandum has been delivered to the Subscriber in
connection with the sale of the Shares, and the Subscriber has not
become aware of any advertisement in printed media of general and
regular paid circulation, radio or television with respect to the
distribution of the Shares or any other advertising or sales
literature (as defined in subsection 56(2) of the Securities Act
(Nova Scotia));
(h) the Company is a "private company" within the meaning ascribed to
that term in the Securities Act (Nova Scotia) and the articles of
association of the Company contain restrictions on the transfer
of the Shares, prohibit any invitation to the public to subscribe
for securities of the Company and restrict the number of
shareholders of the Company, exclusive of persons who are in the
employment of the Company and persons who, having been formerly
in the employment of the Company, were, while in that employment,
and have continued after termination of that employment, to own
at least one share of the Company, to not more than 50 in
number;
(i) the rights conferred on the Subscriber by this Subscription
Agreement pertain only to the Shares and this Subscription
Agreement does not constitute any agreement in respect of or
create any rights with respect to any shares other than the
Shares, and without restricting the generality of the foregoing,
this Subscription Agreement shall not be construed as concerning
any shares of the Company issued to the Subscriber under any
stock option plan of the Company; and
48
(j) the calculation by the Company of Fair Market Value (as defined
below) shall be final and absolute and shall be binding upon the
Subscriber and all heirs, executors, administrators, and legal
personal representatives of the Subscriber, notwithstanding that the
Shares or other shares in the Company may be sold or valued at an
amount different from Fair Market Value as determined by the
Company.
4. SHARE TRANSFER RIGHTS
4.1 General Restriction
Except as otherwise provided for herein or as specifically consented to in
writing by the Company, no Subscriber shall be entitled to, directly or
indirectly, sell, assign, transfer, give, devise, bequeath, mortgage,
charge, pledge, hypothecate or otherwise dispose of, alienate or in anyway
encumber or create a security interest in, or grant any option on, any of
the Shares. Any attempt to accomplish or effect any or all of the acts
prohibited hereby shall be absolutely null and void.
4.2 Put Option
The Company hereby grants to the Subscriber the option to require the
Company to redeem or purchase all but not less than all of the Shares held
by the Subscriber at a purchase price equal to the Fair Market Value (as
hereinafter defined) of the Shares at the time of giving notice of
exercise. The option is subject to the following terms and conditions:
(a) The Subscriber may exercise the option during the month of May in
each year by delivering notice in writing to the Company on or
before May 31 in each year;
(b) The closing of the purchase and sale of the Shares shall take place
within 30 days following receipt by the Company of notice of
exercise;
(c) The closing of the purchase and sale of the Shares shall be subject
to the general purchase and sale provisions attached hereto as
Schedule "A"; and
(d) The right of the Subscriber to require the Company to purchase all
of the Shares shall be subject to the financial covenants and
financing requirements affecting the Company from time to time and
all applicable solvency tests.
4.3 Company's Option To Purchase Shares
The Subscriber hereby grants to the Company the option, but not the
obligation, to
49
purchase all but not less than all the Shares for a purchase price equal
to the Fair Market Value (as hereinafter defined) of the Shares at the
time of giving notice of exercise. The option is subject to the following
terms and conditions:
(a) The right of the Company shall be exercisable at any time by
delivery of notice in writing to the Subscriber or the
Subscriber's representatives;
(b) The closing of the purchase and sale of the Shares shall take place
within 30 days following delivery by the Company of notice of
exercise; and
(c) The closing of the purchase and sale of the Shares shall be subject
to the general purchase and sale provisions attached hereto as
Schedule "A".
4.4 Company's Right of First Refusal
In the event the Subscriber desires to sell or transfer any Shares, the
Subscriber shall first make an offer in writing to the Company to sell all
but not less than all of the Shares, specifying the price per Share, the
manner of payment and the time and place of closing. The Company shall
have the right, but not the obligation to accept such offer in or whole or
in part by delivering notice of acceptance to the Subscriber within 30
days following receipt of such offer. In the event that no acceptance is
received by the Subscriber from the Company within such period, the offer
shall be deemed to have been refused. If the Company does not accept the
offer by the Subscriber, the Subscriber shall not sell or transfer any
Shares at a lower price per Share or in a manner or on terms and
conditions more favourable than those offered to the Company. The right of
first refusal is subject to the following terms and conditions:
(a) The closing of the purchase and sale of the Shares shall take place
within 30 days following delivery by the Company of notice of
acceptance; and
(b) The closing of the purchase and sale of the Shares shall be subject
to the general purchase and sale provisions attached hereto as
Schedule "A".
4.5 Fair Market Value
In this Subscription Agreement:
(a) "FAIR MARKET VALUE" at any particular time means the amount per
share that is the result of (w) the Net Value at the particular
time, divided by (x) the sum of (i) the number of shares in the
capital stock of the Company issued and outstanding immediately
before the particular time, and (ii) the number of shares in the
capital
50
stock of the Company that would have been issued and outstanding on
the conversion or exchange into or for shares or exercise of all
securities and options issued and outstanding immediately before the
particular time that were convertible, exchangeable or carried the
right to subscribe for shares (whether or not such other securities
or options were convertible, exchangeable or carried the right to
subscribe for shares as at the particular time);
(b) "NET VALUE" at any particular time means the balance remaining when
(y) the total amount of outstanding debt of the Company at the
particular time calculated on a consolidated basis, is subtracted
from (z) the product obtained when 7.66 is multiplied by the
Operating Cash Flow; and
(c) "OPERATING CASH FLOW" at any particular time means the consolidated
earnings of the Company for the four immediately preceding fiscal
quarters, before interest, taxes, depreciation, amortization and
corporate overhead, calculated in accordance with generally accepted
accounting principles applied on a basis consistent with historical
policies.
5. PLEDGE OF SHARES AND CUSTODY OF SHARE CERTIFICATES
5.1 As security for the performance by the Subscriber of the Subscriber's
obligations hereunder, the Subscriber hereby pledges the Shares to and in
favour of the Company and directs the Company to hold all certificates
representing the Shares until released upon mutual agreement of the
Subscriber and the Company or upon the event of a sale or transfer of the
Shares in accordance with this Subscription Agreement.
5.2 Upon a default or breach of any term of this Subscription Agreement by the
Subscriber, the Company, without notice, advertisement, demand for payment
or any other formality (all of which are hereby waived) may repurchase the
Shares or sell by public or private sale or otherwise deal with the Shares
in such manner as it thinks fit, and may hold the proceeds in lieu of any
Shares realized and appropriate the same on account of any liability of
the Subscriber to the Company as the Company may reasonably determine.
5.3 The Subscriber, until there has been a default or breach of any term of
this Subscription Agreement, the Subscriber is entitled to receive
dividends or other distributions made by the Company in respect of the
Shares.
5.4 The Subscriber shall execute and deliver upon request by the Company a
pledge of the Shares to the lenders of the Company for the purpose of
securing loans to the Company.
51
The Subscriber acknowledges that for the purposes of securing such loans,
the Company may execute and deliver on behalf of and in the name of the
Subscriber a pledge of the Shares.
6. EMPLOYMENT TERMS UNAFFECTED
6.1 This Subscription Agreement is a special benefit, not a regular benefit,
and shall not be construed as an agreement or understanding, express or
implied, for the employment of the Subscriber for any specific period or
for the issuance of any shares other than the Class E Shares described
above. The Subscriber shall remain subject to discipline and termination
to the same extent as if this Subscription Agreement had not been entered
into by the parties.
7. TERMINATION
7.1 The rights, obligations and liabilities of the Subscriber and the Company
arising from this Subscription Agreement shall terminate with respect to
the Subscriber, upon the sale of his Shares in accordance with this
Agreement.
7.2 At the sole discretion of the Company, the Company may, by written notice
to the Subscriber, terminate this Agreement upon the Shares being listed
for trading on a recognized stock exchange in Canada or the United States
of America.
8. GENERAL
8.1 The Subscriber agrees to execute and deliver to the Company such further
agreements, documents and assurances as may be required to give effect to
the matters contemplated by this Subscription Agreement.
8.2 This Subscription Agreement shall be governed by the laws of Nova Scotia
and the parties irrevocably attorn to the jurisdiction of the Courts of
Nova Scotia.
8.3 This Subscription Agreement may not be assigned by the Subscriber.
8.4 This agreement shall enure to the benefit of and be binding upon the
parties and their respective successors, heirs, executors, administrators,
and legal personal representatives.
IN WITNESS WHEREOF the Subscriber has executed this Agreement this day
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of October, 1997.
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Signature Witness
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Street Address
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City and Province
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Postal Code
Receipt and acceptance of the foregoing subscription for Class E Shares
and consideration therefor is acknowledged by the Company this__________ day
of________________________ , 1997.
SPARKLING SPRING WATER GROUP LIMITED
BY:
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