APPENDIX C EXAMPLE OF ESTATE FREEZE SHARE PROVISIONS INCLUDING

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APPENDIX C EXAMPLE OF ESTATE FREEZE SHARE PROVISIONS INCLUDING Powered By Docstoc
					                          APPENDIX “C”
            EXAMPLE OF ESTATE FREEZE SHARE PROVISIONS
               INCLUDING PRICE ADJUSTMENT CLAUSE
Corporation having two classes of shares:
  1. Common Shares, and
  2. Special Shares (non-voting, redeemable, retractable and including a
     price adjustment clause)

Ontario Corporation Articles of Incorporation paragraph 7; Canada
Corporation Articles of Incorporation paragraph 3:

A.     CLASS A SPECIAL SHARES

(a) Voting:

The Class A Special Shares are voting shares and the holders of Class A Special
Shares are entitled to one vote per Class A Special Share.

(b)    Redemption:

The Class A Special Shares are redeemable as follows:

i. The directors may determine, at any time and from time to time, to redeem the
   whole or any part of the then outstanding Class A Special Shares (such
   share or shares are referred to as the "Redeemed Share" or "Redeemed
   Shares" as the case may be);

ii. The procedure for such redemption, including the giving of notice, if any, shall
    be determined by the directors, acting reasonably;

iii. The Class A Special Shares may be redeemed either on a pro-rata basis or
     otherwise;

iv. The redemption price shall be an amount per Redeemed Share equal to:

      aa.    the fair value of the property or past service in consideration of which
             the share was issued determined by the directors in accordance with
             section 23 of the Business Corporations Act;

      Plus

      bb.    all declared and unpaid non-cumulative cash dividends on such share;

      the aggregate redemption price is referred to, in the case of each registered
      holder, as the "Redemption Amount";

v. On or after the date specified for redemption (the "Redemption Date") the
   registered holders of the Redeemed Shares shall be entitled to payment of
   the Redemption Amount on presentation and surrender at the Corporation's
   registered office or other place designated by the directors in the notice of
   redemption, of certificates for the Redeemed Shares, endorsed for transfer to
   the Corporation;

vi. If less than all of the Class A Special Shares represented by any certificate
    are redeemed, the registered holder shall be entitled to receive a new
    certificate for the number of shares represented by the original certificate
    which are not redeemed;

vii. From and after the Redemption Date, the holders of the Redeemed Shares
     shall cease to be entitled to dividends and shall not be entitled to exercise any
     of the rights of shareholders in respect of the Redeemed Shares unless the
     Corporation has defaulted on payment of the Redemption Amount.

(c)    Retraction:

The Class A Special Shares are retractable as follows:

i.    Any holder of Class A Special Shares shall be entitled to require the
      Corporation to redeem, at any time and from time to time, all or any of the
      Class A Special Shares registered in the name of such holder (such share or
      shares are referred to as the "Retracted Share" or "Retracted Shares" as the
      case may be);

ii. A Certificate or Certificates for the Retracted Shares, endorsed for transfer to
    the Corporation, shall be tendered to the Corporation at the registered office
    of the Corporation together with a notice in writing specifying

     aa.   that the registered holder desires to have the Class A Special Shares
           represented by such certificate(s) redeemed, or the number of shares
           which the holder desires to have redeemed if such number is less than
           the total number of shares represented by the certificate(s), and

     bb.   the business day ("Retraction Date") on which the holder desires to have
           the Corporation redeem such shares;

iii. The Retraction Date shall not, without the consent in writing of the
     Corporation, be less than 30 days after the day on which the notice in writing
     is given to the Corporation.

iv. The Corporation shall redeem the Retracted Shares on the Retraction Date;
v. The retraction price shall be the Redemption Amount;

vi. If less than all of the Class A Special Shares represented by any certificate
    are redeemed, the registered holder shall be entitled to receive a new
    certificate for the number of shares represented by the original certificate
    which are not redeemed;

vii. From and after the Retraction Date, the holders of the Retracted Shares shall
     cease to be entitled to dividends and shall not be entitled to exercise any of
     the rights of shareholders in respect of the Retracted Shares unless the
     Corporation has defaulted on payment of the Redemption Amount.

(d) Dividends:

The Corporation may:

i. from time to time and in the absolute discretion of the directors;

ii. pay non-cumulative dividends on the Class A Special Shares at a rate per
    share per annum not to exceed 7% of the amount equal to the amount
    recorded in the stated capital account maintained in respect of the Class A
    Special Shares divided by the number of Class A Special Shares outstanding.

The holders of the Class A Special Shares shall not be entitled to any dividends
other than or in excess of the non-cumulative dividends provided for in this
paragraph.

B.   PURCHASE FOR CANCELLATION

The Common Share and the Class A Special Shares, or any of them, may be
purchased, in whole or part, for cancellation by the Corporation at its option and
at any time and from time to time as follows:

(a) Such purchase may be pursuant to tenders or, with the unanimous consent
of the holders of all issued Common Shares and Class A Special Shares, as
applicable, by private contract;

(b) The purchase price shall be the lowest price at which, in the opinion of the
directors, such shares are obtainable but, in the case of the Class A Special
Shares, not exceeding the Redemption Amount;

(c) If, in response to an invitation for tenders, shareholders submit tenders at
the same price for more shares than the directors propose to purchase, then
such tenders shall be accepted, if at all, on a pro-rata basis.
E.   PRICE ADJUSTMENT

Where a person, firm or corporation subscribes for Class A Special Shares and
the consideration for the issue of such shares is other than a cash payment, the
subscription price for any such shares shall be the tax cost to the subscribing
Shareholder of the property transferred to the Corporation by the subscribing
shareholder in satisfaction of the subscription price (the "transferred property"). If,
notwithstanding the manner in which the Corporation and subscribing
shareholder have agreed to determine the tax cost of the transferred property:

(a) There shall be issued to either the Corporation or the subscribing
shareholder a notice of assessment or reassessment pursuant to any taxing
statute, which assessment or reassessment is based upon an assumption of fact
or a finding by any taxing authority that the subscribing shareholder's tax cost of
any transferred property is different from that determined by the Corporation and
the subscribing shareholder; or

(b) Any taxing authority notifies either the Corporation or the subscribing
shareholder that it intends to issue such notice of assessment or reassessment;

then, subject to the rights of the Corporation or the subscribing shareholder, if
any, to object to or appeal such assessment to any authority, the subscription
price of the shares issued in consideration of the transferred property as at the
date of the issue of such shares shall be deemed to be and to have always been
the value of the transferred property as finally agreed to between such taxing
authority and the Corporation or the subscribing shareholder, as the case may
be, or where either the Corporation or the subscribing shareholder has objected
to or appealed any such assessment or reassessment, as finally determined by
such authority. Such value, however determined, shall be substituted for the
value originally determined, and the subscription price and manner of payment
shall be adjusted accordingly.

F.   LIQUIDATION, DISSOLUTION OR WINDING-UP

In the event of the liquidation, dissolution or winding-up of the Corporation,
whether voluntary or involuntary, or other distribution of property of the
Corporation among shareholders for the purpose of winding-up its affairs:

(a) Class A Special Shares - Priority: The holders of the Class A Special
Shares shall be entitled to receive from the property of the Corporation a sum
equivalent to the aggregate Redemption Amount of all of the Class A Special
Shares held by them respectively before any amount shall be paid or any
property of the Corporation distributed to the holders of the Common Shares.
The holders of the Class A Special Shares shall not be entitled to share in any
further distribution of the property of the Corporation.
(b) Net Equity: The holders of the Common Shares shall be entitled to receive
the remaining property of the Corporation.