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FORM 20-F
[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
OR
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _____ to _____
Commission file number: 0-26406
VENTURE PACIFIC DEVELOPMENT CORPORATION
(Exact name of Registrant as specified in its charter)
VENTURE PACIFIC DEVELOPMENT CORPORATION
(Translation of Registrant's name into English)
BRITISH COLUMBIA, CANADA
(Jurisdiction of incorporation or organization)
Suite 1204 - 700 West Pender Street
Vancouver, British Columbia, CANADA V6C 1G8
(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of each Name of each exchange
class on which registered
NONE NONE
Securities registered or to be registered pursuant to Section 12(g) of the Act.
Common Shares, without par value
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act.
NONE
(Title of Class)
Indicate the number of outstanding shares of each of the
issuer's classes of capital or common stock as of the close of the period
covered by the annual report: 5,210,327 Common Shares, without par value.
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Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark which financial statement item the
registrant has elected to follow.
Item 17 [X] Item 18 [ ]
GENERAL INFORMATION
CURRENT AND HISTORICAL EXCHANGE RATES
In this Form 20-F all references to dollars ($) are expressed
in Canadian funds. As of September 24, 1996, the exchange rate for conversion to
U.S. Dollars was $1.00 Canadian = $1.3679 U.S. Exchange rates represent the noon
buying rate in New York City for cable transfers in foreign currencies as
certified for customs purposes by the Federal Reserve Bank of New York. The
average rates presented in the table below represent the average of the exchange
rates on the last day of each month during a year for the past 5 years.
[Rates quoted are the Canadian Dollar exchange for US $1.00]
Year Period End Average High Low
- -------------------------------------------------------------------------------
1995 1.3640 1.3726 1.4267 1.3275
1994 1.4030 1.3697 1.4078 1.3103
1993 1.3255 1.2939 1.3443 1.2428
1992 1.2714 1.2143 1.2885 1.1420
1991 1.1558 1.1460 1.1645 1.1203
PART I
Item 1. Description of Business.
A. General
Venture Pacific Development Corporation (hereinafter the
"Company" or the "Registrant") is primarily engaged in the following businesses:
(a) (i) securing management contracts with native Canadian
Indian Bands (referred to herein as "First Nations" or
"First Nations Bands") in Canada to provide them with
requisite financing, planning, development, construction
management and operational expertise to build and operate
gaming facilities on Indian Reserves and (ii) entering joint
ventures with experienced gaming associates to develop and
own casinos in Canada and the United States;
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(b) acquiring and developing real estate properties including
syndicating real estate developments through its
wholly-owned subsidiary, Venture Pacific Capital
Corporation; and
(c) new and used vehicle leasing through Venture Pacific Vehicle
LeaseCorp, Inc.
B. Business Strategy
1. Gaming
The Company is establishing itself as a professional gaming
corporation and intends to build an integrated, fully diversified, public gaming
corporation specializing in the gaming facility market. In this endeavor it has
utilized and will continue to utilize the substantial industry experience of its
gaming associates to execute an aggressive expansion strategy aimed at
dramatically increasing corporate revenues, overall profitability and
shareholder returns.
a. First Nations Gaming
"Gaming facility" operations extend beyond traditional "gambling
only" casinos to the development of entertainment-oriented centers that include
restaurants, keno, and bingo in addition to gambling facilities. Initially, the
Company intends to focus its resources on what management believes is
potentially the most dynamic segment of the gaming facility market, namely First
Nations Gaming in Canada.
First Nations Gaming, or "Indian Gaming," as it is generally
known in the United States, has grown dramatically in the United States in
recent years. Because of current rulings in the United States, the traditional
casino gaming market in North America has expanded from the States of Nevada and
New Jersey to hundreds of establishments operated by Indian Nations throughout
the United States. Indian Gaming, and particularly First Nations Gaming in
Canada, may be conducted by any First Nations Band provided that the Band
obtains a license from a governing body to do so. The Company will engage in all
facets of gaming facility development for First Nations Bands, including
designing, building, financing and managing gaming facilities. The gaming
facilities themselves will be owned by the First Nations Bands.
Competition is becoming more limited to work with and/or advise
these Bands as some other gaming management companies have grown tired of
awaiting the issue of revised gaming regulations. The Company's competition will
be from Canadian-based companies only as the laws of British Columbia allow only
Canadian management companies to offer such services. While the Company believes
that its personnel are as capable as any, it cannot currently accurately assess
the size, experience or resources of its current or potential competitors or
their level of committment in awaiting the issue of revised gaming regulations.
Therefore the Company cannot predict whether or not it will be successful in its
First Nations Gaming business.
Canadian law currently gives Provinces the authority to operate
games of chance within their jurisdiction. In order to operate a gaming facility
on First Nations lands, the Company must first obtain approval by the governing
authority of the applicable First Nations Band in addition to Provincial
Government approval. Each Province has different Regulatory Procedures. To
operate in all Canadian Provinces, the Company must comply with the differing
regulations established by each Provincial Government.
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Existing regulations in British Columbia require an operator to
provide an in-depth market and feasibility study in support of the application
for a license to allow their affiliated First Nations Band to develop and
operate a gaming facility. Existing regulations allow only charitable or
religious organizations to be licensed to conduct gaming operations. The
licensed organizations (licensee) must be operated on a not-for-profit basis and
must exist primarily for public service or community benefit with objectives and
activities that are primarily for: (1) relief of poverty, disadvantage or
distress; (2) advancement of education, culture or the arts; (3) advancement of
religion; (4) for other purposes beneficial to the community (amateur, athletic
sports or public safety and public facilities).
The Province of British Columbia has been examining its existing
regulations with a view to issuing revised gaming regulations. The Province
indicated in June, 1995 that new gaming facilities would be considered as a part
of opportunities afforded to First Nations and that in reviewing proposals the
Gaming Commission would consider, inter alia, its stated objective of enhancing
First Nations opportunities in gaming. However, the Province stated in a news
release on June 28, 1995, that changes to the gaming regulations would be
"moderate" and that no "major" changes in gaming regulations would ensue. The
release also stated that the Gaming Commission will follow the Canadian federal
government's general policy of rejecting "Vegas-style casinos and video lottery
terminals" (without further defining "Vegas-style casinos") but added that the
Gaming Commission has not made any decisions yet concerning "betting limits,
hours of operation, numbers of tables and types of games."
In 1995, the Province assigned the task of revisions to the
British Columbia Gaming Commission. The Gaming Commission is expected to issue
guidelines for the revised gaming regulations sometime before the end of 1996.
Previously, the Gaming Commission has stated that it will follow
a "made in B.C." approach (ensuring that gaming benefits a broad range of
British Columbians by, inter alia, requiring that proposed business plans
evidence the input and support, after consultation, of the local communities
where the gaming will take place, and other policies to ensure that investment
in, and management of, gaming activities resides in British Columbia). The
Gaming Commission also expects that Provincial regulations will be forthcoming
before the end of 1996 which will provide for "pooling" of revenues from First
Nations' gaming operations (i.e., a portion of revenues from any First Nations
facilities will be pooled for use by First Nations across British Columbia).
As outlined above, existing regulations allow charitable
organizations and First Nations Bands to pay up to 40% of their gross revenues
to a management company, such as the Company, for expenses related to gaming
facility operations. Therefore, even if existing regulations are not
substantially revised to expand gaming beyond charitable games and bingo
operations, the Company intends to proceed to offer its services to First
Nations and charitable operations. Although the Company cannot project what
revisions to gaming regulations will be forthcoming, the Gaming Commission's
stated objectives of enhancing opportunities for First Nations' gaming and
ensuring that investment in management of British Columbian gaming be based in
British Columbia would appear to positively impact the Company as a British
Columbian enterprise that is offering investment and management operations to
First Nations Bands. However, the final form that the Gaming Commission's
regulations will take is uncertain.
The Company is assisting a number of First Nation Bands in
British Columbia in their efforts to obtain licenses to establish gaming
facilities on
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their lands. Because current Gaming Commission regulations prohibit publicly
traded companies, such as the Company, from receiving gaming licenses, the
directors of the Company formed a private holding company called TGN The Gaming
Network, Inc. ("TGN") of which such directors are the private shareholders. (See
Organizational documents of TGN at Exhibits 2.5 and 2.6 hereto.) TGN has applied
to the British Columbia Gaming Commission for a casino license. Should this
application be approved, TGN would contract with the Company to design, develop,
finance and manage gaming facilities in conjunction with First Nation Bands and
in accordance with provincial gaming regulations. The Company cannot predict
whether TGN will receive a gaming license.
The Company is also exploring possible joint ventures in the
North American gaming industry. On September 16, 1996, the Company entered into
a Letter of Intent with Louis E. Hinds of Las Vegas, Nevada and Bill's Trading,
Inc. of Richmond, British Columbia, to develop and own a casino near Las Vegas,
Nevada. Pursuant to the terms of the Letter of Intent, the Company will hold an
81% carried interest in the gaming project, Louis E. Hinds will hold a 10%
interest, and Bill's Trading, Inc. will hold the remaining 9% interest. The
Company cautions that the Letter of Intent is subject to the parties' due
diligence and that a formal agreement may not ultimately be entered.
2. Real Estate Development
The Company has fee simple interest in a number of real estate
properties in or near Pemberton, British Columbia. Specific information
regarding each property is set forth under "Item 2. Description of Property."
The Company holds its real estate interests through wholly owned subsidiaries.
The Company has, in the past, sought financing for these projects from a variety
of sources, including standard mortgage and bridge financing.
In the fall of 1995, the Company formed a new corporation,
Venture Pacific Capital Corporation ("Capital"), to raise equity financing
through a syndication structure for development projects. (See organizational
documents at Exhibits 2.7 to 2.9 hereto.) Capital was originally designed to
assist the Company in securing the necessary equity for the Travelodge Motor Inn
project in Pemberton, British Columbia (See Hurley Lodge, below). The equity was
to be raised through an Offering Memorandum for sophisticated investors. The
response from the financial community was such that Capital actively pursued
assignments for other companies on a fee for service basis and a carried
interest position. Capital currently has $8.2 million of equity financing under
contract and a further $7.5 million under negotiation. In the fall of 1996,
Capital may offer asset management services to North American pension funds and
financial institutions on a fee basis.
The Company now has several projects planned or underway with
financing through Capital. These include three motor inns and two brew pubs, to
be located in various parts of British Columbia and in which the Company may
hold equity interests in amounts up to 20%. Capital has been approached by Avex
Corporation of Dallas, Texas to syndicate a 38-acre parcel of land adjacent to
the Texas Motor Speedway in Fort Worth and a 70,000 square foot office building
in Dallas.
Regarding the brew pub, on August 12, 1996, Capital announced
that approvals have been obtained from the City of Prince George, British
Columbia for the establishment of the Buffalo Brew Pub. This is the first Pub
license granted in Prince George since 1989. Capital is proceeding to syndicate
the $2,175,000 required for the project. Capital will earn a syndication fee and
the Company is to have a 10% carried interest in the project. Official opening
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is projected for April, 1997. The managing partners will be Unique Restaurant
Concepts, a Vancouver group with a collective thirty years experience in the
restaurant/bar industry. Unique is involved with Joe Forte's, The Cannery, Da
Pasta Bar and other successful Vancouver restaurant operations. Potential
investors had the opportunity to use personal funds or Registered Retirement
Savings Plan funds (RRSPs). The Company is currently conducting feasibility
studies for similar brew pubs in Invermere, British Columbia and Banff, Alberta.
The Company plans to develop a number of motor inns in British
Columbia. In addition to the Company's current Travelodge project at Hurley
Lodge, the Company is investigating projects involving an 80-unit Travelodge at
Invermere, a resort near Banff and Radium Hot Springs in the Canadian Rockies,
and a 45- unit motor inn at Burns Lake. Additional projects are being considered
for Travelodge Inns in Pemberton and Kelowna.
Real estate development is an intensely competitive and highly
cyclical business, typically involving "boom and bust" cycles. While location is
the most important factors in real estate ownership, development is also
critically affected by the availability of financing and general economic
conditions. The Company's real estate properties are subject to the risks
generally incident to the ownership of real property, including liquidity, the
need to meet fixed obligations, uncertainty regarding adverse local market
conditions due to changes in general or local economic conditions, zoning laws,
neighborhood characteristics, interest rates, availability of mortgage funds,
availability of water and sewer services, changes in real estate property tax
rates and other operating expenses, governmental rules and fiscal policies, acts
of God (which may result in uninsured losses) and other factors which are beyond
the control of the Company. The Company may be unable to resell its properties
at a profit as a result of adverse conditions in local real estate markets or
other factors or the imposition of regulations governing the use of the
properties which have an adverse impact on the value of the properties. Many of
these inherent risks may be intensified by economic recession and by other
potential economic developments and uncertainties.
C. New and Used Vehicle Leasing
In August 1996 the Company formed Venture Pacific Vehicle
LeaseCorp., Inc. ("LeaseCorp"), a wholly-owned subsidiary that will engage in
leasing of new and used vehicles to customers who have approved credit through
non-recourse bank plans. The Company has entered this market with LeaseCorp in
an effort to diversify its business activities and to increase monthly cash
flows. LeaseCorp will maintain an inventory of late model used vehicles for
lease and sale. LeaseCorp will also have the capability to offer new vehicle
leasing at discount prices. LeaseCorp has made arrangements with certain major
vehicle manufacturers to purchase new cars and trucks at fleet discounts, which
are substantially below manufacturers' suggested retail prices. LeaseCorp has
arranged for non-recourse lease funding at two chartered banks to accommodate
new vehicle leasing.
D. Corporate Organization
The Company's principal office is located at Suite 1204 - 700
West Pender Street, Vancouver, British Columbia V6C 1G8. The Company has five
full-time employees. The Company's subsidiaries are all British Columbia
incorporated non-reporting companies. All references to the Company herein
include its subsidiaries unless otherwise noted or unless the context would
indicate
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otherwise. The Company's Consolidated Financial Statements referred to herein
also include its subsidiaries. The Company's fiscal year ends March 31.
The Company was incorporated under the Company Act (British
Columbia) on March 18, 1986. The authorized capital of the Company consists of
50,000,000 common shares without par value (the "Common Shares"), of which
5,210,327 shares were issued and outstanding as of the Company's year-end of
March 31, 1996. All Common Shares of the Company rank equally as to dividends,
voting rights and participation in assets.
The Company became a public company on December 3, 1987 when
it undertook an initial public offering of its Common Shares in British
Columbia, Canada and became listed on the Vancouver Stock Exchange ("VSE"). The
Company raised approximately $250,000 in that offering, which funds were
allocated for working capital and for mineral exploration purposes. The Company
had originally acquired an interest in a mineral property located in Osoyoos,
British Columbia. Prior to the Company's offering, the Company was forced to
change its undertaking from a mineral exploration company to a real estate
development company because it was advised by the British Columbia Ministry of
the Environment, Wildlife Branch, that the mineral property site had been
declared a high priority site for the conservation of a bat habitat and that one
of two species of bat located on the site was being considered for designation
as endangered in California and Oregon. As a result, the Company amended its
prospectus and changed its undertaking to a real estate development company
which was approved by shareholders of the Company on September 23, 1988. From
inception and prior to 1987 the Company had limited business activities.
E. Investor Relations -- Web Page
On May 29, 1996, the Company entered an Investor Relations
Agreement with Berwick Management Corporation ("Berwick"). Under the agreement,
Berwick is to create exposure for the Company via various electronic support
means. Pursuant to the Investor Relations Agreement, Berwick has established a
World Wide Web Home Page on the Internet ("Browser", Netscape) at
http://www.venpac.com. In conjunction with the Investor Relations Agreement,
Jeffrey D. Berwick was appointed to the Board of Directors of 371208 B.C. Ltd.,
a wholly-owned subsidiary of the Company and was granted an option to purchase
75,000 Common Shares at $1.02 per share expiring May 29, 1997.
Item 2. Description of Property.
A. Pemberton, British Columbia - General
The majority of the Company's real estate interests are fee
interests and are located in a broad river valley surrounded by mountains known
as Pemberton, British Columbia. The Village of Pemberton enjoys a rural setting
along the Sea to Sky Highway just 35 kilometers north of the resort municipality
of Whistler, B.C. Pemberton is easily accessible from Vancouver (159 kilometers
to the south) either by automobile along the scenic Sea to Sky Highway, by daily
rail service as provided by B.C. Rail, or by one of the four daily scheduled
passenger bus runs provided by Maverick Coach Lines, Ltd. The Pemberton Airport
offers an alternative method of transportation to and from Pemberton. Access to
the Pemberton area is also available from Lillooet via the Duffy Lake Road. From
Vancouver, the drive by car takes approximately 2 to 2.5 hours.
According to 1991 data supplied by the Sea to Sky Economic
Development Commission, the Pemberton area, in the prior 10 to 15 years,
remained fairly stable but has experienced a steady increase in population. The
1988 population
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of Pemberton was estimated to be approximately 395. In the regional district of
Squamish-Lillooet, approximately 80% of the population is located in the Howe
Sound corridor. The Howe Sound corridor grew in population by approximately 4%
between 1981 and 1986. During this same period, Whistler and Pemberton grew in
population by approximately 46.2% and 19.7% respectively.
Pemberton is a small community of approximately 550 people. It
encompasses in excess of 800 acres and functions as the service center for an
additional approximately 2,100 residents of the Pemberton Valley (not including
the residents of Whistler). The remainder of the Pemberton Valley as well as the
surrounding wilderness area is under the jurisdiction of the Squamish, Lillooet
Regional District.
The community provides both elementary and secondary education
facilities (including a new high school) and the construction of a new community
center is slated to commence in the not too distant future. Other services
available to residents of Pemberton include a library, post office, RCMP
detachment, three churches, a museum, two government offices, a Health Center as
well as a Forestry and Highways office. Numerous commercial and retail services
are also available to the local community.
Pemberton benefits both from the continued development of the
neighboring four season resort of Whistler and its proximity to many natural and
picturesque settings. Natural attractions include alpine meadows, Nairn Falls,
Meager Creek Hot Springs, and Joffre Glaciers. Boating, hiking and fishing are
just some of the activities available to residents and visitors to
Pemberton/Pemberton Valley, with at least ten recreational areas within 30
kilometers of Pemberton itself. Pemberton has an 18-hole municipal golf course
and an 18-hole Sea to Sky National Golf Course.
The Whistler resort area encompasses both the Whistler and
Blackcomb Mountain ski resorts which in 1991 had 55 lodging establishments that
could accommodate over 7,000 guests. In prior years the Whistler resort area
regularly vied with Aspen, Colorado as the top-rated ski resort in North
America. More recently, Whistler has surpassed Aspen in the ratings and has been
rated the number one ski resort in North America for three years running by Snow
Country Magazine, SKI Magazine and Skiing, three U.S. ski magazines. In 1991,
the year round resident population of over 3,300 people increased to over 13,000
in the winter ski season and swelled to over 30,000 on busy weekends. During the
1994/1995 ski season there were a total of 1.7 million ski visits to Whistler.
In 1994 it was estimated that Whistler received nearly 500,000 winter/spring
visitors and 475,000 summer/fall visitors.
The Company believes the Pemberton area will continue to
experience growth as a bedroom community for the growing resort of Whistler, and
that the acquisition and development of real estate properties in the Pemberton
area represents a sound investment at this time. Furthering this belief are
recent and numerous unsolicited inquiries from developers offering to purchase
some of the Company's holdings for the purposes of developing them. The Company
has adopted the position that greater gains can be realized through the
development of its holdings in the long term rather than selling off its assets.
In October, 1993, the Company received an independent real
estate appraisal of its Pemberton real estate holdings prepared by International
Property Consultants ("IPC"), of Vancouver, British Columbia. The IPC appraisal
concluded that as of October 1993, the value of the Company's Pemberton real
estate interests was in the order of $3,426,000. The material assumptions
underlying the appraisal included: good and marketable title, no undisclosed
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interests in the property, that existing uses are legally conforming, that
disclosed property interests were legally enforceable, and that the author did
not undertake independent land, engineering, environmental or zoning surveys,
and therefore assumed no latent defects existed in those areas. The Company paid
IPC, including disbursements and applicable taxes, a total fee of $3,270.31. No
affiliation, either past or present, exists between the Company and IPC.
Although management is aware that competition obviously exists
for development in the fast-growing Pemberton area, competitive factors are a
relative non-issue at this time because the properties are not undergoing
current development. However, as each property is contemplated for development
in the future, feasibility and/or market studies will be undertaken with a
complete risk analysis, including competitive risks.
Regarding the environment, the majority of the Pemberton
Valley is located in a flood plain. Thus, the Company has and will continue to
consult applicable government bodies regarding protection of fish and wildlife
and the design and protection of habitable structures and protection of their
residents or users. Environmental and competitive costs will increase the
overall development cost of the Pemberton properties, but these factors may only
be quantified at the point of development planning, which the Company has not
fully completed with respect to any property. Thus, complete information on
environmental and competitive costs has not yet been determined.
The Company owns approximately 35 acres in Pemberton proper,
but the balance of Company property in the Pemberton Valley consists of 210
acres in the Squamish-Lillooet Regional District. The material effect of the
investment concentration is to position the Company to benefit from the
development of Pemberton as a bedroom community of Whistler and as a service
center for the Pemberton Valley itself. No Company affiliate owns or previously
owned property in the Pemberton Valley, and as such, no collateral benefit was
conferred on property owned by any affiliate as a result of the Pemberton or
Squamish- Lillooet property concentrations.
B. Real Estate Properties of the Company - Specific
1. Gas Bar and Convenience Store
In July 1988, the Company, through its wholly owned
subsidiary, Pemberton Junction Store Ltd., acquired 0.66 acres of land located
at the junction of Pemberton Portage Road and Highway 99 in The Village of
Pemberton for a purchase price of $48,000. Since that time the Company has
constructed, at a total cost of approximately $727,000, a Petro-Canada services
station, car wash and 24 hour convenience store on the property.
Pursuant to an agreement between the Issuer, Pemberton
Junction Store Ltd. and Petro-Canada Inc. ("Petro-Canada"), the Company
initially leased the property to Petro-Canada for a term of five (5) years
commencing July 1, 1990 and ending June 30, 1995, with an option to renew the
lease for two (2) additional terms of five (5) years. By letter agreement, the
Company and Petro- Canada renewed the lease for a five year period ending June
30, 2000. Under the renewal, annual rent to be paid by Petro-Canada is $75,000,
which is prepaid in advance on the first day of July of each year of the renewal
term.
The renewal agreement also provides for the following
adjustments to be paid within sixty (60) days of the end of the lease year:
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(a) where the sales of gasoline and diesel fuel ("Fuel") are
less than 3,800,000 liters in a lease year, then the Company
shall rebate to Petro-Canada an amount equal to $0.015 for
every liter of Fuel sold less than 3,800,000 liters;
(b) where sales of Fuel are more than 4,000,000 liters in a
lease year, Petro-Canada will pay to the Company, as
additional rent, an amount equal to $0.025 for every liter
of Fuel sold in excess of 4,000,000 liters.
Such rental adjustments may be deducted from the following
year's rent. In addition, the Company has granted to Petro-Canada the right of
first refusal to purchase or lease the property and all buildings and
improvements thereon.
Pursuant to an Asset Purchase Agreement dated October 23, 1992
(the "Purchase Agreement") between the Company and 341794 B.C. Ltd., of Suite
300, 1110 Hamilton Street, Vancouver, British Columbia ("B.C. Ltd.") the Company
agreed to sell 50% of all the land, assets and undertaking of the Company's gas
bar and convenience store. Neither 341794 B.C. Ltd. nor any of its directors,
officers or beneficial owners is affiliated with the Company. The Purchase
Agreement provided that the purchase price shall be $450,000 payable as follows:
(a) the amount of $125,000 (which has been paid);
(b) the assumption by B.C. Ltd. of one-half of a mortgage
registered against title to the land in the principal amount
of $200,000;
(c) the unpaid balance of $125,000 is to be paid in monthly
installments in the amount of $4,166.66; and
(d) 50% of the B.C. Ltd.'s cash flow derived from the operation
of the gas bar and convenience store is to be paid to the
Company in quarterly installments and is credited toward the
outstanding purchase price.
The purchase price remaining outstanding accrues interest at
the rate of the prime lending rate as established by The Royal Bank of Canada
calculated semi-annually. In addition, the Purchase Agreement provides that upon
completion of the acquisition, B.C. Ltd. will assume and pay 50% of the balances
owing by the Company as of the time of closing under any mortgages, conditional
sales contracts and any other instruments of indebtedness of the Company with
respect to the operation of the gas bar and convenience store.
Upon completion of the 50% acquisition by B.C. Ltd., the
Company and B.C. Ltd. entered into a joint venture agreement dated October 23,
1992, whereby the Company and B.C. Ltd. agreed to carry on the operations of the
gas bar and convenience store as a joint venture business operation to be known
as the Pemberton Junction Store Joint Venture ("PJSJV"). The Co-Owners Agreement
provides that each party shall contribute an initial capital contribution of
$25,000 to the joint venture. The Co-Owners Agreement also provides that the
co-owners acting together will have full and complete charge of the affairs of
the joint venture and the management of the day-to-day operations of the joint
venture and shall agree to appoint Nester's Market Ltd. as the manager of the
gas bar and convenience store operations. 341794 B.C. Ltd. is a wholly-owned
subsidiary of Nester's Market Ltd. No affiliation exists between the Company,
its directors, officers or beneficial owners and Nester's Market Ltd., its
directors, officers, or beneficial owners.
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Each co-owner granted the other co-owner a right of first
refusal to purchase its respective interest. In addition, should a co-owner not
contribute its proportionate share of contribution to the joint venture when
called upon to do so, that defaulting co-owner's non-payment may be made by the
other co-owner. Any monies so advanced will be considered a demand loan to be
secured by way of a mortgage against the default co-owner's interest in the
title and will accrue interest at the rate equal to the prime rate set by The
Royal Bank of Canada plus 4% per annum.
The term of the joint venture commenced on October 31, 1992
and will continue until the joint venture is dissolved in accordance with the
Co-owners Agreement or October 31, 2012, whichever is the earlier.
Pursuant to an agreement dated October 31, 1992 between PJSJV
and Nester's Market Ltd. ("Nester's"), PJSJV engaged Nester's to manage the
day-to-day operations and business of the convenience store and gas bar service
station. In consideration thereof PJSJV will pay to Nester's a fee in the amount
of $50,000 per annum payable in equal monthly installments of $4,166.66
commencing November 1, 1992. The term of the Management Agreement is from
October 31, 1992 to such time as both parties agree to terminate the Management
Agreement or until the Co-ownership Agreement shall expire or terminate.
However, the Company has the right to terminate the Management Agreement after
October 31, 1994 if the pre-tax net profit of the gas bar and convenience store
did not exceed $100,000. Although pre-tax net profits did not exceed $100,000 by
October 31, 1994, the Company has not yet elected to terminate the agreement.
Sunnybrook Securities Ltd. holds a first mortgage on title to
the lands comprising the gas bar and convenience store. The principal amount of
the mortgage is $400,000 and accrues interest at the rate of 10% per annum.
Monthly payments of principal and interest amount to $1,725.35 (interest of
$1,602.55 and principal of $122.80) and the mortgage matures on December 1,
1997. The principal amount of the mortgage and the obligation to repay the same
is divided 50/50 as between the Company and B.C. Ltd. Sunnybrook Securities Ltd.
is a Grand Cayman company owned by Arthur Clemiss. Arthur Clemiss is a former
director of the Company. As of August 31, 1996, the Company's portion of the
principal outstanding was $116,126.
Petro-Canada Inc. held a second mortgage on title to the lands
comprising the gas bar and convenience store. The principal amount of the
mortgage's $75,000 was payable on demand and carried interest at the rate of 18%
per annum. The mortgage was granted to secure the advance annual rent paid by
Petro-Canada as described above, but the mortgage has been satisfied completely
and the gas bar and convenience store is no longer subject to it.
Both the Company and B.C. Ltd. hold cross third mortgages
against each other's 50% interest in the lands comprising the gas bar and
convenience store. The mortgages were granted for the purpose of securing any
advance made by one of the parties to PJSJV where the other party was not able
to contribute capital on a cash call pursuant to the Co-owners Agreement as
described above.
The Pemberton Junction Store Joint Venture has increased sales
and profits and the professional management has proven to be beneficial, as the
following table of comparative sales and profit figures for the 1993 to 1996
fiscal years demonstrates:
12
50% Share In: 1996 1995 1994 1993
Total Sales: $1,973,854 $1,726,212 $1,547,853 $420,348
Net Profits: 143,370 120,133 99,191 2,543
2. Hurley Lodge
In June 1988, the Company, through its wholly owned
subsidiary, The Hurley Lodge Inc., acquired property consisting of 9.1 acres
located approximately 15 meters southwest of the gas bar and convenience store
property for a purchase price of $134,000. In November 1995, the Company placed
a deposit for a license with Forte Hotels, Inc. of El Cajon California, for the
development of an 80- unit Travelodge Motor Inn on the Hurley Lodge site. The
Company will develop the project in conjunction with Royco Hotels, Inc. of
Calgary, Alberta, which was recently purchased by Hospitality Franchise Systems,
Inc. of New York, the exclusive franchisor of Travelodge and Thriftlodge in
Canada.
In January 1990, the Company had received a feasibility
analysis from Levanthol & Horvath which indicated that the proposed hotel/motel
site would be viable at 100 rooms and forecasts net revenues of $432,000 in year
one, rising to $635,000 in year two and $773,000 in year three. Due to market
conditions and the lack of financing at the time of the study, management of the
Company decided to delay indefinitely the construction of the hotel/motel site.
The feasibility analysis assumed that inflation would continue to rise at 4-6%,
that the motor inn would be affiliated with the Best Western chain, that the
Pemberton airport would be expanded after fall, 1989, that the motel would
provide at least 50 rooms, be well-designed, maintained, and managed, and that
completion of the 100 kilometer Duffy Lake Road between Pemberton and Lillooet
was key to Pemberton's development (now completed). The study assumed that the
economic improvement and development both in the area specifically and in
British Columbia as a whole, would continue on into the 1990s. As the area has
continued to experience growth in the six years since the report has issued,
management anticipates that the projections therein would be favorably exceeded.
The Company paid Levanthol and Horvath approximately $12,450.00 for the study.
The Travelodge Motor Inn is to be located on only part of the
9.1 acre site which is zoned commercial. The inn could be expanded by an
additional 40 rooms if market conditions warrant. A development permit is
pending. The Company is considering offering an equity participation to
investors, subject to regulatory approval.
The balance of the site owned by the Company is being
considered for a free standing chain restaurant, 5,000 square feet of retail
space, a gas/bar convenience store, and a future development of approximately
36-48 townhouse units. Feasibility studies are currently under way in this
regard.
3. Cardlock Fuel Depot
In May 1988, the Company, through its wholly owned subsidiary,
345385 B.C. Ltd., acquired 0.93 acres of land located approximately 300 meters
from the proposed hotel site for a purchase price of $60,000. Pursuant to a
lease and right of first refusal agreement dated June 1, 1989 between the
Company's subsidiary, 345385 B.C. Ltd., and Gordon Milne of Box 939, Garibaldi
Highlands, British Columbia ("Milne"), the Company initially leased the property
to Milne for a primary term of five (5) years commencing January 1, 1990 and
ending
13
December 31, 1994. With the consent of the Company, Milne assigned the lease to
Squamish Petro Services Limited ("Squamish Petro"). The lease provides that rent
shall be paid to the Company at the rate of $1,500 per month from January 1,
1990 to June 1, 1990 and at a rate of $2,000 per month from July 1, 1990 to and
including December 31, 1994. The lease further provides that the property should
not be used for any purpose other than the business of operating an industrial
card-lock facility. The lease also provides that, provided Squamish Petro is not
in default of the lease, it shall have an option to renew the lease for one
successive term of five years. Squamish Petro renewed the lease for a further
term of five years, from January 1, 1995 to December 31, 1999, at a rental of
$2,300 per month.
The lease grants to Squamish Petro a right of first refusal
during the term of the lease to purchase the property from the Company should
the Company receive a bona fide offer to purchase the property from a third
party.
4. Creekside Village
In June 1989, the Company, through its wholly owned
subsidiary, Creekside Village Apartments Ltd., acquired a property of
approximately 5.5 acres located in Pemberton for a purchase price of $58,000.
The Company initially intended to construct residential apartments on this site,
but obtained a rezoning of the property from The Village of Pemberton to
accommodate multiple family dwellings with not more than 144 dwelling units per
parcel of land.
In order to determine the best use of the property, the
Company entered discussions with the Village of Pemberton and completed a
"Creekside Village Market Study" in May, 1994. The Village of Pemberton
indicated that the municipality would favor a less intensive use of the
property. Excerpts from the Official Community Plan of Pemberton shows a
propensity to:
(a) encourage growth of the Village, particularly in the
residential and commercial sectors;
(b) provide affordable housing for the Whistler Resort area;
(c) maintain its "small town" lifestyle, acknowledging the rural
and urban components of Pemberton;
(d) keeping the Village small-scale with respect to low
residential densities; and
(e) strive for an architectural charm that relates to
Pemberton's scale and natural environment.
Non-transient Whistler employees have very few housing options
open to them primarily due to the fact that "conventional" housing is very
expensive and the majority of new construction is targeted towards the
recreational/investor market, rather than as a permanent residential base.
Essentially, Whistler employees are faced with either high rental costs in the
immediate area and or must look to Squamish (located approximately 58 kilometers
south of Whistler) or Pemberton for alternative housing choices should they wish
to own their own homes.
This housing issue, the Village of Pemberton's vision for the
future, and the Company's own Creekside Village Market Study, resulted in the
opinion that a more appropriate use for the property would be the development of
"affordable" townhouse units geared toward those desirous of establishing a
14
permanent residential base in the Whistler/Pemberton area. Establishing what
this "affordable" product should consist of can be formulated by studying the
Squamish townhouse market. Furthermore, a secondary market to consider is that
of the recreational market - a market desirous of locating in the
Whistler/Pemberton Valley region, but unwilling to accept either the product or
pricing choices available given their perceived lifestyle wants or needs.
The architectural firm of Burrowes, Huggins was engaged August
10, 1994 to effect the development of the property, whether through a full
re-zoning of the property or by way of a development variance. Based in
Vancouver, B.C., the principals of this firm are experienced not only in
multi-family developments but also in the development of such projects in the
Whistler area and are familiar with development constraints associated with
rural/resort settings.
The project will involve the development of 54 ground oriented
townhouses offering approximately 1,400 square feet townhouse units arranged in
clusters of 2 to 4 units. The total project will offer approximately 77,000
square feet of net saleable area consisting of wood frame construction. It is
the intent to develop a project that not only complements its rather unique and
natural setting but also creates its own sense of community by acknowledging
Pemberton's desire to maintain its "small town" lifestyle via an architectural
style consistent with its natural setting and scale. Special consideration will
be focused on the siting of units on the property to maximize the benefits of
its river and mountain setting and to allow for us much open space as possible
via internal roadways, parking and green-space considerations.
The target market for this development is the non-transient
Whistler employee wishing to establish a residential base in the
Whistler/Pemberton Valley. The Whistler employee has very few housing options to
choose from. "Conventional" housing in the Whistler area is either very
expensive or virtually non-existent in light of the fact that the majority of
new construction is targeted towards the recreational/investor market. The
Whistler employee faces either high rental costs in the immediate area or must
look to Squamish (approximately 58 kilometers to the south) or Pemberton for
housing choices that are more conducive towards their perceived lifestyles,
wants, and budgets. The same considerations can be applicable to a secondary
target market - that of the recreational market which are again limited by
housing/recreational options available in Whistler - both in terms of cost and
the type of accommodation available to meet their lifestyle wants and needs.
Prices for the units start at $162,500 for a two bedroom home,
which is considerably less than similar housing at Whistler. Marketability of
the units was further enhanced by a decision of the Canada Mortgage and Housing
Corporation (CMHC) to increase lending limits in Pemberton for its high-ratio
financial assistance from $125,000 to $175,000. Whistler Real Estate Company,
which is marketing the units, has presold 70% of the units. The project is well
under construction and is expected to be completed by the end of 1996. First
phase occupancy is expected to be late November or early December 1996.
5. River Front Property
In December 1988, the Company, through its wholly owned
subsidiary 345384 B.C. Ltd., acquired certain property for a purchase price of
$175,000. This property consists of approximately 133 acres and is located
immediately north of Pemberton on the other side of the Lillooet River.
The Company had applied to the Squamish-Lillooet Regional
District to obtain zoning for the development of residential housing on the
property in
15
December, 1989 (the property is located immediately outside of the municipal
boundary of Pemberton). However, in January, 1991 upon further assessment of its
application, the Company determined that market conditions did not warrant
continuing with the development plans.
On September 3, 1996 the Company reached an agreement to sell
the Lilloet River site for $550,000. Finalization of the agreement is subject to
the purchasers' due diligence and completion of definitive documents on or
before October 1, 1996.
6. 40.5 Acre Site
In September 1989, the Company, through its wholly owned
subsidiary, 371208 B.C. Ltd., acquired an interest in 40.5 acres located in
Pemberton at a purchase price of $225,000. The property is part of an
Agricultural Land Reserve and as such is not immediately available for
development. "Agricultural Land Reserves" were established by government
legislation in April, 1973 to preserve agricultural lands for present and future
use and to protect them from encroachment of non-farm uses and subdivisions.
Such designation greatly limits development potential of certain lands, but does
permit one dwelling unit per 10 acres.
The March 30, 1994 Official Community Plan of The Village of
Pemberton identifies this land as suitable for residential development and
recommends its exclusion from the Agricultural Land Reserve. The Community Plan
identifies and shapes the development of the community vis-a-vis commercial,
industrial, or residential development. The Community Plan clearly states that
it is limited in that it can "only encourage senior levels of government to take
action [such as an actual rezoning], but cannot commit or require senior
governments to act." Thus, the Community Plan will not obligate the Canadian
federal government to rezone the Agricultural Land Reserves. When appropriate,
the Company will make application to remove the property from the Agricultural
Land Reserve in order to maximize its development potential. However, the
Company does not have any intentions of attempting to have it taken out of
Agricultural Land Reserve in the near future.
7. Pemberton Ridge Property
In March 1990, the Company, through its wholly owned
subsidiary, 378586 B.C. Ltd., purchased 19 acres located in Pemberton for a
purchase price of $250,000. The Company initially planned to construct a
townhouse development on the site, which was zoned multi-family residential to
permit the development of 120-125 townhouses. However, on August 27, 1996, the
Company reached an agreement to sell the property for $1,000,000.
Item 3. Legal Proceedings.
The Company requested verification of the existence of any
material legal proceedings through a shareholder questionnaire to Arthur Clemiss
in the course of the preparation of this Annual Report on Form 20-F, but Mr.
Clemiss declined to complete the questionnaire. The information reported
reflects the legal proceedings as far as is known to the Company on this basis.
To the Company's knowledge, no material legal proceedings exist which must be
disclosed in response to this item.
16
Item 4. Control of Registrant.
The Company is not directly or indirectly owned or controlled
by another corporation or by any foreign government.
The following table sets forth certain information as of
September 19, 1996 concerning the beneficial ownership of Common Shares of the
Company as to (a) each person known to the management of the Company that is the
beneficial owner of more than 10% of the 5,210,327 outstanding shares of the
Company's Common Shares and (b) the Company's officers and directors as a group:
Ownership of Common Shares(1)
Name and Address Number of Shares Percent
Arthur Clemiss 3,096,184(2) 51.39%
Coral Stone Club
Apartment 14
Post Office Box 30105
West Bay Road, Grand Cayman
British West Indies
Officers and Directors of the
Company as a Group (4 persons) 425,000 7.75%
(1) Unless otherwise noted, each person listed has, to the best of the
Company's knowledge and belief, sole voting and investment power with
respect to the indicated shares. The percentages for each listing are
calculated based on the number of outstanding shares plus the number of
shares that the person or group has the rights to acquire within 60 days.
(2) The Company requested verification of beneficial ownership through a
shareholder questionnaire to Arthur Clemiss in the course of the
preparation of this Annual Report on Form 20-F, but Mr. Clemiss declined to
complete the questionnaire. The information reported reflects Mr. Clemiss'
beneficial ownership as far as is known to the Company. Arthur Clemiss
directly holds of record 45,832 Company Common Shares (0.88%). Sunnybrook
Securities Ltd., a Grand Cayman corporation, directly holds 864,644 Company
Common Shares. Sunnybrook is wholly owned by Arthur Clemiss. An additional
1,371,064 shares are held by Richardson Greenshields Ltd. for Sunnybrook
Securities Ltd. through a Grand Cayman brokerage account. Sunnybrook
Securities Ltd. also holds warrants to purchase 814,644 Common Shares. Mr.
Clemiss is a Canadian citizen, but a permanent resident of Grand Cayman.
Conrad Clemiss is the son of Arthur Clemiss and a director of the Company.
Conrad Clemiss beneficially owns 275,000 shares as follows: 150,000 Common
Shares, an option to purchase 25,000 Common Shares and warrants to purchase
an additional 100,000 shares. Conrad Clemiss claims sole voting and
investment power with respect to his own shares and disclaims all
investment or voting power over Arthur Clemiss' shares or beneficial
position. Conrad Clemiss disclaims that any understandings exist between
himself and Arthur Clemiss which affect the control of the Company.
The Company is unaware of any arrangements which may operate
in the future to result in a change of control of the Company.
17
Item 5. Nature of Trading Market.
The shares are traded in Canada on the Vancouver Stock
Exchange under the symbol VPV and in the United States in the Non-Nasdaq
Over-the-Counter Quotation System under the symbol VEPDF. In June, 1996, the
Company submitted an application for inclusion in the Nasdaq SmallCap Market,
but withdrew the application in August, 1996. The Company plans to resubmit its
application for the Nasdaq SmallCap Market in the future, when the Company's
share price meets the exchange's listing requirements.
The following table sets forth, for the periods indicated, the
high and low reported price of the Company's Common Shares on the Vancouver
Stock Exchange and the Non-Nasdaq Over-the-Counter Quotation System:
Vancouver Stock Exchange Non-Nasdaq OTC
(in Canadian $) (in U.S. $)
High Low High Low
1996
- ----
2nd Quarter 2.00 0.80 1.49 0.33
1st Quarter 1.55 0.61 1.13 0.56
1995
- ----
4th Quarter 0.78 0.35 0.53 0.32
3rd Quarter 1.00 0.70 0.80 0.52
2nd Quarter 1.35 0.70 1.10 0.50
1st Quarter 1.55 0.90 1.15 0.63
1994
- ----
4th Quarter 1.25 1.25 1.52 0.88
3rd Quarter 1.35 1.35 1.36 0.75
2nd Quarter 5.50 1.00 1.11 0.50
1st Quarter 3.50 1.50 4.10 1.30
The Company believes it has in excess of 448 beneficial owners
of its Common Shares worldwide and 174 beneficial holders in the United States
who hold approximately 818,682 shares or approximately 15.7% of the total number
of issued and outstanding shares.
Item 6. Exchange Controls and Other Limitations Affecting Security Holders.
There are no governmental laws, decrees or regulations in
Canada that restrict the export or import of capital or that affect the
remittance of dividends, interest or other payments to nonresident holders of
the Registrant's securities. However, any such remittance to a residence of the
United States may be subject to a withholding tax pursuant to the reciprocal tax
treaty between Canada and the United States. For further information concerning
such withholding tax, see "Item 7. Taxation" below.
There are no limitations under the laws of Canada, the
Province of British Columbia, or in the charter or other constituent documents
of the Registrant
18
with respect to the right of non-resident or foreign owners to hold and/or vote
shares of the Registrant's Common Shares. However, the Investment Canada Act
(the "Act") enacted on June 20, 1985, as amended, requires the prior
notification and, in certain cases, advance review and approval by the
Government of Canada of the acquisition by a "non-Canadian" of "control" of a
"Canadian business," all as defined in the Act. For the purposes of the Act,
"control" can be acquired through the acquisition of all or substantially all of
the assets used in the Canadian business, or the direct or indirect acquisition
of interests in an entity that carries on a Canadian business or which controls
the entity which carries on the Canadian business. Under the Act, control of a
corporation is deemed to be acquired through the acquisition of a majority of
the voting shares of a corporation, and is presumed to be acquired where more
than one-third, but less than a majority, of the voting shares of a corporation
are acquired, unless it can be established that the corporation is not
controlled in fact through the ownership of voting shares. Other rules apply
with respect to the acquisition of non-corporate entities.
Investments requiring review and approval include direct
acquisitions of Canadian businesses with assets with a gross book value of Cdn.
$5,000,000 or more; indirect acquisitions of Canadian businesses with assets of
Cdn. $50,000,000 or more; and indirect acquisitions of Canadian businesses where
the value of assets of the entity or entities carrying on business in Canada,
control of which is indirectly being acquired, is greater than Cdn. $5,000,000
and represents greater than 50% of the total value of the assets of all of the
entities, control of which is being acquired.
Pursuant to the World Trade Organization Agreement
Implementation Act, the Act was amended to provide that the value of the
business acquisition threshold (the "Threshold") above described is increased
from those levels outlined where the acquisition is by a World Trade
Organization Investor or by a non-Canadian other than a World Trade Organization
Investor where the Canadian business that is the subject of the investment is
immediately before the investment controlled by a World Trade Organization
Investor. The Threshold is to be determined yearly in accordance with a formula
set forth in the Act. For 1996, the Threshold was determined to be Cdn.
$168,000,000.
A World Trade Organization Investor includes an individual,
other than a Canadian, who is a national of the World Trade Organization Member,
or who has the right of permanent residence in relation to that World Trade
Organization Member.
Different provisions and considerations apply with respect to
investment to acquire control of a Canadian business that, as defined in the Act
or regulations:
(i) engages in production of uranium and owns an interest in a
producing uranium property in Canada;
(ii) provides financial services;
(iii) provides transportation services;
(iv) is a cultural business.
If an investment is reviewable, an application for review in
the form prescribed by regulation is normally required to be filed with the
Ministry of Industry, Director of Investment prior to the investment taking
place and the investment may not be consummated until the review has been
completed and
19
ministerial approval obtained. Applications for review concerning indirect
acquisitions may be filed up to 30 days after the investment is consummated.
Applications concerning reviewable investments in culturally sensitive and other
specified activities referred to in the preceding paragraph are required upon
receipt of a notice of review. There is, moreover, provision for the Minister (a
person designated as such under the Act) to permit an investment to be
consummated prior to completion of review if he is satisfied that delay would
cause undue hardship to the acquirer or jeopardize the operation of the Canadian
business that is being acquired.
Item 7. Taxation.
CANADIAN FEDERAL INCOME TAXATION
The following discussion is a summary of the principal
Canadian federal income tax considerations generally applicable to purchasers of
the Company's Common Shares pursuant to this Annual Report who, for purposes of
the Income Tax Act (Canada) (the "Canadian Act"), deal at arm's length with the
Company, hold shares of Common Shares as capital property, are not residents of
Canada at any time when holding Common Shares and do not use or hold and are not
deemed to use or hold Common Shares in or in the course of carrying on business
in Canada and, in the case of insurers who carry on insurance business in Canada
and elsewhere, do not hold Common Shares that is effectively connected with an
insurance business carried on in Canada.
This summary is based on the current provision of the Canadian
Act, the regulations thereunder and the Canada-United States Income Tax
Convention (1980) (the "Treaty") as amended. This summary takes into account
specific proposals to amend the Canadian Act and the regulations thereunder
publicly announced by the Minister of Finance prior to the date hereof and the
Company's understanding of the current published administrative and assessing
practices of Revenue Canada, Taxation. This summary does not take into account
Canadian provincial income tax laws or the income tax laws of any country other
than Canada.
A shareholder of the Company will generally not be subject to
tax pursuant to the Canadian Act on a capital gain realized on a disposition of
Common Shares unless the Capital Stock is "taxable Canadian property" to the
shareholder for purposes of the Canadian Act and the shareholder is not eligible
for relief pursuant to an applicable bilateral tax treaty. The Capital Stock
will not be taxable Canadian property to a shareholder provided that the Company
is a "public corporation" within the meaning of the Canadian Act and provided
that such shareholder, or persons with whom such shareholder did not deal at
arms length (within the meaning of the Canadian Act), or any combination
thereof, did not own 25% or more of the issued shares of any class or series of
the Company at any time within five years immediately preceding the date of
disposition. The Company has qualified an elected to be a "public corporation"
within the meaning of the Canadian Act. In addition, the Treaty will generally
exempt a shareholder who is a resident of the United States for purposes of the
Treaty from tax in respect of a disposition of Common Shares provided that the
value of the shares of the Company is not derived principally
20
from real property (including resource property) situated in Canada and provided
such shareholder does not have and has not had within the 12-month period
preceding the disposition a permanent establishment or fixed base available to
such shareholder in Canada.
Any dividend, including stock dividends, paid or credited, or
deemed to be paid or credited, by the Company to a shareholder will be subject
to Canadian withholding tax at the rate of 25% on the gross amount of the
dividend, subject to the provisions of any applicable income tax convention.
Pursuant to the Treaty, the rate of withholding tax generally will be reduced to
15% in respect of dividends paid to a shareholder who is a resident of the
United States for purposes of the Treaty and further reduced to 5% if the
beneficial owner of the shares is a corporation owning at least 10% of the
voting shares of the Company. The reduction to 5% for corporations owning at
least 10% of the voting shares of the Company is phased in at 7% for dividends
paid before 1996 and at 6% for dividends paid before 1997.
The foregoing discussion of Canadian taxation is of a general
and summary nature only and is not intended to be, nor should it be considered
to be, legal or tax advice to any particular shareholder. Accordingly,
prospective investors should consult their own tax advisors as to the tax
consequences of receiving dividends from the Company or disposing of their
Common Shares.
Item 8. Selected Financial Data.
The following table sets forth selected financial data for the
Company. Insofar as it relates to the Company as of and for each of the years in
the five year period ended March 31, 1996, the data has been derived from
financial statements prepared in accordance with Canadian Generally Accepted
Accounting Principles ("GAAP") and reconciliation between Canadian and United
States GAAP (See note 13) that have been audited by Deloitte & Touche,
Vancouver, Canada. The data set forth below should be read in conjunction with
the Company's consolidated financial statements and notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere herein.
1996 1995 1994 1993 1992
(All Canadian Dollars)
Operating Data
Revenue(2) $ 287,039 $ 224,723 $ 176,979 $ 87,875 $ (21,074)
Administrative expenses (367,286) (570,225) (793,640) (175,685) (248,383)
Gain (loss) on disposal
of property held for
development -- 596,398 -- -- (21,545)
Write off of investments -- -- (499,039) -- (10,087)
Gain on disposition of assets -- -- -- 69,941 --
Write off of resource
properties -- -- -- -- (231,553)
----------- ----------- ----------- ----------- -----------
Net income (loss) $ (80,247) $ 250,896 $(1,115,700) $ (17,869) $ (532,642)
=========== =========== =========== =========== ===========
Earnings (loss) per share(1) $ (0.02) $ 0.09 $ (0.57) $ (0.02) $ (0.51)
=========== =========== =========== =========== ===========
Balance Sheet Data
Working capital (deficiency) 1,071,899 1,071,190 351,198 97,471 (21,899)
Total assets(3) 5,177,778 4,021,847 3,423,208 2,809,116 3,059,929
Long term debt 116,514 117,311 198,428 199,626 400,000
Shareholders' equity 4,814,999 3,788,846 3,090,250 2,445,961 2,463,830
21
Summary of differences between generally accepted accounting principles ("GAAP")
in Canada and in the United States (US)
1996 1995 1994 1993 1992
Net income (loss)-
Canadian GAAP $(80,2470) $250,896 $(1,115,700) $(17,869) $(532,642)
Differences:
Deferred casino costs,
expensed under US GAAP (56,735) (221,750) (425,963) -- --
Capitalized holdings costs,
expensed under US GAAP (20,739) (4,959) (5,928) (11,301) (19,991)
----------- ---------- ------------ ----------- -----------
Net income (loss)-US GAAP $(152,721) $ 24,187 $(1,547,591) $(29,170) $(552,633)
=========== ========== =========== ========== ===========
Earnings (loss) per share-
US GAAP(1) $(0.05) $0.01 $(0.86) $(0.03) $(0.59)
======= ===== ======= ======= =======
Weighted average number of shares
outstanding under US GAAP(1) 3,396,308 2,571,288 1,802,245 1,033,615 940,450
Shareholders' equity-
Canadian GAAP $4,814,999 $3,788,846 $3,090,250 $2,445,961 $2,463,830
Differences:
Deferred casino costs, not
capitalized under US GAAP (704,448) (647,713) (425,963) -- --
Capitalized holdings costs,
expensed under US GAAP (156,858) (136,119) (131,160) (125,232) (113,931)
----------- ----------- ----------- ----------- -----------
Shareholders' equity-US GAAP $3,953,693 $3,005,014 $2,533,127 $2,320,729 $2,349,899
========== ========== ========== ========== ==========
(1) Earnings (loss) per share takes into effect the 1-for-6 share consolidation
completed during the year ended March 31, 1993.
(2) Revenues for all periods disclosed comprises the results of the
corporation's interest in a joint venture, interest and other miscellaneous
income. Under US GAAP these amounts would not be considered as "Other
income" rather than "Revenue." There is no effect on reported net income
(loss).
(3) Total assets would be reduced for the adjustments noted under "Shareholders
Equity" resulting in the following amounts under US GAAP: 1996 -
$4,316,472, 1995 - $3,238,015, 1994 - $2,866,085, 1993 - $2,683,884 and
1992 - $2,945,998.
22
Item 9. Management's Discussion and Analysis of Financial Condition and
Results of Operations
MANAGEMENT DISCUSSION
For the year ended March 31, 1996
RESULTS OF OPERATIONS
During the year ended March 31, 1996, the Company has continued its efforts to
enhance its real estate holdings and improve its overall management strategies
and techniques. Total revenue for the year ended March 31, 1996 amounted to
$287,039 compared to $224,723 for the year ended March 31, 1995, or an increase
of twenty-eight percent (28%). The increase in revenue was largely due to an
increase in interest income from a deposit of $1,000,000 in May 1995, resulting
from the sale of the Indian Arm property, reflecting a gain of $596,398 on the
sale itself, and also an increase in revenue from the Pemberton Junction Store
Joint Venture. Net income from the Pemberton Joint Store Joint Venture ("PJSJV")
increased from $140,458 for the year ended March 31, 1995 to $162,180 for the
year ended March 31, 1996, an increase of sixteen percent (16%). The increase in
net income from the PJSJV is largely due to a combination of better management
techniques and increased sales.
Although total revenue was increased by 28% from the last fiscal year, the
management team was able to reduce expenditures by thirty-six percent (36%) from
$570,225 the previous year to $367,286 in the current year (see chart 1). The
reduction was largely due to the capitalization of part of the executives
salaries and wages, which was allocated to projects under development, gaming
facilities and property held for development. The determination of the
management team to reduce costs such as administration, consulting and legal
fees and also traveling expenses resulted in a seventy-seven percent (77%)
decrease in net loss of $345,502 in the year ended March 31, 1995 to a net loss
of $80,247 in the same period in 1996.
RESULTS OF OPERATIONS
Total Revenue Total Expense Net Loss
1996 287,039 367,286 (80,247)
1995 224,723 570,225 250,896
1994 176,979 793,640 (1,115,700)
RESULTS OF OPERATIONS
Expense items for 1996, 1995 and 1994
1996 1995 1994
Administration 0 23,624 52,480
Consulting 0 5,697 122,858
Legal 23,270 39,066 175,295
Travel 31,442 63,386 151,957
LIQUIDITY AND CAPITAL RESOURCES
As is illustrated in chart 3, as at March 31, 1995, the Company had a working
capital of $1,071,899, approximately the same as the previous year's working
capital. Current assets have increased from $1,187,754 in 1995 to $1,319,120 in
the 1996 fiscal year. The increase was mainly due to cash proceeds as explained
below. Current liabilities have increased from $116,564 in 1995 to $247,221 in
1996 due to land development cost accruals. During the 1996 fiscal year, the
Company received total cash proceeds of $1,106,400 ($162,400 from stock warrants
and $994,000 from private placements issued for cash). In addition, the Company
received $170,000 from PJSJV and $124,859 from interest and other income. Gaming
facility development cost was $56,735 for the 1996 fiscal year. $1,033,067 was
invested in land development, mainly in the 54 townhouse complex known as
Creekside Village at Pemberton. An amount of $850,000 from the private placement
23
was additional funding for the Creekside Village Project. Due to the receipt of
$1,000,000 in proceeds from the Indian Arm property in May 1995, the accounts
receivable was decreased from $1,026,771 in the 1995 fiscal year to $16,687 in
1996.
As indicated in table 1 and charts 4 and 5, the Company properties' fair market
value is higher than the original cost by approximately 286% and is 127% higher
than the net book value. The estimated fair market value was based on the most
recent sales of similar properties in the area and appraisal of market
conditions by management as at March 31, 1996.
CHART 3
CURRENT ASSETS, LIABILITIES AND WORKING CAPITAL
Current Assets Current Liabilities Working Capital
1996 5,177,778 362,779 1,269,089
1995 4,021,847 233,001 122,549
TABLE 1
PROPERTIES HELD FOR DEVELOPMENT - APPRECIATION ANALYSIS
DATE OF ORIGINAL NET BOOK VALUE AS ESTIMATED FAIR
PROPERTY ACQUISITION COST AT MARCH 31, 1996 MARKET VALUE
Hurley Lodge June 1988 $134,000 $ 466,694 $ 900,000
Lillooet River Front Dec. 1988 175,000 292,558 780,000
Lillooet Water Front Sept. 1989 225,000 208,644 480,000
Cardlock Fuel Depot May 1988 60,000 160,170 250,000
Pemberton Ridge Mar. 1990 250,000 310,442 850,000
-------- --------- ----------
TOTAL $844,000 $1,438,508 $3,260,000
======== ========= ==========
CHART 4
PROPERTIES HELD FOR DEVELOPMENT
Analysis
Thousands of Dollars
Estimated Fair
Original Cost Net Book Value Market Value
Hurley 175 420 900
Lillooet River 190 230 795
Lillooet Water 210 205 450
Cardlock 30 180 220
Pemberton Ridge 220 230 820
CHART 5
PROPERTIES HELD FOR DEVELOPMENT
Thousands of Dollars
Estimated Fair
Original Cost Net Book Value Market Value
900 1,450 3,250
24
INFLATION AND GOVERNMENTAL POLICY FACTORS
Inflation has not had a material impact on the Company's
operations. There are no additional governmental policies, other than those
discussed under Items 1, 2, 6 and 7 above that have had a material impact on the
Company's operations.
Item 10. Directors and Officers of Registrant.
The directors and executive officers of the Company, their
ages and term of continuous service is as follows:
Position with
Name Age Registrant
Ronald W. Downey 63 President and Director
George E. Scott 74 Corporate Secretary and Director
Denis Beneteau 50 Director
Conrad B. Clemiss 26 Director
Ronald W. Downey is a Director and the President of the Company. He has
served as President, CEO and a Director of the Company since December 13, 1993.
Mr. Downey has been involved in real estate ventures since 1966. Prior to
joining the Company, Mr. Downey was the Agent Nominee for Canada Trust Realty
Inc. of Vancouver, B.C. Mr. Downey holds the following professional
certifications: Agent Nominee, Registered International Valuer, Senior
Certified Valuer, and a Real Estate Oriented Securities Certification. He is a
past officer of Lambda Alpha International (honorary land economics society),
the International Real Estate Federation, the Real Estate Board of Greater
Vancouver, the B.C. Real Estate Association, and the Canadian Real Estate
Association. Mr. Downey is a resident of West Vancouver, British Columbia,
Canada.
George E. Scott has been a Director of the Company since September 26,
1994. He has been an associate of the law firm of Page, Fraser and Associates
since May, 1995, and an associate of the firm's predecessor, Worrall, Scott and
Page, since 1991. From June, 1981 to January, 1991 Mr. Scott was a partner in
Worrall, Scott and Page. Page Fraser and Associates and its predecessors have
performed legal services for normal legal fees for the Company. From 1981 to
1991 Mr. Scott had an indirect interest in the legal fees as a partner, but
since 1991 he has had no direct or indirect interest in the fees as an
associate. He received an L.L.B. (Law) from the University of British Columbia
in 1954, and a Bachelors (B.S.A.) in Agriculture from the same university in
1950. He has been a Barrister and Solicitor in British Columbia since 1954. He
is the President and a Director of Econogreen Environmental Systems, Ltd. of
Vancouver, British Columbia. He is also a director of the following Vancouver,
British Columbia entities: Coral Gold Corporation, Berkley Resources, Inc.,
International Avino Mines, Ltd., Levon Resources, Ltd., and Goldwater Resources,
Ltd. Mr. Scott resides in West Vancouver, British Columbia, Canada.
Denis Beneteau has been a Director since May 24, 1995. He has almost
twenty years experience in management of real estate companies. Since July 1995
he has been the President of D. Beneteau and Associates, after serving as the
President of Vecwest Properties Limited, a Vancouver-based real estate company,
since May, 1994. From June, 1992 through May, 1994 Mr. Beneteau was President
25
of a Toronto based real estate consulting company primarily involved in workouts
for private trusts, life insurance companies and banks. From 1984 to 1992 he was
the Vice President and Chief Financial Officer of Counsel Property Corporation
of Toronto. From 1981 to 1984 he served as Chief Financial Officer and later as
President of Patrician Land Corporation of Edmonton. He was a Senior Loans
Officer with Citi Bank of Canada's Real Estate Group in 1980 and 1981, and from
1976 to 1980 was Vice President of Finance for Cadillac Fairview Corporation's
Land and Housing Group. A Certified General Accountant, he is an active member
of the Certified General Accountants Association of British Columbia, Alberta
and Ontario. Mr. Beneteau graduated with a B.Comm. degree in Economics from the
University of Windsor in 1969. Mr. Beneteau resides in Vancouver, British
Columbia, Canada.
Conrad B. Clemiss has been a Director since August 24, 1995. He is also
a director of Goldwater Resources, Ltd. of Vancouver since August, 1995. He
concurrently works in investor relations for Voisey Bay Resources, a Vancouver
mining exploration firm, where he began in August of 1995. Previously, Mr.
Clemiss served for over eight years in sales for two Vancouver brokerage firms,
Canaccord and Yorktown Continental. He is the son of Arthur Clemiss, who is a
greater than 10% beneficial owner of Company stock as disclosed in Item 4.
All directors are elected annually by the shareholders and hold office
until the next Annual Meeting of Shareholders. Each officer of the Company holds
office at the pleasure of the Board of Directors. No director or officer of the
Company has any family relationship with any other officer or director of the
Company. Mr. Downey is the chair of, and Messrs. Beneteau and Clemiss are
members of the Company's audit committee. Mr. Scott is the chair of, and Messrs.
Beneteau and Clemiss are the members of the Company's compensation committee.
Item 11. Compensation of Directors and Officers.
A. Executive Officers
Ronald W. Downey is the Company's only compensated executive officer.
The Company recently renewed its previous two year employment contract with Mr.
Downey for a new three year period from December 15, 1995 to December 14, 1998.
The new annual salary is $120,000. No other cash or other compensation was paid
to executive officers during fiscal 1996. There are no other plans in effect
pursuant to which cash or non-cash compensation was paid or distributed to
executive officers during the most recently completed fiscal year or is proposed
to be paid or distributed in a subsequent year.
An incentive stock option was granted to Ronald W. Downey, to purchase
an aggregate of 100,000 shares of the Company at a price of $1.39 per share
exercisable on or before December 23, 1995, but Mr. Downey allowed the option to
expire unexercised. Mr. Downey was granted a new option on December 23, 1995 to
purchase 100,000 shares at $0.62 per share exercisable on or before December 23,
1997.
The Company, by standard arrangement, pays its directors $500.00 for
each meeting attended. No other compensation arrangements with directors exists,
whether standing or otherwise. Accordingly, the Company's directors received
cash compensation in the amount of $1,000.00 each for attendance at two
directors' meetings during the fiscal year ended March 31, 1995.
26
Item 12. Options to Purchase Securities from Registrant or Subsidiaries.
The following table sets forth all options and warrants to purchase the
Company's Common Shares which were outstanding as of September 19, 1996:
Number of Shares Exercise Price Expiration Date
---------------- -------------- ---------------
25,000 0.62 December 27, 1996
10,000 0.62 February 8, 1997
25,000 0.92 May 24, 1997
75,000 1.02 May 29, 1997
25,000 0.71 August 24, 1997
110,000 0.62 December 27, 1997
57,000 1.39 August 11, 1998
1,685,715 0.56 Until January 26, 1997; and
0.65 Until exp. January 26, 1998
TOTAL: 2,012,715
The total amount of securities called for by all options held by
directors and officers as a group are 275,000.
Item 13. Interest of Management in Certain Transactions.
No director, officer, security holder named under Item 4 or relative or
spouse of any of the foregoing, had any material interest, direct or indirect,
in any transaction since the commencement of the Company's last financial year
or in any proposed transaction, which, in either case, has materially affected
or will materially affect the Company or any of its subsidiaries other than as
disclosed herein. The Company requested verification of this absence of interest
through a shareholder questionnaire to Arthur Clemiss in the course of the
preparation of this Annual Report on Form 20-F, but Mr. Clemiss declined to
complete the questionnaire. The information reported reflects Mr. Clemiss'
interest as far as is known to the Company.
PART II
(Not Applicable)
PART III
Item 15. Defaults Upon Senior Securities.
None.
Item 16. Changes in Securities and Changes in Security for Registered
Securities.
The Company completed a private placement of 1,685,715 units on March
13, 1996 at a purchase price of $0.56 per unit. Each unit consists of one share
and one share purchase warrant to purchase a further share at a price of $0.56
in the first year and $0.65 in the second year commencing January 26, 1996.
Other than the foregoing, there have been no changes in securities or changes in
security for registered securities.
27
PART IV
Item 17. Financial Statements.
The financial statements filed as part of this Annual Report are listed
in Item 19 - Financial Statements and Exhibits.
All financial statements herein, are stated in accordance with generally
accepted accounting principles ("GAAP") in Canada. Footnote 13 to the financial
statements reconciles the statements to United States GAAP. For the history of
exchange rates which were in effect for Canadian dollars against United States
dollars, see "General Information" preceding Item 1.
Item 18. Financial Statements.
The Company has elected, pursuant to instruction G(c) to Form 20-F to
provide financial statements pursuant to Item 17.
Item 19. Financial Statements and Exhibits.
The following financial statements and exhibits are filed as part of
this Annual Report on Form 20-F:
A. Financial Statements
- Auditor's Report
- Consolidated Balance Sheets of the Company as at March 31, 1996 and
1995.
- Consolidated Statement of (Loss) Income and Deficit for the years
ended March 31, 1996, 1995 and 1994.
- Consolidated Statement of Changes in Financial Position for the years
ended March 31, 1996, 1995 and 1994.
- Notes to the Consolidated Financial Statements.
B. Exhibits
(See Exhibits' Index immediately following the financial statements).
28
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused this annual report to be signed on its
behalf by the undersigned, hereunto duly authorized.
VENTURE PACIFIC DEVELOPMENT CORPORATION
(Registrant)
/s/ Ronald W. Downey
(Signature)
Ronald W. Downey
President and Chief Executive Officer
Date: September 26, 1996
29
AUDITORS REPORT
To the Shareholders of
VENTURE PACIFIC DEVELOPMENT CORPORATION
We have audited the consolidated balance sheets of Venture Pacific Development
Corporation (a development stage company) as at March 31, 1996 and 1995 and the
consolidated statements of income (loss) and deficit and changes in financial
position for each of the years in the three year period ended March 31, 1996 and
cumulative from inception to March 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the Company as at March 31,
1996 and 1995 and the results of its operations and the changes in its financial
position for each of the years in the three year period ended March 31, 1996 and
cumulative from inception to March 31, 1996 in accordance with Canadian
generally accepted accounting principles applied on a consistent basis.
Vancouver, British Columbia
/s/ Deloitte & Touche
---------------------
May 16,1996 Chartered Accountants
30
VENTURE PACIFIC DEVELOPMENT CORPORATION
(Incorporated under the Company Act of British Columbia)
(A development stage company)
CONSOLIDATED BALANCE SHEETS as at March 31,1996
(Expressed in Canadian dollars)
1996 1995
----------------------------
ASSETS
CURRENT
Cash and term deposits $1,269,089 $ 122,549
Accounts receivable 16,687 1,026,771
Inventory 19,048 22,923
Prepaid expenses and deposits 14,296 15,511
---------- -----------
1,319,120 1,187,754
Property held for development (Note 2) 1,773,016 1,737,659
Fixed assets (Note 3) 348,127 364,685
Deferred land development costs (Note 4) 1,033,067 84,036
Deferred gaming facility development costs (Note 5) 704,448 647,713
---------- -----------
$5,177,778 $ 4,021,847
========== ===========
LIABILITIES
CURRENT
Accounts payable $ 236,890 $ 111,940
Deferred revenue 9,375 3,750
Current portion of mortgage payable (Note 7) 956 874
---------- -----------
247,221 116,564
Mortgage payable (Note 7) 115,558 116,437
---------- -----------
362,779 233,001
---------- -----------
SHAREHOLDERS'EQUITY
Capital stock (Note 8) 7,264,692 6,158,292
Deficit (2,449,693) (2,369,446)
---------- -----------
4,814,999 3,788,846
---------- -----------
$5,177,778 $ 4,021,847
========== ===========
Approved by the Directors
/s/ Ronald W. Downey /s/ Dennis Beneteau
- ------------------------- -------------------------
Director Director
31
VENTURE PACIFIC DEVELOPMENT CORPORATION
(A development stage company)
CONSOLIDATED STATEMENT OF (LOSS) INCOME AND DEFICIT
(Expressed in Canadian dollars)
CUMULATIVE FROM YEARS ENDED MARCH 31
INCEPTION TO ----------------------------------
MARCH 31, 1996 1996 1995 1994
-------------------------------------------------------
REVENUE
Interest $ 179,174 $ 53,948 $ 4,483 $ 13,374
Joint venture income (excluding
depreciation)(Note 6) 428,575 162,180 140,458 121,771
Other 157,293 70,911 79,782 41,834
-------------------------------------------------------
765,042 287,039 224,723 176,979
-------------------------------------------------------
EXPENSES
Audit and accounting 293,008 26,271 23,624 52,480
Administration fee 153,104 - 24,449 30,000
Bad debts 13,639 - 11,264 2,375
Bank charges 5,363 939 1,173 514
Consulting 421,233 - 5,697 122,858
Depreciation 81,832 22,153 23,700 26,405
Directors fees 18,200 14,000 - 1,000
Filing fees 78,065 7,144 3,173 23,573
Interest on mortgage payable 59,926 11,466 13,850 26,291
Legal fees 494,988 23,270 39,066 175,295
Office 323,252 66,353 53,444 76,687
Rent 95,179 36,456 50,333 8,389
Abandoned acquisition costs 25,002 - - 25,002
Shareholder information 30,837 2,758 4,965 3,049
Transfer agent fees 32,350 2,369 2,529 4,568
Travel and promotion 347,806 31,442 63,386 151,957
Wages and benefits 435,434 122,665 249,572 63,197
-------------------------------------------------------
2,909,218 367,286 570,225 793,640
-------------------------------------------------------
(LOSS) BEFORE UNDERNOTED ITEMS (2,144,176) (80,247) (345,502) (616,661
Gain on disposal of property
held for development, net 574,853 - 596,398 -
Gain on disposition of assets 69,941 - - -
Write-off of investments (509,126) - - (499,039
Write-off of resource property (441,185) - - -
-------------------------------------------------------
NET (LOSS) INCOME FOR THE PERIOD (2,449,693) (80,247) 250,896 (1,115,700
Deficit at beginning of period - (2,369,446) (2,620,342) (1,504,642
-------------------------------------------------------
DEFICIT AT END OF PERIOD $(2,449,693) $(2,449,693) $(2,369,446) $(2,620,342
========================================================
Net (loss) income per share - $ (0.02) $ 0.09 $ (0.57
========================================================
Weighted average number of
shares outstanding - 3,521,305 2,696,285 1,927,742
========================================================
32
VENTURE PACIFIC DEVELOPMENT CORPORATION
(A development stage company)
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
(Expressed in Canadian dollars)
CUMULATIVE FROM YEARS ENDED MARCH 31
INCEPTION TO -------------------------------------
MARCH 31, 1996 1996 1995 1994
--------------------------------------------------------------
OPERATING ACTIVITIES
Net (loss) income for the period $(2,449,693) $ (80,247) $ 250,896 $(1,115,700)
Items not involving cash
Deferred revenue (29,976) - - (14,988)
Depreciation 194,751 22,153 23,700 26,405
Gain on disposition of property
held for development, net (574,853) - (596,398) -
Write-off of investments 509,126 - - 499,039
Write-off of resource property 441,185 - - -
Gain on disposition of assets (69,941) - - -
------------------------------------------------------------
(1,979,401) (58,094) (321,802) (605,244)
Changes in non-cash operating
working capital 343,510 1,145,832 (1,011,189) (32,411)
------------------------------------------------------------
(1,635,891) 1,087,738 (1,332,991) (637,655)
------------------------------------------------------------
FINANCING ACTIVITIES
Issuance of common shares (net) 7,264,692 1,106,400 447,700 1,759,989
Proceeds of loans and mortgages 1,165,200 - - -
Repayment of loans and mortgage (1,048,768) (879) (80,670) (1,321)
------------------------------------------------------------
7,381,124 1,105,521 367,030 1,758,668
------------------------------------------------------------
INVESTING ACTIVITIES
Purchase of fixed assets (800,115) (5,596) (6,214) (32,652)
Expenditures on property held
for development, net (2,522,104) (35,357) (24,000) (5,928)
Expenditures on resource property (441,185) - - -
Purchase of investment (10,087) - - -
Proceeds on disposal of property 1,064,862 - 1,000,000 -
Investment in and advances
to Venture Pacific
Airways Ltd. net of payable (480,000) - - (480,000)
Casino development costs, net (704,448) (56,735) (221,750) (425,963)
Expenditures on land development (1,033,067) (949,031) (84,036) -
Proceeds of disposition of assets 450,000 - - -
Repayment of note receivable - - - 107,606
------------------------------------------------------------
(4,476,144) (1,046,719) 664,000 (836,937)
------------------------------------------------------------
Increase (decrease)
in cash and term deposits 1,269,089 1,146,540 (301,961) 284,076
Cash and term deposits at
beginning of period - 122,549 424,510 140,434
------------------------------------------------------------
CASH AND TERM DEPOSITS AT
END OF PERIOD $ 1,269,089 $ 1,269,089 $ 122,549 $ 424,510
============================================================
33
VENTURE PACIFIC DEVELOPMENT CORPORATION
(A developmental stage company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
Venture Pacific Development Corporation (the "Company"), is a public company
which was incorporated on March 18, 1986 under the Company Act of British
Columbia. Its shares are traded on the Senior Board of the Vancouver Stock
Exchange. The Company is a development stage enterprise primarily involved in
developing real estate properties and reviewing the viability of developing
casinos for various Native Indian Bands in Canada.
1. SIGNIFICANT ACCOUNTING POLICIES
a. Basis of presentation
These financial statements have been prepared in accordance with Canadian
generally accepted accounting principles which differ in some respects
from those in the United States as outlined in Note 13.
b. Basis of consolidation
These consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. The Company's 50% interest in
the Pemberton Junction Store Joint Venture (Note 6) is accounted for on
the proportionate consolidation basis, whereby the consolidated accounts
include 50% of the assets, liabilities and results of operations of the
joint venture. All inter-company transactions have been eliminated.
c. Property held for development
Property held for development is carried at the lower of cost and
estimated recoverable value. The Company capitalizes all direct costs
relating to properties held for future development. In addition, certain
indirect costs including financing costs and property taxes are
capitalized. To the extent that costs are determined to exceed estimated
recoverable value they will be written down accordingly.
d. Fixed assets
Fixed assets are recorded at cost. Depreciation has been calculated using
the declining-balance method based on annual rates as follows:
Building 4%
Store fixtures and equipment 20%
Office furniture 20%
Computer equipment 30%
e. Inventory
Inventory is valued at lower of cost and net realizable value.
f. Deferred gaming facility costs
Gaming facility costs are recorded at cost and are deferred in the
accounts. The recoverability of amounts shown for deferred gaming facility
costs is dependent upon obtaining the required agreements and necessary
financing to complete the proposed developments in Canada and the United
States. Upon the development of a gaming facility and the commencement of
operation these costs will be amortized. When deferred costs exceed
estimated net realizable value they will be written down to estimated
value. Costs relating to projects abandoned are written off when the
decision to abandon is made.
g. Cash and cash equivalents
The Company considers cash on hand, deposits in banks, and highly liquid
investments with an original maturity of three months or less as cash and
term deposits.
h. Statement of Financial Accounting Standards - No 121
The Company has formulated a policy to adopt the recommendations of
Statement of Accounting Standards No 121, Accounting for the Impairment of
Long Lived Assets and for Long Lived Assets to be Disposed of. The Company
reviews the appropriateness of the carrying value of property held for
development on a periodical basis. The Company estimates fair market value
of property held for development by reference to current transactions of
similar properties and conditions of specific real estate markets. In
circumstances where the fair market value, less disposal costs, is
exceeded by current carrying value, the Company provides for the indicated
impairment. The results of the most recent review indicated that no
impairment was required.
2. PROPERTY HELD FOR DEVELOPMENT
34
The Company capitalized property taxes and other costs, net of incidental
revenue, to property held for development as follows:
As at March 31
--------------
1996 1995
-----------------------------
Property taxes $13,878 $14,976
Other costs 19,861
Less; incidental revenue (13,000) (10,930)
-----------------------------
$20,739 $4,959
=============================
3. FIXED ASSETS
Net Book Value
Accumulated --------------
Cost depreciation 1996 1995
----------------------------------------------
Land $ 38,753 $ - $ 38,753 $ 38,753
Building 287,430 38,086 249,344 260,962
Store fixtures and equipment 78,419 32,642 45,777 50,276
Office furniture 17,475 6,804 10,671 10,957
Computer equipment 7,884 4,302 3,582 3,737
----------------------------------------------
$429,961 $81,834 $348,127 $364,685
==============================================
4. DEFERRED LAND DEVELOPMENT COST
As at March 31
--------------
1996 1995
------------------------
Legal $ 23,030 $ 4,287
Administration and consulting 233,651 14,580
Architectural and engineering 775,758 65,169
Other 628 -
------------------------
$1,033,067 $84,036
========================
5. DEFERRED GAMING FACILITY DEVELOPMENT COSTS
As at March 31
--------------
1996 1995
---------------------------
Consulting and Administration $356,613 $324,591
Legal 222,964 203,011
Travel 101,689 98,756
Other 23,182 21,355
---------------------------
$704,448 $647,713
===========================
6. INVESTMENT IN JOINT VENTURE
Effective November 1, 1992, the Company and the purchaser of the fixed assets
contributed the fixed assets and an initial contribution of $19,500 each to
the Pemberton Junction Store Joint Venture ("PJSJV"). Each of the venturers
has a 50% interest. The joint venture agreement provides for the other venturer
to be the operator for a management fee of $50,000 per annum. The PJSJV operates
a gas station and convenience store in Pemberton, British Columbia.
The Company has proportionately consolidated in its accounts the following in
respect of its joint venture:
As at March 31
--------------
1996 1995
--------------------------
Current assets $ 76,602 $ 79,429
Long term assets 385,634 406,043
Current liabilities (33,734) (32,184)
--------------------------
Net $428,502 $453,288
==========================
Years ended March 31
35
1996 1995 1994
Sales $ 1,973,854 $ 1,726,212 $ 1,543,853
Cost of sales (1,607,019) (1,354,651) (1,213,391)
--------------------------------------------
366,835 371,561 334,462
Expenses 223,465 251,428 235,271
--------------------------------------------
Joint venture income before depreciation 162,180 140,458 121,771
Depreciation 18,810 20,325 22,580
--------------------------------------------
Net income $ 143,370 $ 120,133 $ 99,191
============================================
7. MORTGAGE PAYABLE
As at March 31
--------------
1996 1995
-----------------------
Mortgage loan, with monthly principal and
interest payments of $1,027, secured by
certain fixed assets of the joint venture
and bearing interest at 10% per annum,
due December 1, 1997 $116,514 $117,311
Current portion 956 874
-------- --------
$115,558 $116,437
======== ========
8. CAPITAL STOCK
a. Details of capital stock transactions from inception, March 18, 1986, to
March 31, 1996 are as follows:
Number of shares Amount
Issued on incorporation 1,150,001 $ 107,500
-----------------------------
Balance, March 31, 1987 and 1988 1,150,001 107,500
-----------------------------
Issued for cash pursuant to a private
placement, net of commissions of $25,000 500,000 225,000
Issued for cash pursuant to a public
offering, net of commissions of $45,000 600,000 555,000
Issued for cash on the exercise of warrants 125,000 68,750
Issued for cash on the exercise of options 40,000 20,000
Issued for bonus for loans 34,800 34,800
-----------------------------
Balance, March 31, 1989 2,449,801 1,011,050
Issued for cash pursuant to a private
placement, net of finder's fee of $50,000 800,000 950,000
Issued for cash on the exercise of warrants 890,250 890,250
Issued for bonus for loans 6,024 5,000
Issued for the acquisition of a subsidiary 40,625 65,000
-----------------------------
Balance, March 31, 1990 4,186,700 2,921,300
Issued for cash on the exercise of options 50,000 25,000
Issued for bonus for loans 38,400 34,740
-----------------------------
Balance, March 31, 1991 4,275,100 2,981,040
Issued for cash 1,265,000 713,260
Issued for cash 1,250,000 200,000
Issued for resource property 25,000 11,250
Issued for settlement of debt 136,573 45,053
-----------------------------
Balance, March 31, 1992 6,951,673 3,950,603
Share consolidation 6:1 (Note 8.b.) (5,793,061) -
-----------------------------
Balance, March 31, 1993 (carried forward) 1,158,612 3,950,603
36
Capital stock continued Number of shares Amount
Balance, March 31, 1993 (brought forward) 1,158,612 3,950,603
Issued for cash (Note 8.c.) 1,000,000 496,280
Issued for cash (Note 8.d.) 250,000 1,212,609
Issued for cash on the exercise of options 73,000 51,100
---------------------------
Balance, March 31, 1994 2,481,612 5,710,592
Issued for cash on the exercise of options 43,000 30,100
Issued for cash on the exercise of warrants 720,000 417,600
---------------------------
Balance, March 31, 1995 3,244,612 6,158,292
Issued for cash (Note 8.e.) 1,685,715 944,000
Issued for cash on the exercise of warrants 280,000 162,400
---------------------------
Balance, March 31, 1996 5,210,327 $7,264,692
===========================
b. During the year ended March 31, 1993, the authorized and issued capital
stock of the Company was consolidated on the basis of one share for every six
previously held. Immediately after the consolidation, the authorized capital
was increased to 50,000,000 common shares without par value. All share
numbers elsewhere in these financial statements reflect the effect of this
consolidation.
c. During the year ended March 31, 1994, the Company issued 1,000,000 units
for net proceeds of $496,280, net of costs of $3,720. Each unit consisted
of one share and one non-transferable share purchase warrant which allowed the
holder to purchase an additional share for $0.50 on or before August 11, 1994
and at $0.58 from August 12, 1994 to August 11, 1995. These warrants expired
during the year ended March 31, 1996.
d. During the year ended March 31, 1994, the Company issued 250,000 shares
for net proceeds of $1,212,609, net of commissions and costs of $99,891.
In addition, the agent received 62,500 non-transferable warrants. Each warrant
entitled the holder to purchase one share at $5.25 on or before October 19,
1994. These warrants expired during the year ended March 31, 1995.
e. The Company completed a private placement of 1,685,715 units on March 13,
1996 at a purchase price of $0.56 per unit. Each unit consists of one share
and one share purchase warrant to purchase a further share at a price of $0.56
in the first year and $0.65 in the second year commencing January 26,
1996.
f. Stock options
i. From time to time, the Company grants incentive stock options to
officers, directors, and employees to purchase common shares of
the Company at market related prices.
Information regarding the Company's stock options is summarized
as follows:
Exercise price range
Number of shares ($/share)
Outstanding at April 1, 1992 58,333 $1.56 - 3.30
granted 54,167 1.56
expired (54,167) 1.56
---------
Outstanding at March 31, 1993 (58,333) 1.56 - 3.30
granted 316,000 0.70 - 1.39
exercised (73,000) 0.70
expired (58,333) 1.56 - 3.30
---------
Outstanding at March 31, 1994 243,000 0.70 - 2.10
granted 70,000 1.39 - 1.50
exercised (43,000) 0.70
expired/canceled (46,500) 1.39 - 2.10
---------
Outstanding at March 31, 1995 223,500 1.39 - 2.10
granted 195,000 0.62 - 0.92
expired/canceled (166,500) 1.39 - 1.50
---------
Outstanding at March 31, 1996 252,000 0.62 - 1.39
=========
ii. Options to purchase 252,000 shares are outstanding at March 31, 1996 as
follows:
37
Number of shares Exercise Price Expiry date
25,000 $0.62 December 27, 1996
10,000 0.62 February 8, 1997
25,000 0.92 May 24, 1997
25,000 0.71 August 24, 1997
110,000 0.62 December 27, 1997
57,000 1.39 August 11, 1998
iii. Warrants to purchase 1,685,715 shares for $0.56 per share in the first
year and $0.65 in the second year commencing January 26, 1996.
9. RELATED PARTY TRANSACTIONS
Significant related party transactions and balances not disclosed elsewhere
in these consolidated financial statements include:
As at March 31
--------------
1996 1995 1994
----------------------------------
a. consulting and administration fees incurred with
companies related by directors in common $ - $25,000 $52,293
b. legal fees incurred with a firm in which a director
is a partner - 61,054 191,944
Included in accounts payable at March 31, 1996 is $nil
(1995 - 31,024) payable in respect of these services
10. INCOME TAXES
The provision for income taxes differs from the amounts computed by
applying the combined Canadian federal and provincial income tax rates as
follows:
As at March 31
--------------
1996 1995 1994
--------------------------------------
Provision computed at combined Canadian
federal and provincial rate of 45.3% ($36,351) $113,656 ($505,412)
Recovery of taxes resulting from utilization
of loss carry forwards - (113,656) -
Benefit resulting from losses not recognized 36,351 - 505,412
-------------------------------------
$ - $ - $ -
=====================================
As at March 31, 1996, the Company and its subsidiaries have non-capital losses
for income tax purposes of approximately $2,000,000 available to offset future
taxable income. These losses commence expiring at various dates through 2003.
The potential benefit of these losses has not been reflected in these
consolidated financial statements.
11. COMMITMENTS
i. The Company is committed to future minimum payments under operating
leases for office space as follows:
1997 9,895
1998 11,694
1999 13,493
2000 15,292
2001 -
ii. The Company has estimated costs to complete the properties under
development amounting to approximately $7,000,000. Of this amount,
contract commitments of approximately $5,660,000 are in place. These
costs will be financed through the proceeds of sale of these
properties or by drawing on project finance commitments of $5,879,000.
12. SEGMENTED INFORMATION
The Company operates in two industries in Canada. Substantially all assets
and operations are related to developing real estate properties, except
for those costs which have been capitalized relating to developing gaming
facilities as outlined in Note 5.
13. RECONCILIATION BETWEEN CANADIAN AND U.S. GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES
38
These consolidated financial statements have been prepared in accordance with
Canadian generally accepted accounting principles (GAAP) which differ in some
respects from U.S. GAAP. The material differences between Canadian and U.S. GAAP
which affect the Company's results of operations and financial position are
summarized below:
As at March 31
Cumulative from inception ----------------------------------------------
Result of operations to March 31, 1996 1996 1995 1994
Net loss/income for the year
Canadian GAAP ($2,449,693) ($ 80,247) $ 250,896 ($1,115,700)
Deferred casino development costs (704,448) (56,735) (221,750) (425,963)
Capitalized holding costs (156,858) (20,739) (4,959) (5,928)
----------------------------------------------------------------------
U.S. GAAP ($3,310,999) ($152,721) $ 24,187 ($1,547,591)
======================================================================
Primary loss/earning per share ($ 0.05) $ 0.01 ($ 0.86)
=============================================
Primary weighted average number
of shares outstanding 3,396,308 2,571,288 1,802,245
=============================================
Financial position
Net assets
Canadian GAAP $ 4,814,999 $3,788,846
Deferred casino development costs (704,448) (647,713)
Capitalized holding costs (156,858) (136,119)
----------------------------
U.S. GAAP $ 3,953,693 $3,005,014
============================
14. COMPARATIVE FIGURES
Certain of the comparative figures have been reclassified to conform with
the current year's presentation.
39
INDEX TO AND DESCRIPTION OF EXHIBITS
I. EXHIBITS PREVIOUSLY FILED
A. EXHIBITS FILED IN 1995 AND 1996 IN CONJUNCTION WITH THE COMPANY'S
REGISTRATION STATEMENT ON FORM 10-SB
The following exhibits are incorporated by reference to the Registrant's
registration statement on Form 10-SB, Registration Statement No. 2-25460:
Exhibit No. Description
- ---------- ------------
2. Charter and By-laws:
2.1 Articles of Glider Resources, Inc.
2.2 Certificate of Incorporation of Glider Resources, Inc.
2.3 Certificate of Change of Name from Glider Resources, Inc. to Glider
Developments, Inc.
2.4 Certificate of Change of Name from Glider Developments, Inc. to
Venture Pacific Development Corporation.
6. Material Contracts and Other Agreements
6.1 "Casino Development and Management Agreement - Prince George
Casino" ("Lheit-Lit'en Agreement").
6.2 "Lease / Right of First Refusal to Lease / Right of First Refusal
to Purchase" between Glider Developments, Inc. and Petro-Canada,
Inc.
6.3 "Management Agreement" between Pemberton Junction Store Joint
Venture and Nesters Market Ltd.
6.4 "Co-Owners Agreement" and "Amending Agreement" between Venture
Pacific Development Corporation and 341794 B.C. Ltd.
6.5 "Land Lease / Right of First Refusal to Lease / Right of First
Refusal to Purchase" between 345385 B.C. Ltd. and Gordon Milne;
"Consent to Assignment" to Squamish Petro Services Limited.
6.6 "Offer to Purchase" and "Amending Agreement" between Her Majesty
the Queen and 345418 B.C. Ltd. (Indian Arm land sale).
6.7 Employment Agreement with Ronald W. Downey.
6.8 Loan Commitment Letters from Jagger Grierson Financial Corporation
and Bancorp Mortgage Limited.
8. Other Documents
8.1 Penny Stock Disclosure Document Pursuant to Schedule 15G.
40
B. EXHIBITS FILED ON FORM 6-K DURING 1996
The following are incorporated by reference from the Registrant's
filings in 1996 on Forms 6-K:
Exhibit No. Description
- ----------- -----------
6.9 Investor Relations Agreement with Berwick Management Corp. dated
May 29, 1996.
6.10 Stock Option Agreement with Jeffrey D. Berwick, dated May 29, 1996.
19. Reports Furnished to Security Holders:
19.1 Annual Report and Consolidated Financial Statements for the fiscal
year ended March 31, 1996.
19.2 Report and Consolidated Financial Statements for the quarter ended
June 30, 1996.
20. Other Documents or Statements to Security Holders:
20.1 Information Circular to Accompany Proxy Solicitation, dated June
30, 1996.
II. EXHIBITS FILED WITH THIS SUBMISSION
Exhibit No. Description
- ----------- -----------
2.5 Certificate of Incorporation of B.P.Y.A. 1362 Holdings, Ltd. (TGN
The Gaming Network Inc.), dated May 9, 1995.
2.6 Company Act Memorandum, Articles and Register of Directors of
B.P.Y.A. 1362 Holdings, Ltd. (TGN The Gaming Network Inc.), dated
May 9, 1995.
2.7 Certificate of Incorporation of B.P.Y.A. 1363 Holdings, Ltd., dated
May 9, 1995.
2.8 Company Act Memorandum, Articles and Form 21 Special Resolution of
B.P.Y.A. 1363 Holdings, Ltd.
2.9 Certificate of Change of Name of B.P.Y.A. 1363 Holdings, Ltd. to
Venture Pacific Capital Corporation, dated December 14, 1995.
41
NUMBER: 496172
[LOGO]
CERTIFIED A TRUE COPY
THIS 24 DAY OF APRIL 1996
COMPANY ACT /s/ illegible
----------------------
CANADA SOLICITOR
PROVINCE OF BRITISH COLUMBIA
CERTIFICATE OF INCORPORATION
I Hereby Certify that
B.P.Y.A. 1362 HOLDINGS LTD.
has this day been incorporated under the Company Act
Issued under my hand at Victoria, British Columbia
on May 09, 1995
[SEAL]
/s/ J.S. Powell
----------------------------
JOHN S. POWELL
Registrar of Companies
42
SECOND SCHEDULE
FORM I CERTIFIED A TRUE COPY
THIS 24 DAY OF APRIL 1996
(Section 5) /s/ illegible
----------------------
COMPANY ACT SOLICITOR
MEMORANDUM
I wish to be formed into a company with limited liability under the Company Act
in pursuance of this Memorandum.
1. The name of the Company is B.P.Y.A 1362 HOLDINGS LTD.
2. The authorized capital of the Company consists of Ten Million (10,000,000)
Common shares without par value.
3. 1 agree to take the number and kind and class of shares in the Company set
opposite my name.
FULL NAME, RESIDENT ADDRESS NUMBER AND KIND AND CLASS OF
AND OCCUPATION OF SUBSCRIBER SHARES TAKEN BY SUBSCRIBER
/s/ Illegible ONE (1) COMMON SHARE
- -------------------------------
DOUGLAS H. HOPKINS, Solicitor
1650 Edgewater Lane
North Vancouver, British Columbia
V7H 2M1
-----------------------------
TOTAL SHARES TAKEN: ONE (1) COMMON SHARE
DATED the 26th day of April, 1995.
43
PROVINCE OF BRITISH COLUMBIA
COMPANY ACT CERTIFIED A TRUE COPY
THIS 24 DAY OF APRIL 1996
/s/ illegible
----------------------
ARTICLES SOLICITOR
of
B.P.Y.A. 1362 HOLDINGS LTD.
(the "Company")
PART I
INTERPRETATION
1.1 DEFINITION AND CONSTRUCTION OF WORDS
In these Articles, unless there is something in the subject or context
inconsistent therewith:
"Articles" means these articles of the Company and any and all
amendments, from time to time, thereto and "Article" means any
paragraph hereunder.
"Board" or "the directors" means the directors or the sole director of
the Company for the time being.
"Chairman of the Board" means the person appointed to the office of
chairman of the Board pursuant to these Articles.
"Company Act" means the Company Act of the Province of British Columbia
as from time to time enacted and all amendments thereto and includes
the regulations made pursuant thereto.
"Memorandum" means the memorandum of the Company and any and all
amendments, from time to time, thereto.
"President" means the person appointed to the office of president
pursuant to these Articles.
"Registrar" means the Registrar of Companies or other duly authorized
person performing his duties as registrar under the Company Act.
"Registered Owner" or "Registered Owners" when used with respect to a
share in the capital of the Company means the person or persons, as the
case may be, registered in the register of members in respect of such
share and "Joint Registered Owner" includes a Registered Owner in joint
tenancy and a Registered Owner as a tenant in common.
"Seal" means the common seal of the Company.
"Secretary" means the person appointed to the office of secretary
pursuant to these Articles.
"Superintendent" means the Superintendent of Brokers or any Deputy
Superintendent of Brokers or any duly authorized person performing his
duties appointed pursuant to the Securities Act of the Province of
British Columbia as from time to time enacted and all amendments
thereto and includes the regulations made pursuant thereto.
44
PART 8
BORROWING POWERS
8.1 POWERS OF DIRECTORS
Subject to any Unanimous Shareholders Agreement, the directors may from time to
time at their discretion authorize and cause the Company:
(i) to borrow money in such manner and amount, on such
security, from such sources and upon such terms and
conditions as they think fit;
(ii) to guarantee the repayment of money by any other person
or the performance of any obligation of any person;
(iii) to issue bonds, debentures,and other debt obligations
either outright or as security for any liability or
obligation of the Company or any other person; and
(iv) to grant securities interests, mortgage, charge, whether
by way of specific or floating charge, or both, or give
other security on the undertaking, or on the whole or any
part of the property and assets, of the Company (both
present and future).
8.2 SPECIAL PRIVILEGES AND NEGOTIABILITY OF DEBT OBLIGATIONS
Any bonds, debentures or other debt obligations of the Company may be issued at
a discount, premium or otherwise, and with any special privileges as to
redemption, surrender, drawing, allotment of or conversion into or exchange for
shares or other securities, attending and voting at general meetings of the
Company, appointment or election of directors or otherwise and may by their
terms be assignable free from any equities between the Company and the person to
whom they were issued or any subsequent holder thereof, all as the directors may
determine.
8.3 REGISTER OF DEBENTUREHOLDERS
The Company shall keep or cause to be kept within the Province of British
Columbia in accordance with the Company Act registers of its debentures, its
indebtedness and its debentureholders, which registers may be combined, and,
subject to the provisions of the Company Act, may keep or cause to be kept one
or more branch registers of its debentureholders at such place or places as the
directors may from time to time determine and the directors may by resolution,
regulation or otherwise make such provisions as they think fit respecting the
keeping of such branch registers.
8.4 EXECUTION OF DEBT OBLIGATIONS
Every bond, debenture or other debt obligation of the Company shall be signed
manually by at least one director or officer of the Company or by or on behalf
of a trustee, registrar, branch registrar, transfer agent or branch transfer
agent for the bond, debenture or other obligation appointed by the Company or
under any instrument under which the bond, debenture or other debt obligation is
issued and any additional signatures may be printed or otherwise mechanically
reproduced thereon and, in such event, a bond, debenture or other debt
obligation so signed is as valid as if signed manually notwithstanding that any
person whose signature is so printed or mechanically reproduced shall have
ceased to hold the office that he is stated on such bond, debenture or other
debt obligation to hold at the date of the issue thereof.
8.5 REGISTER OF INDEBTEDNESS
The Company shall keep or cause to be kept a register of its indebtedness to
every director or officer of the Company or an associate of any of them in
accordance with the provisions of the Company Act.
-8-
45
PART 23
RECORD DATES
23.1 RECORD DATE
The directors may fix in advance a date, which shall not be more than the
maximum number of days permitted by the Company Act preceding the date of any
meeting of members or of the payment of any dividend or of the proposed taking
of any other proper action requiring the determination of members as the record
date for the determination of the members entitled to notice of, or to attend
and vote at, any such meeting and any adjournment thereof, or entitled to
receive payment of any such dividend or for any other proper purpose and, in
such case, notwithstanding anything elsewhere contained in these Articles, only
members of record on the date so fixed shall be deemed to be members for the
purposes aforesaid.
23.2 NO CLOSURE OF REGISTER OF MEMBERS
Where no record date is so fixed for the determination of members as provided in
the preceding Article the date on which the notice is mailed or on which the
resolution declaring the dividend is adopted, as the case may be, shall be the
record date for such determination.
PART 24
SEAL
24.1 AFFIXATION OF SEAL TO DOCUMENTS
The directors may provide a Seal for the Company and, if they do so, shall
provide for the safe custody of the Seal which may be affixed to any instrument
in the presence of the President of the Company without the necessity of a
resolution of the directors, or by such person or persons as may be authorized
by a resolution of the directors. For the purpose of certifying under seal true
copies of any document or resolution the Seal may be affixed in the presence of
any director, officer or the solicitor of the Company.
24.2 MECHANICAL REPRODUCTION OF SIGNATURES
To enable the Seal to be affixed to any bonds, debentures, share certificates,
or other securities of the Company, whether in definitive or interim form, on
which facsimiles of any of the signatures of the directors or officers of the
Company are, in accordance with the Company Act and these Articles, printed or
otherwise mechanically reproduced there may be delivered to the firm or company
employed to engrave, lithograph, or print such definitive or interim bonds,
debentures, share certificates or other securities one or more unmounted dies
reproducing the Seal and the Chairman of the Board, the President, the managing
director or a Vice-President and the Secretary, treasurer, secretary-treasurer,
an assistant Secretary, an assistant treasurer or an assistant secretary-
treasurer may by a document authorize such firm or company to cause the Seal to
be affixed to such definitive or interim bonds, debentures, share certificates
or other securities by the use of such dies. Bonds, debentures, share
certificates or other securities to which the Seal has been so affixed shall for
all purposes be deemed to be under and to bear the Seal lawfully affixed
thereto.
24.3 OFFICIAL SEAL FOR OTHER JURISDICTIONS
The Company may have for use in any other province, state, territory or country
an official seal which shall have on its own face the name of the province,
state, territory or country where it is to be used and all of the powers
conferred by the Company Act with respect thereto may be exercised by the
directors or by a duly authorized agent of the Company.
-25-
46
Page No. 1
REGISTER OF DIRECTORS
(PURSUANT TO THE COMPANY ACT (BRITISH COLUMBIA))
NAME OF COMPANY: B.P.Y.A. 1362 HOLDINGS LTD.
FULL NAME AND RESIDENT ADDRESS DATE ELECTED/APPOINTED DATE CEASED OFFICE HELD DATE APPOINTED DATE CEASED
- ----------------------------------------------------------------------------------------------------------------------------------
Douglas H. Hopkins May 9, 1995 April 1, 1996
1650 Edgewater Lane
North Vancouver, BC
V7H 2M1
Conrad Clemiss Apr 1, 1996
2238 West Keith Road
North Vancouver, BC
V7P 1Z5
Dennis Beneteau Apr 1, 1996
Suite 904 - 1501 Howe Street
Vancouver, BC
V6Z 2P8
George E. Scott Apr 1, 1996 Secretary Apr 1, 1996
860 Fairmile Road
West Vancouver, BC
V7S 1R3
Ronald W. Downey Apr 1, 1996 President Apr 1, 1996
575 Stevens Drive
West Vancouver, BC
V7S 1E1
47
NUMBER: 496150
[SEAL]
COMPANY ACT
CANADA
PROVINCE OF BRITISH COLUMBIA
CERTIFICATE OF INCORPORATION
I Hereby Certify that
B.P.Y.A. 1363 HOLDINGS LTD.
has this day been incorporated under the Company Act
Issued under my hand at Victoria, British Columbia
on May 09, 1995
[SEAL]
/s/ J.S. Powell
----------------------------
JOHN S. POWELL
Registrar of Companies
48
SECOND SCHEDULE
FORM I
(Section 5)
COMPANY ACT
MEMORANDUM
I wish to be formed into a company with limited liability under the Company Act
in pursuance of this Memorandum.
1. The name of the Company is B.P.Y.A 1363 HOLDINGS LTD.
2. The authorized capital of the Company consists of Ten Million (10,000,000)
Common shares without par value.
3. 1 agree to take the number and kind and class of shares in the Company set
opposite my name.
FULL NAME, RESIDENT ADDRESS NUMBER AND KIND AND CLASS OF
AND OCCUPATION OF SUBSCRIBER SHARES TAKEN BY SUBSCRIBER
/s/ Illegible ONE (1) COMMON SHARE
- -------------------------------
DOUGLAS H. HOPKINS, Solicitor
1650 Edgewater Lane
North Vancouver, British Columbia
V7H 2M1
-----------------------------
TOTAL SHARES TAKEN: ONE (1) COMMON SHARE
DATED the 26th day of April, 1995.
49
B.P.Y.A. 1363 HOLDINGS LTD.
TABLE OF CONTENTS
PART I
INTERPRETATION
1.1 Definition and Construction of Words .................. 1
1.2 Paragraph Headings .................................... 2
1.3 Definitions Same As Company Act ....................... 2
1.4 Interpretation Act Rules of Construction Apply ........ 2
PART 2
SHARES AND SHARE CERTIFICATES
2.1 Member Entitled to Certificate ........................ 2
2.2 Replacement of Lost or Defaced Certificate ............ 2
2.3 Execution of Certificate .............................. 3
Recognition of Certificate ............................ 3
2.4
PART 3
ISSUE OF SHARES
3.1 Directors Authorized .................................. 3
3.2 Conditions of Allotment ............................... 3
3.3 Commissions and Brokerage ............................. 3
3.4 Conditions of Issue ................................... 4
PART 4
SHARE REGISTERS
4.1 Registers of Members, Transfers and Allotments ........ 4
4.2 Branch Registers of Members ........................... 4
4.3 No Closing of Register of Members ..................... 4
PART 5
TRANSFER AND TRANSMISSION OF SHARES
5.1 Transfer of Shares .................................... 4
5.2 Execution of Instrument of Transfer ................... 5
5.3 Inquiry as to Title Not Required ...................... 5
5.4 Submission of Instruments of Transfer ................. 5
5.5 Transfer Fee .......................................... 5
5.6 Personal Representative Recognized on Death ........... 5
5.7 Death or Bankruptcy ................................... 5
5.8 Persons in Representative Capacity .................... 6
50
PART 6
ALTERATION OF CAPITAL
6.1 Increase of Authorized Capital ......................... 6
6.2 Other Capital Alterations .............................. 6
6.3 Alteration of Special Rights or Restrictions ........... 6
6.4 Consent of Superintendent Required ..................... 7
6.5 Class Meetings of Members .............................. 7
PART 7
PURCHASE AND REDEMPTION OF SHARES
7.1 Company Authorized to Purchase or Redeem its Shares .... 7
7.2 Redemption of Shares ................................... 7
7.3 Purchased or Redeemed Shares Cannot Vote ............... 7
PART 8
BORROWING POWERS
8.1 Powers of Directors .................................... 8
8.2 Special Privileges and Negotiability of Debt Obligations 8
8.3 Register of Debentureholders ........................... 8
8.4 Execution of Debt Obligations .......................... 8
8.5 Register of Indebtedness ............................... 8
PART 9
GENERAL MEETINGS
9.1 Annual General Meeting ................................. 9
9.2 Waiver of Annual General Meetings ...................... 9
9.3 Classification of General Meetings ..................... 9
9.4 Calling of Meetings .................................... 9
9.5 Advance Notice for Election of Directors ............... 9
9.6 Notice for General Meeting ............................. 9
9.7 Waiver or Reduction of Notice .......................... 9
9.8 Notice of Special Business at General Meeting .......... 10
PART 10
PROCEEDINGS AT GENERAL MEETINGS
10.1 Special Business ....................................... 10
10.2 Requirement of Quorum .................................. 10
10.3 Quorum ................................................. 10
10.4 Lack of Quorum ......................................... 10
10.5 Chairman ............................................... 11
10.6 Alternate Chairman ..................................... 11
10.7 Adjournments ........................................... 11
10.8 Resolutions Need Not Be Seconded ....................... 11
-ii-
51
10.9 Decisions by Show of Hands or Poll .................. 11
10.10 Casting Vote ........................................ 11
10.11 Manner of Taking Poll ............................... 11
10.12 Retention of Ballots Cast on a Poll ................. 12
10.13 Voting on a Poll .................................... 12
10.14 Ordinary Resolution Sufficient ...................... 12
10.15 Resolution in Writing Effective ..................... 12
PART 11
VOTES OF MEMBERS
11.1 Number of Votes per Share or Member ................. 12
11.2 Votes of Persons in Representative Capacity ......... 12
11.3 Representative of a Corporate Member ................ 12
11.4 Votes By Joint Holders .............................. 13
11.5 Votes by Committee for a Member ..................... 13
11.6 Appointment of Proxyholders ......................... 13
11.7 Execution of Form of Proxy .......................... 13
11.8 Deposit of Proxy .................................... 13
11.9 Form of Proxy ....................................... 13
11.10 Validity of Proxy Vote .............................. 14
11.11 Revocation of Proxy ................................. 14
PART 12
DIRECTORS
12.1 Number of Directors ................................. 14
12.2 Remuneration and Expenses of Directors .............. 15
12.3 Qualification of Directors .......................... 15
PART 13
ELECTION AND REMOVAL OF DIRECTORS
13.1 Election at Annual General Meetings ................. 15
13.2 Eligibility of Retiring Director .................... 15
13.3 Continuance of Directors ............................ 15
13.4 Election of Less than Required Number of Directors .. 15
13.5 Filling a Casual Vacancy ............................ 16
13.6 Appointment of Additional Directors by Directors .... 16
13.7 Alternate Directors ................................. 16
13.8 Termination of Directorship ......................... 16
13.9 Removal of Directors ................................ 16
PART 14
POWERS AND DUTIES OF DIRECTORS
14.1 Management of Affairs and Business .................. 17
14.2 Appointment of Attorney ............................. 17
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PART 15
DISCLOSURE OF INTEREST OF DIRECTORS
15.1 Disclosure of Conflicting Interest ........................ 17
15.2 Voting and Quorum Regarding Proposed Contract ............. 17
15.3 Director May Hold Office or Place of Profit with Company .. 18
15.4 Director Acting in Professional Capacity .................. 18
15.5 Director Receiving Remuneration from Other Interests ...... 18
PART 16
PROCEEDINGS OF DIRECTORS
16.1 Chairman and Alternate .................................... 18
16.2 Procedure at Meetings ..................................... 18
16.3 Casting Vote .............................................. 18
16.4 Meetings by Conference Telephone .......................... 19
16.5 Notice of Meeting ......................................... 19
16.6 Waiver of Notice of Meetings .............................. 19
16.7 Quorum .................................................... 19
16.8 Continuing Directors May Act During Vacancy ............... 19
16.9 Validity of Acts of Directors ............................. 19
16.10 Resolution in Writing Effective ........................... 20
PART 17
EXECUTIVE AND OTHER COMMITTEES
17.1 Appointment of Executive Committee ........................ 20
17.2 Appointment of Committee of Directors ..................... 20
17.3 Proceedings of Committees ................................. 20
PART 18
OFFICERS
18.1 President and Secretary Required .......................... 21
18.2 Persons Holding More Than One Office and Remuneration ..... 21
18.3 Disclosure of Conflicting Interest ........................ 21
PART 19
INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES
19.1 Indemnification of Directors .............................. 21
19.2 Indemnification of Officers, Employees, Agents ............ 21
19.3 Indemnification Not Invalidated by Non-Compliance ......... 22
19.4 Company May Purchase Insurance ............................ 22
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PART 20
DIVIDENDS AND RESERVE
20.1 Declaration of Dividends ............................ 22
20.2 Declared Dividend Date .............................. 22
20.3 Proportionate to Number of Shares Held .............. 22
20.4 Reserves ............................................ 22
20.5 Receipts from Joint Holders ......................... 23
20.6 No Interest on Dividends ............................ 23
20.7 Payment of Dividends ................................ 23
20.8 Capitalization of Undistributed Surplus ............. 23
PART 21
DOCUMENTS, RECORDS AND REPORTS
21.1 Documents to be Kept ................................ 23
21.2 Accounts to be Kept ................................. 23
21.3 Inspection of Accounts .............................. 23
21.4 Financial Statements and Reports .................... 24
21.5 Member to Receive Financial Statements .............. 24
PART 22
NOTICES
22.1 Method of Giving Notice ............................. 24
22.2 Notice to Joint Holder .............................. 24
22.3 Notice to Personal Representative ................... 24
22.4 Persons to Receive Notice ........................... 24
PART 23
RECORD DATES
23.1 Record Date ......................................... 25
23.2 No Closure of Register of Members ................... 25
PART 24
SEAL
24.1 Affixation of Seal to Documents ..................... 25
24.2 Mechanical Reproduction of Signatures ............... 25
24.3 Official Seal for Other Jurisdictions ............... 25
PART 25
RESTRICTIONS
25.1 Restriction on Transfer of Shares .................. 26
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PROVINCE OF BRITISH COLUMBIA
COMPANY ACT
ARTICLES
of
B.P.Y.A. 1363 HOLDINGS LTD.
(the "Company")
PART I
INTERPRETATION
1.1 DEFINITION AND CONSTRUCTION OF WORDS
In these Articles, unless there is something in the subject or context
inconsistent therewith:
"Articles" means these articles of the Company and any and all
amendments, from time to time, thereto and "Article" means any
paragraph hereunder.
"Board" or "the directors" means the directors or the sole director of
the Company for the time being.
"Chairman of the Board" means the person appointed to the office of
chairman of the Board pursuant to these Articles.
"Company Act" means the Company Act of the Province of British Columbia
as from time to time enacted and all amendments thereto and includes
the regulations made pursuant thereto.
"Memorandum" means the memorandum of the Company and any and all
amendments, from time to time, thereto.
"President" means the person appointed to the office of president
pursuant to these Articles.
"Registrar" means the Registrar of Companies or other duly authorized
person performing his duties as registrar under the Company Act.
"Registered Owner" or "Registered Owners" when used with respect to a
share in the capital of the Company means the person or persons, as the
case may be, registered in the register of members in respect of such
share and "Joint Registered Owner" includes a Registered Owner in joint
tenancy and a Registered Owner as a tenant in common.
"Seal" means the common seal of the Company.
"Secretary" means the person appointed to the office of secretary
pursuant to these Articles.
"Superintendent" means the Superintendent of Brokers or any Deputy
Superintendent of Brokers or any duly authorized person performing his
duties appointed pursuant to the Securities Act of the Province of
British Columbia as from time to time enacted and all amendments
thereto and includes the regulations made pursuant thereto.
55
"Unanimous Shareholders Agreement" means a written agreement among all
the members of the Company entitled to vote in person, or where proxies
are allowed, by proxy at a general meeting, and the Company, or among
all such members, the Company and a person who is not a member, or a
written declaration of the beneficial owner of all the issued voting
shares of the Company, that restricts in whole or in part the powers of
the directors to manage the business and affairs of the Company, as
from time to time amended.
"Vice-President" means the person appointed to the office of
vice-president pursuant to these Articles.
Expressions referring to writing shall be construed as including references to
printing, lithography, typewriting, photography, telecopying and other modes of
representing or reproducing words in a visible form.
Words importing the singular include the plural and vice versa; and words
importing male persons include female persons and words importing persons shall
include corporations.
1.2 PARAGRAPH HEADINGS
The division of these Articles into Parts and paragraphs and the insertion of
headings are for convenience of reference only and shall not affect the
construction or interpretation hereof.
1.3 DEFINITIONS SAME AS COMPANY ACT
The meaning of any words or phrases defined in the Company Act shall, if not
inconsistent with the subject or context, bear the same meaning in these
Articles.
1.4 INTERPRETATION ACT RULES OF CONSTRUCTION APPLY
Subject to the provisions of these Articles, the provisions of the
Interpretation Act of the Province of British Columbia as from time to time
enacted and all amendments thereto shall apply, mutatis mutandis, to the
interpretation of these Articles.
PART 2
SHARES AND SHARE CERTIFICATES
2.1 MEMBER ENTITLED TO CERTIFICATE
Every member is entitled, without charge, to one certificate representing the
share or shares of each class held by him; provided that, in respect of a share
or shares held jointly by several persons, the Company shall not be bound to
issue more than one certificate, and delivery of a certificate for a share to
one of the Joint Registered Owners or to their duly authorized agent shall be
sufficient delivery to all; and provided further that the Company shall not be
bound to issue certificates representing redeemable shares, if such shares are
to be redeemed within one month of the date on which they were allotted. Any
share certificate may be sent through the mail by registered prepaid mail to the
member entitled thereto, and neither the Company nor any transfer agent shall be
liable for any loss occasioned to the member owing to any such share certificate
so sent being lost in the mail, destroyed or stolen.
2.2 REPLACEMENT OF LOST OR DEFACED CERTIFICATE
If a share certificate:
(i) is worn out or defaced, the directors shall, upon
production to them of the said certificate and upon such
other terms, if any, as they may think fit, order the
said certificate to be cancelled and shall issue a new
certificate in lieu thereof;
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(ii) is lost, stolen or destroyed, then upon proof thereof to
the satisfaction of the directors and upon such
indemnity, if any, as the directors deem adequate being
given, a new share certificate in lieu thereof shall be
issued to the person whose share certificate was lost,
stolen or destroyed; or
(iii) represents more than one share and the Registered Owner
thereof surrenders it to the Company with a written
request that the Company issue in his name two or more
certificates each representing a specified number of
shares and in the aggregate representing the same number
of shares as the certificate so surrendered, the Company
shall cancel the certificate so surrendered and issue in
lieu thereof certificates in accordance with such
request.
Such sum, not exceeding the amount permitted by the Company Act, as the
directors may from time to time fix, shall be paid to the Company for each
certificate to be issued under this Article.
2.3 EXECUTION OF CERTIFICATE
Every share certificate shall be signed manually by at least one officer or
director of the Company, or by or on behalf of a registrar, branch registrar,
transfer agent or branch transfer agent of the Company and any additional
signatures may be printed or otherwise mechanically reproduced and in such
event, a certificate so signed is as valid as if signed manually,
notwithstanding that any person whose signature is so printed or mechanically
reproduced shall have ceased to hold the office that he is stated on such
certificate to hold at the date of the issue of a share certificate.
2.4 RECOGNITION OF CERTIFICATE
Except as required by law, statute or these Articles, no person shall be
recognized by the Company as holding any share upon any trust, and the Company
shall not be bound by or compelled in any way to recognize (even when having
notice thereof) any equitable, contingent, future or partial interest in any
share or in any fractional part of a share or (except only as provided by law,
statute or these Articles or as ordered by a court of competent jurisdiction)
any other rights in respect of any share except an absolute right to the
entirety thereof in its Registered Owner.
PART 3
ISSUE OF SHARES
3. 1 DIRECTORS AUTHORIZED
Subject to Article 3.2 and to any direction to the contrary contained in a
resolution passed at a general meeting authorizing any increase or alteration of
capital, the shares shall be under the control of the directors who may, subject
to the rights of the holders of the shares of the Company then issued, issue,
allot, sell or otherwise dispose of, grant options on or otherwise deal in,
shares authorized but not outstanding at such times, to such persons (including
directors), in such manner, upon such terms and conditions, and at such price or
for such consideration, as they, in their absolute discretion, may determine.
3.2 CONDITIONS OF ALLOTMENT
If the Company is, or becomes, a company which is not a reporting company and
the directors are required by the Company Act before allotting any shares to
offer them pro rata to the members, the directors shall, before allotting any
shares, comply with the applicable provisions of the Company Act.
3.3 COMMISSIONS AND BROKERAGE
Subject to the provisions of the Company Act, the Company or the directors on
behalf of the Company, may pay a commission or allow a discount to any person in
consideration of his subscribing or agreeing to subscribe, whether absolutely or
conditionally, for any shares in the Company, or procuring or agreeing to
procure subscriptions, whether
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absolutely or conditionally, for any such shares, provided that the rate of the
commission and discount shall not in the aggregate exceed twenty-five per centum
(25%) of the amount of the subscription price of such shares and the directors
may also pay such brokerage as may be lawful.
3.4 CONDITIONS OF ISSUE
No share may be issued until it is fully paid and the Company shall have
received the full consideration therefor in cash, property or past services
actually performed for the Company. The value of property or services for the
purposes of this Article shall be an amount set by resolution of the directors
that is, in the circumstances of the transaction, no greater than fair market
value. Notwithstanding that the price or consideration for a share may be other
than cash, the price or consideration for a share shall, at the time when the
share is allotted, be expressed in terms of money and so recorded in the
proceedings of the directors of the Company.
PART 4
SHARE REGISTERS
4.1 REGISTERS OF MEMBERS, TRANSFERS AND ALLOTMENTS
The Company shall keep or cause to be kept a register of members, a register of
transfers and a register of allotments within British Columbia, all as required
by the Company Act, and may combine one or more of such registers. If the
Company's capital shall consist of more than one class of shares, a separate
register of members, register of transfers and register of allotments may be
kept in respect of each class of shares. The directors on behalf of the Company
may appoint a trust company to keep the register of members, register of
transfers and register of allotments or, if there is more than one class of
shares, the directors may appoint a trust company, which need not be the same
trust company, to keep the register of members, the register of transfers and
the register of allotments for each class of share. The directors on behalf of
the Company may also appoint one or more trust companies, including the trust
company which keeps the said registers of its shares or of a class thereof, as
transfer agent for its shares or such class thereof, as the case may be, and the
same or another trust company or companies as registrar for its shares or such
class thereof, as the case may be. The directors may terminate the appointment
of any such trust company at any time and may appoint another trust company in
its place.
4.2 BRANCH REGISTERS OF MEMBERS
Subject to the Company Act, the Company may keep or cause to be kept one or more
branch registers of members at such place or places as the directors may from
time to time determine.
4.3 NO CLOSING OF REGISTER OF MEMBERS
The Company shall not at any time close its register of members.
PART 5
TRANSFER AND TRANSMISSION OF SHARES
5.1 TRANSFER OF SHARES
Subject to the provisions of the Memorandum and of these Articles that may he
applicable, any member may transfer any of his shares by instrument in writing
executed by or on behalf of such member and delivered to the Company or its
transfer agent. The instrument of transfer of any share of the Company shall be
in the form, if any, on the back of the Company's share certificates or in such
other form as the directors may from time to time approve. Except to the extent
that the Company Act may otherwise provide, the transferor shall be deemed to
remain the holder of the shares until the name of the transferee is entered in
the register of members or a branch register of members in respect thereof.
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5.2 EXECUTION OF INSTRUMENT OF TRANSFER
The signature of the Registered Owner of any shares, or of his duly authorized
attorney, upon an authorized instrument of transfer shall constitute a complete
and sufficient authority to the Company, its directors, officers and agents to
register in the name of the transferee as named in the instrument of transfer,
the number of shares specified thereon or, if no number is specified, all the
shares of the Registered Owner represented by share certificates deposited with
the instrument of transfer. If no transferee is named in the instrument of
transfer, the instrument of transfer shall constitute a complete and sufficient
authority to the Company, its directors, officers and agents to register, in the
name of the person on whose behalf any certificate representing the shares to be
transferred is deposited with the Company for the purpose of having the transfer
registered, the number of shares specified in the instrument of transfer or, if
no number is specified, all the shares represented by all share certificates
deposited with the instrument of transfer.
5.3 INQUIRY AS TO TITLE NOT REQUIRED
Neither the Company nor any director, officer or agent thereof shall be bound to
inquire into the title of the person named in the form of transfer as
transferee, or, if no person is named therein as transferee, of the person on
whose behalf the certificate is deposited with the Company for the purpose of
having the transfer registered or be liable to any claim by such Registered
Owner or by any intermediate owner or holder of the certificate or of any of the
shares represented thereby or any interest therein for registering the transfer.
5.4 SUBMISSION OF INSTRUMENTS OF TRANSFER
Every instrument of transfer shall be executed by the transferor and left at
the registered office of the Company or at the office of its transfer agent or
registrar for registration together with the share certificate for the shares to
be transferred and such other evidence, if any, as the directors or the transfer
agent or registrar may require to prove the title of the transferee or his right
to transfer the shares and the right of the transferee to have the transfer
registered. All instruments of transfer where the transfer is registered shall
be retained by the Company or its transfer agent or registrar and any instrument
of transfer, where the transfer is not registered, shall be returned to the
person depositing the same together with the share certificate which accompanied
the same when tendered for registration.
5.5 TRANSFER FEE
There shall be paid to the Company in respect of the registration of any
transfer such sum, if any, as the directors may from time to time determine.
5.6 PERSONAL REPRESENTATIVE RECOGNIZED ON DEATH
In the case of the death of a member, the survivor or survivors where the
deceased was a Joint Registered Owner in joint tenancy, and the legal personal
representative of the deceased where he was the sole holder or a Joint
Registered Owner as a tenant in common, shall be the only persons recognized by
the Company as having any title to his interest in the shares. Before
recognizing any legal personal representative the directors may require him to
obtain a grant of probate, letters of administration, grant of representation or
other similar documentation from the jurisdiction in which such document may be
properly issued in connection with the death of the member.
5.7 DEATH OR BANKRUPTCY
A guardian, committee, trustee, curator, tutor, personal representative or
trustee in bankruptcy of a member, although not a member himself, shall have the
same rights, privileges and obligations that attach to the shares held by the
member if the documents required by the Company Act and by Article 5.6 shall
have been deposited with the Company. This Article does not apply on the death
of a member with respect to any share registered in his name and the name of
another person in joint tenancy.
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5.8 PERSONS IN REPRESENTATIVE CAPACITY
Any person becoming entitled to a share in consequence of the death or
bankruptcy of a member shall, upon such documents and evidence being produced to
the Company as the Company Act requires or who becomes entitled to a share as a
result of an order of a Court of competent jurisdiction or a statute, has the
right either to be registered as a member in his representative capacity in
respect of such share, or, if he is a personal representative, instead of being
registered himself, to make such transfer of the share as the deceased or
bankrupt person could have made; but the directors shall, as regards a transfer
by a personal representative or trustee in bankruptcy, have the same right, if
any, to decline or suspend registration of a transferee as they would have in
the case of a transfer of a share by the deceased or bankrupt person before the
death or bankruptcy.
PART 6
ALTERATION OF CAPITAL
6. 1 INCREASE OF AUTHORIZED CAPITAL
The Company may by ordinary resolution amend the Memorandum to increase the
authorized capital of the Company by:
(i) creating shares with par value or shares without par
value, or both;
(ii) increasing the number of shares with par value or shares
without par value, or both; or
(iii) increasing the par value of a class of shares with par
value, if no shares of that class are issued.
6.2 OTHER CAPITAL ALTERATIONS
The Company may by special resolution alter its Memorandum to subdivide,
consolidate, change from shares with par value to shares without par value, or
from shares without par value to shares with par value, or change the
designation of all or any of its shares but only to such extent, in such manner
and with such consents of members holding a class of shares which is the subject
of or affected by such alteration, as the Company Act provides.
6.3 ALTERATION OF SPECIAL RIGHTS OR RESTRICTIONS
Subject to the provisions of the Company Act, the Company may alter the
Memorandum or these Articles:
(i) by such resolution as is permitted by the Company Act, to
create, define and attach special rights or restrictions
to any shares; and
(ii) by such resolution as is permitted by the Company Act,
and by otherwise complying with any applicable provision
of the Memorandum and these Articles to vary or abrogate
any special rights or restrictions attached to any shares
but no right or special right attached to any issued shares shall be prejudiced
or interfered with unless:
(i) if the right or special right prejudiced or interfered
with is attached to a class of shares, members holding
shares of that class, and
(ii) if the right or special right prejudiced or interfered
with is attached to a series of shares and the rights or
special rights attached to that series are affected
differently from those attached to another series of the
same class, members holding shares of that series,
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consent by separate resolution of the members of that class or series, as the
case may be, requiring a majority of three-fourths (3/4ths) of the votes cast or
such greater majority as may be specified in the special rights attached to such
class or series.
6.4 CONSENT OF SUPERINTENDENT REQUIRED
If the Company is or becomes a reporting company, no resolution to create, vary
or abrogate any special right of conversion or exchange attaching to any shares
in the capital of the Company shall be submitted to a general meeting, a class
meeting, or a series meeting unless, if so required by the Company Act, the
Superintendent has first consented to the resolution.
6.5 CLASS MEETINGS OF MEMBERS
Subject to the Company Act, and unless these Articles otherwise provide, the
provisions of these Articles relating to general meetings shall apply, with the
necessary changes and so far as they are applicable, to a class meeting or
series meeting of members holding a particular class or series of shares but the
quorum at a class meeting or series meeting shall be at least one person holding
or representing by proxy not less than one-third of the shares affected.
PART 7
PURCHASE AND REDEMPTION OF SHARES
7.1 COMPANY AUTHORIZED TO PURCHASE OR REDEEM ITS SHARES
Subject to the special rights and restrictions attached to any class or series
of shares, the Company may, by a resolution of the directors and in compliance
with the Company Act, purchase any of its shares at the price and upon the terms
specified in such resolution or redeem, on the terms and in the manner provided
in the Memorandum or these Articles, any of its issued shares that have a right
of redemption attached to them. No such purchase or redemption shall be made if
the Company is insolvent at the time of the proposed purchase or redemption or
if the proposed purchase or redemption would render the Company insolvent.
Unless the shares are to be purchased through a stock exchange or the Company is
purchasing the shares from dissenting members pursuant to the requirements of
the Company Act, or the Company is purchasing shares from a bona fide employee
or a bona fide former employee of the Company or an affiliate of the Company, or
his personal representative, the Company shall make its offer to purchase pro
rata to every member who holds shares of the class or series to be purchased.
7.2 REDEMPTION OF SHARES
If the Company proposes at its option to redeem some but not all of the shares
of any class or series, the directors may, subject to the special rights and
restrictions attached to such class or series of shares, decide the manner in
which the shares to be redeemed shall be selected.
7.3 PURCHASED OR REDEEMED SHARES CANNOT VOTE
Subject to the provisions of the Company Act, any shares purchased or redeemed
by the Company may be cancelled, sold or reissued by it but, while such shares
are held by the Company, it shall not exercise any vote in respect of these
shares and no dividend shall be paid thereon.
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PART 8
BORROWING POWERS
8.1 POWERS OF DIRECTORS
Subject to any Unanimous Shareholders Agreement, the directors may from time to
time at their discretion authorize and cause the Company:
(i) to borrow money in such manner and amount, on such
security, from such sources and upon such terms and
conditions as they think fit;
(ii) to guarantee the repayment of money by any other person
or the performance of any obligation of any person;
(iii) to issue bonds, debentures, and other debt obligations
either outright or as security for any liability or
obligation of the Company or any other person; and
(iv) to grant securities interests, mortgage, charge, whether
by way of specific or floating charge, or both, or give
other security on the undertaking, or on the whole or any
part of the property and assets, of the Company (both
present and future).
8.2 SPECIAL PRIVILEGES AND NEGOTIABILITY OF DEBT OBLIGATIONS
Any bonds, debentures or other debt obligations of the Company may be issued at
a discount, premium or otherwise, and with any special privileges as to
redemption, surrender, drawing, allotment of or conversion into or exchange for
shares or other securities, attending and voting at general meetings of the
Company, appointment or election of directors or otherwise and may by their
terms be assignable free from any equities between the Company and the person to
whom they were issued or any subsequent holder thereof, all as the directors may
determine.
8.3 REGISTER OF DEBENTUREHOLDERS
The Company shall keep or cause to be kept within the Province of British
Columbia in accordance with the Company Act registers of its debentures, its
indebtedness and its debentureholders, which registers may be combined, and,
subject to the provisions of the Company Act, may keep or cause to be kept one
or more branch registers of its debentureholders at such place or places as the
directors may from time to time determine and the directors may by resolution,
regulation or otherwise make such provisions as they think fit respecting the
keeping of such branch registers.
8.4 EXECUTION OF DEBT OBLIGATIONS
Every bond, debenture or other debt obligation of the Company shall be signed
manually by at least one director or officer of the Company or by or on behalf
of a trustee, registrar, branch registrar, transfer agent or branch transfer
agent for the bond, debenture or other obligation appointed by the Company or
under any instrument under which the bond, debenture or other debt obligation is
issued and any additional signatures may be printed or otherwise mechanically
reproduced thereon and, in such event, a bond, debenture or other debt
obligation so signed is as valid as if signed manually notwithstanding that any
person whose signature is so printed or mechanically reproduced shall have
ceased to hold the office that he is stated on such bond, debenture or other
debt obligation to hold at the date of the issue thereof.
8.5 REGISTER OF INDEBTEDNESS
The Company shall keep or cause to be kept a register of its indebtedness to
every director or officer of the Company or an associate of any of them in
accordance with the provisions of the Company Act.
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PART 9
GENERAL MEETINGS
9.1 ANNUAL GENERAL MEETING
Subject to any extensions of time permitted pursuant to the Company Act, the
first annual general meeting of the Company shall be held within fifteen months
from the date of incorporation and thereafter an annual general meeting shall be
held once in every calendar year at such time (not being more than thirteen
months after the holding of the last annual general meeting) and place as may be
determined by the directors.
9.2 WAIVER OF ANNUAL GENERAL MEETINGS
If the Company is, or becomes, a company which is not a reporting company and
all the members entitled to attend and vote at an annual general meeting consent
in writing to all the business which is required to be transacted at the
meeting, the meeting shall be deemed to have been held on the date specified in
the consent and it is not necessary for the Company to hold that annual general
meeting.
9.3 CLASSIFICATION OF GENERAL MEETINGS
All general meetings other than annual general meetings are herein referred to
as and may be called extraordinary general meetings.
9.4 CALLING OF MEETINGS
The directors may, whenever they think fit, convene an extraordinary general
meeting. An extraordinary general meeting, if requisitioned in accordance with
the Company Act, shall be convened by the directors or, if not convened by the
directors, may be convened by the requisitionists as provided by the Company
Act.
9.5 ADVANCE NOTICE FOR ELECTION OF DIRECTORS
If the Company is or becomes a reporting company, advance notice of any general
meeting at which directors are to be elected shall be published in the manner
required by the Company Act.
9.6 NOTICE FOR GENERAL MEETING
A notice convening a general meeting specifying the place, the day, and the hour
of the meeting, and, in case of special business, the general nature of that
business, shall be given as provided in the Company Act and in the manner
hereinafter in these Articles mentioned, or in such manner (if any) as may be
prescribed by ordinary resolution, whether previous notice thereof has been
given or not, to such persons as are entitled by law or under these Articles to
receive such notice from the Company. Accidental omission to give notice of a
meeting to, or the non-receipt of notice of a meeting by, any member shall not
invalidate the proceedings at that meeting.
9.7 WAIVER OR REDUCTION OF NOTICE
All the members of the Company entitled to attend and vote at a general meeting
may, by unanimous consent in writing given before, during or after the meeting,
or if they are present at the meeting by a unanimous vote, waive or reduce the
period of notice of such meeting and an entry in the minute book of such waiver
or reduction shall be sufficient evidence of the due convening of the meeting.
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9.8 NOTICE OF SPECIAL BUSINESS AT GENERAL MEETING
Except as otherwise provided by the Company Act, where any special business at a
general meeting included considering, approving, ratifying, adopting or
authorizing any document or the execution thereof or the giving of effect
thereto, the notice convening the meeting shall, with respect to such document,
be sufficient if it states that a copy of the document or proposed document is
or will be available for inspection by members at the registered office or
records office of the Company or at such other place in British Columbia
designated in the notice during usual business hours up to the date of such
general meeting.
PART 10
PROCEEDINGS AT GENERAL MEETINGS
10.1 SPECIAL BUSINESS
All business shall be deemed special business which is transacted at:
(i) an extraordinary general meeting; and
(ii) an annual general meeting, with the exception of the
consideration of the financial statements and of the
respective reports of the directors and auditor, fixing
or changing the number of directors, approval of a motion
to elect two or more directors by a single resolution,
the election of directors, the appointment of the
auditor, the fixing of the remuneration of the auditor
and such other business as by these Articles or the
Company Act may be transacted at a general meeting
without prior notice thereof being given to the members
or any business which is brought under consideration by
the report of the directors.
10.2 REQUIREMENT OF QUORUM
No business, other than election of the chairman or the adjournment of the
meeting, shall be transacted at any meeting unless a quorum of members, entitled
to attend and vote, is present at the commencement of the meeting, but the
quorum need not be present throughout the meeting.
10.3 QUORUM
Save as herein otherwise provided, a quorum shall be two persons present and
being, or representing by proxy, members holding not less than one-twentieth of
the shares which are entitled to be voted at the meeting. If there is only one
member the quorum is one person present and being, or representing by proxy,
such member. The directors, the Secretary, or in his absence, an assistant
Secretary, and the solicitor of the Company shall be entitled to attend any
general meeting but no such person shall be counted in the quorum or be entitled
to vote at any general meeting unless he shall be a member or proxyholder
entitled to vote thereat.
10.4 LACK OF QUORUM
If within half an hour from the time appointed for a general meeting a quorum is
not present, the meeting, if convened upon the requisition of members, shall be
dissolved. In any other case it shall stand adjourned to the same day in the
next week, at the same time and place, and if at the adjourned meeting a quorum
is not present within half an hour from the time appointed for the meeting, the
person or persons present and being, or representing by proxy, member or members
entitled to attend and vote at the meeting shall be a quorum.
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10.5 CHAIRMAN
The Chairman of the Board, if any, or in his absence the President of the
Company or in his absence a Vice-President of the Company, if any, shall be
entitled to preside as chairman at every meeting of the Company.
10.6 ALTERNATE CHAIRMAN
If at any meeting neither the Chairman of the Board nor President nor a
Vice-President is present within fifteen minutes after the time appointed for
holding the meeting or is willing to act as chairman, the directors present
shall choose someone of their number to be chairman or if all the directors
present decline to take the chair or shall fail to so choose or if no director
be present, the members and proxyholders present shall choose one of their
number to be chairman.
10.7 ADJOURNMENTS
The chairman may and shall, if so directed by the meeting, adjourn the meeting
from time to time and from place to place, but no business shall be transacted
at any adjourned meeting other than the business left unfinished at the meeting
from which the adjournment took place. When a meeting is adjourned for thirty
days or more, notice, but not advance notice (within the meaning of the
regulations made pursuant to the Company Act), of the adjourned meeting shall be
given as in the case of an original meeting. Save as aforesaid, it shall not be
necessary to give any notice of an adjourned meeting or of the business to be
transacted at an adjourned meeting.
10.8 RESOLUTIONS NEED NOT BE SECONDED
No motion proposed at a meeting need be seconded and the chairman may propose a
motion.
10.9 DECISIONS BY SHOW OF HANDS OR POLL
Subject to the provisions of the Company Act, at any meeting a resolution put to
the vote of the meeting shall be decided on a show of hands, unless (before or
on the declaration of the result of the show of hands) a poll is directed by the
chairman or demanded by at least one member entitled to vote who is present in
person or by proxy. The chairman shall declare to the meeting the decision on
every question in accordance with the results of the show of hands or the poll,
and such decision shall be entered in the book of proceedings of the Company. A
declaration by the chairman that a resolution has been carried, carried
unanimously, carried by a particular majority, lost or not carried by a
particular majority and an entry to that effect in the book of the proceedings
of the Company shall be conclusive evidence of the fact, without proof of the
number or proportion of the votes recorded in favour of, or against, the
resolution.
10.10 CASTING VOTE
In the case of an equality of votes, whether on a show of hands or on a poll,
the chairman of the meeting at which the show of hands takes place or at which
the poll is demanded shall not be entitled to a second or casting vote.
10.11 MANNER OF TAKING POLL
No poll may be demanded on the election of a chairman. A poll demanded on a
question of adjournment shall be taken forthwith. A poll demanded on any other
question shall be taken as soon as, in the opinion of the chairman, is
reasonably convenient, but in no event later than seven days after the meeting
and at such time and place and in such manner as the chairman of the meeting
directs. The result of the poll shall be deemed to be the resolution of and
passed at the meeting at which the poll was demanded. Any business other than
that upon which the poll has been demanded may be proceeded with pending the
taking of the poll. A demand for a poll may be withdrawn. In any dispute as to
the admission or rejection of a vote the decision of the chairman made in good
faith shall be final and conclusive.
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10.12 RETENTION OF BALLOTS CAST ON A POLL
Every ballot cast upon a poll and every proxy appointing a proxyholder who casts
a ballot upon a poll shall be retained by the Secretary for such period and be
subject to such inspection as the Company Act may provide.
10.13 VOTING ON A POLL
On a poll a person entitled to cast more than one vote need not, if he votes,
use all his votes or cast all the votes he uses in the same way.
10.14 ORDINARY RESOLUTION SUFFICIENT
Unless the Company Act, the Memorandum or these Articles otherwise provide, any
action to be taken by a resolution of the members may be taken by an ordinary
resolution.
10.15 RESOLUTION IN WRITING EFFECTIVE
A resolution consented to in writing, whether by document, telegram, telex,
telecopy or any method of transmitting legibly recorded messages or other means,
by all of the members shall be as valid and effectual as if it had been passed
at a meeting of the members duly called and held. Such resolution may be in two
or more counterparts which together shall be deemed to constitute one resolution
in writing. Such resolution shall be filed with the minutes of the proceedings
of the members and shall be effective on the date stated thereon or on the
latest date stated on any counterpart.
PART 11
VOTES OF MEMBERS
11.1 NUMBER OF VOTES PER SHARE OR MEMBER
Subject to any special voting rights or restrictions attached to any class of
shares and the restrictions on Joint Registered Owners of shares, on a show of
hands every member who is present in person and entitled to vote shall have one
vote, and on a poll every member shall have one vote for each share of which he
is the Registered Owner, and may exercise such vote either in person or by
proxyholder.
11.2 VOTES OF PERSONS IN REPRESENTATIVE CAPACITY
Any person who is not registered as a member but who claims to be entitled to
vote at any meeting in respect of a share, may vote the share in the same manner
as if he were a member; but, unless the directors have previously admitted his
right to vote at that meeting in respect of the share, he shall satisfy the
directors or the Secretary of his right to vote the share before the time for
holding the meeting or adjourned meeting, as the case may be, at which he
proposes to vote, and unless he shall so satisfy the directors or the Secretary
he shall not be entitled to vote that share.
11.3 REPRESENTATIVE OF A CORPORATE MEMBER
Any corporation not being a subsidiary which is a member of the Company may
authorize such person as it thinks fit to act as its representative at any
meeting. The person so authorized shall be entitled to exercise in respect of
and at such meeting the same powers on behalf of the corporation which he
represents as that corporation could exercise if it were an individual member of
the Company personally present, including, without limitation, the right to
appoint a proxyholder to represent such corporation, and shall, if present at
the meeting, be counted for the purpose of forming a quorum and be deemed to be
a member present at the meeting. Evidence of the appointment of any such
representative shall be in a form satisfactory to the directors and may be sent
to the Company by written instrument, telegram, telex, telecopy or any method of
transmitting legibly recorded messages.
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11.4 VOTES BY JOINT HOLDERS
In the case of Joint Registered Owners of a share the vote of the senior who
exercises a vote, whether in person or by proxyholder, shall be accepted to the
exclusion of the votes of the other Joint Registered Owners; and for this
purpose seniority shall be determined by the order in which the names stand in
the register of members with respect to such share. Several legal personal
representatives of a deceased member whose shares are registered in his sole
name shall for the purpose of this Article be deemed Joint Registered Owners.
11.5 VOTES BY COMMITTEE FOR A MEMBER
A member of unsound mind entitled to attend and vote, in respect of whom an
order has been made by any court having jurisdiction, may vote, whether on a
show of hands or on a poll, by his committee or curator and any such committee
or curator may appoint a proxyholder.
11.6 APPOINTMENT OF PROXYHOLDERS
A member holding more than one share in respect of which he is entitled to vote
shall be entitled to appoint one or more (but not more than five and not more
than one per share) proxyholders to attend, act and vote for him on the same
occasion. If such a member should appoint more than one proxyholder for the same
occasion he shall specify the number of shares each proxyholder shall be
entitled to vote. A member may also appoint one or more alternate proxyholders
to act in the place and stead of an absent proxyholder.
11.7 EXECUTION OF FORM OF PROXY
A proxy shall be in writing under the hand of the appointee or of his attorney
duly authorized in writing, or, if the appointor is a corporation, either under
the seal of the corporation or under the hand of a duly authorized officer or
attorney. A proxyholder need not be a member of the Company.
11.8 DEPOSIT OF PROXY
A proxy and power of attorney or other authority, if any, under which it is
signed or a notarially certified copy thereof shall be deposited at the
registered office of the Company or at such other place as is specified for that
purpose in the notice calling the meeting, not less than forty-eight hours
(excluding Saturdays, Sundays and holidays) before the time for holding the
meeting in respect of which the person named in the instrument is appointed, or,
if the Company is not a reporting company, shall be deposited with a director or
officer of the Company at such meeting prior to its commencement. In addition to
any other method of depositing proxies provided for in these Articles, the
directors may from time to time by resolution make regulations relating to the
depositing of proxies at any place or places and fixing the time or times for
depositing the proxies not exceeding forty-eight hours (excluding Saturdays,
Sundays and holidays) preceding the meeting or adjourned meeting specified in
the notice calling a meeting of members and providing for particulars of such
proxies to be sent to the Company or any agent of the Company in writing by
letter, telegram, telex, telecopy or any method of transmitting legibly recorded
messages so as to arrive before the commencement of the meeting or adjourned
meeting at the office of the Company or of any agent of the Company appointed
for the purpose of receiving such particulars and providing that proxies so
deposited may be acted upon as though the proxies themselves were deposited as
required by this Part and votes given in accordance with such regulations shall
be valid and be counted.
11.9 FORM OF PROXY
Unless the Company Act or any other statute or law which is applicable to the
Company or to any class of its shares requires any other form of proxy, a proxy,
whether for a specified meeting or otherwise, shall be in the form following,
but may also be in any other form that the directors or the chairman of the
meeting shall approve:
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(Name of Company)
The undersigned, being a member of the above named Company, hereby appoints
______________________ or failing him ________________________ as proxyholder
for the undersigned to attend, act and vote for and on behalf of the undersigned
at the general meeting of the Company to be held on the ____ day of 19__, and at
any adjournment thereof.
Signed this ____ day of_____________________, 19__.
______________________
(Signature of member)
_____________________________
(Name of member - printed)
11.10 VALIDITY OF PROXY VOTE
A vote given in accordance with the terms of a proxy is valid notwithstanding
the previous death or incapacity of the member giving the proxy or the
revocation of the proxy or of the authority under which the form of proxy was
executed or the transfer of the share in respect of which the proxy is given,
provided that no notification in writing of such death, incapacity, revocation
or transfer shall have been received at the registered office of the Company or
by the chairman of the meeting or adjourned meeting for which the proxy was
given before the vote is taken.
11.11 REVOCATION OF PROXY
Every proxy may be revoked by an instrument in writing:
(i) executed by the member giving the same or by his attorney
authorized in writing or, where the member is a
corporation, by a duly authorized officer or attorney of
the corporation; and
(ii) delivered either to the registered office of the Company
at any time up to and including the last business day
preceding the day of the meeting, or any adjournment
thereof at which the proxy is to be used, or to the
chairman of the meeting on the day of the meeting or any
adjournment thereof before any vote in respect of which
the proxy is to be used shall have been taken
or in any other manner provided by law. A proxy shall cease to be valid after
one year from its date.
PART 12
DIRECTORS
12.1 NUMBER OF DIRECTORS
The subscribers to the Memorandum of the Company are the first directors. The
directors to succeed the first directors may be appointed in writing by a
majority of the subscribers to the Memorandum or at a meeting of the
subscribers, or if not so appointed, they shall be elected by the members
entitled to vote on the election of directors and the number of directors shall
be the same as the number of directors so appointed or elected or as may be
determined by resolution of the subscribers to the Memorandum of the Company.
The number of directors, excluding additional directors, may be fixed or changed
from time to time by ordinary resolution, whether previous notice thereof has
been given or not, but notwithstanding anything contained in these Articles the
number of directors shall never be less than one or, if the Company is or
becomes a reporting company, less than three.
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12.2 REMUNERATION AND EXPENSES OF DIRECTORS
The remuneration of the directors as such may from time to time be determined by
the directors or, if the directors shall so decide, by the members. Such
remuneration may be in addition to any salary or other remuneration paid to any
officer or employee of the Company as such who is also a director. The directors
shall be repaid such reasonable travelling, hotel and other expenses as they
incur in and about the business of the Company and if any director shall perform
any professional or other services for the Company that in the opinion of the
directors are outside the ordinary duties of a director or shall otherwise be
specially occupied in or about the Company's business, he may be paid a
remuneration to be fixed by the Board, or, at the option of such director, by
the Company in general meeting, and such remuneration may be either in addition
to, or in substitution for any other remuneration that he may be entitled to
receive. The directors on behalf of the Company, unless otherwise determined by
ordinary resolution, may pay a gratuity or pension or allowance on retirement to
any director who has held any salaried office or place of profit with the
Company or to his spouse or dependents and may make contributions to any fund
and pay premiums for the purchase or provision of any such gratuity, pension or
allowance.
12.3 QUALIFICATION OF DIRECTORS
A director shall not be required to hold a share in the capital of the Company
as qualification for his office but shall be qualified as required by the
Company Act to become or act as a director.
PART 13
ELECTION AND REMOVAL OF DIRECTORS
13.1 ELECTION AT ANNUAL GENERAL MEETINGS
At each annual general meeting of the Company all the directors shall retire and
the members entitled to vote thereat shall elect a Board consisting of the
number of directors for the time being fixed pursuant to these Articles. If the
Company is, or becomes, a company that is not a reporting company and the
business to be transacted at any annual general meeting is consented to in
writing by all the members who are entitled to attend and vote thereat such
annual general meeting shall be deemed for the purpose of this Part to have been
held on such written consent becoming effective.
13.2 ELIGIBILITY OF RETIRING DIRECTOR
A retiring director shall be eligible for re-election.
13.3 CONTINUANCE OF DIRECTORS
Where the Company fails to hold an annual general meeting in accordance with the
Company Act, the directors then in office shall be deemed to have been elected
or appointed as directors on the last day on which the annual general meeting
could have been held pursuant to these Articles and they may hold office until
other directors are appointed or elected or until the day on which the next
annual general meeting is held, whichever first occurs.
13.4 ELECTION OF LESS THAN REQUIRED NUMBER OF DIRECTORS
If at any general meeting at which there should be an election of directors, the
places of any of the retiring directors are not filled by such election, such of
the retiring directors who are not re-elected as may be requested by the
newly-elected directors shall, if willing to do so, continue in office to
complete the number of directors for the time being fixed pursuant to these
Articles until further new directors are elected at a general meeting convened
for the purpose. If any such election or continuance of directors does not
result in the election or continuance of the number of directors for the time
being fixed pursuant to these Articles such number shall be fixed at the number
of directors actually elected or continued in office.
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13.5 FILLING A CASUAL VACANCY
Where there is a vacancy on the Board as a consequence of an increase in the
number of directors, an increase in the minimum number of directors, a director
ceasing to act, or for any other reason, but not in the case of a vacancy
resulting from a failure of the members to elect the required number of
directors at an annual general meeting, the remaining directors or director may
appoint any person as a director to fill such vacancy. If after such vacancy
there is no director or the remaining directors or director neglect or refuse
to fill such vacancy, the members shall have the power to appoint between
successive annual general meetings, by ordinary resolution, any person as a
director to fill such vacancy. Any director so appointed shall hold office only
until the next following annual general meeting of the Company, but shall be
eligible for election at such meeting.
13.6 APPOINTMENT OF ADDITIONAL DIRECTORS BY DIRECTORS
Between successive annual general meetings the directors shall have power to
appoint one or more additional directors but not more than one-third of the
number of directors elected or appointed at the last annual general meeting at
which directors were elected. Any director so appointed shall hold office only
until the next following annual general meeting of the Company, but shall be
eligible for election at such meeting and so long as he is an additional
director the number of directors shall be increased accordingly.
13.7 ALTERNATE DIRECTORS
Any director may by instrument in writing, telegram, telex, telecopy or any
method of transmitting legibly recorded messages delivered to the Company
appoint any person to be his alternate to act in his place at meetings of the
directors at which he is not present unless the directors shall have reasonably
disapproved the appointment of such person as an alternate director and shall
have given notice to that effect to the director appointing the alternate
director within a reasonable time after delivery of such appointment to the
Company. Every such alternate director shall be entitled to notice of meetings
of the directors and to attend and vote as a director at a meeting at which the
person appointing him is not personally present, and, if he is a director, to
have a separate vote on behalf of the director he is representing in addition to
his own vote. A director may at any time by instrument, telegram, telex,
telecopy or any method of transmitting legibly recorded messages delivered to
the Company revoke the appointment of an alternate appointed by him. The
remuneration payable to such an alternate shall he payable out of the
remuneration of the director appointing him.
13.8 TERMINATION OF DIRECTORSHIP
The office of director shall be vacated if the director:
(i) resigns his office by notice in writing delivered to the
registered office of the Company; or
(ii) is convicted of an indictable offence and the other
directors shall have resolved to remove him; or
(iii) ceases to be qualified to act as a director pursuant to
the Company Act.
13.9 REMOVAL OF DIRECTORS
The Company may by special resolution remove any director before the expiration
of his period of office and may by an ordinary resolution appoint another person
in his stead.
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PART 14
POWERS AND DUTIES OF DIRECTORS
14.1 MANAGEMENT OF AFFAIRS AND BUSINESS
Subject to any Unanimous Shareholders Agreement, the directors shall manage, or
supervise the management of, the affairs and business of the Company and shall
have the authority to exercise all such powers of the Company as are not, by the
Company Act or by the Memorandum or these Articles, required to be exercised by
the Company in general meeting.
14.2 APPOINTMENT OF ATTORNEY
The directors may from time to time by power of attorney or other instrument
under the Seal, appoint any person to be the attorney of the Company for such
purposes, and with such powers, authorities and discretions (not exceeding those
vested in or exercisable by the directors under these Articles and excepting the
powers of the directors relating to the constitution of the Board and of any of
its committees and the appointment or removal of officers and the power to
declare dividends) and for such period, with such remuneration and subject to
such conditions as the directors may think fit, and any such appointment may be
made in favour of any corporation, firm or person or body of persons, and any
such power of attorney may contain such provisions for the protection or
convenience of persons dealing with such attorney as the directors think fit.
Any such attorney may be authorized by the directors to sub-delegate all or any
of the powers, authorities and discretions for the time being vested in him.
PART 15
DISCLOSURE OF INTEREST OF DIRECTORS
15.1 Disclosure of Conflicting Interest
A director who is, in any way, directly or indirectly interested in an existing
or proposed contract or transaction with the Company or who holds any office or
possesses any property whereby, directly or indirectly, a duty or interest might
be created in conflict with his duty or interest as a director shall disclose to
the Board the nature and extent of his interest in such contract or transaction
or of the conflict or potential conflict with his duty and interest as a
director, as the case may be, in accordance with the provisions of the Company
Act.
15.2 Voting and Quorum Regarding Proposed Contract
A director, other than a sole director, shall not vote in respect of any such
contract or transaction with the Company in which he is interested and if he
shall do so his vote shall not be counted, but he shall be counted in the quorum
present at the meeting at which such vote is taken. Subject to the provisions of
the Company Act, the foregoing prohibitions shall not apply to:
(i) any such contract or transaction relating to a loan to
the Company, which a director or a specified corporation
or a specified firm in which he has an interest has
guaranteed or joined in guaranteeing the repayment of the
loan or any part of the loan;
(ii) any contract or transaction made or to be made with, or
for the benefit of a holding corporation or a subsidiary
corporation of which a director is a director or officer;
(iii) determining the remuneration of the directors;
(iv) purchasing and maintaining insurance to cover directors
against liability incurred by them as directors; or
(v) the indemnification of any director by the Company.
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These exceptions may from time to time be suspended or amended to any extent
approved by the Company in general meeting and permitted by the Company Act,
either generally or in respect of any particular contract or transaction or for
any particular period.
15.3 DIRECTOR MAY HOLD OFFICE OR PLACE OF PROFIT WITH COMPANY
A director may hold any office or place of profit with the Company (other than
the office of auditor of the Company) in conjunction with his office of director
for such period and on such term (as to remuneration or otherwise) as the
directors may determine and no director or intended director shall be
disqualified by his office from contracting with the Company either with regard
to his tenure of any such other office or place of profit or as vendor,
purchaser or otherwise, and, subject to compliance with the provisions of the
Company Act, no contract or transaction entered into by or on behalf of the
Company in which a director is in any way interested shall be liable to be
voided by reason thereof.
15.4 DIRECTOR ACTING IN PROFESSIONAL CAPACITY
Subject to compliance with the provisions of the Company Act, a director or his
firm may act in a professional capacity for the Company (except as auditor of
the Company) and he or his firm shall be entitled to remuneration for
professional services as if he were not a director.
15.5 DIRECTOR RECEIVING REMUNERATION FROM OTHER INTERESTS
A director may be or become a director or other officer or employee of, or
otherwise interested in, any corporation or firm in which the Company may be
interested as a shareholder or otherwise, and, subject to compliance with the
provisions of the Company Act, such director shall not be accountable to the
Company for any remuneration or other benefits received by him as director,
officer or employee of, or from his interest in, such other corporation or firm,
unless the Company in general meeting otherwise directs.
PART 16
PROCEEDINGS OF DIRECTORS
16.1 CHAIRMAN AND ALTERNATE
The Chairman of the Board, if any, or in his absence the President, shall
preside as chairman at every meeting of the directors, or if there is no
Chairman of the Board or neither the Chairman of the Board nor the President is
present within fifteen minutes of the time appointed for holding the meeting or
is willing to act as chairman, or, if the Chairman of the Board, if any, and the
President have advised the Secretary that they will not be present at the
meeting, the directors present shall choose one of their number to be chairman
of the meeting.
16.2 PROCEDURE AT MEETINGS
The directors may meet together for the dispatch of business, adjourn and
otherwise regulate their meetings, as they think fit. Questions arising at any
meeting shall be decided by a majority of votes. Meetings of the Board held at
regular intervals may be held at such place, at such time and upon such notice
(if any) as the Board may by resolution from time to time determine.
16.3 CASTING VOTE
On any vote of the directors, in the event of an equality of votes, the chairman
shall not have a second or casting vote.
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16.4 MEETINGS BY CONFERENCE TELEPHONE
A director may participate in a meeting of the Board or of any committee of the
directors by means of conference telephones or other communications facilities
by means of which all directors participating in the meeting can hear each other
and provided that all such directors agree to such participation. A director
participating in a meeting in accordance with this Article shall be deemed to be
present at the meeting and to have so agreed and shall be counted in the quorum
therefor and be entitled to speak and vote thereat.
16.5 NOTICE OF MEETING
A director may, and the Secretary or an assistant Secretary upon request of a
director shall, call a meeting of the Board at any time. Reasonable notice of
such meeting specifying the place, day and hour of such meeting shall be either
delivered personally, given by mail, postage prepaid, addressed to each of the
directors and alternate directors at his address as it appears on the books of
the Company or by leaving it at his usual business or residential address or by
telephone, telegram, telex, telecopy or any method of transmitting legibly
recorded messages. It shall not be necessary to give notice of a meeting of
directors to any director or alternate director if such meeting is to be held
immediately following a general meeting at which such director shall have been
elected or is the meeting of directors at which such director is appointed or to
an alternate director if such meeting is the meeting at which his appointment is
approved.
16.6 WAIVER OF NOTICE OF MEETINGS
Any director of the Company may file with the Secretary a document executed by
him waiving notice of any past, present or future meeting or meetings of the
directors being, or required to have been, sent to him and may at any time
withdraw such waiver with respect to meetings held thereafter.
After filing such waiver with respect to future meetings and until such waiver
is withdrawn no notice need be given to such director and unless the director
otherwise requires in writing to the Secretary, to his alternate director, of
any meeting of directors and all meetings of the directors so held shall be
deemed not to be improperly called or constituted by reason of notice not having
been given to such director or alternate director.
16.7 QUORUM
The quorum necessary for the transaction of the business of the directors may be
fixed by the directors and if not so fixed shall be two directors or, if the
number of directors is fixed at one, shall be one director.
16.8 CONTINUING DIRECTORS MAY ACT DURING VACANCY
The continuing directors may act notwithstanding any vacancy in their body, but,
if and so long as the number is reduced below the number fixed pursuant to these
Articles as the necessary quorum of directors, the continuing directors may act
for the purpose of increasing the number of directors to that number, or of
summoning a general meeting of the Company, but for no other purpose.
16.9 VALIDITY OF ACTS OF DIRECTORS
Subject to the provisions of the Company Act, all acts done by a meeting of the
directors or of a committee of directors, or by any person acting as a director,
shall, notwithstanding that it be afterwards discovered that there was some
defect in the qualification, election or appointment of any such directors or of
the members of such committee or person acting as aforesaid, or that they or any
of them were disqualified, be as valid as if every such person had been duly
elected or appointed and was qualified to be a director.
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16.10 RESOLUTION IN WRITING EFFECTIVE
A resolution consented to in writing, whether by document, telegram, telex,
telecopy or any method of transmitting legibly recorded messages or other
means, by all of the directors shall be valid and effectual as if it had been
passed at a meeting of the directors duly called and held. Such resolution may
be in two or more counterparts which together shall be deemed to constitute one
resolution in writing. Such resolution shall be filed with the minutes of the
proceedings of the directors and shall be effective on the date stated thereon
or on the latest date stated on any counterpart.
PART 17
EXECUTIVE AND OTHER COMMITTEES
17.1 APPOINTMENT OF EXECUTIVE COMMITTEE
The directors may by resolution appoint an executive committee to consist of
such member or members of their body as they think fit, which committee shall
have, and may exercise during the intervals between the meetings of the Board,
all the powers vested in the Board except the power to fill vacancies in the
Board, the power to change the membership of, or fill vacancies in, said
committee or any other committee of the Board and such other powers, if any, as
may be specified in the resolution. The said committee shall keep regular
minutes of its transactions and shall cause them to be recorded in books kept
for that purpose, and shall report the same to the Board at such times as the
Board may from time to time require. The Board shall have the power at any time
to revoke or override the authority given to or acts done by the executive
committee except as to acts done before such revocation or overriding and to
terminate the appointment or change the membership of such committee and to fill
vacancies in it. The executive committee may make rules for the conduct of its
business and may appoint such assistants as it may deem necessary. A majority of
the members of said committee shall constitute a quorum thereof.
17.2 APPOINTMENT OF COMMITTEE OF DIRECTORS
The directors may by resolution appoint one or more committees consisting of
such member or members of their body as they think fit and may delegate to any
such committee between meetings of the Board such powers of the Board (except
the power to fill vacancies in the Board and the power to change the membership
of or fill vacancies in any committee of the Board and the power to appoint or
remove officers appointed by the Board) subject to such conditions as may be
prescribed in such resolution, and all committees so appointed shall keep
regular minutes of their transactions and shall cause them to be recorded in
books kept for that purpose, and shall report the same to the Board at such
times as the Board may from time to time require. The directors shall also have
power at any time to revoke or override any authority given to or acts to be
done by any such committees except as to acts done before such revocation or
overriding and to terminate the appointment or change the membership of a
committee and to fill vacancies in it. Committees may make rules for the conduct
of their business and may appoint such assistants as they may deem necessary. A
majority of the members of a committee shall constitute a quorum thereof.
17.3 PROCEEDINGS OF COMMITTEES
The executive committee and any other committee may meet and adjourn as it
thinks proper. Questions arising at any meeting shall be determined by a
majority of votes of the members of the committee present, and in case of an
equality of votes the chairman shall not have a second or casting vote. A
resolution approved in writing whether by document, telegram, telex, telecopy or
any method of transmitting legibly recorded messages, by all the members of the
executive committee or any other committee shall be as valid and effective as if
it had been passed at a meeting of such committee duly called and constituted.
Such resolution may be in two or more counterparts which together shall be
deemed to constitute one resolution in writing. Such resolution shall be filed
with the minutes of the proceedings of the committee and shall be effective on
the date stated thereon or on the latest date stated in any counterpart.
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PART 18
OFFICERS
18.1 PRESIDENT AND SECRETARY REQUIRED
The directors shall, from time to time, appoint a president, and a secretary and
such other officers, if any, as the directors shall determine and the directors
may, at any time, terminate any such appointment. No officer shall be appointed
unless he is qualified in accordance with the provisions of the Company Act.
18.2 PERSONS HOLDING MORE THAN ONE OFFICE AND REMUNERATION
One person may hold more than one of such offices except that the offices of
president and secretary must be held by different persons unless the Company has
only one member. Any person appointed as the Chairman of the Board, the
President or the managing director shall be a director. The other officers need
not be directors. The remuneration of the officers of the Company as such and
the terms and conditions of their tenure of office or employment shall from time
to time be determined by the directors; such remuneration may be by way of
salary, fees, wages, commission or participation in profits or any other
means or all of these modes and an officer may in addition to such remuneration
be entitled to receive after he ceases to hold such office or leaves the
employment of the Company a pension or gratuity. The directors may decide what
functions and duties each officer shall perform and may entrust to and confer
upon him any of the powers exercisable by them upon such terms and conditions
and with such restrictions as they think fit and may from time to time revoke,
withdraw, alter or vary all or any of such functions, duties and powers. The
Secretary shall, inter alia, perform the functions of a secretary as specified
in the Company Act.
18.3 DISCLOSURE OF CONFLICTING INTEREST
Every officer of the Company who holds any office or possesses any property
whereby, whether directly or indirectly, duties or interests might be created in
conflict with his duties or interests as an officer of the Company shall, in
writing, disclose to the President the fact and the nature, character and extent
of the conflict.
PART 19
INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES
19.1 INDEMNIFICATION OF DIRECTORS
Subject to the provisions of the Company Act, the directors shall cause the
Company to indemnify a director or former director of the Company and the
directors may cause the Company to indemnify a director or former director of a
corporation of which the Company is or was a shareholder and the heirs and
personal representatives of any such person against all costs, charges and
expenses, including an amount paid to settle an action or satisfy a judgment,
actually and reasonably incurred by him or them including an amount paid to
settle an action or satisfy a judgment in a civil, criminal or administrative
action or proceeding to which he is or they are made a party by reason of his
being or having been a director of the Company or a director of such
corporation, including any action brought by the Company or any such
corporation. Each director of the Company on being elected or appointed shall be
deemed to have contracted with the Company on the terms of the foregoing
indemnity.
19.2 INDEMNIFICATION OF OFFICERS, EMPLOYEES, AGENTS
Subject to the provisions of the Company Act, the directors may cause the
Company to indemnify any officer, employee or agent of the Company or of a
corporation of which the Company is or was a shareholder (notwithstanding that
he is also a director) and his heirs and personal representatives against all
costs, charges and expenses whatsoever incurred by him or them and resulting
from his acting as an officer, employee or agent of the Company or such
corporation. In addition the Company shall indemnify the Secretary or an
assistant Secretary of the Company (if he shall not be a full time employee of
the Company and notwithstanding that he is also a director) and his respective
heirs and legal representatives
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against all costs, charges and expenses whatsoever incurred by him or them and
arising out of the functions assigned to the office of the secretary by the
Company Act or these Articles and each such Secretary and assistant Secretary
shall on being appointed be deemed to have contracted with the Company on the
terms of the foregoing indemnity, provided such Secretary or assistant
Secretary has acted honestly and in good faith with a view to the best interests
of the Company, or he had reasonable grounds for believing that his conduct was
lawful.
19.3 INDEMNIFICATION NOT INVALIDATED BY NON-COMPLIANCE
The failure of a director or officer of the Company to comply with the
provisions of the Company Act, the Memorandum or these Articles shall not
invalidate any indemnity to which he is entitled under this Part.
19.4 COMPANY MAY PURCHASE INSURANCE
The directors may cause the Company to purchase and maintain insurance for the
benefit of any person who is or was serving as a director, officer, employee or
agent of the Company or as a director, officer, employee or agent of any
corporation of which the Company is or was a shareholder and his heirs or
personal representatives against any Liability incurred by him as such director,
officer, employee or agent.
PART 20
DIVIDENDS AND RESERVE
20.1 DECLARATION OF DIVIDENDS
The directors may from time to time declare and authorize payment of such
dividends, if any, as they may deem advisable and need not give notice of such
declaration to any member. No dividend shall be paid otherwise than out of funds
or assets, or both, properly available for the payment of dividends and a
declaration by the directors as to the amount of such funds or assets available
for dividends shall be conclusive. The Company may pay any such dividend wholly
or in part by the distribution of specific assets and in particular by paid up
shares, bonds, debentures or other securities of the Company or any other
corporation or in any one or more such ways as may be authorized by the Company
or the directors and where any difficulty arises with regard to such a
distribution the directors may settle the same as they think expedient, and in
particular may fix the value for distribution of such specific assets or any
part thereof, and may determine that cash payments in substitution for all or
any part of the specific assets to which any members are entitled shall be made
to any members on the basis of the value so fixed in order to adjust the rights
of all parties and may vest any such specific assets in trustees for the persons
entitled to the dividend as may seem expedient to the directors.
20.2 DECLARED DIVIDEND DATE
Any dividend declared on shares of any class by the directors may be made
payable on such date as is fixed by the directors.
20.3 PROPORTIONATE TO NUMBER OF SHARES HELD
Subject to the Company Act and to the rights of members (if any) holding shares
with special rights as to dividends, all dividends on shares of any class shall
be declared and paid according to the number of such shares held.
20.4 RESERVES
The directors may, before declaring any dividend, set aside out of the funds
properly available for the payment of dividends such sums as they think proper
as a reserve or reserves, which shall, at the discretion of the directors, be
applicable for meeting contingencies, or for equalizing dividends, or for any
other purpose to which such funds of the Company may be properly applied, and
pending such application may, at the like discretion, either be employed in the
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business of the Company or be invested in such investments as the directors may
from time to time think fit. The directors may also, without placing the same in
reserve, carry forward such funds, which they think prudent not to divide.
20.5 RECEIPTS FROM JOINT HOLDERS
If several persons are Joint Registered Owners of any share, any one of them may
give an effective receipt for any dividend, bonus or other moneys payable in
respect of the share.
20.6 NO INTEREST ON DIVIDENDS
No dividend shall bear interest against the Company. Where the aggregate
dividend to which a member is entitled includes a fraction of a cent, such
fraction shall be disregarded in making payment thereof and such payment shall
be deemed to be payment in full.
20.7 PAYMENT OF DIVIDENDS
Any dividend, bonus or other moneys payable in cash in respect of shares may be
paid by cheque or warrant sent through the post directed to the registered
address of the Registered Owner, or in the case of Joint Registered Owners, to
the registered address of that one of the Joint Registered Owners who is first
named on the register, or to such person and to such address as the Registered
Owner or Joint Registered Owner may direct in writing. Every such cheque or
warrant shall be made payable to the order of the person to whom it is sent. The
mailing of such cheque or warrant shall, to the extent of the sum represented
thereby (plus the amount of any tax required by law to be deducted), discharge
all liability for the payment of such dividend, bonus or other moneys unless
such cheque or warrant shall not be paid on presentation or the amount of tax so
deducted shall not be paid to the appropriate taxing authority.
20.8 CAPITALIZATION OF UNDISTRIBUTED SURPLUS
Notwithstanding anything contained in these Articles the directors may from time
to time capitalize any retained earnings or surplus of the Company and may from
time to time issue as fully paid and non-assessable any unissued shares, or any
bonds, debentures or debt obligations of the Company as a dividend representing
such retained earnings or surplus or any part thereof.
PART 21
DOCUMENTS, RECORDS AND REPORTS
21.1 DOCUMENTS TO BE KEPT
The Company shall keep at its records office or at such other place as the
Company Act may permit, the documents, copies, registers, minutes, and records
which the Company is required by the Company Act to keep at its records office
or such other place, as the case may be.
21.2 ACCOUNTS TO BE KEPT
The Company shall cause to be kept proper books of account and accounting
records in respect of all financial and other transactions of the Company in
order properly to record the financial affairs and condition of the Company and
to comply with the Company Act.
21.3 INSPECTION OF ACCOUNTS
Unless the directors determine otherwise, or unless otherwise determined by an
ordinary resolution, no member of the Company shall be entitled to inspect the
accounting records of the Company.
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21.4 FINANCIAL STATEMENTS AND REPORTS
The directors shall from time to time at the expense of the Company cause to be
prepared and laid before the annual general meeting such financial statements
and reports as are required by the Company Act.
21.5 MEMBER TO RECEIVE FINANCIAL STATEMENTS
Every member shall be entitled to be furnished once gratis on demand with a copy
of the latest annual financial statement of the Company and, if so required by
the Company Act, a copy of each such annual financial statement and interim
financial statement shall be mailed to each member.
PART 22
NOTICES
22.1 METHOD OF GIVING NOTICE
A notice, statement or report may be given or delivered by the Company to any
member either by delivery to him personally or by sending it by mail to him to
his address as recorded in the register of members. Where a notice, statement or
report is sent by mail, service or delivery of the notice, statement or report
shall be deemed to be effected by properly addressing, prepaying and mailing the
notice, statement or report and to have been given on the day (Saturdays,
Sundays and holidays excepted) following the date of mailing. A certificate
signed by the Secretary or other officer of the Company or of any other
corporation acting in that behalf for the Company that the letter, envelope or
wrapper containing the notice, statement or report was so addressed, prepaid and
mailed shall be conclusive evidence thereof.
22.2 NOTICE TO JOINT HOLDER
A notice, statement or report may be given or delivered by the Company to the
Joint Registered Owners of a share by giving the notice to the Joint Registered
Owner first named in the register of members in respect of the share.
22.3 NOTICE TO PERSONAL REPRESENTATIVE
A notice, statement or report may be given or delivered by the Company to the
persons entitled to a share in consequence of the death, bankruptcy or
incapacity of a member by sending it through the mail prepaid addressed to them
by name or by the title of representatives of the deceased or incapacitated
person or trustee of the bankrupt, or by any like description, at the address
(if any) supplied to the Company for the purpose by the persons claiming to be
so entitled, or (until such address has been so supplied) by giving the notice
in a manner in which the same might have been given if the death, bankruptcy or
incapacity had not occurred.
22.4 PERSONS TO RECEIVE NOTICE
Notice of every meeting of members shall be given in a manner hereinbefore
authorized to every member holding, at the time of the issue of the notice or
the date fixed for determining the members entitled to such notice, whichever is
the earlier, shares which confer the right to notice of and to attend and vote
at any such meeting. No other person except the auditor of the Company and the
directors of the Company shall be entitled to receive notices of any such
meeting.
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PART 23
RECORD DATES
23.1 RECORD DATE
The directors may fix in advance a date, which shall not be more than the
maximum number of days permitted by the Company Act preceding the date of any
meeting of members or of the payment of any dividend or of the proposed taking
of any other proper action requiring the determination of members as the record
date for the determination of the members entitled to notice of, or to attend
and vote at, any such meeting and any adjournment thereof, or entitled to
receive payment of any such dividend or for any other proper purpose and, in
such case, notwithstanding anything elsewhere contained in these Articles, only
members of record on the date so fixed shall be deemed to be members for the
purposes aforesaid.
23.2 NO CLOSURE OF REGISTER OF MEMBERS
Where no record date is so fixed for the determination of members as provided in
the preceding Article the date on which the notice is mailed or on which the
resolution declaring the dividend is adopted, as the case may be, shall be the
record date for such determination.
PART 24
SEAL
24.1 AFFFIXATION OF SEAL TO DOCUMENTS
The directors may provide a Seal for the Company and, if they do so, shall
provide for the safe custody of the Seal which may be affixed to any instrument
in the presence of the President of the Company without the necessity of a
resolution of the directors, or by such person or persons as may be authorized
by a resolution of the directors. For the purpose of certifying under seal true
copies of any document or resolution the Seal may be affixed in the presence of
any director, officer or the solicitor of the Company.
24.2 MECHANICAL REPRODUCTION OF SIGNATURES
To enable the Seal to be affixed to any bonds, debentures, share certificates,
or other securities of the Company, whether in definitive or interim form, on
which facsimiles of any of the signatures of the directors or officers of the
Company are, in accordance with the Company Act and these Articles, printed or
otherwise mechanically reproduced there may be delivered to the firm or company
employed to engrave, lithograph, or print such definitive or interim bonds,
debentures, share certificates or other securities one or more unmounted dies
reproducing the Seal and the Chairman of the Board, the President, the managing
director or a Vice-President and the Secretary, treasurer, secretary-treasurer,
an assistant Secretary, an assistant treasurer or an assistant secretary-
treasurer may by a document authorize such firm or company to cause the Seal to
be affixed to such definitive or interim bonds, debentures, share certificates
or other securities by the use of such dies. Bonds, debentures, share
certificates or other securities to which the Seal has been so affixed shall for
all purposes be deemed to be under and to bear the Seal lawfully affixed
thereto.
24.3 OFFICIAL SEAL FOR OTHER JURISDICTIONS
The Company may have for use in any other province, state, territory or country
an official seal which shall have on its own face the name of the province,
state, territory or country where it is to be used and all of the powers
conferred by the Company Act with respect thereto may be exercised by the
directors or by a duly authorized agent of the Company.
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PART 25
RESTRICTIONS
25.1 Restriction on Transfer of Shares
Notwithstanding anything contained in these Articles, the directors may, in
their absolute discretion, decline to register any transfer of shares and shall
not be required to disclose their reasons therefor; provided that at such time
as a class of shares in the capital of the Company have been listed for trading
on any stock exchange or any regulatory authority has accepted for filing and
has issued a receipt for a prospectus qualifying the distribution of such shares
to the public, any restriction on the transfer of such shares shall, by that
fact, be removed.
FULL NAME, RESIDENT ADDRESS NUMBER AND KIND AND CLASS OF
AND OCCUPATION OF SUBSCRIBER SHARES TAKEN BY SUBSCRIBER
/s/ DOUGLAS H. HOPKINS ONE (1) COMMON SHARE
- -------------------------------
DOUGLAS H. HOPKINS, Solicitor
1650 Edgewater Lane
North Vancouver, British Columbia
V7H 2M1
------------------------------
TOTAL SHARES TAKEN: ONE (1) COMMON SHARE
DATED the 26th day of April, 1995.
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Certificate of
Incorporation No. 496150
PROVINCE OF BRITISH COLUMBIA I CERTIFY THIS IS A COPY OF A
DOCUMENT FILED ON
DEC 1 4 1995.
FORM 21
(Section 371)
COMPANY ACT /s/ J.S. Powell
-----------------------
JOHN S. POWELL
REGISTRAR OF COMPANIES
PROVINCE OF BRITISH COLUMBIA
SPECIAL RESOLUTION
The following special resolution was passed by the undermentioned Company on the
date stated:
Name of Company: B.P.Y.A. 1363 HOLDINGS LTD.
Date resolution passed: November 23, 1995
Resolution:
RESOLVED, as special resolutions, that:
1. The name of the Company be changed to VENTURE PACIFIC CAPITAL CORPORATION.
2. The Memorandum, as altered by these resolutions, be in the form attached
hereto and marked Schedule "A" so that the Memorandum as altered shall, at
the time of filing, comply with the Company Act British Columbia.
CERTIFIED a true copy the 23rd day of November, 1995.
/s/ illegible
----------------------------------
Signature
Director
----------------------------------
Relationship to Company
81
SCHEDULE "A"
ALTERED MEMORANDUM
(as altered by Special Resolution dated November 23, 1995)
OF
VENTURE PACIFIC CAPITAL CORPORATION
1. The name of the company is VENTURE PACIFIC CAPITAL CORPORATION.
2. The authorized capital of the company consists of Ten Million (10,000,000)
Common shares without par value.
82
NUMBER: 496150
[SEAL]
CERTIFICATE
OF
CHANGE OF NAME
COMPANY ACT
CANADA
PROVINCE OF BRITISH COLUMBIA
I HEREBY CERTIFY that
B.P.Y.A. 1363 HOLDINGS LTD.
has this day changed its name to
VENTURE PACIFIC CAPITAL CORPORATION
ISSUED under my hand at Victoria, British Columbia
on December 14, 1995
/s/ J.S. POWELL
-----------------------
[SEAL] JOHN S. POWELL
Registrar of Companies