As filed
with the Securities and Exchange Commission on July 22, 2010
|
UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13E-4F
ISSUER TENDER OFFER STATEMENT
PURSUANT TO SECTION
13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
Quest Capital
Corp.
(
Exact name of Issuer as specified in its
Charter)
Canada
(Jurisdiction of Issuers Incorporation
or Organization)
Quest Capital Corp.
(Name(s) of Person(s)
Filing Statement)
Common Shares
(Title of Class of
Securities)
74835U109
(CUSIP Number of Class of Securities
(if applicable))
Sandra Lee
Corporate Secretary
Quest Capital Corp
.
Suite 1028 550 Burrard Street
Vancouver, British Columbia,
Canada V6C 2B5
(604) 689 - 1428
(Name, address (including zip
code) and telephone number (including area code) of person authorized to receive
notices and communications on behalf of the person(s) filing statement)
July 22, 2010
(Date tender offer first
published, sent or given to security holders)
CALCULATION OF FILING FEE
Transaction
Valuation
|
Amount of Filing Fee
|
US$57,756,000
(1)
|
US$4,118
(1)
|
(1)
|
The fee has been calculated pursuant to the instructions
for Schedule 13E-4F as prescribed by Section 13(e)(3) of the Securities
Exchange Act of 1934, as amended, based on a maxi mum aggregate purchase
price of Cdn$60 million and based on an exchange rate of Cdn$1.00 to
US$0.9626, the inverse of the noon buying rate in The City of New York for
cable transfers in Canadian dollars as certified for customs purposes by
the Federal Reserve Bank of New York on July 16,
2010.
|
[ ] Check box if any part of the fee is offset as provided by
Rule 0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
Amount Previously Paid:
|
Registration No.:
|
Filing Party:
|
|
Form/Schedule:
|
Date Filed:
|
Table of Contents
PART I
INFORMATION REQUIRED TO BE
SENT TO SHAREHOLDERS
This document is important and requires your immediate attention.
If you are in any doubt as to how to deal with it, you should consult your investment
dealer, stock broker, bank manager, lawyer or other professional advisor. The
Offer has not been approved or disapproved by any securities regulatory authority
nor has any securities regulatory authority passed upon the fairness or merits
of the Offer or upon the adequacy of the information contained in this document.
Any representation to the contrary is unlawful.
This document does not constitute an offer or a solicitation
to any person in any jurisdiction in which such offer or solicitation is unlawful.
The Offer is not being made to, and deposits will not be accepted from or on
behalf of, persons in any jurisdiction in which the making or acceptance of
the Offer would not be in compliance with the laws of any such jurisdiction.
However, Quest Capital Corp. may, in its sole discretion, take such action as
it may deem necessary to extend the Offer to persons in any such jurisdiction.
QUEST CAPITAL CORP.
OFFER TO PURCHASE FOR NOT MORE THAN CDN$ 60,000,000 IN CASH
up to 44,444,444 of its Common Shares at a purchase price of
not less than Cdn$ 1.35 and not more than Cdn$ 1.60 per Common Share
Quest Capital Corp. (
Quest
or the
Corporation
) hereby offers to purchase for cancellation
from the holders (the
Shareholders
) of common shares in the
capital of the Corporation (the
Shares
) up to Cdn$ 60,000,000
in value of its Shares, on the terms and subject to the conditions set forth
herein. The Corporation will determine a single price per Share (the
Purchase
Price
), which will not be less than Cdn$ 1.35 per Share or more than
Cdn$ 1.60 per Share, that will enable it to purchase the maximum number of Shares
that are properly deposited pursuant to the Offer having an aggregate purchase
price not exceeding Cdn$ 60,000,000. If the Purchase Price is determined to
be Cdn$ 1.35 (which is the minimum Purchase Price under the Offer (as defined
below)), the maximum number of Shares that may be purchased by the Corporation
is 44,444,444.
A Shareholder may deposit Shares
pursuant to (i) auction tenders in which the Shareholder specifies a price of
not less than Cdn$ 1.35 per Share or more than Cdn$ 1.60 per Share (each an
Auction Tender
), in increments of Cdn$ 0.01 per Share, as
specified by such Shareholder, or (ii) purchase price tenders in which the Shareholder
does not specify a price per Share, but rather agrees to have the Shareholders
Shares purchased at the Purchase Price that is determined as provided herein
(each a
Purchase Price Tender
).
The offer by the Corporation and
all deposits of Shares are subject to the terms and conditions set forth in
the offer to purchase (
Offer to Purchase
), the accompanying
issuer bid circular (
Circular
), and the related letter of
transmittal (the
Letter of Transmittal
) and notice of guaranteed
delivery (the
Notice of Guaranteed Delivery
) (which together
constitute and are herein referred to as the
Offer
).
Each Shareholder who has properly
deposited Shares pursuant to an Auction Tender at or below the Purchase Price
or pursuant to a Purchase Price Tender, and who has not validly withdrawn such
Shares, will receive the Purchase Price, payable in cash (subject to applicable
withholding taxes, if any), for all Shares purchased, on the terms and subject
to the conditions of the Offer, including the provisions relating to pro ration
described herein.
If the aggregate purchase price for Shares properly deposited
by the Expiration Date (as defined herein) pursuant to Auction Tenders at or
below the Purchase Price and/or pursuant to Purchase Price Tenders would exceed
Cdn$ 60,000,000, Quest will, upon the terms and subject to the conditions of
the Offer, purchase at the Purchase Price the Shares so deposited on a pro rata
basis, except that Odd Lot tenders (as described herein) will not
be subject to pro ration. See Offer to Purchase Number of Shares
and Pro Ration.
This Offer expires at 5:00 p.m.
(Toronto time) on August 30, 2010, unless extended, varied or withdrawn by Quest
(the Expiration Date). The Offer is not conditional upon any minimum
number of Shares being deposited. The Offer is, however, subject to certain
other conditions that are customary for transactions of this nature. Quest reserves
the right to withdraw the Offer and not take up and pay for any Shares deposited
under the Offer unless certain conditions are satisfied or waived. See
Offer
to Purchase
Conditions of the Offer
.
1
The Corporation will determine
the Purchase Price, which will not be less than Cdn$ 1.35 or more than Cdn$
1.60, taking into account the respective numbers of Shares deposited pursuant
to Auction Tenders and Purchase Price Tenders and the prices specified by Shareholders
making Auction Tenders. The Purchase Price will be the lowest price between
Cdn$ 1.35 and Cdn$ 1.60 at which Shares have been validly deposited, or have
been deemed to be deposited, that will enable the Corporation to purchase the
maximum number of deposited Shares, with an aggregate purchase price not exceeding
Cdn$ 60,000,000. Shares deposited by a Shareholder pursuant to an Auction Tender
will not be purchased by the Corporation pursuant to the Offer if the price
specified by the Shareholder is greater than the Purchase Price determined by
the Corporation. Shareholders who wish to deposit Shares without specifying
a price at which such Shares may be purchased by the Corporation should make
a Purchase Price Tender. Under a Purchase Price Tender, Shares will be purchased
at the Purchase Price determined as provided herein. Shareholders who validly
deposit Shares without specifying whether they are making an Auction Tender
or a Purchase Price Tender, or who specify that they are making an Auction Tender
but fail to specify a price for such Auction Tender, will be deemed to have
made a Purchase Price Tender. For the purpose of determining the Purchase Price,
Shares deposited pursuant to a Purchase Price Tender will be deemed to have
been deposited at Cdn$1.35 per Share (which is the minimum Purchase Price under
the Offer).
Primary Capital Inc. (
Primary
Capital
) was engaged by the Corporation to prepare a liquidity opinion
(the
Liquidity Opinion
) as prescribed under Multilateral
Instrument 61-101
Protection of Minority Security Holders in Special
Transactions
. The Liquidity Opinion delivered by Primary Capital to the
board of directors of the Corporation (the
Board of Directors
)
concludes that, based on and subject to the assumptions and limitations stated
in the Liquidity Opinion, (i) there is a liquid market for the Shares at the
time of the making of the Offer, and (ii) it is reasonable to conclude that,
following the completion of the Offer in accordance with its terms, there will
be a market for the Shareholders who do not tender to the Offer that is not
materially less liquid than the market that existed at the time of the making
of the Offer. A copy of the Liquidity Opinion of Primary Capital is attached
hereto as Schedule A. The Liquidity Opinion is subject to the qualifications,
assumptions and restrictions set out therein and any summary of the Liquidity
Opinion appearing in the Offer is qualified in its entirety by reference to
the Liquidity Opinion itself.
The Shares are listed and posted
for trading on the Toronto Stock Exchange (the
TSX
) under
the symbol QC and on the NYSE Amex Equities Exchange (the
NYSE
Amex
) under the symbol QCC.
The intention to make the Offer
was announced on June 10, 2010. The closing prices of the Shares on the TSX
and the NYSE Amex on June 9, 2010, the last full trading day immediately preceding
the date of the announcement by Quest of its intention to make the Offer, were
Cdn$ 1.27 and US$ 1.22 per Share, respectively. The Offer is dated July 19,
2010. The closing prices of the Shares on the TSX and the NYSE Amex on July
16, 2010, the last full trading day prior to the date of the Offer, were Cdn$
1.55 and US$ 1.48 per Share, respectively. The maximum Purchase Price under
the Offer represents a premium of approximately 19% over the volume weighted
average trading price of the Shares on the TSX of Cdn$ 1.34 for the last 30
trading days prior to June 10, 2010, the date of the announcement by Quest of
its intention to make the Offer.
Shareholders should carefully
consider the income tax consequences of accepting the Offer and depositing Shares
under the Offer. See
Issuer Bid Circular Certain Canadian
Federal Income Tax Considerations and Issuer Bid Circular
Certain United States Federal Income Tax Considerations
.
Shareholders who wish to tender
any or all of their Shares to the Offer must complete and execute the accompanying
Letter of Transmittal in accordance with the instructions set forth therein
and deposit the completed Letter of Transmittal, together with the certificates
representing the Shares being deposited and all other documents required by
the Letter of Transmittal, at the specified office of the Depositary (as defined
herein) at or prior to the Expiration Date. Shareholders whose Shares are registered
in the name of a nominee may request their investment dealer, stock broker,
bank, trust company or other nominee to take the necessary steps to deposit
such Shares under the Offer. Shareholders who wish to deposit Shares under the
Offer and whose certificates are not immediately available may do so by following
the procedure for guaranteed delivery set forth in the Offer to Purchase under
Procedure for Depositing Shares.
Neither Quest nor the Board
of Directors, in making the decision to present the Offer to Shareholders, makes
any recommendation to any Shareholder as to whether to deposit or refrain from
depositing Shares. Shareholders are strongly urged to review and evaluate carefully
the information provided in the Offer, consult their own financial, legal, investment
and tax advisors and make their own decisions as to whether to deposit Shares
to the Offer and, if so, how many Shares to deposit, and at what price or prices.
All dollar references in the Offer
to Purchase and the Circular are in Canadian dollars (Cdn$) or United States
dollars (US$), except where otherwise indicated. On July 16, 2010, the last
full trading day prior to the date of the Offer, the noon rate of exchange as
reported by the Bank of Canada was Cdn$ 1.00 = US$ 0.949 (US$1.00 = Cdn$ 1.0537)
.
2
NO PERSON HAS BEEN AUTHORIZED
TO MAKE ANY RECOMMENDATION ON BEHALF OF THE CORPORATION OR THE BOARD OF DIRECTORS
AS TO WHETHER SHAREHOLDERS SHOULD DEPOSIT OR REFRAIN FROM DEPOSITING SHARES
PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THE OFFER OTHER THAN AS SET
FORTH IN THIS OFFER. IF GIVEN OR MADE, ANY SUCH RECOMMENDATION OR ANY SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION,
THE BOARD OF DIRECTORS OR THE DEPOSITARY.
Any questions or requests for information
regarding the Offer should be directed to the Depositary at the address and
telephone and facsimile number of the Depositary set forth on the last page
of this Offer to Purchase and Circular.
July 19, 2010
3
INFORMATION FOR UNITED STATES SHAREHOLDERS ONLY
This Offer is made by Quest, a
Canadian issuer, for its own securities. Shareholders in the United States are
permitted to participate in the Offer on the same terms as Shareholders outside
the United States. However, while the Offer to Purchase and the Circular are
subject to disclosure requirements under the laws of the provinces and territories
of Canada, Shareholders should be aware that these disclosure requirements are
different from those under the laws of the United States.
Financial statements of the Corporation
have been prepared in accordance with Canadian generally accepted accounting
principles (
GAAP
) and thus are not comparable, in all respects,
to financial statements of United States companies. Significant differences
between Canadian GAAP and United States GAAP as they relate to the Corporations
financial statements are described in Note 20 of Quests consolidated financial
statements for the years ended December 31, 2009 and 2008.
The enforcement by Shareholders
of civil liabilities under United States federal securities laws may be adversely
affected by the fact that the Corporation is incorporated under the laws of
Canada and a majority of its officers and directors are residents of countries
other than the United States. Enforcement of civil liabilities under U.S. securities
laws may further be affected adversely by the fact that some or all of the experts
named in this Offer to Purchase and the Circular may be residents of Canada.
Shareholders should be aware that
acceptance of the Offer may have tax consequences under United States law and
under Canadian law. See Issuer Bid Circular Certain Canadian Federal
Income Tax Considerations and Issuer Bid Circular Certain
United States Federal Income Tax Considerations for a general summary
of federal income tax considerations in respect of the Offer under Canadian
and United States law, respectively. This Circular does not address any income
or other tax consequences in jurisdictions outside of Canada or the United States.
Furthermore Shareholders should consult their own tax advisors regarding the
specific tax considerations applicable to them with respect to the disposition
of Shares pursuant to the Offer.
The Corporation currently expects
that the Offer will be treated as a taxable transaction for U.S. federal income
tax purposes, and that an exchange pursuant to the Offer will be fully taxable
to a U.S. holder of Shares. As such, each U.S. holder of Shares will recognize
taxable gain or loss equal to the difference between (1) the amount of cash
received in the exchange, and (2) such U.S. holders adjusted tax basis
in Shares transferred in the exchange. If the Corporation is or has been a passive
foreign investment company or PFIC for U.S.
federal income tax purposes at any time during the U.S. holders holding
period of Shares (other than a U.S. holder who timely made certain U.S. federal
income tax elections as discussed below under Issuer Bid Circular
Certain United States Federal Income Tax Considerations),
(i) any gain recognized in the exchange would be allocated rateably over the
U.S. holders holding period for Shares, (ii) the amount allocated to the
current taxable year and to any taxable year prior to the first taxable year
in which the Corporation was a PFIC would be treated as ordinary income for
the year of disposition, and (iii) the amount allocated to each other year would
be subject to tax at the highest tax rate in effect for that year and the interest
charge generally applicable to underpayments of tax would be imposed on the
resulting tax attributable to each such year.
The foregoing is a very brief
summary of U.S. federal income tax considerations only and is qualified in its
entirety by the more detailed general description of U.S. federal income tax
considerations contained under Issuer Bid Circular Certain
United States Federal Income Tax Considerations below. Neither this
description nor the longer form discussion is intended to be legal or tax advice
to any particular U.S. holder of Shares. Shareholders are urged to consult their
own tax advisors to determine the particular tax consequences to them of the
sale of Shares pursuant to the Offer.
Shareholders should be aware
that the Corporation, directly or indirectly, may bid for or purchase Shares,
or related securities, during the period of time the Offer is open, to the extent
permitted under applicable Canadian securities laws and regulations.
This transaction has not been approved
or disapproved by the United States Securities and Exchange Commission (the
SEC
) or any state securities commission, nor has the SEC
or any state securities commission passed on the accuracy or adequacy of the
Offer. Any representation to the contrary is a criminal offence.
4
AVAILABLE INFORMATION
In addition to the requirements
of applicable securities laws in the provinces and territories of Canada, Quest
is subject to the informational requirements of the United States Securities
Exchange Act of 1934, as amended (the
Exchange Act
)
and, in accordance therewith, files periodic reports with and furnishes other
information to the SEC relating to its business, financial condition and other
matters. Quest is filing an issuer tender offer statement on Schedule 13E-4F
with the SEC with respect to the Offer. Such tender offer statement and the
periodic reports filed and other information furnished by Quest may be inspected
and copied at the SECs Public Reference Room at 100 F Street, N.E., Washington,
D.C. 20549. The public may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet
web site that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC. The address
of this Internet site is
www.sec.gov
.
5
TABLE OF CONTENTS
6
SUMMARY
We are providing this summary for your convenience. It highlights
material information relating to the Offer, but you should understand that it
does not describe all of the details of the Offer to the same extent as described
elsewhere herein. We therefore urge you to read the entire Offer to Purchase,
Circular, Letter of Transmittal and Notice of Guaranteed Delivery because they
contain important information. We have included references to certain sections
of the Offer where you will find a more complete discussion.
Who is offering to purchase
my Shares?
|
Quest Capital Corp., which we
refer to as
we
,
us
, the
Corporation
or
Quest
.
|
|
|
What securities are included
in this Offer?
|
We are offering to purchase outstanding
common shares (the
Shares
). See Offer to Purchase
The Offer.
|
|
|
What will be the purchase price
of the Shares?
|
We are conducting the Offer through
a procedure called a modified Dutch Auction. This procedure
allows you to select the price within a price range specified by us at
which you are willing to sell your Shares. The price range for the Offer
is Cdn$ 1.35 to Cdn$ 1.60 per Share. You have two methods by which you
may select the price at which you are willing to sell your Shares. You
may choose an Auction Tender in which you specify the price within this
range, or you may choose a Purchase Price Tender in which you do not specify
a price, but agree to have your Shares purchased by us at the Purchase
Price we determine. If you agree to accept the Purchase Price determined
under the Offer, your Shares will be deemed to be deposited at the minimum
price of Cdn$ 1.35 per Share. The Purchase Price will be the lowest price
(not less than Cdn$ 1.35 per Share or more than Cdn$ 1.60 per Share) that
will enable us to purchase the maximum number of deposited Shares having
an aggregate purchase price not exceeding Cdn$ 60,000,000 (or such lesser
number of Shares as are properly deposited). We will determine the Purchase
Price by taking into account the numbers of Shares deposited pursuant
to Auction Tenders and Purchase Price Tenders, the prices specified by
Shareholders making Auction Tenders, and the price at which Shares deposited
pursuant to Purchase Price Tenders are deemed to be deposited.
|
|
|
|
If you wish to maximize the chance
that your Shares will be purchased, you should check the box beside the
caption A Purchase Price Tender in Box A Type
of Tender in the Letter of Transmittal, indicating that you will
accept the Purchase Price determined by us. You should understand that
this election will have the same effect as if you selected the minimum
price of Cdn$ 1.35 per Share. If your Shares are purchased under the Offer,
you will be paid the Purchase Price (subject to applicable withholding
taxes, if any (See Issuer Bid Circular - Certain Canadian Federal
Income Tax Considerations Shareholders Not Resident in Canada))
in cash, without interest, promptly following the expiration of the Offer.
Under no circumstances will we pay you interest on the Purchase Price,
even if there is a delay in making payment. See Offer to Purchase
Purchase Price.
|
|
|
|
All Shares purchased by us, including
Shares deposited at or below the Purchase Price pursuant to Auction Tenders
and Shares deposited pursuant to Purchase Price Tenders, will be purchased
at the Purchase Price.
|
7
How many Shares will Quest
purchase?
|
We are offering to purchase for
cancellation Shares that have an aggregate purchase price of Cdn$ 60,000,000.
At the maximum purchase price of Cdn$ 1.60 per Share, we could purchase
37,500,000 Shares. At the minimum purchase price of Cdn$ 1.35 per Share,
we could purchase 44,444,444 Shares. Since we will only be able to determine
the Purchase Price after the Expiration Date, the number of Shares that
we will purchase will not be known until after the Expiration Date. See
Offer to Purchase Number of Shares and Pro Ration.
|
|
|
|
We will return all Shares not
purchased under the Offer, including Shares deposited pursuant to Auction
Tenders at prices greater than the Purchase Price, Shares not purchased
as a result of pro ration and Shares not accepted for purchase.
|
|
|
Why is Quest making this
Offer?
|
As was announced on June 10,
2010, subject to Shareholder approval, in the future Quest intends to
discontinue its current real estate lending business and to change its
lending strategy to focus instead on natural resource lending. Its business
will be primarily directed to bridge and mezzanine lending to precious
metal mining, exploration and development companies and oil and gas companies
and will include financing base metal mining, exploration and development
companies and other resource related businesses. While the Offer is not
dependent on the completion of this reorganization, the Board of Directors
believes that the Offer may accommodate the needs of Shareholders who
are focused on real estate by allowing them to tender their Shares to
the Offer. Furthermore, the Board of Directors believes that the purchase
of Shares pursuant to the Offer represents an effective and desirable
use of part of the Corporations available cash. See Issuer
Bid Circular Purpose and Effect of the Offer.
|
|
|
How will Quest pay for the
Shares purchased under
the Offer?
|
We will fund the purchase of
Shares under the Offer and the payment of related fees and expenses with
cash on hand, cash generated by further monetization of existing loans
and through the use, if necessary, of a Cdn$ 35,000,000 stand-by commitment.
See Issuer Bid Circular Source Of Funds.
|
|
|
How do I tender my Shares?
|
To tender your Shares: (a) you
must deliver your Share certificate(s) and a properly completed and duly
executed Letter of Transmittal to the Depositary at the address appearing
on the back cover page of this Offer to Purchase and Circular, or (b)
tender in accordance with the procedures for book-entry transfer established
by CDS Clearing and Depository Services Inc. in Canada, or (c) tender
through the Depositary Trust Company pursuant to DTCs Automated
Tender Offer Program. If you are not able to deliver the certificate(s)
for the Shares being deposited pursuant to the Offer, cannot complete
the book-entry transfer procedures described in the Offer to Purchase
or all required documents do not reach the Depositary within the prescribed
time period, you must follow the guaranteed delivery procedure described
in Offer to Purchase Procedure for Depositing Shares.
|
|
|
|
If your Shares are held through
an investment dealer, stock broker, bank, trust company or other nominee,
you must request such investment dealer, stock broker, bank, trust company
or other nominee to effect the transaction for you. You may also contact
the Depositary for assistance. See Offer to Purchase Procedure
for Depositing Shares and the instructions in the related Letter
of Transmittal.
|
|
|
|
You may deposit Shares either
pursuant to an Auction Tender (as described below) or pursuant to a Purchase
Price Tender (as described below). You may deposit some Shares pursuant
to an Auction Tender and other Shares pursuant to a Purchase Price Tender.
|
8
|
Auction Tenders
: In making
an Auction Tender, you must specify the minimum price per Share (not less
than Cdn$ 1.35 or more than Cdn$ 1.60 per Share, in increments of Cdn$0.01
per Share) at which you are willing to have such Shares purchased by us.
We will not purchase your Shares if the purchase price you specify in
your Auction Tender is greater than the Purchase Price determined by us.
|
|
|
|
Purchase Price Tenders
:
If you wish to deposit Shares but you do not wish to specify a price at
which such Shares may be purchased by us, you should make a Purchase Price
Tender. For the purpose of determining the Purchase Price, all Shares
deposited pursuant to Purchase Price Tenders will be deemed to have been
deposited at Cdn$1.35 per Share (which is the minimum Purchase Price under
the Offer). See Offer to Purchase The Offer.
|
|
|
Can I tender portions of my
Shares at different prices?
|
Yes, you can elect to tender
some of your Shares at one price and some of your Shares at another price.
However, you cannot tender the same Shares at different prices. If you
tender some Shares at one price and other Shares at another price, you
must use a separate Letter of Transmittal for each such tender. See Offer
to Purchase Procedure for Depositing Shares.
|
|
|
How long do I have to tender
my Shares? Can the Offer be
extended, varied or
terminated?
|
You may tender your shares until
the Offer expires. The Offer expires at 5:00 p.m. (Toronto time) on August
30, 2010, unless extended, varied or withdrawn by Quest. If an investment
dealer, stock broker, bank, trust company or other nominee holds your
Shares, it is likely that the nominee has established an earlier deadline
for you to act to instruct the nominee to accept the Offer on your behalf.
We urge you to contact your investment dealer, stock broker, bank, trust
company or other nominee to confirm the nominees deadline.
|
|
|
|
We may extend or vary the Offer
in our sole discretion. See Offer to Purchase Extension and
Variation of the Offer. We can also terminate the Offer under certain
circumstances. See Offer to Purchase Conditions of the Offer.
|
|
|
How will I be notified if
Quest extends the Offer?
|
We will issue a press release
by 9:00 a.m. (Toronto time) on the business day after the previously scheduled
expiration date if we decide to extend the Offer. See Offer to Purchase
Extension and Variation of the Offer.
|
|
|
Are there any conditions to
the Offer?
|
Yes. The Offer is subject to
a number of conditions, such as, among others, the absence of court and
governmental action prohibiting the Offer and changes in general market
conditions or our business that, in our judgment, make it inadvisable
to proceed with the Offer. See Offer to Purchase Conditions
of the Offer.
|
|
|
Once I have tendered Shares
to the Offer, can I withdraw
my Shares?
|
Yes. You may withdraw any Shares
that you have tendered (a) at any time prior to the Expiration Date, (b)
at any time after the Expiration Date if the Shares have not been taken
up by the Corporation before actual receipt by the Depositary of a notice
of withdrawal with respect to such Shares, (c) if the Shares have been
taken up but not paid for by the Corporation within three business days
of being taken up, or (d) at any time before the expiration of 10 days
from the date that a notice of change or variation (other than a variation
that (i) consists solely of an increase in the consideration offered for
the Shares under the Offer where the time for deposit is not extended
for greater than 10 days, or (ii) consists solely of the waiver of a condition
of the Offer) has been given in accordance with this Offer (see Offer
to Purchase - Extension and Variation of the Offer). See Offer
to Purchase Withdrawal Rights.
|
9
How do I withdraw Shares that I
previously tendered?
|
You must deliver, on a timely
basis, a written or facsimile notice of withdrawal to the Depositary at
the address appearing on the back cover page of this Offer to Purchase
and Circular. Your notice of withdrawal must specify your name, the number
of Shares to be withdrawn and the name of the registered holder of such
Shares. Some additional requirements will apply if the Share certificates
to be withdrawn have been delivered to the Depositary or if your Shares
have been tendered under the procedure for book-entry transfer. See Offer
to Purchase Withdrawal Rights.
|
|
|
What impact will the Offer
have on the liquidity of the
market for Shares?
|
Our Board of Directors has determined,
based on a liquidity opinion prepared by Primary Capital, which is attached
to this Offer to Purchase and Circular as Schedule A, that it is reasonable
to conclude that, following completion of the Offer in accordance with
its terms, there will be a market for the Shareholders who do not tender
to the Offer that is not materially less liquid than the market that existed
at the time of the making of the Offer. See Issuer Bid Circular
Purpose and Effect of the Offer Liquidity of Market.
|
|
|
What happens if Shares with
an aggregate purchase price
of more than Cdn$60,000,000
are tendered to the Offer?
|
If the aggregate purchase price
for Shares properly deposited by the Expiration Date pursuant to Auction
Tenders at or below the Purchase Price or pursuant to Purchase Price Tenders
would exceed Cdn$ 60,000,000, then we will purchase the deposited Shares
on a pro rata basis according to the number of Shares deposited (or deemed
to be deposited) at or below the Purchase Price by the depositing Shareholders
(with adjustments to avoid the purchase of fractional Shares), except
that deposits by Shareholders who own Odd Lots will not be subject to
pro ration.
|
|
|
What do I do if I own an
odd lot of Shares?
|
If you beneficially own fewer
than 100 Shares as of the Expiration Date, and you deposit all such Shares,
we will accept for purchase, without pro ration but otherwise subject
to the terms and conditions of the Offer, all your Shares deposited pursuant
to an Auction Tender at or below the Purchase Price or pursuant to a Purchase
Price Tender. You should check Box D Odd Lots in the
Letter of Transmittal. See Offer to Purchase Number of Shares
and Pro Ration.
|
|
|
How will Quest accept and pay
for the Shares I tender?
|
Promptly after we have determined
the Purchase Price, we will publicly announce the Purchase Price and will
take up the Shares to be purchased pursuant to the Offer promptly after
the Expiration Date, but in any event not later than ten days after such
date. Quest will pay for such Shares within three business days after
taking up the Shares. See Offer to Purchase Acceptance for
Payment and Payment for Shares.
|
|
|
Has Quest or the Board of Directors
adopted a position on the Offer?
|
In making the decision to present
the Offer to Shareholders, Quest and the Board of Directors do not make
any recommendation to any Shareholder as to whether to deposit or refrain
from depositing Shares. You are urged to consult your own financial, legal,
investment and tax advisors and make your own decision whether to deposit
Shares to the Offer and, if so, how many Shares to deposit, and at what
price or prices.
|
|
|
Will I have to pay brokerage
commissions?
|
If you deposit your Shares directly
with the Depositary, you will not be obligated to pay brokerage fees or
commissions to us or to the Depositary. However, we recommend that you
consult with your own investment dealer, stock broker, bank, trust company
or other nominee to determine whether any fees or commissions are payable
to your own investment dealer, stock broker, bank, trust company or other
nominee in connection with your deposit of Shares pursuant to the Offer.
|
10
What are the income tax
consequences if I tender
my
Shares?
|
You should carefully consider
the income tax consequences of depositing Shares pursuant to the Offer.
We urge you to consult your own financial, legal, investment and tax advisors.
See Issuer Bid Circular Certain Canadian Federal Income Tax
Considerations and Issuer Bid Circular Certain United
States Federal Income Tax Considerations.
|
|
|
In what currency will Quest
pay for the Shares that I tender?
|
We will pay the Purchase Price
(less applicable withholding taxes, if any) in Canadian dollars and payments
of amounts owing to depositing Shareholders will be made in Canadian dollars
only. On July 16, 2010, the last full trading day prior to the date of
the Offer, the noon rate of exchange, as reported by the Bank of Canada,
was Cdn$ 1.00 = US$ 0.949.
|
|
|
What is a recent market
price for the Shares?
|
On June 9, 2010, the last full
trading day prior to the date that Quest announced its intention to make
the Offer, the closing prices on the TSX and the NYSE Amex of the Shares
were Cdn$ 1.27 and US$ 1.22, respectively. On July 16, 2010, the last
full trading day prior to the date of the Offer, the closing prices on
the TSX and the NYSE Amex of the Shares were Cdn$ 1.55 and US$ 1.48, respectively.
See Issuer Bid Circular Price Range of Shares.
|
|
|
What will happen if I do nothing?
|
If you do nothing, you will continue
to hold the number of Shares that you owned before the Offer and your
proportionate Share ownership interest in Quest will increase following
successful completion of the Offer.
|
|
|
Who can I talk to if I have
questions?
|
For further information regarding
the Offer, you may contact the Depositary or you may consult your own
investment dealer, stock broker, bank, trust company or other nominee.
The address and telephone and facsimile number of the Depositary are set
forth on the last page of this Offer.
|
|
|
How do I get my Shares back if
I have
deposited them to the Offer
but they are
not taken up?
|
Certificates for all Shares validly
deposited but not taken up, including all Shares deposited pursuant to
Auction Tenders at prices in excess of the Purchase Price, and Shares
not taken up due to pro ration or improper tenders, will be returned as
soon as practicable after the Expiration Date or termination of the Offer
without expense to the depositing Shareholder.
|
NO PERSON HAS BEEN AUTHORIZED
TO MAKE ANY RECOMMENDATION ON BEHALF OF THE CORPORATION OR THE BOARD OF DIRECTORS
AS TO WHETHER SHAREHOLDERS SHOULD DEPOSIT OR REFRAIN FROM DEPOSITING SHARES
PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THE OFFER OTHER THAN AS SET
FORTH IN THIS OFFER. IF GIVEN OR MADE, ANY SUCH RECOMMENDATION OR ANY SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION,
THE BOARD OF DIRECTORS OR THE DEPOSITARY.
11
CURRENCY AND EXCHANGE RATES
Except where otherwise indicated,
all dollar amounts set forth in the Offer to Purchase and Circular are expressed
in Canadian dollars (Cdn$) or United States dollars (US$). On June 9, 2010,
the last full trading day immediately prior to the announcement of Quests
intention to make the Offer, the noon rate of exchange as reported by the Bank
of Canada was Cdn$ 1.00 = US$ 0.962. On July 16, 2010, the last full trading
day prior to the date of the Offer, the noon rate of exchange as reported by
the Bank of Canada was Cdn$ 1.00 = US$ 0.949.
NOTICE TO HOLDERS OF OPTIONS
The Offer is made only for Shares
and is not made for any options to acquire Shares or other securities or other
rights to acquire Shares. Any holder of such securities who wishes to accept
the Offer must, to the extent permitted by the terms thereof and applicable
law, fully exercise, convert or exchange, as applicable, the options to acquire
Shares or other securities or other rights in order to deposit the resulting
Shares in accordance with the terms and conditions of the Offer. Any such exercise,
conversion or exchange must occur sufficiently in advance of the Expiration
Date to assure holders of options or other securities or other rights to acquire
Shares that they will have sufficient time to comply with the procedures for
depositing Shares under the Offer. Any such exercise, conversion or exchange
will be irrevocable, including where the Shares tendered are subject to pro
ration or otherwise are not taken up. The tax consequences to holders of options
to acquire Shares or other securities or other rights to acquire Shares in respect
of any such exercise, conversion or exchange are not described herein and all
such holders are advised to contact their own tax advisors for tax advice having
regard to their own particular circumstances.
12
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Offer includes certain statements
that constitute forward-looking statements, and forward-looking
information within the meaning of applicable securities laws (forward-looking
statements and forward-looking information are collectively
referred to as forward-looking statements, unless otherwise stated).
These statements appear in a number of places in this Offer and include statements
regarding our intent, or the beliefs or current expectations of our officers
and directors. Such forward-looking statements involve known and unknown risks
and uncertainties that may cause our actual results, performance or achievements
to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. When used in this Offer,
words such as believe, anticipate, estimate,
project, intend, expect, may,
will, plan, should, would, contemplate,
possible, attempts, seeks and similar expressions
are intended to identify these forward-looking statements. Forward-looking statements
may relate to the Corporations future outlook and anticipated events or
results and may include statements regarding the Corporations future financial
position, business strategy, budgets, litigation, projected costs, financial
results, taxes, plans and objectives. We have based these forward-looking statements
largely on our current expectations and projections about future events and
financial trends affecting the financial condition of our business.
These forward-looking statements
were derived utilizing numerous assumptions regarding expected growth, results
of operations, performance and business prospects and opportunities that could
cause our actual results to differ materially from those in the forward-looking
statements. While the Corporation considers these assumptions to be reasonable,
based on information currently available, they may prove to be incorrect. Accordingly,
you are cautioned not to put undue reliance on these forward-looking statements.
Forward-looking statements should not be read as a guarantee of future performance
or results.
To the extent any forward-looking
statements constitute future-oriented financial information or financial outlooks,
as those terms are defined under applicable Canadian securities laws, such statements
are being provided to describe the current anticipated potential of the Corporation
and readers are cautioned that these statements may not be appropriate for any
other purpose, including investment decisions.
Forward-looking statements are
based on information available at the time those statements are made and/or
management's good faith belief as of that time with respect to future events,
and are subject to risks and uncertainties that could cause actual performance
or results to differ materially from those expressed in or suggested by the
forward-looking statements. Material risk factors which could cause actual results
to differ materially from the forward-looking statements include, but are not
limited to general declines in the value of real estate; changes in Quests
ability to realize on security or dispose of security granted by borrowers in
respect of loans which default; our ability to manage the defaults of Quests
borrowers; our ability to maintain Quests status as a MIC (as defined
herein); changes in Quests ability to reinvest cash, as its current loans
become due, in loans that meet its current lending criteria; changes in Quest's
ability to identify creditworthy loan candidates; changes in Quests ability
to manage its credit risk; changes in Quests ability to attract and retain
key management and personnel; changes in applicable regulatory requirements
and regimes; interest rate fluctuations; geographic concentration of the loan
portfolio in Western Canada; the impact of competition; risks inherent in the
monetization of its existing loan portfolio; Quests ability to successfully
effect the Reorganization (as defined herein) including its ability to succeed
in its transition from real estate to natural resource lending; and other risk
factors including, but not limited to, those under Risk Factors
in the Corporations most recent Annual Information Form.
Should Quest successfully effect
the Reorganization to become a natural resource lender, Quest will be subject
to many of the risks noted above as well as additional risks which include but
are not limited to: general declines in the value of natural resources; political
risks when lending to parties resident in or with assets located in foreign
jurisdictions; changes to environmental laws which may impact the underlying
value of the security or cash flow of the borrower; and reliance on estimates
of proven and probable quantities of the underlying resources constituting security
for its loans.
Forward-looking statements speak
only as of the date those statements are made. Except as required by applicable
law, we assume no obligation to update, or to publicly announce the results
of any change to, any forward-looking statement contained or incorporated by
reference herein to reflect actual results, future events or developments, changes
in assumptions or changes in other factors affecting the forward-looking statements.
If we update any one or more forward-looking statements, no inference should
be drawn that we will make additional updates with respect to those or other
forward-looking statements.
You should not place undue importance
on forward-looking statements and should not rely upon these statements as of
any other date. All forward-looking statements contained in this Offer are expressly
qualified in their entirety by this cautionary statement.
13
OFFER TO PURCHASE
To the holders of Common Shares of Quest
Capital Corp.
THE OFFER
Quest Capital Corp. (
Quest
or the
Corporation
) hereby offers to purchase for cancellation
from the holders (the
Shareholders
) of common shares in the
capital of the Corporation (the
Shares
) up to Cdn$ 60,000,000
in value of its Shares, pursuant to (i) auction tenders of not less than Cdn$
1.35 per Share or more than Cdn$ 1.60 per Share, in increments of Cdn$ 0.01
per Share, as specified by such Shareholders (each an
Auction Tender
),
or (ii) purchase price tenders in which each Shareholder does not specify a
price per Share, but rather agrees to have the Shareholders Shares purchased
at the Purchase Price (as defined below) that is determined as provided herein
(each a
Purchase Price Tender
), in either case payable in
cash and on the terms and subject to the conditions set forth in this offer
to purchase (the
Offer to Purchase
), the accompanying issuer
bid circular (the
Circular
), the related letter of transmittal
(the
Letter of Transmittal
) and the notice of guaranteed
delivery (the
Notice of Guaranteed Delivery
) (which together
constitute and are herein referred to as the
Offer
).
The Offer is made only for Shares
and is not made for any options to acquire Shares or other securities or other
rights to acquire Shares. Any holder of such securities who wishes to accept
the Offer must, to the extent permitted by the terms thereof and applicable
law, fully exercise, convert or exchange, as applicable, the options to acquire
Shares or other securities or other rights in order to deposit the resulting
Shares in accordance with the terms and conditions of the Offer. Any such exercise,
conversion or exchange must occur sufficiently in advance of the Expiration
Date to assure holders of options or other securities or other rights to acquire
Shares that they will have sufficient time to comply with the procedures for
depositing Shares under the Offer described under Offer to Purchase
Procedure for Depositing Shares. Any such exercise, conversion or exchange
will be irrevocable, including where the Shares tendered are subject to pro
ration or otherwise are not taken up. The tax consequences to holders of options
to acquire Shares or other securities or other rights to acquire Shares in respect
of any such exercise, conversion or exchange are not described herein and all
such holders are advised to contact their own tax advisors for tax advice having
regard to their own particular circumstances.
The Offer will expire at 5:00 p.m.
(Toronto time) on August 30, 2010, unless extended, varied or withdrawn by Quest
(the
Expiration Date
).
Subject to the satisfaction or
waiver by Quest of the conditions of the Offer, all Shareholders who have, prior
to the Expiration Date, properly deposited and not validly withdrawn their Shares
pursuant to Auction Tenders at prices at or below the Purchase Price and/or
pursuant to Purchase Price Tenders will receive in cash the Purchase Price (subject
to applicable withholding taxes, if any) for all Shares purchased, on the terms
and subject to the conditions of the Offer, including the provisions relating
to pro ration described herein.
The Offer is not conditional
upon any minimum number of Shares being deposited. The Offer is, however, subject
to certain other conditions customary for transactions of this nature. Quest
reserves the right to withdraw the Offer and not take up and pay for any Shares
deposited under the Offer if the conditions of the Offer are not satisfied or
waived. See
Offer to Purchase Conditions of the Offer
.
Prior to the Expiration Date, all
factual information regarding the number of Shares deposited and the prices
at which such Shares have been deposited will be kept confidential, and Computershare
Investor Services Inc. (the
Depositary
) will be directed
by the Corporation to maintain such confidentiality.
The accompanying Circular, Letter
of Transmittal and Notice of Guaranteed Delivery contain important additional
information and should be read carefully by each Shareholder before making any
decision with respect to the Offer.
Shareholders should carefully consider
the income tax consequences of accepting the Offer. See Issuer Bid Circular
Certain Canadian Federal Income Tax Considerations and Issuer
Bid Circular Certain United States Federal Income Tax Considerations.
PURCHASE PRICE
As promptly as practicable following
the Expiration Date, Quest will, upon the terms and subject to the conditions
of the Offer, determine a single price (which will be not less than Cdn$ 1.35
per Share and not more than Cdn$ 1.60 per Share) (the
Purchase Price
)
that it will pay for each Share properly deposited pursuant to the Offer and
taken up by the Corporation, taking into account the number of Shares deposited
pursuant to Auction Tenders and Purchase Price Tenders, the prices specified
by Shareholders making Auction Tenders, and the price at which Shares deposited pursuant
to Purchase Price Tenders are considered to be deposited. A Shareholder who
wishes to deposit Shares, but does not wish to specify a price at which such
Shares may be purchased by the Corporation, should make a Purchase Price Tender.
14
For the purpose of determining
the Purchase Price, Shares deposited pursuant to Purchase Price Tenders will
be deemed to have been deposited at Cdn$ 1.35 per Share (which is the minimum
Purchase Price under the Offer). The Purchase Price will be the lowest price
(not less than Cdn$ 1.35 per Share or more than Cdn$ 1.60 per Share) that will
allow Quest to purchase the maximum number of deposited Shares having an aggregate
purchase price that would not exceed Cdn$ 60,000,000 (or such lesser number
of Shares as are properly deposited).
If you wish to maximize the likelihood
that your Shares will be purchased under the Offer, you should check the box
beside the caption A Purchase Price Tender in Box A Type
of Tender on the Letter of Transmittal, indicating that you will accept
the Purchase Price determined by us. You should understand that this election
will have the same effect as if you selected the minimum price of Cdn$1.35 per
Share. If your Shares are purchased under the Offer, you will be paid the Purchase
Price (subject to applicable withholding taxes, if any (see Issuer Bid
Circular Certain Canadian Federal Income Tax Considerations Shareholders
Not Resident in Canada)) in cash, without interest, promptly following
the expiration of the Offer. Under no circumstances will we or the Depositary
pay you interest on the Purchase Price, even if there is a delay in making payment.
All Shares purchased by us,
including Shares deposited at or below the Purchase Price pursuant to Auction
Tenders and Shares deposited pursuant to Purchase Price Tenders, will be purchased
at the Purchase Price.
Promptly after it has determined
the Purchase Price, the Corporation will publicly announce the Purchase Price
for the Shares, and upon the terms and subject to the conditions of the Offer
(including the pro ration provisions described herein), all Shareholders who
have properly deposited and not validly withdrawn their Shares, either pursuant
to Auction Tenders at prices at or below the Purchase Price or pursuant to Purchase
Price Tenders, will receive the Purchase Price, payable in cash (subject to
applicable withholding taxes, if any), for all Shares purchased. Quest will
take up such Shares promptly after the Expiration Date, but in any event not
later than ten days after such date. The Corporation will pay for such Shares
within three business days after taking up the Shares. The Corporation will
acquire Shares to be purchased pursuant to the Offer and title thereto under
this Offer upon having taken up such Shares even if payment therefor shall not
yet have been effected.
The Purchase Price will be denominated
in Canadian dollars and payments of amounts owing to a depositing Shareholder
will be made in Canadian dollars only. All dollar amounts set forth herein are
expressed in Canadian dollars (Cdn$) or United States dollars (US$), except
where otherwise indicated.
N
UMBER OF
S
HARES AND
P
RO
R
ATION
As at July 19, 2010, the Corporation
had 139,529,934 Shares issued and outstanding. In addition, as at July 19, 2010,
the Corporation had 6,664,166 stock options issued and outstanding, of which
2,820,353 were vested, and exercisable for an aggregate of 2,820,353 Shares.
Accordingly, based on such figures, as well as the number of issued and outstanding
Quest stock options as of July 19, 2010, a minimum of 37,500,000 Shares and
a maximum of 44,444,444 Shares, or approximately 25.65% and 30.40%, respectively,
of the total number of issued and outstanding Shares (on a fully diluted basis),
would be taken up and paid for under the Offer by the Corporation if the Purchase
Price is Cdn$ 1.60 or Cdn$ 1.35, respectively (which are the respective maximum
and minimum Purchase Prices under the Offer).
If the aggregate purchase price
(calculated at the Purchase Price) for Shares properly deposited by the Expiration
Date (and not validly withdrawn) pursuant to Auction Tenders at or below the
Purchase Price and pursuant to Purchase Price Tenders would be less than or
equal to Cdn$ 60,000,000, the Corporation will purchase at the Purchase Price
all Shares deposited upon the terms and subject to the conditions of the Offer.
If the aggregate purchase price (calculated at the Purchase Price) for Shares
properly deposited by the Expiration Date (and not withdrawn) pursuant to Auction
Tenders at or below the Purchase Price and pursuant to Purchase Price Tenders
would exceed Cdn$ 60,000,000, the Corporation will accept Shares for purchase
first from all Odd Lot Holders (as defined herein) who properly deposited all
their Shares pursuant to Auction Tenders at or below the Purchase Price or pursuant
to Purchase Price Tenders. With respect to depositing Shareholders who are not
Odd Lot Holders, the Corporation will accept Shares for purchase at the Purchase
Price on a pro rata basis according to the number of Shares deposited (or deemed
to be deposited) at or below the Purchase Price by the depositing Shareholders,
less the number of Shares purchased from Odd Lot Holders, from Shareholders
making Auction Tenders who properly deposit their Shares at or below the Purchase
Price and from Shareholders making Purchase Price Tenders (with adjustments
to avoid the purchase of fractional Shares). Quest will return all Shares not
purchased under the Offer, including Shares deposited pursuant to Auction Tenders
at prices greater than the Purchase Price and Shares not purchased because of
pro ration or improper tenders.
15
For purposes of the Offer, the
Corporation will be deemed to have accepted for payment, subject to pro ration,
Shares properly deposited, and not withdrawn, pursuant to Auction Tenders at
or below the Purchase Price and pursuant to Purchase Price Tenders, having an
aggregate purchase price of not more than Cdn$ 60,000,000, if, as and when the
Corporation gives oral notice (to be confirmed in writing) or written notice
to the Depositary of its acceptance of such Shares for payment pursuant to the
Offer.
As a result of the provisions
described above, a Shareholder depositing Shares pursuant to an Auction Tender
at Cdn$ 1.35, the lowest price in the range, and a Shareholder depositing Shares
pursuant to a Purchase Price Tender, will each have such Shares purchased at
the Purchase Price, if any Shares are purchased under the Offer, subject to
the pro ration provisions described herein and the preferential acceptance of
Odd Lots.
For purposes of the Offer, the
term
Odd Lots
means all Shares properly deposited by the
Expiration Date (and not validly withdrawn), in accordance with the procedures
set forth in this Offer to Purchase, pursuant to Auction Tenders at prices at
or below the Purchase Price or pursuant to Purchase Price Tenders, by or on
behalf of Shareholders who beneficially own on the Expiration Date an aggregate
of fewer than 100 Shares (
Odd Lot Holders
). As set forth
above, Odd Lots will be accepted for purchase before any pro ration. In order
to qualify for this treatment, an Odd Lot Holder must properly deposit, pursuant
to an Auction Tender at a price at or below the Purchase Price or pursuant to
a Purchase Price Tender, all Shares beneficially owned by such Odd Lot Holder.
Partial deposits will not qualify for this preference. This treatment is not
available to holders of 100 or more Shares even if holders have separate share
certificates for fewer than 100 Shares or hold fewer than 100 Shares in different
accounts. Any Odd Lot Holder wishing to deposit all Shares beneficially owned,
free of pro ration, must complete Box D -Odd Lots on the Letter
of Transmittal and, if applicable, on the Notice of Guaranteed Delivery. Shareholders
owning an aggregate of less than 100 Shares whose Shares are purchased pursuant
to the Offer will not only avoid the payment of brokerage commissions, but will
also avoid any odd-lot discounts, each of which may be applicable on a sale
of their Shares in a transaction on the TSX or the NYSE Amex.
P
ROCEDURE FOR
D
EPOSITING
S
HARES
Proper Deposit of Shares
To deposit Shares pursuant to the
Offer, (i) the certificates for all deposited Shares in proper form for transfer,
together with a properly completed and duly executed Letter of Transmittal (or
a manually executed photocopy thereof) relating to such Shares with signatures
that are guaranteed if so required in accordance with the instructions in the
Letter of Transmittal, and any other documents required by the Letter of Transmittal,
must be received by the Depositary at one of the addresses listed in the Letter
of Transmittal by the Expiration Date, or (ii) the guaranteed delivery procedure
described below must be followed, or (iii) such Shares must be transferred pursuant
to the procedures for book-entry transfer described below (and a confirmation
of such tender must be received by the Depositary, including a Book-Entry Confirmation
or an Agents Message (each as defined below) if the tendering Shareholder
has not delivered a Letter of Transmittal). The term
Book-Entry Confirmation
means a confirmation of a book-entry transfer of a Shareholders Shares
by CDS Clearing and Depository Services Inc. (
CDS
). The term
Agents Message
means a message, transmitted by the
Depository Trust Company (
DTC
) to and received by the Depositary
and forming a part of a Book-Entry Confirmation, which states that DTC has received
an express acknowledgment from the tendering participant, which acknowledgment
states that such participant has received and agrees to be bound by the Letter
of Transmittal and that the Corporation may enforce such Letter of Transmittal
against such participant.
A Shareholder who wishes to
deposit Shares under the Offer and whose certificate is registered in the name
of an investment dealer, stock broker, bank, trust company or other nominee
should immediately contact such nominee in order to take the necessary steps
to be able to deposit such Shares under the Offer.
Participants of CDS in Canada
or DTC in the United States should contact such depositary, or any other applicable
depositary, to obtain instructions as to the method of depositing Shares under
the terms of the Offer.
In accordance with Instruction
5 in the Letter of Transmittal, or the Book-Entry Confirmation or Agents
Message in lieu thereof, (a) each Shareholder desiring to deposit Shares pursuant
to the Offer must indicate in Box A Type of Tender in such
Letter of Transmittal, or the Book-Entry Confirmation or Agents Message
in lieu thereof, or, if applicable, the Notice of Guaranteed Delivery, whether
such Shareholder is depositing Shares pursuant to an Auction Tender or a Purchase
Price Tender, and (b) each Shareholder desiring to deposit Shares pursuant to
an Auction Tender must further indicate, in Box B Auction Tender
Price (in Canadian Dollars) Per Share at Which Shares Are Being Deposited
in such Letter of Transmittal, or the Book-Entry Confirmation or Agents
Message in lieu thereof, the price per Share (in increments of Cdn$ 0.01 per
Share) at which such Shares are being deposited. Under (a) and (b), respectively,
only one box may be checked.
16
If a Shareholder wishes to deposit
Shares in separate lots at different prices and/or a different type of tender
for each lot, such Shareholder must complete a separate Letter of Transmittal,
or a Book-Entry Confirmation or Agents Message in lieu thereof, (and,
if applicable, a Notice of Guaranteed Delivery) for each lot and price at which
the Shareholder is depositing Shares. The same Shares cannot be deposited (unless
previously properly withdrawn as provided in this Offer to Purchase under Withdrawal
Rights) pursuant to both an Auction Tender and a Purchase Price Tender,
or pursuant to an Auction Tender at more than one price. All Shares deposited
by Shareholders who fail to specify an Auction Tender price for their Shares
or fail to indicate that they have deposited their Shares pursuant to a Purchase
Price Tender will be deemed to have deposited their Shares pursuant to a Purchase
Price Tender.
In addition, Odd Lot Holders who
deposit all their Shares must complete Box D Odd Lots in
the Letter of Transmittal in order to qualify for the preferential treatment
available to Odd Lot Holders as set forth in this Offer to Purchase under Number
of Shares and Pro Ration.
Shares deposited pursuant to an
Auction Tender will only be taken up and paid for if the price specified in
the Auction Tender is equal to or less than the Purchase Price.
Signature Guarantees
No signature guarantee is required
on a Letter of Transmittal if the Letter of Transmittal is signed by the registered
holder of the Shares exactly as the name of the registered holder appears on
the share certificate deposited therewith, and payment and delivery are to be
made directly to such registered holder. In all other cases, all signatures
on a Letter of Transmittal must be guaranteed by a Canadian Schedule 1 chartered
bank, a participating organization of Toronto Stock Exchange Inc., a member
of the Securities Transfer Agent Medallion Program (STAMP), a member of the
Stock Exchanges Medallion Program (SEMP) or a member of the New York Stock Exchange
Inc. Medallion Signature Program (MSP) (each such entity, an
Eligible
Institution
). Members of these programs are usually members of a recognized
stock exchange in Canada or the United States, members of the Investment Industry
Regulatory Organization of Canada, members of the Financial Industry Regulatory
Authority or banks and trust companies in the United States. See Instruction
1 in the Letter of Transmittal.
If a certificate representing Shares
is registered in the name of a person other than the signatory to a Letter of
Transmittal, or if payment is to be made, or certificates representing Shares
not purchased or deposited are to be issued to a person other than the registered
holder, the certificate must be endorsed or accompanied by an appropriate stock
power, in either case, signed exactly as the name of the registered holder appears
on the certificate with the signature on the certificate or stock power signature
guaranteed by an Eligible Institution.
Book-Entry Transfer Procedures CDS
Any financial institution that
is a participant in CDS may make book-entry delivery of the Shares through the
CDS on-line tendering system pursuant to which book-entry transfers may be effected
(
CDSX
) by causing CDS to deposit such Shares to the Depositary
in accordance with the applicable CDS procedures. Delivery of Shares to the
Depositary by means of book-entry through CDSX will constitute a valid tender
under the Offer.
Shareholders may accept the Offer
by following the procedures for a book-entry transfer established by CDS, provided
that a Book-Entry Confirmation through CDSX is received by the Depositary at
its office in Toronto, Ontario prior to the Expiration Date. Shareholders, through
their respective CDS participants, who utilize CDSX to accept the Offer via
book-entry of their holdings with CDS, shall be deemed to have completed and
submitted a Letter of Transmittal and to be bound by the terms thereof and therefore
such instructions received by the Depositary are considered to be a valid tender
in accordance with the terms of the Offer. Delivery of documents to CDS does
not constitute delivery to the Depositary.
Book-Entry Transfer Procedures DTC
Any financial institution that
is a participant in DTC may make book-entry delivery of Shares by causing DTC
to deposit such Shares to the Depositary in accordance with DTCs procedures.
Although delivery of Shares may
be effected under the Offer at DTC, a Letter of Transmittal (or a manually executed
photocopy thereof) with any required signature guarantees, or (in the case of
a book-entry transfer) an Agents Message in lieu of a Letter of Transmittal
and any other required documents, must, in any case, be transmitted to and received
by the Depositary at its address in Toronto on or prior to the Expiration Date
in connection with the tender of such Shares.
Delivery of documents to DTC
does not constitute delivery to the Depositary.
17
Holders who are tendering by book-entry
at DTC may execute their tender through DTCs Automated Tender Offer Program
(
ATOP
) by transmitting their acceptance to DTC in accordance
with DTCs ATOP procedures. DTC will then verify the acceptance and send
a message to the Depositary. Delivery of the message by DTC will satisfy the
terms of the Offer in lieu of execution and delivery of a Letter of Transmittal
by the participant identified in the Agents Message. Accordingly, a Letter
of Transmittal need not be completed by a Shareholder tendering through ATOP.
Method of Delivery
The method of delivery of certificates
representing Shares and all other required documents is at the option and risk
of the depositing Shareholder. If certificates representing Shares are to be
sent by mail, registered mail with return receipt requested, properly insured,
is recommended and the mailing must be made sufficiently in advance of the Expiration
Date to permit delivery to the Depositary on or prior to such date. Delivery
of a share certificate representing Shares will only be treated as having been
made upon actual receipt of such share certificate representing Shares by the
Depositary.
Guaranteed Delivery
If a Shareholder wishes to deposit
Shares pursuant to the Offer and cannot deliver certificates for such Shares,
the book-entry transfer procedures described above cannot be completed before
the Expiration Date or time will not permit all required documents to reach
the Depositary by the Expiration Date, such Shares may nevertheless be deposited
if all of the following conditions are met:
|
(a)
|
such deposit is made by or through an Eligible Institution;
|
|
|
|
|
(b)
|
a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form provided by the Corporation or a manually
executed photocopy thereof (indicating the type of tender and, in the
case of an Auction Tender, the price specified for the Shares being deposited)
is received by the Depositary, at its office in Toronto, Ontario, as set
out in the Notice of Guaranteed Delivery, by the Expiration Date; and
|
|
|
|
|
(c)
|
the share certificates for all deposited Shares in proper
form for transfer, together with a properly completed and duly executed
Letter of Transmittal (or a manually executed photocopy thereof) relating
to such Shares, with signatures guaranteed if so required in accordance
with the Letter of Transmittal, and any other documents required by the
Letter of Transmittal, are received by the Depositary at its Toronto,
Ontario, office, before 5:00 p.m. (Toronto time) on or before the third
trading day on the TSX after the Expiration Date.
|
The Notice of Guaranteed Delivery
may be hand delivered, couriered, mailed or transmitted by facsimile transmission
to the Toronto, Ontario, office of the Depositary listed in the Notice of Guaranteed
Delivery, and must include a guarantee by an Eligible Institution in the form
set forth in the Notice of Guaranteed Delivery.
The tender information specified
in a Notice of Guaranteed Delivery by a person completing such Notice of Guaranteed
Delivery will, in all circumstances, take precedence over the tender information
that is specified in the related Letter of Transmittal that is subsequently
deposited.
Payment for Shares deposited
and accepted for payment pursuant to the Offer for which a Notice of Guaranteed
Delivery was delivered in accordance with the requirements set forth above will
be made only after timely receipt by the Depositary of certificates for such
Shares, a properly completed and duly executed Letter of Transmittal (or a manually
executed photocopy thereof) relating to such Shares with signatures that are
guaranteed if so required and any other documents required by the Letter of
Transmittal.
Determination of Validity
All questions as to the number
of Shares to be taken up, the price to be paid therefor, the form of documents
and the validity, eligibility (including time of receipt) and acceptance for
payment of any deposit of Shares, will be determined by the Corporation, in
its sole discretion, which determination will be final and binding on all parties.
Quest reserves the absolute right to reject any or all deposits of Shares determined
by it in its sole discretion not to be in proper form or not completed in accordance
with the instructions set forth herein and in the Letter of Transmittal or the
acceptance for payment of, or payment for, which may, in the opinion of the
Corporations counsel, be unlawful under the laws of any jurisdiction.
Quest also reserves the absolute right to waive any of the conditions of the
Offer or any defect or irregularity in any deposit of Shares. No deposit of
Shares will be deemed to be properly made until all defects and irregularities
have been cured or waived. None of the Corporation, the Depositary or any other
person will be under any duty to give notification of any defect or irregularity
in any deposit or incur any liability for failure to give any such notice. The
Corporations interpretation of the terms and conditions
of the Offer (including, without limitation, the Letter of Transmittal and the
Notice of Guaranteed Delivery) will be final and binding.
18
Under no circumstances will interest
accrue or be paid by Quest or the Depositary on the Purchase Price to any person
depositing Shares regardless of any delay in making payment, including any delay
in making payment to any person using the guaranteed delivery procedures, and
the payment for Shares deposited pursuant to the guaranteed delivery procedures
will be the same as that for Shares delivered to the Depositary on or prior
to the Expiration Date, even if the Shares to be delivered pursuant to the guaranteed
delivery procedures are not so delivered to the Depositary at such date and,
therefore, payment by the Depositary on account of such Shares is not made until
after the date the payment for the Deposited Shares accepted for payment pursuant
to the Offer is to be made by the Corporation.
Formation of Agreement
The proper deposit of Shares pursuant
to any one of the procedures described above will constitute a binding agreement
between the depositing Shareholder and the Corporation, effective as of the
Expiration Date, upon the terms and subject to the conditions of the Offer.
Prohibition on Short Tenders
It is a violation of Section 14(e)
of the Exchange Act and Rule 14e-4 promulgated thereunder for a person, directly
or indirectly, to deposit Shares for a persons own account unless, at
the time of the deposit and at the end of the day on the Expiration Date, such
person (i) has a net long position equal to or greater than the number of (x)
the Shares deposited or (y) other securities immediately convertible into, exercisable,
or exchangeable for the number of the Shares deposited and upon acceptance of
such persons deposit, will acquire such Shares for deposit by conversion,
exercise or exchange of such other securities and (ii) will deliver or cause
such Shares to be delivered in accordance with the terms of the Offer. Section
14(e) and Rule 14e-4 provide a similar restriction applicable to the deposit
or guarantee of deposit on behalf of another person. The deposit of Shares to
the Offer pursuant to any procedures described herein will constitute a representation
to the Corporation by the Shareholder that (i) such Shareholder has a net long
position in the Shares being deposited within the meaning of Rule 14e-4 and
(ii) the deposit of such Shares complies with Rule 14e-4.
W
ITHDRAWAL
R
IGHTS
Except as otherwise expressly provided
herein, deposits of Shares pursuant to the Offer will be irrevocable. Shares
deposited pursuant to the Offer may be withdrawn by a Shareholder:
|
(a)
|
at any time prior to the Expiration Date;
|
|
|
|
|
(b)
|
at any time after the Expiration Date if the Shares
have not been taken up by the Corporation before actual receipt by the
Depositary of a notice of withdrawal with respect to such Shares;
|
|
|
|
|
(c)
|
if the Shares have been taken up but not paid for by
the Corporation within three business days of being taken up; or
|
|
|
|
|
(d)
|
at any time before the expiration of 10 days from the
date that a notice of change or notice of variation (other than a variation
that (i) consists solely of an increase in the consideration offered for
the Shares under the Offer where the time for deposit is not extended
for greater than 10 days, or (ii) consists solely of the waiver of a condition
of the Offer) has been given in accordance with this Offer (see Extension
and Variation of the Offer).
|
For a withdrawal to be effective,
a notice of withdrawal in writing must actually be received by the Depositary
by the dates specified above at the place of deposit of the relevant Shares.
Any such notice of withdrawal (i) must be signed by or on behalf of the person
who signed the Letter of Transmittal (or Notice of Guaranteed Delivery) that
accompanied the Shares being withdrawn or, in the case of Shares tendered by
a CDS participant through CDSX or a DTC participant through ATOP, be signed
by such participant in the same manner as the participants name is listed
on the applicable Book-Entry Confirmation or Agents Message, or be accompanied
by evidence sufficient to the Depositary that the person withdrawing the tender
has succeeded to the beneficial ownership of the Shares, and (ii) must specify
the name of the person who deposited the Shares to be withdrawn, the name of
the registered holder, if different from that of the person who deposited such
Shares, and the number of Shares to be withdrawn. If the certificates for the
Shares deposited pursuant to the Offer have been delivered or otherwise identified
to the Depositary, then, prior to the release of such certificates, the depositing
Shareholder must submit the serial numbers shown on the particular certificates
evidencing the Shares to be withdrawn and the signature on the notice of withdrawal
must be guaranteed by an Eligible Institution (as defined in this Offer to Purchase
under Procedure for Depositing Shares), except in the case of Shares
deposited by an Eligible Institution.
A withdrawal of Shares deposited pursuant
to the Offer can only be accomplished in accordance with the foregoing procedures.
The withdrawal
shall take effect only upon actual receipt by the Depositary
of a properly completed and executed notice of withdrawal in writing.
19
A Shareholder who wishes to
withdraw Shares from the Offer and who holds Shares through an investment dealer,
stock broker, bank, trust company or other nominee should immediately contact
such nominee in order to take the necessary steps to be able to withdraw such
Shares from the Offer. Participants of CDS or DTC should contact such depositary
with respect to the withdrawal of Shares from the Offer.
All questions as to the form and
validity (including time of receipt) of notices of withdrawal will be determined
by the Corporation, in its sole discretion, which determination shall be final
and binding for all purposes. None of the Corporation, the Depositary or any
other person shall be obligated to give any notice of any defect or irregularity
in any notice of withdrawal and none of them shall incur any liability for failure
to give any such notice.
Any Shares properly withdrawn will
thereafter be deemed not deposited for purposes of the Offer. However, withdrawn
Shares may be redeposited prior to the Expiration Date by again following the
procedures described herein. See Procedure for Depositing Shares.
If Quest extends the period of
time during which the Offer is open for acceptance, is delayed in its purchase
of Shares or is unable to purchase Shares pursuant to the Offer for any reason,
then, without prejudice to Quests rights under the Offer, the Depositary
may, subject to applicable law, retain on behalf of Quest all Shares deposited
under the Offer. In the event of such retention, such Shares may not be withdrawn
except to the extent depositing Shareholders are entitled to withdrawal rights
as described herein.
C
ONDITIONS OF THE
O
FFER
Notwithstanding any other provision
of the Offer, the Corporation shall not be required to accept for purchase,
to purchase or to pay for any Shares deposited, and may withdraw, terminate,
cancel or amend the Offer or may postpone the taking up or payment for Shares
deposited, if, at any time before the payment for any such Shares, any of the
following events shall have occurred (or shall have been determined by the Corporation,
in its sole judgment, to have occurred) and which, in Quests sole judgment
in any such case and regardless of the circumstances, makes it inadvisable to
proceed with the Offer or with such acceptance for purchase, purchase or payment:
|
(a)
|
there shall have been threatened, pending or taken any
action, suit or proceeding by any government or governmental authority
or regulatory or administrative agency in any jurisdiction, or by any
other person in any jurisdiction, before any court or governmental authority
or regulatory or administrative agency in any jurisdiction (i) challenging
or seeking to cease trade, make illegal, delay or otherwise directly or
indirectly restrain or prohibit the making of the Offer, the acceptance
for payment of some or all of the Shares by the Corporation or otherwise
directly or indirectly relating in any manner to or affecting the Offer,
or (ii) seeking material damages or that otherwise, in the sole judgment
of the Corporation, has or may have a material adverse effect on the Shares
or the business, income, assets, liabilities, condition (financial or
otherwise), properties, operations, results of operations or prospects
of the Corporation or its affiliates taken as a whole or has impaired
or may materially impair the contemplated benefits of the Offer to the
Corporation or the Shareholders;
|
|
|
|
|
(b)
|
there shall have been any action or proceeding threatened,
pending or taken or approval withheld or any statute, rule, regulation,
stay, decree, judgment, order or injunction proposed, sought, enacted,
enforced, promulgated, amended, issued or deemed applicable to the Offer
or the Corporation or its affiliates by any court, government or governmental
authority or regulatory or administrative agency in any jurisdiction that,
in the sole judgment of the Corporation, might directly or indirectly
result in any of the consequences referred to in clauses (i) or (ii) of
paragraph (a) above or, in the sole judgment of the Corporation, would
or might prohibit, prevent, restrict or delay consummation of or materially
impair the contemplated benefits to the Corporation or the Shareholders
of the Offer;
|
|
|
|
|
(c)
|
there shall have occurred (i) any general suspension
of trading in, or limitation on prices for, securities on any securities
exchange or in the over-the-counter market in Canada or the United States,
(ii) the declaration of a banking moratorium or any suspension of payments
in respect of banks in Canada or the United States (whether or not mandatory),
(iii) a natural disaster or the commencement of a war, armed hostilities
or other international or national calamity directly or indirectly involving
Canada, the United States, or any other region where the Corporation maintains
significant business activities, (iv) any limitation by any government
or governmental authority or regulatory or administrative agency or any
other event that, in the sole judgment of the Corporation, might affect
the extension of credit by banks or other lending institutions, (v) any
significant decrease in the market price of the Shares since the close
of business on July 16, 2010, the last full trading day prior to the date
of the Offer, (vi) any change in general political, market, economic or
financial conditions that has or may have a material adverse effect on
the business, income, assets, liabilities, condition (financial or otherwise),
properties, operations, results of operations or prospects of the
Corporation or its affiliates, or the trading in, or value of, the Shares,
(vii) any decline in any of the S&P/TSX Composite Index, the Dow Jones
Industrial Average or the Standard and Poors Index of 500 Industrial
Companies by an amount in excess of 10%, measured from the close of business
on July 16, 2010, the last full trading day prior to the date of the Offer,
or (vii) any material change in short-term or long-term interest rates
in Canada or the United States;
|
20
|
(d)
|
there shall have occurred any change or changes (or
any development involving any prospective change or changes) in the business,
income, assets, liabilities, condition (financial or otherwise), properties,
operations, results of operations or prospects of the Corporation or its
affiliates that, in the sole judgment of the Corporation, has, have or
may have a material adverse effect with respect to the Corporation or
its affiliates taken as a whole;
|
|
|
|
|
(e)
|
any take-over bid or tender or exchange offer with respect
to some or all of the securities of the Corporation, or any merger, amalgamation,
arrangement, business combination or acquisition proposal, disposition
of assets, or other similar transaction with or involving the Corporation
or its affiliates, other than the Offer, shall have been proposed, announced
or made by any individual or entity other than Quest;
|
|
|
|
|
(f)
|
the Corporation shall have determined, in its sole judgment,
that the Purchase Price for a Share would exceed the fair market value
of such Share at the time of the acquisition of such Share by the Corporation
pursuant to the Offer, determined without reference to the Offer;
|
|
|
|
|
(g)
|
the Corporation shall have concluded, in its sole judgment,
that the Offer or the taking up and payment for any one or more of the
Shares by the Corporation is illegal or not in compliance with applicable
law, or that necessary exemptions under applicable securities legislation,
including exemptions from the valuation requirements, are not available
to the Corporation for the Offer and, if required under any such legislation,
the Corporation shall not have received the necessary exemptions from
or approvals or waivers of the appropriate courts or applicable securities
regulatory authorities in respect of the Offer;
|
|
|
|
|
(h)
|
any change shall have occurred or been proposed to the
Income Tax Act
(Canada) or the
Income Tax Regulations,
as
amended, or to the publicly available administrative policies or assessing
practices of the Canada Revenue Agency, that, in the sole judgment of
the Corporation, is detrimental to the Corporation or its affiliates taken
as a whole or to a Shareholder, or with respect to making the Offer or
taking up and paying for Shares deposited under the Offer;
|
|
|
|
|
(i)
|
any change shall have occurred or been proposed to the
United States Internal Revenue Code of 1986,
as amended, the Treasury
regulations promulgated thereunder, or publicly available administrative
policies of the U.S. Internal Revenue Service, or the equivalent laws,
regulations and policies of another jurisdiction where one or more Shareholders
are resident, that, in the sole judgment of the Corporation, is detrimental
to the Corporation or its affiliates taken as a whole or to a Shareholder,
or with respect to making the Offer or taking up and paying for Shares
deposited under the Offer;
|
|
|
|
|
(j)
|
the Corporation shall have determined that the consummation
of the Offer is reasonably likely to cause the Shares to be delisted from
the TSX or the NYSE Amex or to be eligible for deregistration under the
Exchange Act;
|
|
|
|
|
(k)
|
Primary Capital shall have withdrawn or amended its
opinion with respect to the liquidity of the Shares; or
|
|
|
|
|
(l)
|
the Corporation shall have determined, in its sole judgment,
that the Corporation would not be able to satisfy the requirements to
qualify as a MIC at all times throughout the taxation year of the Corporation
in which the Offer would otherwise be completed.
|
The foregoing conditions are for
the sole benefit of the Corporation and may be asserted by the Corporation,
in its sole discretion, regardless of the facts or circumstances giving rise
to any such events, or may be waived by the Corporation, in its sole discretion,
in whole or in part, if not satisfied on or prior to the Expiration Date. The
failure by the Corporation at any time to exercise its rights under any of the
foregoing conditions, or delay in doing so, shall not be deemed a waiver of
any such right; any waiver of any such right with respect to particular facts
and other circumstances shall not be deemed a waiver with respect to any other
facts and circumstances; and each such right shall be deemed an ongoing right
which may be asserted at any time or from time to time.
Any waiver of a condition or the
withdrawal of the Offer by the Corporation shall be deemed to be effective on
the date on which notice of such waiver or withdrawal by the Corporation is
delivered or otherwise communicated, in writing, to the Depositary at its principal office in Toronto, Ontario. Quest, after giving notice
to the Depositary of any waiver of a condition or the withdrawal of the Offer,
shall make a public announcement of such waiver or withdrawal and provide or
cause to be provided notice of such waiver or withdrawal to the TSX, the NYSE
Amex and any applicable Canadian and United States securities regulatory authorities.
If the Offer is withdrawn, the Corporation shall not be obligated to take up,
accept for purchase or pay for any Shares deposited under the Offer, and the
Depositary will return all certificates relating to deposited Shares, Letters
of Transmittal and Notices of Guaranteed Delivery and any related documents
to the parties by whom they were deposited.
21
A
CCEPTANCE FOR
P
AYMENT AND
P
AYMENT
FOR
S
HARES
After it has determined the Purchase
Price, the Corporation will publicly announce the Purchase Price and will take
up the Shares to be purchased pursuant to the Offer promptly after the Expiration
Date, but in any event not later than ten days after such time. The Corporation
will pay for such Shares within three business days after taking up the Shares.
The Corporation will acquire Shares to be purchased pursuant to the Offer and
title thereto upon having taken up such Shares even if payment therefor shall
not have been effected.
Number of Shares
For purposes of the Offer, the
Corporation will be deemed to have accepted for payment, subject to pro ration,
Shares properly deposited, and not withdrawn, pursuant to Auction Tenders at
or below the Purchase Price and pursuant to Purchase Price Tenders, having an
aggregate purchase price of not more than Cdn$ 60,000,000, if, as and when the
Corporation gives oral notice (to be confirmed in writing) or written notice
to the Depositary at its principal office in Toronto, Ontario of its acceptance
of such Shares for payment pursuant to the Offer.
Payment
The Purchase Price payable by the
Corporation, and thus the amount owing to any depositing Shareholder, will be
denominated in Canadian dollars.
Payment for Shares accepted for
purchase pursuant to the Offer will be made by depositing the aggregate Purchase
Price for such Shares with the Depositary (by bank transfer or other means satisfactory
to the Depositary, acting reasonably), who will act as agent for the depositing
Shareholders for the purposes of receiving payment from the Corporation and
transmitting such payment to the depositing Shareholders. Receipt by the Depositary
from the Corporation of payment for such Shares will be deemed to constitute
receipt of payment by such depositing Shareholders. Under no circumstances will
interest be paid by the Corporation or the Depositary to Shareholders depositing
Shares by reason of any delay in paying for any Shares or otherwise.
In the event of pro ration of Shares
deposited pursuant to Auction Tenders and Purchase Price Tenders, the Corporation
will determine the pro ration factor and pay for those deposited Shares accepted
for payment as soon as practicable after the Expiration Date. However, the Corporation
does not expect to be able to announce the final results of any such pro ration
for at least three business days after the Expiration Date.
Certificates for all Shares not
purchased, including all Shares deposited pursuant to Auction Tenders at prices
in excess of the Purchase Price, and Shares not purchased due to pro ration
or improper tenders, will be returned as soon as practicable after the Expiration
Date or termination of the Offer without expense to the depositing Shareholder.
The Offer provides Shareholders
with the opportunity to sell their Shares without incurring brokerage commissions.
However, Shareholders are cautioned to consult with their own investment dealer,
stock broker, bank, trust company or other nominee to determine whether any
fees or commissions are payable to their investment dealer, stock broker, bank,
trust company or other nominee in connection with a deposit of Shares pursuant
to the Offer. Quest will pay all fees and expenses of the Depositary in connection
with the Offer.
The Purchase Price for Shares deposited
and purchased will be paid by cheque issued to the order of, and certificate(s)
representing Shares not deposited or not purchased under the Offer will be issued
to, the person signing the relevant Letter of Transmittal or in the name of
such other person as specified by the person signing the Letter of Transmittal
by properly completing the appropriate box of such Letter of Transmittal. Unless
the depositing Shareholder instructs the Depositary to hold the cheque for pick-up
by checking Box H Hold For Pick-Up in the Letter of Transmittal,
the cheque and certificates will be forwarded by first-class mail, postage prepaid,
to the payee at the address specified in the Letter of Transmittal. In the absence
of an address being provided, cheques or certificates representing all Shares
not purchased will be forwarded to the address of the person as shown on the
share register for the Shares.
E
XTENSION AND
V
ARIATION OF THE
O
FFER
Subject to applicable law, the
Corporation expressly reserves the right, in its sole discretion, and regardless
of whether or not any of the conditions specified herein shall have been satisfied
or waived, at any time or from time to time, to extend the period of time during
which the Offer is open or to vary the terms and conditions of the Offer by
giving written notice, or oral notice (to be confirmed in writing), of extension or variation to the Depositary and by
causing the Depositary to provide to all Shareholders, where required by law,
as soon as practicable thereafter, a copy of the notice in the manner set forth
herein. After giving notice of an extension or variation to the Depositary,
the Corporation will make a public announcement of the extension or variation
(such announcement, in the case of an extension, is to be issued no later than
9:00 a.m. (Toronto time) on the next business day after the last previously
scheduled or announced expiration date) and provide or cause to be provided
notice of such extension or variation to the TSX, the NYSE Amex and any applicable
Canadian and United States securities regulatory authorities. Any notice of
extension or notice of variation will be deemed to have been given and be effective
on the day on which it is delivered or otherwise communicated, in writing, to
the Depositary at its principal office in Toronto, Ontario.
22
Where the terms of the Offer are
varied (other than a variation consisting solely of a waiver of a condition
of the Offer or any extension of the Offer resulting from the waiver), the period
during which Shares may be deposited pursuant to the Offer shall not expire
before ten days after the notice of variation has been mailed, delivered or
otherwise properly communicated to Shareholders unless otherwise permitted by
applicable legislation. During any such extension or in the event of any variation,
all Shares previously deposited and not taken up or withdrawn will remain subject
to the Offer and may be accepted for purchase by the Corporation in accordance
with the terms of the Offer, subject to the terms and conditions set forth in
this Offer to Purchase under Acceptance for Payment and Payment for Shares
and Withdrawal Rights. An extension of the Expiration Date or a
variation of the Offer does not constitute a waiver by the Corporation of its
rights in this Offer to Purchase.
Notwithstanding the foregoing,
except as provided by applicable Canadian securities legislation, the Offer
may not be extended by the Corporation if all the terms and conditions of the
Offer have been complied with (except those waived by the Corporation), unless
the Corporation first takes up and pays for all Shares properly deposited under
the Offer and not withdrawn.
The Corporation also expressly
reserves the right, in its sole and absolute discretion, (i) to terminate the
Offer and not take up and pay for any Shares not theretofore taken up and paid
for upon the occurrence of any of the events, or failure to satisfy any of the
conditions, specified in this Offer to Purchase under Conditions of the
Offer, and/or (ii) at any time or from time to time, to amend the Offer
in any respect, subject to applicable Canadian securities legislation.
Any such extension, delay, termination
or amendment will be followed as promptly as practicable by a public announcement.
Without limiting the manner in which the Corporation may choose to make any
public announcement, except as provided by applicable law, the Corporation shall
have no obligation to publish, advertise or otherwise communicate any such public
announcement other than by making a release through its usual news wire service
or any other news wire service.
If the Corporation makes a material
change in the terms of the Offer or the information concerning the Offer, the
Corporation will extend the time during which the Offer is open to the extent
required under applicable Canadian securities legislation.
P
AYMENT IN THE
E
VENT OF
M
AIL
S
ERVICE
I
NTERRUPTION
Notwithstanding the provisions
of the Offer, cheques in payment for Shares purchased under the Offer and certificates
for any Shares to be returned will not be mailed if the Corporation determines
that delivery by mail may be delayed. Persons entitled to cheques or certificates
that are not mailed for this reason may take delivery at the office of the Depositary
at which the deposited certificates for the Shares were delivered until the
Corporation has determined that delivery by mail will no longer be delayed.
Quest will provide notice, in accordance with the Offer, of any determination
not to mail under this section as soon as reasonably practicable after such
determination is made. The deposit of cheques with the Depositary in these circumstances
will constitute delivery to the persons entitled to them.
E
NCUMBRANCES AND
D
IVIDENDS
Shares acquired pursuant to the
Offer shall be acquired by the Corporation free and clear of all liens, charges,
hypothecs, encumbrances, security interests, claims, restrictions and equities
whatsoever, together with all rights and benefits arising therefrom, provided
that any dividends or distributions that may be paid, issued, distributed, made
or transferred on or in respect of such Shares to Shareholders of record on
or prior to the date upon which the Shares are taken up and paid for under the
Offer shall be for the account of such Shareholders. Each Shareholder of record
on that date will be entitled to receive that dividend or distribution, whether
or not such Shareholder deposits Shares pursuant to the Offer.
Each depositing Shareholder will
be bound by a representation and warranty that such Shareholder has full power
and authority to deposit, sell, assign and transfer the deposited Shares and
any and all dividends, distributions, payments, securities, rights, assets or
other interests which may be declared, paid, issued, distributed, made or transferred
on or in respect of the deposited Shares with a record date on or after the
date that Quest takes up and accepts for purchase the deposited Shares and that,
if the deposited Shares are taken up and accepted for purchase by Quest, Quest
will acquire good title thereto, free and clear of all liens, charges, encumbrances,
security interests, claims, restrictions and equities whatsoever, together with
all rights and benefits arising therefrom.
23
N
OTICE
Without limiting any other lawful
means of giving notice, any notice to be given by the Corporation or the Depositary
under the Offer will be deemed to have been properly given if it is mailed by
first-class mail, postage prepaid, to the registered Shareholders at their respective
addresses as shown on the share registers maintained in respect of the Shares,
and will be deemed to have been received on the first business day following
the date of mailing. These provisions apply despite (i) any accidental omission
to give notice to any one or more Shareholders, and (ii) any interruption of
mail service in Canada, the United States or elsewhere following mailing. In
the event of an interruption of mail service following mailing, the Corporation
will use reasonable efforts to disseminate the notice by other means, such as
publication. If post offices in Canada or the United States are not open for
deposit of mail, or there is reason to believe there is or could be a disruption
in all or any part of the postal service, any notice which the Corporation or
the Depositary may give or cause to be given under the Offer will be deemed
to have been properly given and to have been received by Shareholders if it
is issued by way of a news release and if it is published once in the
National
Post
or
The Globe and Mail,
in
La Presse
and in
The Wall
Street Journal
.
O
THER
T
ERMS OF THE
O
FFER
|
(a)
|
No investment dealer, stock broker, bank, trust company
or other person has been authorized to give any information or to make
any representation on behalf of the Corporation or the Board of Directors
other than as contained in the Offer, and, if any such information or
representation is given or made, it must not be relied upon as having
been authorized by the Corporation or the Board of Directors.
|
|
|
|
|
(b)
|
It is a term of the Offer that, for the purposes of
subsection 191(4) of the
Income Tax Act
(Canada), the specified
amount in respect of each Share shall be the closing price on the
TSX on the Expiration Date for the Shares (the
Specified Amount
).
Shareholders should carefully consider the income tax consequences of
accepting the Offer. See Issuer Bid Circular Certain Canadian
Federal Income Tax Considerations and Issuer Bid Circular
Certain United States Federal Income Tax Considerations.
|
|
|
|
|
(c)
|
The Offer and all contracts resulting from the acceptance
thereof shall be governed by, and construed in accordance with the laws
of, the Province of Ontario and the laws of Canada applicable therein.
Each party to a contract resulting from an acceptance of the Offer unconditionally
and irrevocably attorns to the jurisdiction of the courts of the Province
of Ontario.
|
|
|
|
|
(d)
|
Quest, in its sole discretion, shall be entitled to
make a final and binding determination of all questions relating to the
interpretation of the Offer, the validity of any acceptance of the Offer,
the pro rata entitlement of each depositing Shareholder, if applicable,
and the validity of any withdrawal of Shares.
|
|
|
|
|
(e)
|
The Offer is not being made to, and deposits of Shares
will not be accepted from or on behalf of, Shareholders residing in any
jurisdiction in which the making of the Offer or the acceptance thereof
would not be in compliance with the laws of such jurisdiction. Quest may,
in its sole discretion, take such action as it may deem necessary to extend
the Offer to Shareholders in any such jurisdiction.
|
Neither Quest nor its Board
of Directors, in making the decision to present the Offer to Shareholders, makes
any recommendation to any Shareholder as to whether to deposit or refrain from
depositing Shares. Shareholders are urged to consult their own financial, legal,
investment and tax advisors and make their own decision whether to deposit Shares
to the Offer and, if so, how many Shares to deposit, and at what price or prices.
24
The accompanying Circular, together
with this Offer to Purchase, constitutes the issuer bid circular required under
Canadian securities legislation applicable to the Corporation with respect to
the Offer.
The accompanying Circular contains
additional information relating to the Corporation and the Offer and the Corporation
urges you to read it, the Letter of Transmittal and the Notice of Guaranteed
Delivery.
DATED
this 19
th
day of July 2010.
|
QUEST CAPITAL CORP.
|
|
|
|
By:
(Signed)
BRIAN E. BAYLEY
|
|
|
|
President and Chief Executive Officer
|
|
|
|
By:
(Signed)
JIM GROSDANIS
|
|
|
|
Chief
Financial Officer
|
25
ISSUER BID CIRCULAR
This Circular is being furnished
in connection with the offer by Quest to purchase, for not more than Cdn$ 60,000,000
in cash, up to a maximum of 44,444,444 of its Shares at a Purchase Price of
not less than Cdn$ 1.35 per Share and not more than Cdn$ 1.60 per Share. Terms
defined in the Offer to Purchase and not otherwise defined herein have the same
meanings in this Circular. The terms and conditions of the Offer to Purchase
are incorporated into and form part of this Circular. Reference is made to the
Offer to Purchase for details of its terms and conditions.
Q
UEST
C
APITAL
C
ORP
.
Nature of Business
Quests current primary business
is to provide real estate mortgage financings in Canada. Quests borrowers
include owners of multi-unit residential buildings, land and commercial properties.
In the latter part of 2008 and throughout 2009, Quest experienced an increase
in its impaired loans and consequently Quest primarily focused on the collection
and monetization of its existing loan portfolio rather than on the origination
of new loans. The Corporation has made progress in this regard, and expects
further monetization to occur during 2010. Proceeds from monetizations have
been used to purchase non-recourse syndicated loans and to reinvest in mortgages,
with remaining cash not being reinvested through further lending. As such, the
Corporation has indicated its intention to recommence lending. Further details
are contained in its Management Discussion and Analysis for the year ended December
31, 2009 and for the quarter ended March 31, 2010 (together, the
MD&A
).
Since January 1, 2008, Quest has
organized its business, operations and assets in order to qualify as a mortgage
investment corporation (a
MIC
) for Canadian income tax purposes.
A MIC is a special-purpose corporation defined under Section 130.1 of the
Income
Tax Act
(Canada) (the
Tax Act
). A MIC does not pay corporate-level
taxes when all taxable income is distributed to shareholders as dividends during
a taxation year or within 90 days of its year end. Taxable Canadian shareholders
receive dividend payments subject to Canadian tax as interest income. As of
January 1, 2008, the Corporation has had to continually meet the following criteria
to maintain MIC eligibility: (i) at least 50% of its assets must consist of
residentially oriented mortgages and/or cash; (ii) it must not directly hold
any foreign assets, including investments secured by real property located outside
of Canada; (iii) it must not engage in operational activities outside of the
business of lending and investing of funds; and (iv) no person may own more
than 25% of any class of the issued and outstanding shares. A MIC is only permitted
to lend on properties collateralized by Canadian real estate properties. Quest
has continually met the criteria to maintain MIC eligibility since January 1,
2008 and intends to qualify as a MIC throughout the taxation year in which a
Shareholder disposes of Shares pursuant to the Offer.
Quest generates revenues through
interest it receives on its loan portfolio. Quests revenues are subject
to the return it is able to generate on its capital, its ability to reinvest
funds as loans mature and are repaid, and the nature and credit quality of its
loan portfolio, including the quality of the collateral security.
The registered office of Quest
is located at Suite 1700, Park Place, 666 Burrard Street, Vancouver, British
Columbia V6C 2X8. Its principal office is located at 550 Burrard Street, Suite
1028, Bentall V, Vancouver, British Columbia V6C 2B5.
Additional Information
Quest is subject to the information
and reporting requirements of Canadian provincial securities laws and the rules
of the TSX, the NYSE Amex and the Exchange Act and in accordance therewith files
periodic reports and other information with securities regulatory authorities
in Canada, the TSX, the NYSE Amex and the SEC, relating to its business, financial
condition and other matters. Quest is required to disclose in such reports certain
information, as of particular dates, concerning Quests directors and officers,
their compensation, stock options granted to them, the principal holders of
Quests securities and any material interest of such persons in transactions
with Quest. The Corporation files reports, statements and other information
with the Canadian Securities Administrators which may be accessed on the System
for Electronic Document Analysis and Retrieval (
SEDAR
) web
site at
www.sedar.com
.
Quest is also filing an issuer
tender offer statement on Schedule 13E-4F with the SEC with respect to the Offer
pursuant to Section 13(e)(1) of the Exchange Act and Rule 13e-4(g) promulgated
thereunder. The Offer in the United States will be made on the terms and subject
to the conditions set forth in the Offer to Purchase and the Letter of Transmittal.
Quest is subject to the informational requirements of the Exchange Act and in
accordance therewith files annual reports and furnishes other reports and information
with the SEC relating to its business, financial condition and other matters.
The tender offer statement and such reports and other information filed or furnished
by Quest may be inspected and copied at the SECs Public Reference Room
at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain information
on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The SEC maintains an internet web site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC at
www.sec.gov
.
26
Proposed Reorganization
In May 2010, the Corporation and
Sprott Consulting Limited Partnership (
SCLP
) entered into
discussions about working together to restructure the business of the Corporation
to transition it from real estate lending to natural resources lending, generally
for resource companies that are smaller to intermediate sized in terms of capitalization.
On June 9, 2010, the Corporation and SCLP signed a letter of intent (the
LOI
)
pursuant to which the parties confirmed their mutual understanding and intention
to work together concerning the restructuring of the business of Quest, the
change in Quests lending strategy from real estate to natural resource
lending, the rebranding and change of name of Quest, the investment in Quest
by Sprott Inc. (together with its affiliates (as defined in the
Securities
Act
(Ontario)),
Sprott
) and certain related persons by
way of a private placement, the entering into of a management services agreement
and certain related matters in respect of Quest and its governance and management
described herein (collectively, the
Reorganization
). Management
of Quest believes that by combining the Corporations asset base and lending
expertise with SCLPs deal flow, contacts and execution abilities, the
Corporation expects to become a significant player in the natural resource lending
sector and can create greater value for Shareholders.
The LOI, a copy of which is available
on SEDAR at www.sedar.com, contemplates that the following will take place in
connection with the restructuring of the Corporation:
-
Change in Lending Strategy:
Quest will discontinue its current real
estate lending business and will change its lending strategy to focus on
natural resource lending. Its business will be primarily directed to bridge
and mezzanine lending to precious metal mining, exploration and development
companies and oil and gas companies and will include financing base metal
mining, exploration and development companies and other resource related
businesses.
-
Management Services Agreement:
SCLP will provide certain management
services to the Corporation, including raising capital, managing all public
filings and certain other matters, following the closing date of the Reorganization
(the
Closing Date
), which will occur following the completion
of the Offer, pursuant to the terms of a management services agreement between
Quest and SCLP (the
MSA
) to be entered into by the parties,
subject to the approval of the Shareholders. In connection with the entering
into of the MSA, certain directors and officers of the Corporation were
expected to enter into consulting and employment contracts with SCLP.
-
Change of Name:
Quest will seek the approval of the Shareholders
to change its name from Quest Capital Corp. to Sprott
Resource Lending Corp. (
SRLC
), or such other similar
name as may be agreed to by the Corporation and SCLP. The purpose of the
proposed name change is to reflect the change in the Corporations
lending strategy and to capitalize on the goodwill attached to the Sprott
name.
-
Election of Directors:
Under the MSA SCLP will be granted the right
to nominate two directors to the board of directors of SRLC to serve following
the Closing Date, subject to the approval of the Shareholders. SCLP has
determined to initially nominate John Embry and Peter Grosskopf for election
to the Board pursuant to such right. SCLPs right to nominate future
SCLP nominees, as well as the right of the SCLP nominees to serve as directors
of the Corporation, shall only remain so long as the MSA is in effect.
-
Private Placement:
Within a period of seven days after the Expiration
Date, Sprott and certain employees or clients of Sprott as SCLP may direct
(each, a
Designee
) will make an investment in the Corporation
through a private placement of Shares of up to Cdn$ 25,000,000 (the
Private
Placement
). The Private Placement would be carried out pursuant
to subscription agreements in customary form, having terms and conditions
acceptable to SCLP and the Corporation, each acting reasonably, and be subject
to any applicable regulatory, stock exchange or other applicable approvals.
Participation in the Private Placement, which would be priced at the lower
of the Purchase Price and Cdn$ 1.60 per Share, would be restricted to Sprott
and its Designees.
-
Change in Management:
Following the execution and delivery by the
Corporation of the MSA, A. Murray Sinclair and Brian Bayley will resign
from their respective positions as Chairman and President and Chief Executive
Officer of the Corporation. SCLP will, pursuant to the terms of the MSA,
provide the Corporation with the services of a Chief Executive Officer,
Chief Financial Officer and Chief Operating Officer. Peter Grosskopf will
serve as the Corporations President and Chief Executive Officer and
Jim Grosdanis will serve as the Corporations Chief Financial Officer.
The Corporation will announce the name of the individual who will serve
as Chief Operating Officer, as well as the Chairman, at a later date expected
to be in advance of the meeting of Shareholders to approve the Reorganization.
In addition, Sandra Lee and Narinder Nagra will continue as Corporate Secretary
and Senior Vice President, Asset Management, respectively, on a temporary
basis until appropriate replacements are made.
-
Dividend and Normal Course Issuer Bid Policy:
The parties anticipate
that the Board of Directors would establish, upon or following the Closing
Date, a dividend policy providing for the payment of an annual dividend
in a percentage equal to the average 30-year Government of Canada bond interest
rate or similar index for the relevant year (the
Hurdle Rate
). It is also anticipated that
the Board of Directors will establish, upon or following the Closing Date, a
normal course issuer bid policy pursuant to which Quest would seek regulatory
approval, from time to time, to enable it to repurchase its Shares in the event
such Shares trade below their book value. These policies will be initiated shortly
before the end of December 2010.
27
-
Monetization and Redeployment:
Quests existing real estate
loan book will be monetized and redeployed into new resource loans.
-
Substantial Issuer Bid:
Quest agreed to make the Offer prior to
completing the Reorganization.
-
Break Fee:
Pursuant to the terms of the LOI, SCLP will be entitled
to the payment by Quest of a break fee of Cdn$ 1.5 million in the event
that Quest enters into a competing transaction.
-
Lock-Up Agreements:
On June 9, 2009, A. Murray Sinclair, Brian Bayley,
Rick Rule and Helmsdale Bank Corp. (collectively, the
Locked-Up
Shareholders
) each entered into a support and voting agreement
with SCLP (collectively, the
Support Agreements
). Pursuant
to the terms of the Support Agreements, the Locked- Up Shareholders, have
agreed to vote, or cause such Locked-Up Shareholders Shares to be
voted, in favour of the Shareholders resolutions approving the Reorganization.
The Corporation and SCLP have agreed
that Sprott Lending Consulting Limited Partnership (
SLCLP
),
an affiliate of SCLP, shall perform all the services and shall be entitled to
all of the rights and obligations of SCLP under the LOI.
The Corporation, a special purpose
wholly-owned subsidiary of the Corporation and SLCLP shall enter into a partnership
agreement (the
Partnership Agreement
), thereby creating a
partnership (the
Partnership
) for the purpose of making bridge
and mezzanine loans to precious and base metal mining, exploration and development
companies and oil and gas companies and other resource related businesses (the
Partnership Business
). SLCLP will be the managing partner
of the Partnership and the Corporation and a wholly-owned subsidiary will be
the ordinary partners. The Corporation will initially invest in the Partnership
the available free cash that is not required to operate its existing real estate
lending portfolio. As the Corporations existing loan portfolio is monetized,
the Corporation will invest additional free cash in the Partnership. Loans to
be made by the Partnership will be approved by the Board or the Credit Committee
of the Partnership and, for certain loans, the management of the Partnership.
The completion of the Reorganization
is subject to the satisfaction of a number of conditions including, among others,
any applicable regulatory or other legal requirements, the settlement of definitive
documentation and approval by the Shareholders. The Offer is not conditional
on the Shareholder approval or consummation of the Reorganization. A management
proxy circular (the
Reorganization Circular
) seeking the
approval of the Shareholders including, without limitation, in respect of the
entering into of the MSA and the Partnership Agreement, the proposed change
of name of Quest, the increase in the maximum number of directors, the election
of additional directors and other matters, is being mailed to Shareholders concurrently
with the sending of this Offer.
Further details of the Reorganization,
including the proposed Partnership, the Partnership Agreement and the MSA are
available in the Reorganization Circular in the section entitled Matters
Requiring Shareholder Approval 1. Management Services, available
on SEDAR at www.sedar.com.
Notwithstanding the foregoing,
the Corporation does not expect that it will cease to qualify as a MIC during
the taxation year in which a Shareholder disposes of Shares pursuant to the
Offer.
P
URPOSE AND
E
FFECT OF THE
O
FFER
The Board of Directors of Quest
has determined that the purchase of Shares pursuant to the Offer represents
an effective and desirable use of part of Quests available cash for the
following reasons:
|
(a)
|
Quest believes that the Offer is an equitable and efficient
means to distribute up to an aggregate of Cdn$ 60,000,000 in cash to its
Shareholders while providing Shareholders with an option to elect whether
or not to participate in the distribution; and
|
|
|
|
|
(b)
|
the Offer provides Shareholders who are considering
the sale of all or a portion of their Shares with an opportunity to determine
the price at which they are willing to sell their Shares if such Shares
are deposited pursuant to an Auction Tender, or the opportunity to deposit
their Shares without specifying a price if such Shares are deposited pursuant
to a Purchase Price Tender and, if any such Shares are purchased pursuant
to the Offer, to sell such Shares for cash without the usual transaction
costs associated with market sales. Shareholders whose Shares are not
purchased under the Offer will realize a proportionate increase in their
equity interest in Quest if Shares are purchased pursuant to the Offer.
|
28
Furthermore, subject to Shareholder
approval, Quest will discontinue its current real estate lending business and
will change its lending strategy to focus instead on natural resource lending
as part of the Reorganization. Its business will be primarily directed to bridge
and mezzanine lending to precious metal mining, exploration and development,
and oil and gas companies, and could potentially include lending to base metal
mining, exploration and development companies and other resource related businesses.
While the Offer is not dependent on the completion of this reorganization, the
Board of Directors believes that the Offer will accommodate the needs of Shareholders
who are focused on real estate by allowing them to tender their Shares to the
Offer.
The Board of Directors has entered
into a Cdn$ 35,000,000 stand-by commitment provided by Middlemarch Partners
Limited (
Middlemarch
) to fund part of the Offer should Quests
efforts to monetize additional loans, together with the Corporations existing
cash reserves, otherwise fail to be adequate to fund the full aggregate Purchase
Price for Shares under the Offer.
Neither Quest nor its Board
of Directors, in making the decision to present the Offer to Shareholders, makes
any recommendation to any Shareholder as to whether to deposit or refrain from
depositing Shares. Shareholders are urged to consult their own financial, legal,
investment and tax advisors and make their own decision whether to deposit Shares
to the Offer and, if so, how many Shares to deposit, and at what price or prices.
Background to the Offer
Quest has determined that pursuing
a substantial issuer bid would be an efficient use of the Corporations
financial resources for the reasons set out above.
The Board of Directors considered
the proposed Offer and whether it would be in the best interests of the Corporation.
In evaluating the Offer, the Board of Directors gave careful consideration to
a number of factors, including the following:
|
(a)
|
the Offer is an equitable and efficient means to distribute
an aggregate of up to Cdn$ 60,000,000 in cash to its Shareholders while
providing Shareholders with an option to elect whether or not to participate
in the distribution;
|
|
|
|
|
(b)
|
after giving effect to the Offer, Quest will continue
to have sufficient financial resources and working capital;
|
|
|
|
|
(c)
|
the Offer provides Shareholders with an opportunity
to realize on all or a portion of their investment in the Corporation,
should they desire liquidity, in quantities which might not otherwise
be available in the market and without incurring brokerage commissions
which might otherwise be payable on a sale of their Shares in a transaction
on the TSX or the NYSE Amex;
|
|
|
|
|
(d)
|
depositing Shares under the Offer is optional and available
to all Shareholders and, therefore, each Shareholder is free to accept
or reject the Offer;
|
|
|
|
|
(e)
|
the Offer is not conditional upon any minimum number
of Shares being deposited;
|
|
|
|
|
(f)
|
Shareholders who do not deposit their Shares to the
Offer will realize a proportionate increase in their equity interest in
the Corporation to the extent Shares are purchased by the Corporation
pursuant to the Offer; and
|
|
|
|
|
(g)
|
it is reasonable to conclude that, following the completion
of the Offer, there would be a market for holders of the Shares who do
not tender to the Offer that is not materially less liquid than the market
that existed at the time of the making of the Offer (see Liquidity
of Market and Schedule A Liquidity Opinion of Primary Capital
Inc.).
|
On July 12, 2010, the Board of
Directors approved the Offer to Purchase, the Circular, the Letter of Transmittal
and the Notice of Guaranteed Delivery.
Subject to certain exceptions,
Canadian securities laws prohibit the Corporation and its affiliates from acquiring
any Shares, other than pursuant to the Offer, until at least 20 business days
after the Expiration Date or date of termination of the Offer. Subject to applicable
law, Quest may in the future purchase additional Shares on the open market,
in private transactions, through issuer bids or otherwise. Any such purchases
may be on the same terms or on terms that are more or less favourable to Shareholders
than the terms of the Offer. Any possible future purchases by the Corporation
will depend on many factors, including the market price of the Shares, the Corporations
business and financial position, the results of the Offer and general economic
and market conditions. The Shares purchased under the Offer will be cancelled
by the Corporation.
Shareholders should carefully consider
the income tax consequences of accepting the Offer. See Certain Canadian
Federal Income Tax Considerations and Certain United States Federal
Income Tax Considerations.
29
Liquidity of Market
As at July 19, 2010, the Corporation
had 139,529,934 issued and outstanding Shares and 98,854,599 issued and outstanding
Shares comprising the
public float
, which consists of the
issued and outstanding Shares excluding Shares beneficially owned, or over which
control or direction is exercised, by related parties of the Corporation (as
defined under applicable Canadian securities laws)
.
For the purpose of
the Offer,
related parties
are the directors and officers
of the Corporation, as well as the directors and officers of affiliated entities
of the Corporation and holders of Shares carrying more than 10% of the voting
rights attached to all outstanding Shares. On the basis of the minimum Purchase
Price under the Offer, the maximum number of Shares that the Corporation is
offering to purchase pursuant to the Offer represents approximately 31.85 %
of the Shares issued and outstanding as at July 19, 2010, or approximately 30.40
% of the Shares issued and outstanding on that date on a fully diluted basis
(assuming the exercise of all Quest stock options as of July 19, 2010, there
would be an aggregate of 146,194,100 Shares outstanding as of such date). If
the Corporation purchases 44,444,444 Shares pursuant to the Offer (such number
being the maximum number of Shares that may be purchased pursuant to the Offer
from the public float and none of the related parties
deposit their Shares pursuant to the Offer), the public float would be comprised
of 54,410,155 Shares (assuming no exercise of options).
In connection with the making of the Offer, the Corporation has
determined that:
|
(a)
|
there are published markets for the Shares,
namely both the TSX and the NYSE Amex;
|
|
|
|
|
|
(b)
|
during the 12-month period before June 10,
2010, the date prior to the announcement by Quest of its intention to
make the Offer:
|
|
|
|
|
|
|
(i)
|
the number of the issued and outstanding Shares was
at all times at least 5,000,000, excluding the Shares beneficially owned,
directly or indirectly, or over which control or direction was exercised,
by related parties and the Shares that were not freely tradeable;
|
|
|
|
|
|
|
(ii)
|
the aggregate trading volume of the Shares was at least
1,000,000 shares on the TSX;
|
|
|
|
|
|
|
(iii)
|
there were at least 1,000 trades in the Shares on the
TSX; and
|
|
|
|
|
|
|
(iv)
|
the aggregate value of the trades in Shares based on
the price of the trades referred to in clause (iii) was at least Cdn$
15,000,000; and
|
|
|
|
|
|
(c)
|
the market value of the Shares on the TSX,
as determined in accordance with Multilateral Instrument 61-101
Protection of Minority Security Holders in Special Transactions
(
MI
61-101
), was at least Cdn$75,000,000 for May 2010, being the
calendar month preceding the calendar month in which the Offer was announced.
|
The Corporation has obtained a
liquidity opinion (
Liquidity Opinion
) from Primary Capital
Inc. (
Primary Capital
) as contemplated by MI 61-101. Primary
Capital is a privately owned exempt market dealer based in Toronto, Canada.
Primary Capital has been determined to be qualified and independent for the
purposes of MI 61-101. Primary Capital (i) is not an insider, associate or affiliate
of the Corporation, (ii) has not acted as an advisor to the Corporation in connection
with the Offer, (iii) for its Liquidity Opinion, will be paid a fee of Cdn$
40,000 plus applicable taxes and reasonable out-of-pocket expenses, payable
upon the delivery of the Liquidity Opinion, and such fee is not contingent in
any way on the conclusions in the Liquidity Opinion or the outcome of the Offer,
(iv) has no financial interest in the outcome of the Offer, (v) is not a manager,
co-manager or member of a soliciting dealer group for the Offer, (vi) is not
the external auditor of the Corporation, and (vii) has been indemnified by the
Corporation for certain liabilities arising out of its engagement to prepare
and deliver the Liquidity Opinion. Primary Capital may, in the future, provide
services to the Corporation and/or its affiliates in the ordinary course of
its business.
The Liquidity Opinion delivered
by Primary Capital to the Board of Directors concludes that, based on and subject
to the assumptions and limitations stated in the Liquidity Opinion, (i) there
was a liquid market for the Shares for the Shareholders at the time of the making
of the Offer, and (ii) it is reasonable for the Board of Directors to conclude
that, following the completion of the Offer in accordance with its terms, there
will be a market for the Shareholders who do not tender to the Offer that is
not materially less liquid than the market that existed at the time of the making
of the Offer. A copy of the Liquidity Opinion of Primary Capital is attached
hereto as Schedule A. The Liquidity Opinion is subject to the qualifications,
assumptions and restrictions set out therein and this summary of the Liquidity
Opinion is qualified in its entirety by reference thereto.
The Board of Directors considered
the anticipated effect of the Offer on the liquidity of the market for holders
of Shares who do not deposit Shares under the Offer and, in doing so, reviewed
the Liquidity Opinion and considered the following factors:
30
|
(a)
|
the maximum number of Shares that would be repurchased
under the Offer, if the Purchase Price is determined to be Cdn$ 1.35,
being the minimum Purchase Price under the Offer, would represent 31.85
% of the Shares issued and outstanding on the date prior to the announcement
by Quest of its intention to make the Offer;
|
|
|
|
|
(b)
|
the extent by which the aggregate trading volume, number
of trades and aggregate trading value of the Shares during the 12-month
period preceding the date prior to the announcement by Quest of its intention
to make the Offer, the size of the public float of the Shares, and the
market value of the Shares, exceed the minimum liquid market
requirements specified in MI 61-101; and
|
|
|
|
|
(c)
|
the number of Shares to be acquired under the Offer
in relation to the public float, the aggregate trading volume and aggregate
trading value of the Shares on the TSX and the NYSE Amex, the number of
trades on the TSX and the NYSE Amex, and the market value of the Shares
in the 12 months preceding the date of the announcement of the Offer.
|
The Board of Directors determined
that it is reasonable to conclude that, based upon the foregoing and the Liquidity
Opinion, following the completion of the Offer, there will be a market for holders
of the Shares who do not deposit Shares under the Offer that is not materially
less liquid than the market that existed at the time of the making of the Offer.
Quest is relying on the liquid market exemption specified in MI
61-101 and, as a consequence, is not required to obtain a formal valuation with
respect to the Offer. Accordingly, the valuation requirements of applicable
securities regulatory authorities in Canada applicable to issuer bids will not
be applicable in connection with the Offer.
The Shares are registered under
the Exchange Act, which requires, among other things, that Quest furnish certain
information to the SEC. Quest believes that the purchase of Shares pursuant
to the Offer will not result in the Shares becoming eligible for deregistration
under the Exchange Act.
C
ORPORATE
S
TRUCTURE AND
S
HARE
C
APITAL
Authorized and Issued and Outstanding Capital
As of July 19, 2010, the record
date for the mailing of the Offer to Shareholders, the authorized capital of
Quest consisted of the following: (a) an unlimited number of common shares without
par value; (b) an unlimited number of First Preferred Shares without par value;
and (c) an unlimited number of Second Preferred Shares without par value, of
which 139,529,934 common shares were issued and outstanding. Currently, there
are no First Preferred Shares or Second Preferred Shares issued or outstanding.
The issued and outstanding Shares as
of July 19, 2010, along with potential Shares, are as follows:
Outstanding Shares
|
|
July 19, 2010
|
|
|
|
|
|
Issued and Outstanding Shares
Common Shares
|
|
139,529,934
|
|
|
|
|
|
Potential Shares
Options to acquire Common Shares (including
unvested options)
|
|
6,664,166
|
|
|
|
|
|
Total Shares (fully diluted basis)
|
|
146,194,100
|
|
The Shares are listed on the TSX and
the NYSE Amex, under the symbols QC and QCC, respectively.
Shares
Shareholders are entitled to one
vote per Share at any annual or special meeting of the Shareholders, except
for meetings at which any holders of a specified class or series of shares are
entitled to vote. Shareholders shall be entitled to receive dividends, if, as
and when declared by the Board of Directors out of the assets of the Corporation
properly applicable to the payment of dividends in such amounts and payable
at such times and at such place or places in Canada as the Board of Directors
may, from time to time, determine. In the event of the liquidation, dissolution
or winding up of the Corporation or other distribution of the assets of the
Corporation among its shareholders for the purpose of winding up its affairs,
the holders of Shares shall, subject to the rights of the holders of any other
class of shares of the Corporation entitled to receive the assets of the Corporation
upon such distribution in priority to Shares, be entitled to participate in
any distribution of the assets of the Corporation.
31
Preferred Shares
The First Preferred Shares and
Second Preferred Shares may be issued in one or more series. The directors of
the Corporation may by resolution before the issue of any series alter the Corporations
Articles of Continuance to fix the number of preferred shares in a series and
create, attach and define special rights such as the payment of dividends and
rights of redemption, conversion and retraction. Holders of First Preferred
Shares shall be entitled to one vote in respect of each First Preferred Share
held at general meetings. Holders of Second Preferred Shares shall not be entitled
as such to vote at any annual or special meeting of the Shareholders, except
for meetings at which any holders of a specified class or series of shares are
entitled to vote. Holders of First Preferred Shares of each series rank on a
parity with the First Preferred Shares of every other series and are entitled
to preference over the Second Preferred Shares and the Shares. Holders of Second
Preferred Shares of each series rank on a parity with the Second Preferred Shares
of every other series and are entitled to preference over the Shares.
W
ITHDRAWAL
R
IGHTS
The description of the withdrawal
rights of Shareholders in the Offer to Purchase under Withdrawal Rights,
is incorporated into and forms part of this Circular.
F
INANCIAL
S
TATEMENTS
The audited annual consolidated
financial statements of Quest as at and for the year ended December 31, 2009,
and the unaudited interim consolidated financial statements of Quest as at and
for the three-month period ended March 31 2010, have previously been mailed
to Shareholders, and are available on the SEDAR web site at
www.sedar.com
,
the EDGAR web site at
www.sec.gov
or Quests web site at
www.questcapcorp.com
.
The interim consolidated financial statements of Quest as at and for the six-month
period ended June 30, 2010, are expected to be released on or about August 6,
2010 and will be available on SEDAR, EDGAR and on Quests web site. Shareholders
may obtain copies of the most recent interim financial statements, without charge,
upon request to the Corporate Secretary of Quest, at 550 Burrard Street, Suite
1028, Bentall V, Vancouver, British Columbia V6C 2B5.
P
RICE
R
ANGE OF
S
HARES
Trading of Shares on Principal Markets
The Shares are listed on the TSX and
the NYSE Amex under the respective symbol QC and QCC.
The following tables set forth
the high and low closing prices per Share and the volumes of the Shares traded
on the TSX and the NYSE Amex, respectively, as compiled from Dow Jones Factiva,
for each month from January 2010 to July 2010.
|
|
Common Shares (TSX)
|
|
|
|
|
|
Common Shares (NYSE Amex)
|
|
|
|
High
|
|
|
Low
|
|
|
|
|
|
|
|
|
High
|
|
|
Low
|
|
|
|
|
|
|
(Cdn$)
|
|
|
(Cdn$)
|
|
|
Volume
|
|
|
|
|
|
(US$)
|
|
|
(US$)
|
|
|
Volume
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 2010
|
|
1.40
|
|
|
1.19
|
|
|
5,398,206
|
|
|
January 2010
|
|
|
1.35
|
|
|
1.10
|
|
|
2,549,684
|
|
February 2010
|
|
1.30
|
|
|
1.21
|
|
|
1,441,790
|
|
|
February 2010
|
|
|
1.23
|
|
|
1.10
|
|
|
1,545,247
|
|
March 2010
|
|
1.36
|
|
|
1.22
|
|
|
6,539,793
|
|
|
March 2010
|
|
|
1.30
|
|
|
1.15
|
|
|
1,934,707
|
|
April 2010
|
|
1.44
|
|
|
1.27
|
|
|
13,977,741
|
|
|
April 2010
|
|
|
1.44
|
|
|
1.24
|
|
|
2,614,720
|
|
May 2010
|
|
1.39
|
|
|
1.26
|
|
|
3,132,061
|
|
|
May 2010
|
|
|
1.38
|
|
|
1.20
|
|
|
3,201,903
|
|
June 2010
|
|
1.54
|
|
|
1.26
|
|
|
4,184,499
|
|
|
June 2010
|
|
|
1.52
|
|
|
1.21
|
|
|
3,477,057
|
|
July 1, 2010 to
July 16, 2010
|
|
1.58
|
|
|
1.45
|
|
|
1,819,854
|
|
|
July 1, 2010 to
July 16, 2010
|
|
|
1.53
|
|
|
1.36
|
|
|
1,858,784
|
|
On June 9, 2010, the last full
trading day prior to the announcement by Quest of its intention to make the
Offer, the closing prices per Share on the TSX and NYSE Amex were Cdn$ 1.27
and US$ 1.22, respectively. On July 16, 2010, the last full trading day prior
to the date of the Offer, the closing prices on the TSX and NYSE Amex of the
Shares were Cdn$ 1.55 and US$ 1.48, respectively.
Shareholders are urged to obtain current
market quotations for the Shares.
D
IVIDENDS
Consistent with its status as a
MIC, Quests dividend policy has been to distribute substantially all of
its taxable income to the Corporations shareholders in the form of dividends,
whereas other issuers generally pay out only a portion of their taxable income
to their shareholders. As a MIC, Quest can deduct dividends paid to shareholders
during the year (and within 90 days thereafter) from its income for Canadian
income tax purposes. Such dividends are taxable in the shareholders hands
as interest. Further, a MIC can pay certain capital gains dividends which are
taxed as capital gains in the shareholders hands. Refer to the Corporations
MD&A under the Dividend Policy section thereof for the year ended
December 31, 2009. Following the entering into of the MSA, the Board of Directors
intends to establish a dividend policy providing for the payment of an annual
dividend in a percentage equal to the Hurdle Rate. See Proposed Reorganization
above.
32
During its last two financial years,
the Corporation has declared and paid cash dividends per Share as noted below:
Dividend per Share
|
Record Date
|
Payment Date
|
Cdn$ 0.025
|
March
14, 2008
|
March
31, 2008
|
Cdn$ 0.045
|
June 13, 2008
|
June 27, 2008
|
Cdn$ 0.045
|
September 15, 2008
|
September 30, 2008
|
Cdn$ 0.045
|
December 15, 2008
|
December 31, 2008
|
The Corporation did not declare any
dividends on its Shares in 2009 and has not declared any dividends to date in
2010.
During its last two financial years,
the Corporation has declared and paid dividends per First Preferred Share, Series
A, as noted below:
Dividend per Share
|
Record Date
|
Payment Date
|
Cdn$ 0.068
1
|
March
31, 2009
|
April
9, 2009
|
Cdn$ 0.067
1
|
June 30, 2009
|
July 2, 2009
|
Cdn$ 0.068
1
|
September 30, 2009
|
October 1, 2009
|
Cdn$ 0.047
2
|
December 2, 2009
|
December 2, 2009
|
Cdn$ 0.051
2
|
December 8, 2009
|
December 8, 2009
|
Cdn$ 0.058
2
|
December 18, 2009
|
December 18, 2009
|
Cdn$ 0.068
2
|
December 31, 2009
|
December 31, 2009
|
1
Dividends for the
March 31, 2009 and June 30, 2009 record dates were paid in Common Shares.
Dividends for the September 30, 2009 record date were paid in cash.
2
During December 2009, the Corporation redeemed preferred
shares outstanding. For each tranche of shares redeemed, dividends owed
at the date of redemption were paid in cash.
|
The Corporations dividend
policy is guided by its status as a MIC for purposes of the Tax Act. This status
allows the Corporation to reduce its taxable income to a negligible amount through
the payment of dividends to common and preferred shareholders after first utilizing
any tax losses and other tax deduction carry-forwards available to it. Under
the current economic circumstances, Quest cannot reasonably determine the precise
timing, in the short term, of the utilization of its tax loss carry-forwards,
but it is unlikely a dividend will be paid during 2010 or in the immediate future.
P
REVIOUS
P
URCHASES
A
ND
S
ALES
The only securities purchased by
the Corporation during the 12-month period preceding the date of the Offer are
the securities set out below in this Circular under Previous Purchases.
The only securities distributed by the Corporation during the 5-year period
preceding the date of the Offer are the securities set out below in this Circular
under Previous Distributions.
Previous Purchases
Effective December 30, 2008, the
Corporation completed a private placement of Cdn$ 40,000,000 of Cumulative 13.5%
First Preferred Shares, Series A, with voting rights. In September 2009, the
preferred shareholders agreed to waive their retraction rights and further agreed
to amend the redemption provisions attaching to the preferred shares, allowing
the Corporation to redeem the First Preferred Shares, Series A in tranches of
at least Cdn$ 2,500,000. In addition, the effective dividend rate was reduced
from 13.50% to 12.75% on October 1, 2009, with a further planned reduction to
12.00% on January 1, 2010. In December 2009, the Corporation repurchased and retired all of its Cdn$ 40,000,000 First Preferred
Shares, Series A.
33
On December 16, 2009, the Corporation
received approval from the TSX for a normal course issuer bid (
NCIB
),
under which the Corporation may make open market purchases of its Shares over
the TSX. Purchases pursuant to the NCIB commenced on December 18, 2009 and will
terminate on December 17, 2010 or on such earlier date as the Corporation may
complete its purchases or otherwise terminate the NCIB. Under the NCIB, the
Corporation may purchase up to 12,132,650 Shares, which represents approximately
10% of the total of the Corporations public float as at December 10, 2009.
The actual number of Shares purchased, the timing of the purchases and the prices
at which the Shares will be purchased will depend upon future market conditions.
A maximum of 42,793 Shares (being 25% of the average daily trading volume) may
be purchased by Quest on any one day under the NCIB, except where purchases
are made in accordance with the block purchase exemption under applicable
TSX policies. The Corporation will pay market price at the time of acquisition
for any Shares purchased under the NCIB. The Corporation will cancel shares
purchased under the NCIB. As of July 19, 2010, the Corporation had purchased
and cancelled 11,934,400 of its outstanding Shares under the NCIB through the
facilities of the TSX at a weighted average price per Share of Cdn$ 1.35. In
accordance with applicable Canadian securities laws, the Corporation has suspended
repurchases of any Shares under the NCIB until after the expiry or termination
of the Offer. As a result of previous purchases under the NCIB, only 198,250
Shares are available to be repurchased under the NCIB. Such Shares purchased
by the Corporation pursuant to the NCIB were purchased at the prevailing market
price at the time of purchase, at prices ranging from Cdn$ 1.17 to Cdn$ 1.41.
Previous Distributions
On January 11, 2006, a total of 41,667 Shares were issued on
the exercise of warrants attached to previously issued Shares.
In February 2006,
a total of 6,500,001 Shares were issued on the exercise of warrants attached
to previously issued Shares.
On March 2, 2006, a total of 2,291,667 Shares were
issued on the exercise of warrants attached to previously issued Shares.
On April 3, 2006, a total of 24,225
Shares were issued on the exercise of options held by the underwriting agents
of a previous Share issuance.
On April 27, 2006, a total of 15,625,000
Shares were issued in a public offering.
In May 2007, a total of 86,850
Shares were issued on the exercise of options held by the underwriting agents
of a previous Share issuance.
On July 6, 2007, a total of 832,500
Shares were issued on the exercise of options held by the underwriting agents
of a previous Share issuance.
On August 23, 2007, a total of
100,000 Shares were issued on the exercise of options held by the underwriting
agents of a previous Share issuance.
On September 14, 2007, a total
of 36,000 Shares were issued on the exercise of options held by the underwriting
agents of a previous Share issuance.
On October 24, 2007, a total of
8,400 Shares were issued on the exercise of options held by the underwriting
agents of a previous Share issuance.
On April 9, 2009, a total of 2,141,435
Shares were issued to the holders of First Preferred Shares, Series A, representing
payment of the declared dividend.
On July 2, 2009, a total of 1,571,135
Shares were issued to the holders of First Preferred Shares, Series A, representing
payment of the declared dividend.
Furthermore, during the five years
preceding the Offer, Shares have been distributed upon the exercise of stock
options. The table below indicates the number of Shares that were issued by
the Corporation during the five years preceding the date of the announcement
of the Offer upon the exercise of stock options:
|
|
Number of
|
|
Average Exercise
|
|
Aggregate Proceeds
|
|
|
Shares
|
|
Price
|
|
Received by
|
Year of Distribution
|
|
Issued
|
|
Per Share
|
|
Corporation
|
|
|
(#)
|
|
(Cdn$)
|
|
(Cdn$)
|
2010 (up to June 9, 2010)
|
|
-
|
|
-
|
|
-
|
2009
|
|
-
|
|
-
|
|
-
|
2008
|
|
-
|
|
-
|
|
-
|
2007
|
|
883,333
|
|
1.78
|
|
1,571,300
|
2006
|
|
1,094,500
|
|
1.95
|
|
2,135,520
|
34
O
WNERSHIP OF
Q
UEST
S
S
ECURITIES
; A
RRANGEMENTS
C
ONCERNING
S
HARES
Ownership of the Securities of the Corporation
The following table indicates,
as at July 19, 2010, the number of outstanding securities of the Corporation
beneficially owned, or over which control or direction was exercised, by each
director and officer of the Corporation and, to the knowledge of the Corporation
after reasonable enquiry, by each director and officer of its subsidiaries and
each associate of a director or officer of the Corporation or its subsidiaries.
Name
|
Relationship with
the Corporation
|
Number of
Shares
|
% of
Outstanding
Shares
|
Number of
Options to
Acquire Shares
|
Average
Exercise
Price per
Share
(Cdn$)
|
% of
Outstanding
Options
|
Robert G. Atkinson
|
Director
|
450,000
|
0.32
|
150,000
|
2.09
|
2.25
|
Brian E. Bayley
|
Director, President
and Chief Executive
Officer
|
3,172,788
|
2.27
|
1,000,000
|
1.35
|
15.01
|
W.
David Black
|
Lead Director
|
100,416
|
0.07
|
150,000
|
2.09
|
2.25
|
Frank B. Mayer
|
Director
|
1,040,200
|
0.75
|
200,000
|
1.76
|
3.00
|
Dale Peniuk
|
Director
|
20,000
|
0.01
|
250,000
|
2.55
|
3.75
|
Stewart J.L.
Robertson
|
Director
|
100,000
|
0.07
|
150,000
|
1.16
|
2.25
|
A.
Murray Sinclair
|
Chairman
|
20,068,597
|
14.38
|
1,000,000
|
1.35
|
15.01
|
Walter Traub
|
Director
|
100,000
|
0.07
|
250,000
|
2.55
|
3.75
|
Jim Grosdanis
|
Chief Financial
Officer
|
40,000
|
0.03
|
1,000,000
|
1.72
|
15.01
|
Narinder Nagra
|
Senior Vice
President, Asset
Management
|
100,000
|
0.07
|
500,000
|
1.35
|
7.50
|
Korm Trieu
|
Vice President,
Finance and
Controller
|
-
|
-
|
225,000
|
1.57
|
3.38
|
Sandra Lee
|
Corporate Secretary
|
-
|
-
|
150,000
|
1.35
|
2.25
|
To the knowledge of the Corporation
and its directors and officers, after reasonable enquiry, no associate or affiliate
of an insider of the Corporation, no associate or affiliate of the Corporation,
no insider of the Corporation (other than a director or officer) and no person
or company acting jointly or in concert with the Corporation, owns any securities
of the Corporation except as otherwise disclosed. Based on publicly available
information and to the knowledge of the directors and officers of the Corporation,
as at July 19, 2010, the only persons who beneficially own, or exercise control
or direction over, more than 10% of the voting rights attached to all outstanding
Shares, are the following:
Name
|
Number of Common Shares
(1)
|
Percentage of Outstanding
Common
Shares
|
A. Murray Sinclair
|
7,002,430 directly and 13,066,167
indirectly through Helmsdale Bank Corp.
(2)
|
14.38%
|
Dundee Corporation
|
15,483,334
|
11.10%
|
Notes
:
(1)
Indicates the number of Common Shares as disclosed
in publicly available sources and through enquiries.
35
(2)
Mr. Sinclair beneficially owns but does
not control or exercise direction over the Common Shares held by Helmsdale Bank
Corp.
C
ONTRACTS
, A
RRANGEMENTS
O
R
U
NDERTAKINGS
W
ITH
S
HAREHOLDERS
There are no contracts, arrangements
or undertakings, formal or informal, between Quest and any Shareholder or director
or officer of Quest in relation to the Offer or any person or company with respect
to any securities of Quest in relation to the Offer.
A
CCEPTANCE
O
F
O
FFER
To the knowledge of the Corporation
and its directors and officers, after reasonable enquiry, no director or officer
of the Corporation, no associate or affiliate of a director or officer of the
Corporation, no insider of the Corporation (other than a director or officer)
and no person or company acting jointly or in concert with the Corporation,
has indicated any present intention to deposit any of such persons or
companys Shares pursuant to the Offer except as noted below. However,
in the event that the circumstances or decisions of any such persons or companies
change they may decide to tender Shares to the Offer or sell their Shares through
the facilities of the TSX, the NYSE Amex or otherwise during the period prior
to the Expiration Date. See Ownership of Quests Securities; Arrangements
Concerning Shares for information relating to the number of Shares held
by each of the directors and officers of Quest and such other persons referred
to in this Circular under Ownership of Quests Securities; Arrangements
Concerning Shares.
Pursuant to the terms of the Support
Agreements, the Locked-Up Shareholders have agreed to not dispose of any of
their Shares except pursuant to the terms of the Offer, and, in any event, the
Locked-Up Shareholders have agreed to not dispose of any of their Shares prior
to the meeting of Shareholders being held for the purpose of approving the Reorganization.
C
OMMITMENTS
T
O
A
CQUIRE
S
HARES
Quest has no agreements, commitments
or understandings to acquire securities of the Corporation, other than pursuant
to the Offer. To the knowledge of the Corporation, after reasonable inquiry,
no person or company referred to in this Circular under Ownership of Quests
Securities; Arrangements Concerning Shares has any agreement, commitment
or understanding to acquire securities of the Corporation. Although not an agreement,
commitment or understanding to acquire securities of the Corporation, Quest
is authorized to acquire up to 198,250 Shares under the NCIB.
B
ENEFITS
F
ROM
T
HE
O
FFER
No person or company referred to
in this Circular under Ownership of Quests Securities; Arrangements
Concerning Shares will receive any direct or indirect benefit from accepting
or refusing to accept the Offer, other than the consideration available to any
Shareholder who does or does not participate in the Offer.
P
RIOR
S
ECURITIES
T
RANSACTIONS
Walter M. Traub, a director of
the Corporation, sold 50,000 Shares on the open market on July 5, 2010 at a
price of Cdn$ 1.49. Based on the Corporations records and on information
provided to the Corporation by its directors, officers and subsidiaries, except
as otherwise disclosed, none of the Corporation or any of its directors, officers
or subsidiaries, or, to the best of its knowledge, any of its subsidiaries
directors and officers or associates of a director or officer of the Corporation
or of any of its subsidiaries, has effected any transactions involving its Shares
during the 60 days prior to July 19, 2010.
M
ATERIAL
C
HANGES
I
N
T
HE
A
FFAIRS
O
F
T
HE
C
ORPORATION
Except as described or referred
to in the Offer (including under Quest Capital Corp. Proposed Reorganization),
the directors and officers of the Corporation are not aware of information which
indicates that any material change has occurred in the affairs of Quest since
March 31, 2010, the date of the most recent interim consolidated financial statements
of the Corporation, other than such material changes which have been publicly
disclosed or which would not reasonably be expected to affect the decision of
the Shareholders to accept or reject the Offer.
G
OING
P
RIVATE
T
RANSACTION
OR
B
USINESS
C
OMBINATION
The Offer does not constitute,
and is not intended to be followed by, a going private transaction or business
combination. Canadian provincial and territorial securities laws prohibit Quest
and its affiliates from acquiring any Shares other than pursuant to the Offer
until at least 20 business days after the Expiration Date or the date of termination
of the Offer. Subject to applicable law, Quest may in the future purchase additional
Shares on the open market, pursuant to its existing or future normal course
issuer bids (including, without limitation, as contemplated in the LOI), in
private transactions, through subsequent issuer bids, or otherwise. Any such
purchases may be on the same terms or on terms that are more or less favourable
to Shareholders than the terms of the Offer. Any possible future purchases by
Quest will depend on many factors, including the market price of the Shares,
Quests business and financial position, the results of the Offer, and
general economic and market conditions.
36
P
RIOR
V
ALUATIONS
Pursuant to the provisions of MI
61-101, an issuer making an offer for its securities must, with certain limited
exceptions, disclose every prior valuation or appraisal of its securities or
any material asset made in the 24 months before the date of such offer whether
or not prepared by an independent valuator which would reasonably be expected
to affect the decision of a securityholder to retain or dispose of the securities
affected by the offer. To the knowledge of the directors and officers of Quest
no prior valuations (as defined in MI 61-101) regarding Quest or
its material assets have been prepared within the 24 months preceding the date
hereof.
C
ERTAIN
C
ANADIAN
F
EDERAL
I
NCOME
T
AX
C
ONSIDERATIONS
The following summary describes,
as at the date hereof, the principal Canadian federal income tax considerations
under the Tax Act generally applicable to a Shareholder that sells Shares pursuant
to the Offer and who, for purposes of the Tax Act and at all relevant times,
(i) holds the Shares as capital property, and (ii) deals at arms length
and is not
affiliated
(as defined in the Tax Act) with the
Corporation (a
Holder
). Generally, the Shares will be considered
to be capital property to a Shareholder provided that the Shareholder does not
use or hold, and is not deemed to use or hold, the Shares in the course of carrying
on a business and has not acquired the Shares in one or more transactions considered
to be an adventure in the nature of trade.
This summary does not apply to
a Shareholder: (i) that is a
specified financial institution
(as defined in the Tax Act); (ii) a
financial institution
(as defined in the Tax Act) for purposes of the
mark-to-market
rules in the Tax Act; (iii) an interest in which constitutes a
tax
shelter investment
within the meaning of the Tax Act; or (iv) that
has elected to report its
Canadian tax results
(as defined
in the Tax Act) in a currency other than Canadian currency. All such Shareholders
should consult their own tax advisors.
This summary is based upon the
current provisions of the Tax Act and the regulations thereunder (the
Regulations
),
and on an understanding of the current published administrative policies and
assessing practices of the Canada Revenue Agency (the
CRA
).
This summary takes into account all specific proposals to amend the Tax Act
and the Regulations publicly announced by or on behalf of the Minister of Finance
(Canada) prior to the date hereof (the
Tax Proposals
) and
assumes that all Tax Proposals will be enacted in the form proposed. However,
there can be no assurance that the Tax Proposals will be enacted as proposed,
or at all. This summary does not otherwise take into account or anticipate any
changes in law or in administrative policies and assessing practices, whether
by legislative, regulatory, administrative or judicial action, nor does it take
into account provincial, territorial or foreign tax legislation or considerations,
which may differ significantly from those discussed herein.
This summary assumes that the Corporation
will qualify as a MIC throughout the taxation year of the Corporation in which
the disposition of Shares by a Holder pursuant to the Offer occurs. In order
to so qualify for any particular taxation year, the Corporation must satisfy
certain requirements specified in the Tax Act continuously throughout such taxation
year. As a result, although the Corporation intends to qualify as a MIC throughout
the taxation year of the Corporation in which the disposition of Shares by a
Holder pursuant to the Offer occurs, there can be no assurance that the Corporation
will so qualify. Holders are cautioned that the tax consequences to a Holder
of a disposition of Shares to the Corporation pursuant to the Offer would be
materially different than the tax consequences described in this summary if
the Corporation does not qualify as a MIC continuously throughout the taxation
year of the Corporation in which the disposition of Shares by a Holder pursuant
to the Offer occurs. In particular, amounts described below in this summary
as interest received by or paid to a Holder on a bond would instead be considered
to be an amount received, and paid to, such Holder as a dividend on the Shares,
which dividend would give rise to materially different tax consequences to Shareholders
than those described below (including, in the case of a Non-Resident Shareholder
(as defined below), to a liability for Canadian non-resident withholding tax
in respect of the dividend). Holders are urged to consult their own tax advisors
in this regard.
This summary is of a general
nature only and is not intended to be, nor should it be construed to be, legal
or tax advice to any particular Shareholder. This summary is not exhaustive
of all Canadian federal income tax considerations. Accordingly, Shareholders
should consult their own tax advisors for advice with respect to the tax consequences
to them of selling their Shares pursuant to the Offer, having regard to their
own particular circumstances.
The tax treatment of a sale
of Shares by a Holder pursuant to the Offer may differ materially from the treatment
which would generally apply to a sale by the Holder in the market. Accordingly,
Holders may wish to consider selling their Shares in the market prior to the
expiration of the Offer as an alternative to accepting the Offer. The selling
price from such market sales may be different from the price paid by the Corporation
pursuant to the Offer. Holders should consult their own tax advisors to determine
whether doing so would be advantageous for them in their particular circumstances.
37
Shareholders Resident in Canada
The following discussion applies
to a Holder who, for the purposes of the Tax Act and at all relevant times,
is or is deemed to be resident in Canada (a
Resident Shareholder
).
Certain Shareholders resident in Canada who might not otherwise be considered
to hold their Shares as capital property may, in certain circumstances, be entitled
to make the irrevocable election permitted by subsection 39(4) of the Tax Act
to have such Shares and every other Canadian security owned by such
Shareholder in the taxation year of the election and in all subsequent taxation
years deemed to be capital property to such Shareholder by making this irrevocable
election permitted by subsection 39(4) of the Tax Act.
A Resident Shareholder that disposes
of Shares pursuant to the Offer will be deemed to have received, and the Corporation
will be deemed to have paid, an amount of interest payable on a bond issued
by the Corporation equal to the amount by which the amount paid by the Corporation
for such Shares exceeds the
paid-up capital
(within the meaning
of the Tax Act) in respect of such Shares (the Corporation has established that
the paid-up capital of the Shares for income tax purposes is at least Cdn$ 0.9195
per Share). The amount of such interest will be included as interest in computing
the Resident Shareholders income for the taxation year in which it is
received. The balance of the amount paid by the Corporation to acquire the Resident
Shareholders Shares will constitute proceeds of disposition of such Shares.
A Resident Shareholder will realize
a capital gain (or capital loss) to the extent that the proceeds of disposition
of such Resident Shareholders Shares (determined as described above),
net of any reasonable costs of disposition, exceed (or are exceeded by) the
adjusted cost base of the Shares to the Resident Shareholder immediately before
the time of disposition. See Taxation of Capital Gains and Capital Losses
below.
A Resident Shareholder that is
a
Canadian-controlled private corporation
(as defined in
the Tax Act) throughout the year may be liable to pay an additional refundable
tax of 6 2/3% on its aggregate investment income for the year, which
is defined to include amounts in respect of interest.
Taxation of Capital Gains and Losses
In general, a Resident Shareholder
will be required to include one-half of the amount of any capital gain (a
taxable
capital gain
) realized in a taxation year in computing the Resident
Shareholders income for the year and will be required to deduct one-half
of any capital loss (an
allowable capital loss
) realized
in the year against net taxable capital gains, if any, realized in the year.
Allowable capital losses in excess of taxable capital gains realized in the
year may generally be carried back three years or forward indefinitely and deducted
against net taxable capital gains realized in such years, subject to the detailed
rules and limitations contained in the Tax Act.
In general terms, where a Resident
Shareholder or a person affiliated with such Resident Shareholder has acquired
Shares in a period beginning 30 days before the sale of Shares pursuant to the
Offer and ending 30 days after the sale of Shares pursuant to the Offer and
continues to hold such Shares (or in certain circumstances, a right to acquire
such Shares) at the end of such 60-day period, and such Resident Shareholder
has realized a capital loss on a sale of Shares pursuant to the Offer, then:
(i) in the case of a Resident Shareholder that is a corporation, trust or partnership,
all or a portion of such capital loss may be denied and suspended under the
Tax Act, and (ii) in the case of all other Resident Shareholders, including
individuals (other than trusts), all or a portion of such capital loss may be
denied and added to the cost of other Shares held by such Resident Shareholders
under the superficial loss rules contained in the Tax Act. Resident
Shareholders to whom these rules may apply are urged to consult their own tax
advisors with respect to the application of these rules in their particular
circumstances.
The amount of any capital loss
realized by a Resident Shareholder that is a corporation will be reduced by
the amount of dividends received, or deemed to have been received, on the Shares
(including any dividends deemed to be received as a result of the sale of Shares
to the Corporation pursuant to the Offer) to the extent and under the circumstances
prescribed by the Tax Act. Similar rules apply where a corporation is a member
of a partnership or a beneficiary of a trust that, directly or indirectly through
a partnership or a trust, disposes of Shares pursuant to the Offer.
Resident Shareholders (other than
certain trusts) who are individuals and who realize net capital gains on the
disposition of Shares pursuant to the Offer may be subject to an alternative
minimum tax under the Tax Act.
A Resident Shareholder that is
a Canadian-controlled private corporation (as defined in the Tax
Act) throughout the year may be liable to pay an additional refundable tax of
6 2/3% on its aggregate investment income for the year, which is
defined to include amounts in respect of taxable capital gains.
38
Shareholders not Resident in Canada
The following portion of the summary
applies to a Holder who, at all relevant times, for purposes of the Tax Act,
is neither resident nor deemed to be resident in Canada, and does not and is
not deemed to use or hold his Shares in carrying on business in Canada (a
Non-Resident
Shareholder
). Special rules not discussed in this summary may apply
to a non-resident insurer carrying on an insurance business in Canada and elsewhere,
and any such insurers should consult their own tax advisors.
A Non-Resident Shareholder that
disposes of Shares pursuant to the Offer will be deemed to have received, and
the Corporation will be deemed to have paid, an amount of interest payable on
a bond issued by the Corporation equal to the amount by which the amount paid
by the Corporation for such Shares exceeds the paid-up capital (within
the meaning of the Tax Act) in respect of such Shares (the Corporation has established
that the paid-up capital of the Shares for income tax purposes is at least Cdn$
0.9195) . While the issue is not free from doubt, such interest should not be
subject to Canadian non-resident withholding tax and the Corporation does not
currently intend to withhold any amount in respect of Canadian non-resident
withholding tax in this regard. The balance of the amount paid by the Corporation
to acquire the Non-Resident Shareholders Shares will constitute proceeds
of disposition of such Shares.
A Non-Resident Shareholder will
realize a capital gain (or capital loss) to the extent that the proceeds of
disposition of such NonResident Shareholders Shares (determined as described
above), net of any reasonable costs of disposition, exceed (or are exceeded
by) the adjusted cost base of the Shares to the Non-Resident Shareholder immediately
before the time of disposition.
A Non-Resident Shareholder who
disposes of Shares to the Corporation pursuant to the Offer will not be subject
to tax under the Tax Act in respect of any capital gain realized on the disposition
of such Shares unless the Shares are taxable Canadian property
(as defined in the Tax Act) to such Non-Resident Shareholder at the time of
disposition and the gain is not otherwise exempt from taxation in Canada pursuant
to the terms of an applicable income tax convention or treaty.
Generally, Shares will not constitute
taxable Canadian property to a Non-Resident Shareholder unless (i) at any time
during the 60-month period immediately preceding the disposition of the Shares,
the Non-Resident Shareholder, persons with whom the NonResident Shareholder
did not deal at arms length, or the Non-Resident Shareholder together
with all such persons, owned 25% or more of the issued shares of any class or
series of shares of the capital stock of the Corporation and (ii) at any time
during such 60-month period, more than 50% of the fair market value of the Shares
was derived directly or indirectly from one or any combination of real or immovable
property situated in Canada,
Canadian resource properties
(as defined in the Tax Act),
timber resource properties
(as
defined in the Tax Act) and options in respect of, interests in, or for civil
law rights in, any such properties. In addition, certain provisions of the Tax
Act may deem property to be taxable Canadian property of a Non-Resident Shareholder
in specific circumstances.
Even if the Shares are taxable
Canadian property to a Non-Resident Shareholder, any capital gain realized upon
the disposition thereof may not be subject to tax under the Tax Act if such
gain is exempt from taxation in Canada pursuant to the provisions of an applicable
income tax treaty or convention. Non-Resident Shareholders should consult their
own advisors with respect to the availability of any relief under the terms
of an applicable income tax treaty or convention in their particular circumstances.
In the event that the Shares constitute
taxable Canadian property to a Non-Resident Shareholder and any capital gain
realized upon a disposition thereof is not exempt from tax under the Tax Act
pursuant to the terms of an applicable income tax treaty or convention, then
in such circumstances, the tax consequences as described above under Holders
Resident in Canada Taxation of Capital Gains and Capital Losses
will generally apply. Such Non-Resident Shareholders whose Shares are taxable
Canadian property should consult their own tax advisors in this regard.
C
ERTAIN
U
NITED
S
TATES
F
EDERAL
I
NCOME
T
AX
C
ONSIDERATIONS
TO ENSURE COMPLIANCE WITH TREASURY DEPARTMENT CIRCULAR 230,
SHAREHOLDERS ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF U.S. FEDERAL TAX
ISSUES IN THIS OFFER TO PURCHASE AND CIRCULAR IS NOT INTENDED OR WRITTEN TO
BE USED, AND CANNOT BE USED, BY SHAREHOLDERS FOR THE PURPOSE OF AVOIDING PENALTIES
THAT MAY BE IMPOSED ON SUCH SHAREHOLDERS UNDER THE INTERNAL REVENUE CODE; (B)
THIS DISCUSSION WAS WRITTEN IN CONNECTION WITH PROMOTION OR MARKETING (WITHIN
THE MEANING OF CIRCULAR 230) OF THE TRANSACTIONS OR MATTERS DISCUSSED IN THIS
OFFER TO PURCHASE AND CIRCULAR; AND (C) EACH SHAREHOLDER SHOULD SEEK ADVICE
BASED ON SUCH PERSONS PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX
ADVISOR.
The following discussion summarizes
certain U.S. federal income tax considerations generally applicable to U.S.
Holders (as defined below) of Shares relating to the exchange of
Shares for either an Auction Tender or a Purchase Price Tender received in response
to the Offer. This summary is based upon the Internal Revenue Code of 1986,
as amended (the
Code
), Treasury regulations promulgated
thereunder, judicial authorities, published positions of the Internal Revenue
Service (the
IRS
) and other applicable authorities, all as in effect on the date hereof and
all of which are subject to change, perhaps retroactively, and to differing
interpretations, so as to result in U.S. federal income tax considerations different
from those summarized below.
39
For purposes of this summary, a
U.S. Holder
is a beneficial owner of Shares,
who holds such Shares as a capital asset and who is, for U.S. federal income
tax purposes:
-
an individual who is a citizen or resident of the United States;
-
a corporation, or other entity taxable as a corporation, that is created
or organized under the laws of the United States or any state thereof or the
District of Columbia;
-
an estate, the income of which is subject to taxation in the United States
regardless of its source; or
-
a trust if it has validly elected to be treated as a U.S. person for U.S.
federal income tax purposes or if a U.S. court can exercise primary supervision
over its administration and one or more U.S. persons have the authority to
control all of its substantial decisions.
There can be no assurance that
the IRS will not challenge one or more of the tax considerations described in
this summary, and the Corporation has not obtained, nor does it intend to obtain,
a ruling from the IRS or an opinion from legal counsel with respect to the U.S.
federal income tax considerations discussed herein. This summary addresses only
certain considerations arising under U.S. federal income tax law, and does not
address any other federal tax considerations or any tax considerations arising
under the laws of any state, locality or non-U.S. taxing jurisdiction.
This summary is of a general nature
only and does not address all of the U.S. federal income tax considerations
that may be relevant to a U.S. Holder in light of such holders particular
situation. In particular, this discussion deals only with U.S. Holders that
hold Shares as capital assets, and does not address the special tax rules that
may apply to special classes of taxpayers, such as, for example: securities
broker-dealers; persons who hold Shares as part of a hedging, conversion, synthetic,
wash or constructive sale, straddle or other integrated transaction; U.S. Holders
whose functional currency is not the U.S. dollar; U.S. expatriates; persons
who are owners of an interest in a partnership or other pass-through entity
that is a holder of Shares; partnerships or other entities taxable as partnerships;
regulated investment companies; financial institutions; insurance companies;
traders that have elected a mark-to-market method of accounting; tax-exempt
organizations; holders that own, directly, indirectly or by attribution, 10%
or more of the Corporations outstanding voting share capital; persons
who received their Shares upon the exercise of employee stock options or otherwise
in connection with the performance of services; persons that have been, are,
or will be a resident or deemed to be a resident in Canada for purposes of the
Tax Act; persons that use or hold, will use or hold, or are or will be deemed
to use or hold, Shares in connection with carrying on a business in Canada;
or persons that have a permanent establishment in Canada for the purposes of
the Canada-United States Income Tax Convention. If a partnership (including
for this purpose any entity treated as a partnership for U.S. federal income
tax purposes) holds Shares, the tax treatment of a partner will generally depend
upon the status of the partner and upon the activities of the partnership. A
partner of a partnership that owns or may acquire Shares should consult the
partners tax advisor regarding the specific tax consequences of the disposition,
acquisition and ownership of the applicable Shares.
This summary does not address the
state, local, U.S. federal alternative minimum tax, or foreign tax consequences
to U.S. Holders of the Offer or of any other matters discussed in this summary.
Each U.S. Holder should consult its own tax advisor regarding the state, local,
U.S. federal alternative minimum tax and foreign tax consequences to them of
the Offer and such other matters.
Tax Considerations of U.S. Holders Who Accept the Offer
Tax Characterization of the Offer Generally
The Corporation currently expects
that the acquisition of Shares pursuant to the Offer is a taxable exchange and
that each U.S. Holder of Shares who accepts the Offer will be fully taxable
for U.S. federal income tax purposes.
Classification of the Corporation as a Passive Foreign Investment
Company
As described below, the tax considerations
of the Offer to a particular U.S. Holder will depend on whether the Corporation
is a passive foreign investment company (a
PFIC
)
during any year in which a U.S. Holder owned Shares. In general, a non-U.S.
corporation is a PFIC for any taxable year in which either (i) 75% or more of
the non-U.S. corporations gross income is passive
income, or (ii) 50% or more of the average value, determined on the basis of
a quarterly average, of the non-U.S. corporations assets produced or are
held for the production of passive income. Passive income
includes, for example, dividends, interest, certain rents and royalties, certain
gains from the sale of stock and securities, and certain gains from commodities
transactions. Subject to certain limited exceptions Shares held (or deemed held)
by a U.S. Holder at any time during a taxable year in which the Corporation
was a PFIC are treated as shares of a PFIC in the hands of such holder for all
subsequent years even if the Corporation did not meet the gross income or passive
asset thresholds necessary to be classified as a PFIC in a subsequent year.
The determination of PFIC status is inherently factual, is subject to a number
of uncertainties, and can be determined only annually at the close of the taxable
year in question. The Corporation believes that it was likely a PFIC
for the year ended December 31, 2009 and anticipates that it likely will be
a PFIC in subsequent taxable years. U.S. Holders are urged to consult their
own U.S. tax advisors regarding the application of the PFIC rules to the Offer
and the matters addressed herein.
40
Gain or Loss Generally
The Corporation currently expects
that the exchange of Shares for cash is a fully taxable event to a U.S. Holder.
Such characterization would generally result in the following U.S. federal income
tax consequences. A U.S. Holder will recognize gain or loss equal to the difference
between (i) the cash received by such U.S. Holder in the Offer and (ii) the
adjusted tax basis of such U.S. Holder in such Shares exchanged for cash.
Subject to the modifications pursuant
to the PFIC rules discussed below, any gain or loss recognized by the U.S. Holder
would be short-term capital gain or loss, unless the holding period for the
Shares exchanged was more than 12 months at the closing of the exchange made
pursuant to the Offer, in which case any gain or loss recognized would be long-term
capital gain or loss. Preferential tax rates for long-term capital gains are
generally applicable to a U.S. Holder that is an individual, estate or trust.
There are currently no preferential tax rates for long-term capital gains for
a U.S. Holder that is a corporation. The deduction of capital losses is subject
to significant limitations.
Treatment of Recognized Gain if the Corporation is a PFIC
Non-Electing PFIC Shareholder
If a U.S. Holder disposes of Shares
in the Offer that were held by the U.S. Holder directly, indirectly or constructively
during such time, if any, that the Corporation was a PFIC (shares in a PFIC
are sometimes referred to herein as
PFIC Shares
)
and the U.S. Holder did not make a timely QEF Election or a Mark-to-Market Election
with respect to its Shares (such elections being described below), gain realized
from the sale of such U.S. Holders PFIC Shares will be taxed under the
excess distribution regime. Under that regime, gain,
if any, realized on that disposition will be allocated ratably on a daily basis
to each day of the U.S. Holders holding period with respect to such shares.
Gain allocated to any period preceding the first year in the holding period
when the Corporation was a PFIC and gain allocated to the year of disposition
will be treated as gain arising in the year of disposition and taxed at ordinary
U.S. federal income tax rates for the year of disposition. Gain allocated to
each of the other years (the
PFIC Years
) will
be taxed at the highest U.S. federal income tax rate in effect for each of those
years, without regard to the U.S. Holders other items of income and loss
for such year. Any such tax would be increased by an interest charge determined
for each of the PFIC Years at the rate generally applicable to underpayments
of tax for such taxable year. The sum of the taxes and interest calculated for
all years will be an addition to the tax for the year in which the sale of the
PFIC Shares occurs. A U.S. Holder that is not a corporation must treat the interest
as non-deductible personal interest. A U.S. Holder who has previously made certain
elections (as further described below) may be able to mitigate the adverse PFIC
tax consequences that would apply to such U.S. Holder in the Offer if the Corporation
is or has been a PFIC during the time such holder has held Shares.
Treatment of Recognized Gain if the Corporation is a PFIC
PFIC Shareholder who has made a Timely Qualified Electing Fund Election
A U.S. Holder who has made a timely
and effective election to treat the Corporation as a qualified electing
fund under the Code for the first taxable year of the U.S. Holders
holding period for the Shares during which the Corporation was a PFIC (a
QEF
Election
) generally would not be subject to the PFIC rules discussed
above. Instead, the electing U.S. Holder would include annually in gross income
its pro rata share of the ordinary earnings and net capital gain of the Corporation,
whether or not such amounts are actually distributed, and would be taxable on
gain recognized in the exchange pursuant to the Offer in the manner that a U.S.
Holder would be taxable if the Corporation had not been a PFIC (as described
above under
Gain or Loss Generally
). However,
this option would require significant information and undertakings from the
Corporation, and, accordingly, it may not be, and may not have been, available
to U.S. Holders.
Treatment of Recognized Gain if the Corporation is a PFIC
PFIC Shareholder who has made a Timely Mark-to-Market Election
A U.S. Holder of PFIC Shares would
also not be subject to the excess distribution regime if the U.S. Holder had
made a timely and effective election to mark the PFIC Shares to market (a
Mark-to-Market
Election
). In the case of any U.S. Holder that has timely made
an effective Mark-to-Market Election for the first taxable year of the U.S.
Holders holding period for the Shares during which the Corporation was
a PFIC, gain realized by such holder from the sale of PFIC Shares generally
would be taxed at ordinary income tax rates
.
U.S. Holders are urged to seek advice from their own tax
advisors to discuss the particular tax consequences of the Offer applicable
to them, including all aspects of the PFIC rules.
41
Foreign Currency Considerations
In the case of a U.S. Holder that
receives Canadian dollars in connection with the Offer, the amount realized
will be based on the U.S. dollar value of the Canadian dollars received on the
date of actual or constructive receipt, regardless of whether the Canadian dollars
are converted into U.S. dollars at that time. If Canadian dollars received by
a U.S. Holder are not converted into U.S. dollars on the date of receipt, a
U.S. Holder may recognize foreign currency exchange gain or loss (taxed as ordinary
income or loss) on a subsequent disposition or conversion of such Canadian dollars.
U.S. Holders are urged to consult their own tax advisors concerning the U.S.
tax consequences of acquiring, holding and disposing Canadian dollars.
Information Reporting and Backup Withholding
Information returns may be required
to be filed with the IRS relating to payments made to particular U.S. Holders.
In addition, a U.S. Holder may be subject to a backup withholding tax (currently
imposed at a rate of 28%) on those payments unless the holder is an exempt recipient
(such as a corporation) or provides its taxpayer identification number and certifies
that the holder is exempt from or otherwise not subject to backup withholding.
Any amounts withheld under the backup withholding rules will be allowed as a
refund or credit against the U.S. Holders U.S. federal income tax liability
provided the required information is timely furnished to the IRS. U.S. Holders
should consult their own tax advisors as to the information reporting and backup
withholding tax rules particular to them.
THE ABOVE SUMMARY IS NOT INTENDED TO CONSTITUTE A COMPLETE
ANALYSIS OF ALL TAX CONSIDERATIONS APPLICABLE TO HOLDERS OF SHARES WITH RESPECT
TO THE DISPOSITION OF SHARES PURSUANT TO THE OFFER. U.S. HOLDERS SHOULD CONSULT
THEIR OWN TAX ADVISORS AS TO THE TAX CONSIDERATIONS APPLICABLE TO THEM IN THEIR
PARTICULAR CIRCUMSTANCES.
L
EGAL
M
ATTERS
A
ND
R
EGULATORY
A
PPROVALS
Quest is not aware of any license
or regulatory permit that is material to the Corporations business that
might be adversely affected by the Corporations acquisition of Shares
pursuant to the Offer or, except as noted below, of any approval or other action
by any government or governmental, administrative or regulatory authority or
agency in any jurisdiction, that would be required for the acquisition or ownership
of Shares by the Corporation pursuant to the Offer and that has not been obtained
on or before the date hereof. Should any such approval or other action be required,
the Corporation currently contemplates that such approval will be sought or
other action will be taken. Quest cannot predict whether it may determine that
it must delay the acceptance for payment of Shares deposited pursuant to the
Offer pending the outcome of any such matter.
There can be no assurance that
any such approval or other action, if needed, would be obtained or would be
obtained without substantial conditions or that the failure to obtain any such
approval or other action might not result in adverse consequences to the Corporations
business.
The Corporations obligations
under the Offer to take up and pay for Shares are subject to certain conditions.
See Offer to Purchase Conditions of the Offer.
S
OURCE
O
F
F
UNDS
The Corporation will fund any purchases
of Shares pursuant to the Offer from available cash on hand, further monetization
of existing loans and through the use, if necessary, of a Cdn$ 35,000,000 stand-by
commitment (the
Facility
) provided by Middlemarch.
The Facility is subject to the
terms and conditions of a letter agreement with Middlemarch whereby Middlemarch
agrees that the Corporation may, from time to time, draw any amount or amounts
in increments of Cdn$ 1,000,000 up to Cdn$ 35,000,000 in order to make cash
payments for any Shares tendered pursuant to the Offer. Interest on the outstanding
principal amount drawn shall accrue at a rate per annum equal to 8% from the
drawdown date to September 30, 2010; at a rate per annum equal to 9% from October
1, 2010 to October 31, 2010; at a rate per annum equal to 10% from November
1, 2010 to November 30, 2010; and at a rate per annum equal to 11% from December
1, 2010 to December 31, 2010. The Corporation has the right to prepay, from
time to time, any portion of the principal amount drawn (plus all accrued interest
thereon) under the Facility on three (3) business days written notice
provided that any prepayment shall not be in increments of less than Cdn$1,000,000.
Any amount drawn under the Facility is repayable no later than December 31,
2010. The Corporation has paid Middlemarch a one-time commitment fee in the
amount of Cdn$ 350,000.
The total amount of funds that
can be used in the Offer is Cdn$ 60,000,000 and will allow the Corporation to
purchase up to 44,444,444 Shares at a Purchase Price of not less than Cdn$ 1.35
per Share.
42
D
EPOSITARY
Quest has appointed Computershare
Investor Services Inc. to act as a depositary for, among other things, (i) the
receipt of certificates representing Shares and related Letters of Transmittal
deposited under the Offer, (ii) the receipt of Notices of Guaranteed Delivery
delivered pursuant to the procedures for guaranteed delivery set forth in the
Offer to Purchase under Procedure for Depositing Shares, (iii) the
receipt from the Corporation of cash to be paid in consideration of the Shares
acquired by the Corporation under the Offer, as agent for the depositing Shareholders,
and (iv) the transmittal of such cash (by cheque) to the depositing Shareholders,
as agent for the depositing Shareholders. The Depositary may contact Shareholders
by mail, telephone or facsimile and may request investment dealers, stock brokers,
banks, trust companies or other nominees to forward materials relating to the
Offer to beneficial owners.
F
EES
A
ND
E
XPENSES
The Depositary will receive reasonable
and customary compensation for its services, will be reimbursed for certain
reasonable out-of-pocket expenses and will be indemnified against certain liabilities
and expenses in connection with the Offer, including certain liabilities under
Canadian provincial and territorial securities laws. Quest will not pay any
fees or commissions to any investment dealer, stock broker, bank, trust company
or other nominee for soliciting deposits of Shares pursuant to the Offer. No
fee or commission will be payable by any Shareholder who deposits such Shares
directly with the Depositary in connection with this Offer. If you are a non-registered
Shareholder who holds your Shares through an investment dealer, stock broker,
bank, trust company or other nominee, you should consult with such persons regarding
whether fees or commissions will apply in connection with a deposit of Shares
pursuant to the Offer. Investment dealers, stock brokers, banks and trust companies
will, upon request, be reimbursed by the Corporation for reasonable and necessary
costs and expenses incurred by them in forwarding materials to their customers.
In addition, the Corporation has
retained Primary Capital to provide the Liquidity Opinion, for which Primary
Capital will receive the fees described under Purpose and Effect of the
Offer Liquidity of Market.
Middlemarch was paid a Cdn$ 350,000
one-time commitment fee on June 14, 2010. Middlemarch will also be reimbursed
by the Corporation for reasonable and necessary costs and expenses incurred
by them in connection with the Facility.
Assuming the maximum number of
Shares is purchased under the Offer, Quest is expected to incur expenses of
approximately Cdn$ 325,000 in connection with the Offer, which includes filing
fees, legal, accounting, depositary, translation and printing fees and the fees
of Primary Capital for the Liquidity Opinion. Such fees and expenses will be
paid by Quest from available cash on hand.
S
TATUTORY
R
IGHTS
Securities legislation in the provinces
and territories of Canada provides Shareholders with, in addition to any other
rights they may have at law, one or more rights of rescission, price revision
or to damages, if there is a misrepresentation in a circular or notice that
is required to be delivered to the Shareholders. However, such rights must be
exercised within prescribed time limits. Shareholders should refer to the applicable
provisions of the securities legislation of their province or territory for
particulars of those rights or consult a lawyer.
43
APPROVAL AND CERTIFICATE
July 19, 2010
The Board of Directors of Quest
Capital Corp. (the Corporation) has approved the contents of the
Offer to Purchase and the accompanying Issuer Bid Circular dated July 19, 2010,
and the sending, communicating or delivery of the Offer to Purchase and the
Issuer Bid Circular to the holders of common shares of the Corporation. The
Offer to Purchase and the Issuer Bid Circular contain no untrue statement of
a material fact and do not omit to state a material fact that is required to
be stated or that is necessary to make a statement not misleading in light of
the circumstances in which it was made.
(Signed)
BRIAN E. BAYLEY
|
(Signed)
JIM GROSDANIS
|
|
|
|
|
President and
|
|
Chief Executive Officer
|
Chief Financial Officer
|
|
|
On behalf of the Board of Directors:
|
|
|
(Signed)
A. MURRAY SINCLAIR
|
(Signed)
W. DAVID BLACK
|
|
|
|
|
Director
|
Director
|
44
CONSENT OF PRIMARY CAPITAL INC.
TO: The Board of Directors of Quest Capital Corp.
We consent to the inclusion of
our name and the reference to our liquidity opinion dated July 19, 2010 under
Issuer Bid Circular Purpose and Effect of the Offer and to
the inclusion of the text of our opinion in Schedule A to the Offer, which schedule
is incorporated by reference in the Offer.
July 19, 2010
(
Signed
)
Primary Capital Inc.
45
SCHEDULE A - LIQUIDITY OPINION OF PRIMARY CAPITAL INC.
July 19, 2010
|
|
Quest Capital Corp.
|
Suite 1028 550 Burrard Street
|
38th Floor
|
Vancouver, British Columbia
|
V6C 2B5
|
|
The Board of Directors of
|
Quest Capital Corp.
|
Suite 1028 550 Burrard Street
|
38th Floor
|
Vancouver, British Columbia
|
V6C 2B5
|
Dear Sirs/Mesdames:
Primary Capital Inc. ("Primary") understands that Quest Capital
Corp. ("Quest" or the "Corporation") intends to make a substantial issuer bid
(the "Offer") to purchase, for no more than Cdn$60,000,000 in cash, outstanding
common shares (the "Shares") of the Corporation for cancellation by way of a
modified Dutch auction at a price per Share that is not less than Cdn$1.35 per
Share or more than Cdn$1.60 per Share. The Corporation will determine a single
price per share (the "Purchase Price"), which will not be less than Cdn$1.35 or
more than Cdn$1.60 per Share, that is the lowest price that enables it to
purchase the maximum number of Shares having an aggregate Purchase Price not
exceeding Cdn$60,000,000. Primary understands that as at June 10, 2010 there
were 139,529,934 Shares issued and outstanding and that up to 37,500,000 Shares
will be taken up and paid for if the Purchase Price is determined to be Cdn$1.60
and up to 44,444,444 Shares will be taken up and paid for if the Purchase Price
is determined to be Cdn$1.35. Primary also understands that the terms and
conditions of the Offer will be set forth in the offer to purchase and the
issuer bid circular to be prepared by the Corporation and to be dated July 19,
2010 in connection with the Offer and the related letter of transmittal and
notice of guaranteed delivery (which together constitute the "Offer Documents").
Pursuant to the terms of the Offer, holders of the Shares can tender their
Shares to the Corporation by means of an Auction Tender or Purchase Price Tender
(each as defined in the Offer Documents). Capitalized terms used herein, unless
defined otherwise, have the same meanings as used in the Offer.
In addition, we understand that the Offer will constitute an
"issuer bid" for purposes of Multilateral Instrument 61-101
Protection of
Minority Security Holders in Special Transactions
("MI 61-101").
Engagement of Primary
By letter agreement dated June 16, 2010 (the "Engagement
Letter"), the Corporation engaged Primary to prepare and deliver a written
opinion (the "Liquidity Opinion") to the Corporation and the board of directors of the Corporation (the "Board") as to
(i) whether a liquid market exists for the Shares as at the date hereof, and
(ii) whether it is reasonable for the Board to conclude that, following the
completion of the Offer in accordance with its terms, there will be a market for
holders of Shares who do not tender to the Offer that is not materially less
liquid than the market that existed at the time of the making of the Offer. The
Liquidity Opinion is delivered in connection with assisting the Board in making
its determination that the Offer qualifies for the "liquid market" exemption
from the valuation requirements of MI 61-101 pursuant to subsection 3.4(b)
thereof.
-2-
Primary will receive a fee from the Corporation for its
services for providing the Liquidity Opinion. Such fee is payable whether or not
the Offer is successful. In addition, the Corporation has agreed to reimburse
Primary for its reasonable out-of-pocket expenses and to indemnify Primary for
certain liabilities arising out of Primarys engagement.
Credentials of Primary
Primary is a registered exempt market dealer in Ontario. The
Fairness Opinion expressed herein represents the opinion of Primary and the form
and content herein have been approved for release by the principals of Primary,
who are experienced in merger, acquisition, divestiture, valuation and capital
market matters. Primary is not in the business of providing auditing services
and is not controlled by a financial institution.
Neither Primary nor any of its affiliated entities is an
insider, issuer insider, associated entity or affiliated entity (as those terms
are defined for the purposes of MI 61-101) of the Corporation or any of its
associates or affiliates. Primary may, in the future, in the ordinary course of
its business, perform valuation, financial advisory or investment banking
services for the Corporation or any of its associates or affiliates. As an
exempt market dealer, Primary may, in the ordinary course of its business,
provide investment advice to its clients on investment matters, including with
respect to the Corporation or its associates or affiliates or the Offer. Primary
has no current agreement, understanding or arrangement with the Corporation
regarding the provision of future services.
Scope of Review
In preparing the Liquidity Opinion, we have reviewed and relied
upon or carried out (without attempting to verify independently the completeness
or accuracy thereof), among other things, the following:
1.
|
the most recent draft dated July 9, 2010 of the Offer
Documents;
|
|
|
2.
|
the daily trading activity, volumes, and price history of
the Shares on the Toronto Stock Exchange (the "TSX"), as we determined
necessary in order to provide the Liquidity Opinion;
|
|
|
3.
|
the trading activity and volumes of shares of certain
other companies listed and traded on the TSX, as we determined necessary
in order to provide the Liquidity Opinion;
|
|
|
4.
|
the distribution of ownership of the Shares to the extent
publicly disclosed or provided to us by the
Corporation;
|
-3-
5.
|
the number of Shares proposed to be purchased under the
Offer relative to (i) the number of outstanding Shares less (ii) the
number of Shares owned by related parties of the Corporation and Shares or
blocks thereof that are known by us to be not freely tradeable, as
provided to us by the Corporation;
|
|
|
6.
|
the customary difference (i.e. the spread) between
bid and ask prices in trading activity of the Shares and the shares of
other companies listed and traded on the TSX, as we determined necessary
in order to provide the Liquidity Opinion;
|
|
|
7.
|
other public information with respect to the
Corporation;
|
|
|
8.
|
discussions with senior management of the
Corporation;
|
|
|
9.
|
the parameters set out in MI 61-101 that quantify the
basis on which a liquid market is deemed to exist in respect of a class of
securities;
|
|
|
10.
|
precedent issuer bids that we considered relevant;
and
|
|
|
11.
|
such other information as we considered necessary or
appropriate in the circumstances.
|
We have conducted such additional analyses and investigations
as we considered to be appropriate in the circumstances for the purpose of
arriving at the opinion contained in the Liquidity Opinion as at the date
hereof.
Assumptions and Limitations
The Liquidity Opinion is rendered on the basis of securities
market, economic and general business and financial conditions prevailing as at
the date hereof, and conditions affecting the Corporation and the Shares as at
the date hereof. In formulating the Liquidity Opinion, we have made several
other assumptions, including that all of the conditions required to implement
the Offer, as set forth in the Offer Documents, will be met, that there will be
no significant change in the terms of the Offer, and that there shall be no
significant change in the holdings of Shares other than as a result of purchases
by the Corporation under the Offer. We have also assumed that there will be no
material adverse change in general market conditions or in the market conditions
pertaining to the Shares following the date hereof.
Primary has relied upon the completeness, accuracy and fair
presentation of all of the financial and other information, data, advice,
opinions or representations obtained by it from public sources, senior
management of the Corporation and their consultants and advisors (collectively,
the "Information"). The Liquidity Opinion is conditional upon such completeness,
accuracy and fair presentation of such Information. Subject to the exercise of
professional judgment, and except as expressly described herein, we have not
attempted to verify independently the completeness, accuracy or fair
presentation of any of the Information.
We have not prepared a formal valuation of the Corporation or
any of its securities or assets and the Liquidity Opinion should not be
construed as such. The Liquidity Opinion does not constitute an opinion
concerning the fairness, from a financial point of view, of the consideration
offered to holders of Shares pursuant to the Offer.
The Liquidity Opinion is not to be construed as a
recommendation to any shareholder of the Corporation as to whether or not to
tender its Shares under the Offer. In addition, we are not expressing any opinion as to the value of the Shares, or the
prices at which such Shares will trade after the completion of the Offer.
-4-
The Liquidity Opinion has been provided to the Corporation and
the Board for use only in determining the availability of an exemption from the
formal valuation requirements of MI 61-101 (pursuant to section 3.4(b)(i) and
(ii) thereof) and may not be relied upon for any other purpose or by any other
person without the prior written consent of Primary. The Liquidity Opinion is
given as of the date hereof and Primary disclaims any undertaking or obligation
to advise any person of any change in any fact or matter affecting the Liquidity
Opinion which may come or be brought to the attention of Primary after the date
hereof. Without limiting the foregoing, if, after the date hereof, we learn of
any material change in any fact or matter affecting the Liquidity Opinion,
Primary reserves the right to change, modify or withdraw the Liquidity
Opinion.
Primary consents to the inclusion in the Offer Documents of the
Liquidity Opinion and further consents, subject to its review and approval
acting reasonably, to the inclusion in the Offer Documents of summaries of the
Liquidity Opinion. Primary shall bear no responsibility for the form or content
of the Offer Documents other than for the Liquidity Opinion.
Primary believes that its analyses must be considered as a
whole and that selecting portions of the analyses or the factors considered by
it, without considering all factors and analyses together, could create a
misleading view of the process underlying the Liquidity Opinion. The preparation
of an opinion is a complex process and is not necessarily susceptible to partial
analysis or summary description. Any attempt to do so could lead to undue
emphasis on any particular factor or analysis.
For the purposes of the Liquidity Opinion, Primary has
considered, among other things, the meaning ascribed to the term "liquid market"
in paragraph 1.2(1)(a) of MI 61-101. The term "liquid market" is defined for the
purposes of the Liquidity Opinion as a market for the Shares with sufficient
breadth and depth to provide a reasonable opportunity for investors to buy and
sell the Shares (assuming market conditions and trading volumes that are not
affected by extraordinary circumstances) without materially impacting the market
price of the Shares.
Conclusion
Based upon and subject to the foregoing, it is our opinion
that: (i) a liquid market exists for the Shares as at the date hereof; and (ii)
it is reasonable to conclude that, following the completion of the Offer in
accordance with its terms, there will be a market for holders of Shares who do
not tender to the Offer that is not materially less liquid than the market that
existed at the time of the making of the Offer.
Yours very truly,
PRIMARY CAPITAL INC.
(signed)
Primary Capital Inc.
The Letter of Transmittal, certificates
for Shares, any other required documents and, if applicable, the Notice of Guaranteed
Delivery, must be sent or delivered by each depositing Shareholder or the depositing
Shareholders investment dealer, stock broker, bank, trust company or other
nominee to the Depositary at its address specified below.
Office of the Depositary, for this Offer:
|
|
COMPUTERSHARE INVESTOR SERVICES INC.
|
|
By Mail or Registered Mail
|
|
Computershare Investor Services Inc.
|
P.O. Box 7021
|
31 Adelaide Street East
|
Toronto, Ontario M5C 3H2
|
|
Attention: Corporate Actions
|
|
Telephone (outside North America): 1 (514) 982-7555
|
Toll Free (within North America): 1 (800) 564-6253
|
Facsimile: 1-866-249-7775
|
Email: corporateactions@computershare.com
|
|
By Hand or Courier
|
|
Toronto
|
Computershare Investor Services Inc.
|
100 University Avenue
|
9
th
Floor
|
Toronto, Ontario M5J 2Y1
|
Attention: Corporate Actions
|
Any questions or requests for assistance
may be directed to the Depositary at the addresses and telephone numbers specified
above. Shareholders also may contact their investment dealer, stock broker,
bank, trust company or other nominee for assistance concerning the Offer. Additional
copies of the Offer to Purchase, the Circular, the Letter of Transmittal and
the Notice of Guaranteed Delivery may be obtained from the Depositary. Manually
executed photocopies of the Letter of Transmittal will be accepted.
The instructions accompanying this Letter of Transmittal
should be read carefully before this Letter of Transmittal is completed. The
Depositary or your broker, investment dealer, bank, trust company or other
nominee can assist you in completing this Letter of Transmittal.
LETTER OF TRANSMITTAL
To Deposit Common Shares (the
Shares)
of
QUEST CAPITAL CORP.
Pursuant to the Offer
to Purchase Dated July 19, 2010
THE OFFER WILL BE OPEN FOR ACCEPTANCE
UNTIL
5:00 P.M. (TORONTO TIME) ON AUGUST 30, 2010,
UNLESS THE OFFER
IS EXTENDED, WITHDRAWN OR VARIED.
|
The Depositary for this Offer is: Computershare
Investor Services Inc.
|
|
By Mail or Registered Mail
|
|
Computershare Investor Services Inc.
|
P.O. Box 7021
|
31 Adelaide Street East
|
Toronto, Ontario M5C 3H2
|
Attention: Corporate Actions
|
|
|
|
By Hand or Courier
|
|
Computershare Investor Services Inc.
|
100 University Avenue, 9
th
Floor
|
Toronto, Ontario M5J 2Y1
|
Attention: Corporate Actions
|
This Letter of Transmittal, or a manually executed photocopy
thereof, in each case properly completed and duly executed, together with all
other required documents, must accompany certificates for the Shares pursuant to
the offer to purchase dated July 19, 2010 (together with any amendments,
supplement or variations thereto, the Offer to Purchase) made by Quest Capital
Corp. (the Corporation) to holders of Shares (Shareholders) and must be
delivered or sent to and received by the Depositary at one of the addresses set
forth above on or prior to the Expiration Date.
The terms and conditions of the Offer to Purchase, and the
accompanying Circular are incorporated by reference in this Letter of
Transmittal. Capitalized terms used but not defined in this Letter of
Transmittal have the meanings ascribed to them in the Offer to Purchase and
Circular. Shareholders should carefully consider the income tax consequences of
depositing Shares under the Offer. See the sections entitled Certain Canadian
Federal Income Tax Considerations and Certain United States Federal Income Tax
Considerations in the Circular that accompanies this Letter of Transmittal.
Please read carefully the instructions set forth below before completing this
Letter of Transmittal.
TO:
|
QUEST CAPITAL CORP. (the Corporation)
|
AND TO:
|
COMPUTERSHARE INVESTOR SERVICES INC. (the
Depositary)
|
The undersigned delivers to the Corporation the enclosed
certificate(s) for Shares and, subject only to the provisions of the Offer to
Purchase regarding withdrawal, irrevocably accepts the Offer for such Shares
upon the terms and conditions contained in the Offer to Purchase and Circular.
The following are the details of the enclosed certificate(s):
DESCRIPTION OF SHARES DEPOSITED
(See
Instructions 3 and 4)
|
Names(s) and Address(es) of Registered Owner(s)
(Please Fill
in Exactly as Name(s) Appear(s) on Share Certificate(s))
|
Shares Deposited (Attach signed list if necessary)
|
Share Certificate Number(s)
|
Number of Shares Represented by
Certificate(s)
|
Number of
Shares Deposited*
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Shares Deposited
|
|
|
*
|
If you desire to deposit fewer than all Shares evidenced
by any share certificates listed above, indicate in this column the number
of Shares you wish to deposit. Otherwise, all Shares evidenced by such
share certificates will be considered to have been deposited. See
Instruction 4 in this Letter of Transmittal.
|
Delivery of this instrument to an address other than those
shown above does not constitute a valid delivery.
S
HAREHOLDERS WHO WISH TO DEPOSIT
S
HARES
UNDER THE
O
FFER AND WHOSE CERTIFICATE IS REGISTERED IN THE NAME OF
A BROKER, INVESTMENT DEALER, BANK, TRUST COMPANY OR OTHER NOMINEE SHOULD
IMMEDIATELY CONTACT SUCH NOMINEE IN ORDER TO TAKE THE NECESSARY STEPS TO BE ABLE
TO DEPOSIT SUCH
S
HARES UNDER THE
O
FFER.
2
Shareholders whose certificates
are not immediately available or who cannot deliver to the Depositary their
certificates for Shares and all other documents which this Letter of Transmittal
requires by the Expiration Date (as defined in the Offer to Purchase) may only
deposit their Shares according to the guaranteed delivery procedure set forth
under the heading Procedure for Depositing Shares of the Offer to Purchase.
See Instruction 2 in this Letter of Transmittal.
The undersigned hereby deposits
to the Corporation the above-described Shares at the price per Share indicated
in this Letter of Transmittal or pursuant to a Purchase Price Tender (as defined
in the Offer to Purchase), as specified below, payable in cash (subject to
applicable withholding taxes, if any) and upon the terms and subject to the
conditions set forth in the Offer to Purchase, the accompanying issuer bid
circular (the Circular), this Letter of Transmittal and the Notice of
Guaranteed Delivery (all of which, together, constitute the Offer).
Subject to and effective upon
acceptance for purchase of the Shares deposited hereby in accordance with the
terms of the Offer, the undersigned hereby sells, assigns and transfers to or
upon the order of the Corporation all rights, title and interest in and to all
Shares deposited hereby pursuant to an Auction Tender (as defined in the Offer
to Purchase) or pursuant to a Purchase Price Tender, and hereby irrevocably
constitutes and appoints the Depositary as attorney-in-fact of the undersigned
with respect to such Shares, with full power of substitution (such power of
attorney being an irrevocable power coupled with an interest), to:
|
(a)
|
deliver certificates for such Shares, together with all
accompanying evidences of transfer and authenticity, to or upon the order
of the Corporation upon receipt by the Depositary, as the undersigned's
agent, of the Purchase Price (as hereinafter defined);
|
|
|
|
|
(b)
|
present certificates for such Shares for cancellation and
transfer on the Corporation's books; and
|
|
|
|
|
(c)
|
receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares, subject to the next paragraph, all in
accordance with the terms of the Offer.
|
|
|
|
|
The undersigned hereby covenants, represents and
warrants that:
|
|
|
|
|
(a)
|
the undersigned is the registered holder of the Shares
deposited hereby and has full power and authority to deposit, sell, assign
and transfer the Shares;
|
|
|
|
|
(b)
|
when and to the extent the Corporation accepts the Shares
for payment, the Corporation will acquire good, marketable, and
unencumbered title thereto, free and clear of all mortgages, hypothecs,
liens, charges, encumbrances, security interests, claims, restrictions and
equities whatsoever relating to the sale or transfer of the Shares,
together with all rights and benefits arising therefrom, provided that any
dividends or distributions which may be paid, issued, distributed, made or
transferred on or in respect of such Shares to Shareholders of record on
or prior to the date on which the Shares are taken up and paid for under
the Offer shall be for the account of the undersigned;
|
|
|
|
|
(c)
|
on request, the undersigned will execute and deliver any
additional documents that the Depositary or the Corporation deems
necessary or desirable to complete the assignment, transfer, and purchase
of the Shares deposited hereby;
|
|
|
|
|
(d)
|
the surrender of the undersigneds Shares complies with
applicable laws;
|
|
|
|
|
(e)
|
all information inserted by or on behalf of the
undersigned into this Letter of Transmittal is accurate;
|
|
|
|
|
(f)
|
the undersigned represents and warrants that (i) the
undersigned has a net long position in Shares or equivalent securities
at least equal to the Shares tendered within the meaning of Rule 14e-4
under the Securities Exchange Act of 1934, as amended (the Exchange
Act), and (ii) such tender of Shares complies with Rule 14e-4 under the
Exchange Act; and
|
|
|
|
|
(g)
|
the undersigned has read and agrees to all of the terms
of the Offer to Purchase and this Letter of Transmittal.
|
3
The names and addresses of the
registered owners should be printed, if they are not already printed above, as
they appear on the certificates representing Shares deposited hereby. The
certificates representing Shares deposited and the number of Shares that the
undersigned wishes to deposit should all be indicated in the appropriate boxes.
If the deposit is being made pursuant to an Auction Tender, the purchase price
at which such Shares are being deposited should be indicated in Box B Auction
Tender.
The undersigned understands
that he or she must indicate whether the Shares are being deposited pursuant to
an Auction Tender or a Purchase Price tender by completing Box A Type of
Tender.
All Shares deposited by a
Shareholder and which have not been withdrawn, who fails to specify any Auction
Tender Price for his or her Shares or fails to indicate that he has deposited
Shares pursuant to the Purchase Price Tender will be deemed to have deposited
Shares pursuant to the Purchase Price Tender.
The undersigned understands that
the Corporation will, upon the terms and subject to the conditions of the Offer,
determine a single price per Share (not less than Cdn$1.35 per Share or more
than Cdn$1.60 per Share) (the Purchase Price) that it will pay for Shares
validly deposited and not withdrawn pursuant to the Offer, taking into account
the number of Shares deposited pursuant to Auction Tenders and Purchase Price
Tenders, the prices specified by Shareholders making Auction Tenders, and the
price at which Shares deposited pursuant to Purchase Price Tenders are
considered to be deposited. For the purpose of determining the Purchase Price,
Shares deposited pursuant to Purchase Price Tenders will be considered to have
been deposited at Cdn$1.35 per Share (which is the minimum Purchase Price under
the Offer). The undersigned understands that the Corporation will select the
lowest price that will allow it to purchase the maximum number of deposited
Shares having an aggregate purchase price not exceeding Cdn$60,000,000 (or such
lesser number of Shares as are properly deposited) at a price not less than
Cdn$1.35 per Share or more than Cdn$1.60 per Share pursuant to the Offer. If the
Purchase Price is determined to be Cdn$1.35 per Share, the minimum purchase
price under the Offer, the maximum number of Shares that may be purchased is
44,444,444. The undersigned understands and acknowledges that all Shares
properly deposited and not withdrawn pursuant to Auction Tenders at prices at or
below the Purchase Price and pursuant to Purchase Price Tenders will be
purchased at the Purchase Price, payable in cash (subject to applicable
withholding taxes, if any (see Certain Canadian Federal Income Tax
Considerations in the Circular)), upon the terms and subject to the conditions
of the Offer, including the applicable pro ration provisions relating to Shares
deposited, and that the Corporation will return all other Shares, including
Shares deposited and not withdrawn at prices greater than the Purchase Price,
and Shares not purchased because of pro ration.
The undersigned recognizes that
under certain circumstances set forth in the Offer to Purchase, the Corporation
may terminate or amend the Offer or may not be required to purchase any of the
Shares deposited hereby or may accept for payment, in accordance with the
applicable pro ration provisions relating to Shares deposited, fewer than all of
the Shares deposited hereby. The undersigned understands and acknowledges that
certificate(s) for any Shares not deposited or not purchased will be returned to
the undersigned at the address indicated in Box F below. The undersigned
recognizes that the Corporation has no obligation, pursuant to the Offer, to
transfer any certificates for Shares from the name of the registered owner.
The undersigned understands and
acknowledges that the proper deposit of Shares pursuant to any one of the
procedures described above will constitute a binding agreement between the
undersigned and the Corporation, effective as of the Expiration Date, upon the
terms and subject to the conditions of the Offer.
The undersigned understands and
acknowledges that payment for Shares accepted for payment pursuant to the Offer
will be made by the Corporation by depositing the aggregate Purchase Price for
such Shares with the Depositary (by bank transfer or other means satisfactory to
the Depositary), which will act as agent for Shareholders who have properly
deposited Shares in acceptance of the Offer and have not withdrawn them for the
purposes of receiving payment from the Corporation and transmitting payment to
such Shareholders. The undersigned further understands and acknowledges that
receipt by the Depositary from the Corporation of payment for such Shares will
be deemed to constitute receipt of payment by such Shareholders. Under no
circumstances will interest be paid by the Corporation or the Depositary by
reason of any delay in paying for any Shares or otherwise.
4
The undersigned instructs the
Corporation and the Depositary to issue the cheque for the Purchase Price for
such of the deposited Shares that are taken up by the Corporation to the order
of the person identified in Box E Issue Cheque and/or Certificate(s) in the
Name of and mail such cheque to the address indicated in Box F Send Cheque
and/or Certificate(s) to, unless Box H Hold for Pick-Up is checked. Such
payment will be made in Canadian dollars.
All authority conferred or agreed
to be conferred in this Letter of Transmittal shall survive the death or
incapacity of the undersigned, and any obligations of the undersigned under this
Letter of Transmittal shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned. Except as stated in the Offer to
Purchase, this deposit is irrevocable.
If a share certificate has been
lost, stolen or destroyed, this Letter of Transmittal, including Box L Lost,
Stolen or Destroyed Certificates should be completed as fully as possible and
forwarded to the Depositary, together with a letter describing the loss, theft
or destruction and providing a telephone number. The Depositary will respond
with the replacement requirements, which include certain additional documents
that must be signed in order to obtain replacement certificate(s) and the
payment of the required lost certificate fee.
By reason of the use by the
undersigned of an English language form of Letter of Transmittal, the
undersigned and both of you shall be deemed to have required that any contract
evidenced by the Offer as accepted through this Letter of Transmittal, as well
as all documents related thereto, be written exclusively in the English
language.
En raison de l'usage d'une lettre d'envoi en langue anglaise par le
soussigné, le soussigné et les destinaires sont présumés avoir requis que tout
contrat atteste par l'offre et son acceptation par cette envoi, de même que tous
les documents qui s'y rapportent, soient rédigés exclusivement en langue
anglaise
.
5
BOX A
TYPE OF TENDER
|
Check only one box. Failure to complete Box
A, or if more than one box is checked, will result in the Shares
being tendered pursuant to a Purchase Price Tender.
Shares are being deposited hereby pursuant to
(check one)
:
|
[ ]
|
An Auction Tender
(Please
complete Box B)
|
[ ]
|
A Purchase Price Tender
(Please
complete Box C)
|
BOX B
AUCTION TENDER
PRICE (IN CANADIAN DOLLARS) PER
SHARE AT WHICH SHARES ARE
BEING DEPOSITED.
|
|
|
|
BOX C
PURCHASE PRICE TENDER
|
|
|
|
|
This box MUST be completed if
Shares are being deposited pursuant to a Purchase Price Tender. Failure to
complete either Box B or Box C will result in the Shares being tendered
pursuant to a Purchase Price Tender.
|
|
|
This box MUST be completed if Shares are
being deposited pursuant to an Auction Tender.
|
|
|
|
|
|
Check the appropriate box to indicate the Auction
Tender Price.
|
|
The undersigned either
(check
one)
:
|
|
|
[ ]
|
is depositing __________ Common Shares beneficially owned by the
undersigned,
OR
|
CHECK ONLY ONE BOX.
|
|
Failure to specify any price below will
result in Shares being
deemed to have been deposited pursuant to a
Purchase Price
Tender. If you specify more than one price below,
you will be
deemed to have deposited your Shares at the lowest
applicable price indicated.
|
|
[ ]
|
is a broker, investment dealer, bank, trust company or other
nominee that is depositing, for the beneficial owners thereof, Common
Shares with respect to which it is the owner of record.
|
|
|
|
|
|
|
|
|
IF PORTIONS OF SHAREHOLDINGS ARE
BEING
DEPOSITED
AT DIFFERENT PRICES, USE A
SEPARATE LETTER OF TRANSMITTAL FOR EACH
PRICE SPECIFIED (SEE
INSTRUCTIONS 5 AND 6).
|
|
BOX D
ODD LOTS
(See Instruction 8)
|
|
|
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
|
Cdn$1.35
Cdn$1.36
Cdn$1.37
Cdn$1.38
Cdn$1.39
Cdn$1.40
Cdn$1.41
Cdn$1.42
Cdn$1.43
Cdn$1.44
Cdn$1.45
Cdn$1.46
Cdn$1.47
|
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
|
Cdn$1.48
Cdn$1.49
Cdn$1.50
Cdn$1.51
Cdn$1.52
Cdn$1.53
Cdn$1.54
Cdn$1.55
Cdn$1.56
Cdn$1.57
Cdn$1.58
Cdn$1.59
Cdn$1.60
|
|
To be completed ONLY if Shares
are being deposited by or on behalf of persons beneficially owning an
aggregate of fewer than 100 Shares as of the close of business on the
Expiration Date.
|
|
|
|
|
The undersigned either
(check
one)
:
|
|
|
|
[ ]
|
will be the beneficial owner of an aggregate of fewer than 100
Shares as of the close of business on the Expiration Date, all of which
are deposited, or
|
|
|
|
|
[ ]
|
is a broker, investment dealer, bank,
trust company or other nominee that (i) is depositing, for the beneficial
owners thereof, Shares with respect to which it is the record owner, and
(ii) believes, based upon representations made to it by each such
beneficial owner, that such beneficial owner will own an aggregate of
fewer than 100 Shares as of the close of business on the Expiration Date
and is depositing all such Shares.
|
6
BOX E
|
|
BOX F
|
|
|
|
ISSUE CHEQUE AND/OR CERTIFICATE(S)
|
|
SEND CHEQUE AND/OR CERTIFICATE(S)
|
IN THE NAME OF:
|
|
(Unless Box H is checked) TO:
|
(please print)
|
|
|
|
|
|
|
|
|
|
|
(Name)
|
(Name)
|
|
|
|
|
|
|
|
|
|
|
|
(Street Address and Number)
|
|
(Street Address and Number)
|
|
|
|
|
|
|
(City and Province or State)
|
|
(City and Province or State)
|
|
|
|
|
|
|
(Country and Postal (Zip) Code)
|
|
(Country and Postal (Zip) Code)
|
|
|
|
|
|
|
(Telephone Business Hours)
|
|
|
|
|
BOX G
|
|
|
JURISDICTION OF RESIDENCE
|
(Social Insurance or Social Security Number)
|
|
|
|
|
(Please check the appropriate box)
|
|
|
|
|
|
I/we hereby declare that the registered holder(s) of
the certificates deposited hereunder:
|
|
|
|
|
|
[
] IS/ARE
|
|
|
[
] IS
NOT/ARE NOT
|
|
|
|
|
|
resident(s) of Canada.
|
|
|
|
|
|
|
|
|
BOX H
|
|
|
HOLD FOR PICK-UP
|
|
|
|
|
|
[ ]
Hold certificates and/or cheques for Shares for pick-up.
|
BOX I
|
|
[ ]
|
Check here
if certificates for deposited Shares are being delivered pursuant to a Notice
of Guaranteed Delivery previously sent to the Depositary and complete the
following:
|
|
|
|
Name(s)
of Registered Owner(s)
|
|
|
|
|
Date of
Execution of Notice of Guaranteed Delivery
|
|
|
|
|
Name of Eligible Institution Which Guaranteed Delivery
|
|
|
|
|
7
BOX J
|
|
BOX K
|
|
|
|
SHAREHOLDER(S) SIGN HERE
|
|
SIGNATURE GUARANTEE
|
(See Instructions 1 and 7)
|
|
(See Instruction 1)
|
|
|
Authorized
|
Must be duly executed by registered owner(s) exactly
as name(s) appear(s) on certificate(s) or on a security position listing
or by person(s) authorized to become registered owner(s) by certificate(s)
and documents transmitted with this Letter of Transmittal. If signature
is by attorney-in-fact, executor, administrator, trustee, guardian, officer
of a corporation or other legal representative acting in a fiduciary or
representative capacity, please set forth the full title.
See
Instruction
7.
|
|
Signature: ________________________________________
|
|
(Guarantor)
|
|
|
|
Name: ______________________________________
|
|
(Please Print)
|
|
|
|
|
|
Authorized
|
|
Name of Firm: ________________________________
|
Signature(s): ____________________________________
|
|
|
(Shareholder(s) or Legal Representative)
|
|
Title: _______________________________________
|
|
|
|
Name(s): _______________________________________
|
|
Address: ____________________________________
|
(Please Print)
|
|
|
|
|
|
|
|
|
|
|
(Include
Postal Code or
Zip Code)
|
Address: ______________________________________
|
|
|
(Include Postal Code or Zip Code)
|
|
Area Code and Telephone Number _________________
|
|
|
|
Area Code and Telephone Number: __________________
|
|
|
|
|
|
Canadian Shareholders must provide their Social
Insurance No.; U.S. Shareholders must provide their
Taxpayer Identification
No. or Social Security No.
|
|
Dated: _______________________________________
|
|
|
|
|
|
|
Date: _________________________________________
|
|
|
|
|
|
8
BOX L
|
|
BOX M
|
LOST, STOLEN OR DESTROYED
|
|
Indicate whether you are a U.S. Shareholder
(as
|
CERTIFICATES
|
|
defined below) or are acting on behalf
of a
|
|
|
U.S. Shareholder.
|
To be completed ONLY if certificates representing
Shares being deposited have been lost, stolen or destroyed.
|
|
|
|
|
|
|
[ ]
|
The owner signing below represents that it is not a U.S. Shareholder
and is not acting on behalf of a U.S. Shareholder;
|
The undersigned has either
(check one)
:
|
|
|
|
|
|
|
[ ]
|
lost his
or her certificate(s) representing Shares;
|
|
|
OR
|
|
|
|
|
|
[ ]
|
had his
or her certificate(s) representing Shares stolen;
or
|
|
[ ]
|
The owner signing below represents that it is a U.S. Shareholder
or is acting on behalf of a U.S. Shareholder.
|
|
|
|
[ ]
|
had his
or her certificate(s) representing Shares destroyed.
|
|
|
|
|
|
A U.S. Shareholder
is any Shareholder that is either (A) providing an address in Box E that
is located within the United States or any territory or possession thereof,
or (B) a U.S. person for United States federal income tax purposes. If you
are a U.S. Shareholder or are acting on behalf of a U.S. Shareholder, then
in order to avoid backup withholding of U.S. federal income tax you must
complete the Substitute Form W-9 included below or otherwise provide certification
that you are exempt from backup withholding, as provided in the instructions.
|
If a certificate representing Shares has been
lost, stolen or destroyed, this Letter of Transmittal, including this Box
L, must be completed as fully as possible and forwarded, together with a
letter describing the loss, theft or destruction and providing a telephone
number, to the Depositary. The Depositary will respond with the replacement
requirements.
|
|
9
INSTRUCTIONS
Forming Part of the Terms of the Offer
1.
Signature Guarantees.
No guarantee of a signature is
required on this Letter of Transmittal if this Letter of Transmittal is duly
executed by the registered holder of the Shares deposited with this Letter of
Transmittal exactly as the name of the registered holder appears on the share
certificate deposited herewith, and payment and delivery are to be made directly
to such registered holder pursuant to the information provided in Box E
Issue Cheque and/or Certificate(s) in the Name of above
In all other cases, an Eligible
Institution must guarantee all signatures on this Letter of Transmittal by completing
Box K Signature Guarantee. Eligible Institution
refers to a Canadian Schedule 1 chartered bank, a participating organization
of Toronto Stock Exchange Inc., a member of the Securities Transfer Agent Medallion
Program (STAMP), a member of the Stock Exchanges Medallion Program (SEMP) or
a member of the New York Stock Exchange Inc. Medallion Signature Program (MSP)
(each such entity, an Eligible Institution). Members of these programs
are usually members of a recognized stock exchange in Canada or the United States,
members of the Investment Industry Regulatory Organization of Canada, members
of the Financial Industry Regulatory Authority or banks and trust companies
in the United States.
2.
Delivery of Letter of Transmittal and Certificates; Guaranteed
Delivery Procedures.
Certificates for all physically deposited Shares together with
a properly completed and duly executed Letter of Transmittal (or manually executed
photocopy thereof) and any other documents required by this Letter of Transmittal,
should be hand delivered, couriered or mailed to the Depositary at the appropriate
address set forth herein and must be received by the Depositary by the Expiration
Date (as defined in the Offer to Purchase).
Shareholders whose certificates
are not immediately available or who cannot deliver certificates for Shares
and all other required documents to the Depositary or complete the procedures
for book-entry transfer prior to the Expiration Date, may deposit their Shares
by or through any Eligible Institution by properly completing and duly executing
and delivering a Notice of Guaranteed Delivery substantially in the form provided
(or a manually executed photocopy thereof) by the Corporation through the Depositary
(indicating the type of deposit and, in the case of an Auction Tender, the price
at which Shares are being deposited) to the Depositary by the Expiration Date,
which must include a guarantee by an Eligible Institution in the form set forth
in the Notice of Guaranteed Delivery, and by otherwise complying with this guaranteed
delivery procedure as set forth in the Offer to Purchase under Procedure
for Depositing Shares Guaranteed Delivery. Pursuant to such guaranteed
delivery procedure, the certificates for all physically deposited Shares, as
well as a properly completed and duly executed Letter of Transmittal (or a manually
executed photocopy thereof), relating to such Shares, with signatures guaranteed
if so required in accordance with this Letter of Transmittal, and all other
documents required by this Letter of Transmittal, must be received by the Toronto
(Ontario) office of the Depositary before 5:00 p.m. (Toronto time) on or before
the third trading day on the Toronto Stock Exchange after the Expiration Date.
See Procedure for Depositing Shares in the Offer to Purchase.
The Notice of Guaranteed Delivery
may be hand delivered, couriered, mailed or transmitted by facsimile transmission
to the Toronto (Ontario) office of the Depositary listed in the Notice of Guaranteed
delivery, and must include a guarantee by an Eligible Institution in the form
set forth in the Notice of Guaranteed Delivery.
The tender information specified
in a Notice of Guaranteed Delivery by a person completing such Notice of Guaranteed
Delivery will, in all circumstances, take precedence over the tender information
that is specified in the related Letter of Transmittal that is subsequently
deposited.
10
The method of delivery of all
documents, including certificates for Shares, is at the election and risk of
the depositing Shareholder. Delivery is only effective upon receipt by the Depositary.
If delivery is by mail, registered mail with return receipt requested, properly
insured, is recommended. Shareholders whose Shares are registered in the name
of a broker, investment dealer, bank, trust company or other nominee should
contact such persons for assistance in depositing their Shares. In all cases,
sufficient time should be allowed to ensure timely delivery in advance of the
Expiration Date.
The Corporation will not purchase
any fractional Shares, nor will it accept any alternative, conditional or contingent
deposits. All depositing Shareholders, by execution of this Letter of Transmittal
(or a manually executed photocopy thereof), waive any right to receive any notice
of the acceptance of their deposit.
3.
Inadequate Space.
If the space provided in the
box captioned Description of Shares Deposited is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
signed schedule and attached to this Letter of Transmittal.
4.
Partial Deposits and Unpurchased Shares.
If
fewer than all of the Shares evidenced by any certificate are to be deposited,
fill in the number of Shares which are to be deposited in the box entitled Number
of Shares Deposited. In such case, if any deposited Shares are purchased,
a cheque for the Purchase Price in respect of such deposited Shares will be
issued and a new certificate for the remainder of the Shares evidenced by the
old certificate(s) will be issued and sent to the address indicated in Box F
Send Cheque and/or Certificate(s) to, as soon as reasonably
practicable after the Expiration Date. All Shares represented by the certificate(s)
listed and delivered to the Depositary are deemed to have been deposited unless
otherwise indicated.
5.
Indication of Type of Tender
.
To deposit
Shares, the Shareholder must complete Box A Type of Tender
on this Letter of Transmittal or, if applicable, on the Notice of Guaranteed
Delivery, indicating whether he or she is depositing Shares pursuant to an Auction
Tender (Box B) or a Purchase Price Tender (Box C)
. Either Box B or Box C
must be checked. All Shares deposited and not withdrawn, by a Shareholder, who
fails to specify any Auction Tender price for his or her Shares or fails to
indicate that he or she has deposited his or her Shares pursuant to a Purchase
Price Tender will be considered to have deposited his or her Shares pursuant
to a Purchase Price Tender. The same Shares cannot be deposited, unless previously
properly withdrawn as provided in the Offer to Purchase, pursuant to both an
Auction Tender and a Purchase Price Tender or pursuant to Auction Tenders at
more than one price.
However, if a Shareholder desires to deposit Shares
in separate lots at a different type of tender for each lot, such Shareholder
must complete a separate Letter of Transmittal or, if applicable, a Notice of
Guaranteed Delivery for each lot which the Shareholder is depositing.
6.
Indication of Price at Which Shares are being Deposited
.
For Shares to be properly deposited pursuant to an Auction Tender, the Shareholder
must complete Box B Auction Tender Price on this Letter of
Transmittal indicating the price per Share (in increments of $0.01 per Share)
in Canadian dollars at which he or she is depositing Shares. A Shareholder wishing
to deposit portions of his or her Shares pursuant to Auction Tenders at different
prices must complete a separate Letter of Transmittal for each price at which
he or she wishes to deposit each such portion of his or her Shares. The same
Shares cannot be deposited pursuant to Auction Tenders (unless previously withdrawn
as provided in the Offer to Purchase under the heading Withdrawal Rights)
at more than one price. No price can be specified by Shareholders making a Purchase
Price Tender. In order to deposit Shares properly, one price, and only one price,
under Auction Tender Price (in Canadian dollars) per Share at which Shares
Are Being Deposited on each Letter of Transmittal must be checked if an
Auction Tender is selected as the type of tender election. Any Shares tendered
as an Auction Tender without a price being indicated in the appropriate box
in the Letter of Transmittal will be deemed to be a Purchase Price Tender. Any
Shares tendered as an Auction Tender with more than one price indicated will
be deemed to have been tendered at the lowest applicable price indicated.
11
7.
Signatures on Letter of Transmittal, Stock Power
and Endorsements.
|
(a)
|
If Box J in this Letter of Transmittal is signed by
the registered owner(s) of the Shares deposited hereby, the signature(s)
must correspond exactly with the name(s) as written on the face of the
certificate without any change whatsoever.
|
|
|
|
|
(b)
|
If the Shares are registered in the names of two or
more joint owners, each such owner must sign in Box J in this Letter of
Transmittal.
|
|
|
|
|
(c)
|
If any deposited Shares are registered in different
names on several certificates, it will be necessary to complete, sign,
and submit as many separate Letters of Transmittal as there are different
registrations of certificates.
|
|
|
|
|
(d)
|
When this Letter of Transmittal is duly executed by
the registered owner(s) of the Shares listed and transmitted hereby, no
endorsements of certificate(s) representing such Shares or separate stock
powers are required unless payment is to be made, or the certificates
for Shares not deposited or not purchased are to be issued, to a person
other than the registered owner(s). Any signature(s) required on such
certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is duly executed by a person other than
the registered owner(s) of the certificate(s) listed, the certificates
must be endorsed or accompanied by appropriate stock powers, in either
case signed exactly as the name(s) of the registered owner(s) appear(s)
on the certificate, and signatures on such certificate(s) or stock power(s)
must be guaranteed by an Eligible Institution. An ownership declaration,
which can be obtained from the Depositary, must also be completed and
delivered to the Depositary. See Instruction 1 in this Letter of Transmittal.
|
|
|
|
|
(e)
|
If this Letter of Transmittal or any certificates
or stock powers are duly executed by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or any other legal
representative acting in a fiduciary or representative capacity, such
persons should so indicate when signing and must submit proper evidence
satisfactory to the Corporation or the Depositary of their authority to
so act.
|
8.
Odd Lots.
As described in the Offer to Purchase
under Number of Shares and Pro ration, if the Corporation is to
purchase less than all Shares deposited by the Expiration Date, the Shares purchased
first will consist of all Shares so deposited by any Shareholder who will own
beneficially, as of the close of business on the Expiration Date, an aggregate
of fewer than 100 Shares and who deposits all of his or her Shares under Auction
Tenders at or below the Purchase Price or under Purchase Price Tenders. This
treatment will not be available unless Box D Odd Lots is
completed.
9.
Payment and Delivery Instruction.
The undersigned
of the Letter of Transmittal must identify to whom a cheque and/or certificates
should be issued by completing Box E Issue Cheque and/or Certificate(s)
in the Name of. Such cheque and/or certificates will be sent to the address
indicated in Box F Send Cheque and/or Certificate(s) to,
unless such cheque and/or certificates is to be held by the Depositary for pick-up
by the undersigned or any person designated by the undersigned in writing and
Box H Hold for Pick-Up is checked.
10.
Irregularities.
All questions as to the number
of Shares to be taken up, the price to be paid therefor, the form of documents
and the validity, eligibility (including time of receipt) and acceptance for
payment of any deposit of Shares, will be determined by the Corporation, in
its sole discretion, and will be final and binding on all parties. The Corporation
reserves the absolute right to reject any or all deposits of Shares determined
by it in its sole discretion not to be in proper form or not completed in accordance
with the instructions herein and in the Offer or the acceptance for payment
of, or payment for, which may, in the opinion of the Corporation's counsel,
be unlawful under the laws of any jurisdiction. The Corporation also reserves
the absolute right to waive any of the conditions of the Offer or any defect
or irregularity in any deposit of Shares. No deposit of Shares will be deemed
to be properly made until all defects and irregularities have been cured or
waived.
None of the Corporation, the Depositary or any other person will
be under any duty to
give notification of any defect or irregularity in deposits
or incur any liability for failure to give any such notice.
The Corporation's
interpretation of the terms and conditions of the Offer (including this Letter
of Transmittal and the Notice of Guaranteed Delivery) will be final and binding.
12
11.
Substitute Form W-9
. Each U.S. Shareholder
depositing Shares to the Depositary is required to provide the Depositary with
a correct U.S. taxpayer identification number (TIN) (generally the
Shareholders social security number or federal employer identification
number) and certain other information, on Substitute Form W-9, which is provided
under Important U.S. Tax Information for U.S. Shareholders Depositing
Shares to the Depositary below. Failure to provide the information on
this form may subject the depositing Shareholder to a US$50 or greater penalty
imposed by the U.S. Internal Revenue Service and backup withholding of 28% of
any payment made to such Shareholder pursuant to the Offer.
12.
Questions and Requests for Assistance and Additional
Copies.
Questions and requests for assistance may be directed to the
Depositary at its address and telephone and facsimile numbers set forth herein.
Additional copies of the Offer to Purchase, the Circular and this Letter of
Transmittal and copies of the Notice of Guaranteed Delivery may be obtained
from the Depositary or from your broker, investment dealer, bank, trust company,
or other nominee.
13.
Governing Law.
The Offer and any agreement
resulting from the acceptance of the Offer will be construed in accordance with
and governed by the law of the Province of Ontario and the laws of Canada applicable
therein.
PRIVACY NOTICE
Computershare Investor Services Inc. is committed to protecting
your personal information. In the course of providing services to you and our
corporate clients, we receive non-public personal information about you from
transactions we perform for you, forms you send us, other communications we
have with you or your representatives, etc. This information could include your
name, address, social insurance number, securities holdings and other financial
information. We use this information to administer your account, to better serve
your and our clients' needs and for other lawful purposes relating to our services.
We have prepared a Privacy Code to tell you more about our information practices
and how your privacy is protected. It is available at our Web site, computershare.com,
or by writing us at 100 University Ave., Toronto, Ontario, M5J 2Y1. Computershare
Investor Services Inc. will use the information you are providing on this form
in order to process your request and will treat your signature(s) on this form
as your consent to the above.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY EXECUTED
PHOTOCOPY THEREOF (TOGETHER WITH CERTIFICATES FOR SHARES AND ALL OTHER REQUIRED
DOCUMENTS) MUST BE RECEIVED BY THE DEPOSITARY ON OR BEFORE THE EXPIRATION DATE.
13
IMPORTANT U.S. TAX INFORMATION FOR U.S. SHAREHOLDERS
DEPOSITING SHARES TO THE DEPOSITARY
Under U.S. federal income tax law, in order to avoid backup withholding
on payments by the Corporation of cash and/or Shares made pursuant to the Offer
to Purchase, a U.S. Shareholder whose deposited Shares are accepted for payment
is required to provide the Depositary with such Shareholders correct TIN
(e.g. social security number or employer identification number), certify under
penalties of perjury that such TIN is correct, and provide certain other certifications
on Substitute Form W-9 below, unless an exemption applies. If such Shareholder
is an individual, the TIN is his or her social security number.
If the Depositary is not timely provided with the correct TIN,
if the Shareholder fails to provide the required certification, or if the Shareholder
fails to provide an adequate basis for an exemption, as the case may be, such
Shareholder may be subject to penalties imposed by the Internal Revenue Service
(IRS) and backup withholding in an amount currently imposed at a
rate of 28% of the gross proceeds of any payment received pursuant to the Offer
to Purchase. Backup withholding is not an additional tax. Rather, the amount
of the backup withholding can be credited against the U.S. federal income tax
liability of the person subject to the backup withholding, provided the required
information is given to the IRS. If backup withholding results in an overpayment
of U.S. federal income tax, a refund may be obtained by the Shareholder upon
the timely filing of a U.S. federal income tax return. In addition, failure
to provide the correct information on the Substitute Form W-9 may subject the
Shareholder to various penalties, including a US$50 penalty for each such failure,
unless such failure is due to reasonable cause and not to willful neglect.
To prevent backup withholding on any payments made pursuant to
the Offer to Purchase, each U.S. Shareholder must provide the Depositary with
(a) his or her correct TIN by completing the Substitute Form W-9 accompanying
this Letter of Transmittal, which requires such Shareholder to certify under
penalty of perjury: (1) that the TIN provided is correct (or that such Shareholder
is awaiting a TIN); (2) that (i) the Shareholder is exempt from backup withholding;
(ii) the Shareholder has not been notified by the IRS that he or she is subject
to backup withholding as a result of a failure to report all interest or dividends;
or (iii) the IRS has notified the Shareholder that he or she is no longer subject
to backup withholding; and (3) that the Shareholder is a U.S. person (including
a U.S. resident alien), or (b) if applicable, an adequate basis for exemption.
The U.S. Shareholder is required to give the Depositary the TIN
of the registered holder of the Shares. If the Shares are registered in more
than one name or are not registered in the name of the actual owner, consult
the Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 (the
Form W-9 Guidelines
) which
accompany this Letter of Transmittal for additional guidance on which number
to report.
Certain U.S. Shareholders (including, among others, corporations,
individual retirement accounts and certain foreign individuals and entities)
are not subject to backup withholding but may be required to provide evidence
of their exemption from backup withholding. To prevent possible erroneous backup
withholding, an exempt Shareholder should indicate their exempt status in Part
2 of the Substitute Form W-9. See the Form W-9 Guidelines for more instructions.
If a U.S. Shareholder does not have a TIN, such Shareholder should:
(i) consult the Form W-9 Guidelines for instructions on applying for a TIN;
(ii) indicate awaiting TIN in Part 2 of the Substitute Form W-9;
and (iii) sign and date the Substitute Form W-9 and the Certificate of Awaiting
Taxpayer Identification Number. In such case, the Depositary may withhold 28%
of the gross proceeds of any payment made to such Shareholder prior to the time
a properly certified TIN is provided to the Depositary, and if the Depositary
is not provided with a TIN within sixty (60) days, such amounts will be paid
over to the IRS.
If the Substitute Form W-9 is not applicable to a U.S. Shareholder
because such Shareholder is not a U.S. person for U.S. federal income tax purposes,
such Shareholder will instead need to submit an appropriate and properly completed
IRS Form W-8BEN, Form W8-ECI or Form W8-IMY, as the case may be, signed under
penalties of perjury, attesting to such Shareholders exempt status. An
appropriate IRS Form W-8 may be obtained from the Depositary.
14
A U.S. SHAREHOLDER WHO FAILS TO PROPERLY COMPLETE THE SUBSTITUTE
FORM W-9 SET OUT IN THIS LETTER OF TRANSMITTAL OR, IF APPLICABLE, THE APPROPRIATE
IRS FORM W-8, MAY BE SUBJECT TO BACKUP WITHHOLDING OF U.S. FEDERAL INCOME TAX
OF 28% OF THE GROSS PROCEEDS OF ANY PAYMENTS MADE TO SUCH SHAREHOLDER PURSUANT
TO THE OFFER TO PURCHASE. BACKUP WITHHOLDING IS NOT AN ADDITIONAL U.S. FEDERAL
INCOME TAX. RATHER, THE U.S. FEDERAL INCOME TAX LIABILITY OF PERSONS SUBJECT
TO BACKUP WITHHOLDING WILL BE REDUCED BY THE AMOUNT OF BACKUP WITHHOLDING TAX
WITHHELD. IF SUCH WITHHOLDING RESULTS IN AN OVERPAYMENT OF U.S. FEDERAL INCOME
TAXES, A REFUND MAY BE OBTAINED BY THE TIMELY FILING OF A U.S. FEDERAL INCOME
TAX RETURN WITH THE IRS.
TO ENSURE COMPLIANCE WITH TREASURY DEPARTMENT CIRCULAR 230,
SHAREHOLDERS ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF U.S. FEDERAL TAX
ISSUES IN THIS LETTER OF TRANSMITTAL IS NOT INTENDED OR WRITTEN TO BE USED,
AND CANNOT BE USED BY SUCH SHAREHOLDERS, FOR THE PURPOSE OF AVOIDING PENALTIES
THAT MAY BE IMPOSED ON SUCH SHAREHOLDERS UNDER THE INTERNAL REVENUE CODE; (B)
SUCH DISCUSSION IS BEING USED IN CONNECTION WITH THE PROMOTION OR MARKETING
(WITHIN THE MEANING OF CIRCULAR 230) BY THE CORPORATION OF THE TRANSACTIONS
OR MATTERS ADDRESSED HEREIN; AND (C) EACH SHAREHOLDER SHOULD SEEK ADVICE BASED
ON ITS PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.
15
TO BE COMPLETED BY TENDERING SHAREHOLDERS
THAT ARE U.S. PERSONS
(INCLUDING U.S. RESIDENT ALIENS)
(See Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9 below)
SUBSTITUTE
Form W-9
Department of the Treasury
Internal Revenue Service
Payers Request for Taxpayer
Identification Number (TIN)
|
Please check the appropriate box indicating
your status:
[ ] Individual/Sole proprietor
[ ] Corporation
[ ] Partnership
[ ] Other
Please fill out your name and address below:
Name:
Address
(Number and street):
City, State and Zip Code:
Part 1
PLEASE PROVIDE YOUR
TIN IN THE BOX AT RIGHT AND CERTIFY
BY SIGNING AND DATING BELOW
|
|
Social Security Number
OR
Employer Identification Number
|
|
Part 2
Awaiting TIN
[ ]
Exempt
[ ]
|
|
CERTIFICATION
UNDER PENALTIES OF
PERJURY, I CERTIFY THAT: (1) The number shown on this form is my correct
Taxpayer Identification Number (or I am waiting for a number to be issued
to me) and (2) I am not subject to backup withholding either because (a)
I am exempt from backup withholding; or (b) I have not been notified by
the Internal Revenue Service (the
IRS
) that I am subject
to backup withholding as a result of failure to report all interest and
dividends, or (c) the IRS has notified me that I am no longer subject
to backup withholding.
|
CERTIFICATION INSTRUCTIONS
You must
cross out item (2) above if you have been notified by the IRS that you
are subject to backup withholding because of under-reporting interest
or dividends on your tax return. However, if after being notified by the
IRS that you were subject to backup withholding you received another notification
from the IRS stating that you are no longer subject to backup withholding,
do not cross out item (2). If you are exempt from backup withholding,
check the applicable box in Part 2.
|
SIGNATURE DATE
NAME (Please Print)
ADDRESS (Number and street)
City, State and Zip Code
|
NOTE:
|
FAILURE TO COMPLETE AND RETURN THIS
FORM MAY RESULT IN BACKUP WITHHOLDING OF 28
PERCENT OF ANY PAYMENT
MADE TO YOU PURSUANT TO THE OFFER TO PURCHASE. PLEASE REVIEW
THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER
ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
|
CONTINUED
16
TENDERING SHAREHOLDERS MUST COMPLETE THE FOLLOWING CERTIFICATE
IF THEY
CHECKED THE APPLICABLE BOX IN PART 2 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury
that a taxpayer identification number has not been issued to me, and either
(a) I have mailed or delivered an application to receive a taxpayer identification
number to the appropriate Internal Revenue Service Center or Social Security
Administration Office or (b) I intend to mail or deliver an application in the
near future. I understand that if I do not provide a taxpayer identification
number to the payor by the time of payment, 28% of all reportable payments made
to me will be withheld until I provide a number and that, if I do not provide
my taxpayer identification number within 60 calendar days, such retained amounts
shall be remitted to the IRS as backup withholding.
17
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number
to Give the Payer
. Social Security numbers have nine digits separated
by two hyphens: i.e., 000-00-0000. Employer identification numbers have nine
digits separated by only one hyphen: i.e., 00-0000000. The table below will
help determine the number to give the payer.
For this type of account:
|
Give the NAME and SOCIAL SECURITY number of __
|
Individual
Two or more individuals (joint account)
Custodian account of a minor (Uniform Gift to Minors Act)
The usual revocable savings trust (grantor is also trustee)
So-called trust account that is not a legal or valid trust
under state law
Sole proprietorship or single-owner LLC
|
The individual
The actual owner of the account or, if combined
funds, any one of the individuals
(1)
The minor
(2)
The grantor-trustee
(1)
The actual owner
(1)
The owner
(3)
|
|
|
|
Give the NAME and EMPLOYER IDENTIFICATION number
of
|
For this type of
account:
|
__
|
A valid trust, estate, or pension trust
Corporate or LLC electing corporate status on Form 8832
Association, club, religious, charitable, educational or other
tax-exempt organization
Partnership or Multi-Member LLC
A Broker or registered nominee
Account with the Department of Agriculture in the name of a
public entity (such as a state or local government, school district, or prison)
that receive agricultural program
payments
|
Legal entity (do not furnish the taxpayer identification
number of the personal representative or trustee unless the legal
entity itself is not designated in the account title.)
(4)
The corporation
The organization
The partnership
The broker or nominee
The public entity
|
(1)
|
List first and circle the name of the person whose number
you furnish.
|
(2)
|
Circle the minors name and furnish the minors
social security number.
|
(3)
|
Show the name of the individual owner. Use either SSN
or EIN.
|
(4)
|
List first and circle the name of the legal trust, estate,
or pension trust.
|
NOTE:
|
IF NO NAME IS CIRCLED WHEN THERE IS MORE THAN ONE
NAME, THE NUMBER WILL BE CONSIDERED TO BE THAT OF THE FIRST NAME LISTED.
|
18
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
How to Get a TIN
To apply for an SSN, obtain Form SS-5, Application for a Social
Security Card, at the local office of the Social Security Administration or
get this form on-line at www.ssa.gov/online/ss-5.pdf. You may also get this
form by calling 1-800-772-1213. You can apply for an EIN online by accessing
the IRS website at www.irs.gov/businesses and clicking on Employer ID Numbers
under Business Topics. Use Form SS-4, Application for Employer Identification
Number, to apply for an EIN. You can get Form SS-4 from the IRS by calling 1-800-TAX-FORM
(1-800-829-3676) or from the IRS web site at www.irs.gov.
If you do not have a TIN, write Applied For in Part
1, check the Awaiting TIN box in Part 2, sign and date the form
in the two spaces indicated, and return it to the payer. For interest and dividend
payments and certain payments made with respect to readily tradable instruments,
you will generally have 60 calendar days to get a TIN and give it to the payer.
If the payer does not receive your TIN within 60 calendar days, backup withholding,
if applicable, will begin and continue until you furnish your TIN.
Note: Writing Applied For on the form means that
you have already applied for a TIN or that you intend to apply for one soon.
As soon as you receive your TIN, complete another Form W-9, include your TIN,
sign and date the form, and return it to the payer.
Payees Exempt from Backup Withholding
Generally, individuals (including sole proprietors) are not exempt
from backup withholding. Corporations are exempt from backup withholding for
certain payments, such as interest and dividends.
Note: If you are exempt from backup withholding, you should still
complete Substitute Form W-9 to avoid possible erroneous backup withholding.
If you are exempt, enter your correct TIN in Part 1, check the Exempt
box in Part 2, and sign and date the form.
Exempt Payees.
Backup withholding is not required on any payments made to the
following payees:
1.
|
An organization exempt from tax under section 501(a),
or an individual retirement plan (IRA), or a custodial account
under section 403(b)(7), if the account satisfies the requirements of
section 401(f)(2).
|
|
|
2.
|
The United States or any of its agencies or instrumentalities.
|
|
|
3.
|
A state, the District of Columbia, a possession of the
United States, or any of their subdivisions or instrumentalities.
|
|
|
4.
|
A foreign government, a political subdivision of a foreign
government, or any of their agencies or instrumentalities.
|
|
|
5.
|
An international organization or any of its agencies
or instrumentalities.
|
Other payees that may be exempt from backup withholding include:
6.
|
A corporation.
|
|
|
7.
|
A foreign central bank of issue.
|
|
|
8.
|
A dealer in securities or commodities required to register
in the United States, the District of Columbia, or a possession of the
United States.
|
|
|
9.
|
A futures commission merchant registered with the Commodity
Futures Trading Commission.
|
|
|
10.
|
A real estate investment trust.
|
|
|
11.
|
An entity registered at all times during the tax year
under the Investment Company Act of 1940.
|
|
|
12.
|
A common trust fund operated by a bank under section
584(a).
|
19
13.
|
A financial institution.
|
|
|
14.
|
A middleman known in the investment community as a nominee
or custodian.
|
|
|
15.
|
A trust exempt from tax under section 664 or described
in section 4947.
|
Exempt payees described above should file Form W-9 to avoid possible
erroneous backup withholding.
FILE THIS FORM WITH THE PAYER, FURNISH YOUR
TAXPAYER IDENTIFICATION NUMBER, CHECK THE EXEMPT BOX IN PART 2 OF
THE FORM, SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Certain payments other than interest, dividends and patronage
dividends that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A, 6042, 6044, 6045,
6049, 6050A and 6050N, and their regulations.
Privacy Act Notice
. Section 6109 of the Internal Revenue
Code requires you to give your correct TIN to persons who must file information
returns with the IRS to report interest, dividends, and certain other income
paid to you, mortgage interest you paid, the acquisition or abandonment of secured
property, cancellation of debt, or contributions you made to an IRA or Archer
MSA or HSA. The IRS uses the numbers for identification purposes and to help
verify the accuracy of your tax return. The IRS may also provide this information
to the Department of Justice for civil and criminal litigation and to cities,
states, the District of Columbia and U.S. possessions to carry out their tax
laws. The IRS may also disclose this information to other countries under a
tax treaty, or to federal and state agencies to enforce federal nontax criminal
laws and to combat terrorism.
You must provide your TIN whether or not you are required to
file a tax return. Payers must generally withhold 28% of taxable interest, dividends,
and certain other payments to a payee who does not give a TIN to a payer. The
penalties described below may also apply.
Penalties
Failure to Furnish TIN.
If you fail to furnish your correct
TIN to a payer, you are subject to a penalty of $50 for each such failure unless
your failure is due to reasonable cause and not to willful neglect.
Civil Penalty for False Information With Respect to Withholding
.
If you make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
Criminal Penalty for Falsifying Information
. Willfully
falsifying certifications or affirmations may subject you to criminal penalties
including fines and/or imprisonment.
Failure to Report Certain Dividend and Interest Payments
.
If you fail to include any portion of an includible payment for interest, dividends
or patronage dividends in gross income and such failure is due to negligence,
a penalty of 20% is imposed on any portion of an underpayment attributable to
that failure.
Misuse of TINs.
If the payer discloses or uses TINs in
violation of federal law, the payer may be subject to civil and criminal penalties.
FOR ADDITIONAL INFORMATION, CONTACT YOUR TAX
ADVISOR OR THE INTERNAL REVENUE SERVICE
20
T
HIS LETTER IS NOT A
L
ETTER OF
T
RANSMITTAL
NOTICE OF GUARANTEED DELIVERY
for Deposit of Common Shares of
QUEST CAPITAL CORP.
Pursuant to the Offer to Purchase dated July 19
,
2010
THE OFFER WILL BE OPEN FOR ACCEPTANCE
UNTIL 5:00 P.M. (TORONTO TIME) ON AUGUST 30, 2010,
UNLESS THE OFFER IS EXTENDED, WITHDRAWN OR VARIED.
|
As set forth in the Offer to Purchase (as defined below), this
form or one substantially equivalent hereto must be used to deposit common shares
(Common Shares) of Quest Capital Corp. (the Corporation)
pursuant to the Offer to Purchase (as defined below) if (1) certificates for
such Common Shares are not immediately available or cannot reach Computershare
Investor Services Inc. (the Depositary) by the Expiration Date (as
defined in the Offer to Purchase), (2) the procedures for book-entry transfer
described in Procedure for Depositing Shares of the Offer to Purchase
cannot be completed before the Expiration Date or (3) time will not permit all
documents required by the Letter of Transmittal (as defined below) to reach
the Depository before the Expiration Date. This form, signed and properly completed,
may be hand delivered, couriered, mailed or transmitted by facsimile transmission
to the Toronto (Ontario) office of the Depositary set forth below.
TO:
|
QUEST CAPITAL CORP.
|
AND TO:
|
COMPUTERSHARE INVESTOR SERVICES INC., as Depositary
|
The Depositary for the Offer to Purchase is:
COMPUTERSHARE INVESTOR SERVICES INC.
|
|
|
By Mail or Registered Mail
|
By Hand or Courier
|
|
|
Computershare Investor Services Inc.
|
Computershare Investor Services Inc.
|
P.O. Box 7021
|
100 University Avenue
|
31 Adelaide St. East
|
9
th
Floor
|
Toronto, Ontario
|
Toronto, Ontario
|
M5C 3H2
|
M5J 2Y1
|
Attention: Corporate Actions
|
Attention: Corporate Actions
|
By Facsimile Transmission
(905) 771-4082
Delivery of this Notice of Guaranteed Delivery to an address,
or transmission of this Notice of Guaranteed Delivery to a facsimile number,
other than as set forth above, does not constitute a valid delivery. Capitalized
terms used but not defined in this Notice of Guaranteed Delivery have the meanings
ascribed to them in the Offer to Purchase and Circular.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on the Letter of Transmittal is required to be guaranteed
by an Eligible Institution (as defined below), such signature must appear in
Box K Signature Guarantee in the Letter of Transmittal.
The undersigned hereby deposits to the Corporation, upon the
terms and subject to the conditions set forth in the offer to purchase dated
July 19, 2010 (the Offer to Purchase), the accompanying issuer bid
circular (the Circular) included therein, the related letter of
transmittal (the Letter of Transmittal) and this notice of guaranteed
delivery (the Notice of Guaranteed Delivery) (which together constitute
the Offer), receipt of which is hereby acknowledged, the number
of Common Shares indicated below pursuant to the guaranteed delivery procedure
set forth in the Offer to Purchase under Procedure for Depositing Shares.
DESCRIPTION OF COMMON SHARES DEPOSITED (Please
print or type. If space is insufficient, please attach a list in the form
below)
|
Certificate Number(s)
|
Name in which Registered
(Please fill in exactly as name(s)
appear(s) on certificate(s))
|
Number of Common Shares
Represented by Certificate
|
Number of Common Shares
Deposited*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL:
|
|
|
* Unless otherwise indicated, the total number
of Common Shares evidenced by certificates delivered will be deemed to
have been deposited. Refer to Instruction 4 of the Letter of Transmittal,
Partial Deposits and Unpurchased Shares.
|
SHAREHOLDER SIGNATURE(S)
|
|
|
Signature(s) of Shareholder(s)
|
|
Address(es)
|
|
|
|
|
|
|
Name (please print or type)
|
|
|
|
|
|
|
|
|
Date
|
|
Postal Code / Zip Code
|
|
|
|
|
|
|
|
|
Daytime Telephone Number
|
IMPORTANT: This Notice of Guaranteed Delivery or a manually
executed photocopy hereof (together with all other required documents) must
be received by the Depositary at its Toronto, Ontario, address at or prior to
the Expiration Date. Delivery of this Notice of Guaranteed Delivery to an address
or transmission of this Notice of Guaranteed Delivery via a facsimile to a number
other than set forth above does not constitute a valid delivery.
DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE OF GUARANTEED
DELIVERY.
CERTIFICATES FOR COMMON SHARES MUST BE SENT WITH YOUR
LETTER OF
TRANSMITTAL.
|
The Eligible Institution which completes the guarantee on page
4 of this Notice of Guaranteed Delivery must communicate the guarantee to the
Depositary and must deliver the Letter of Transmittal and certificates for Common
Shares to the Depositary within the time period show herein. Failure to do so
could result in a financial loss to such Eligible Institution.
- 2 -
BOX A
TYPE OF TENDER
|
Check only one box. Failure to complete Box
A, or if more than one box is checked,
will result in the Shares being tendered pursuant to the Purchase Price
Tender.
Shares are being deposited hereby pursuant to (
check one
):
|
[ ]
An Auction Tender
(Please complete
Box B)
|
|
[ ]
A Purchase Price Tender
(Please complete Box C)
|
FAILURE TO COMPLETE EITHER BOX B OR BOX C
WILL RESULT IN THE SHARES BEING TENDERED PURSUANT
TO THE PURCHASE PRICE TENDER.
|
BOX B
|
|
|
AUCTION TENDER
|
|
BOX C
|
PRICE (IN CANADIAN DOLLARS) PER
|
|
PURCHASE PRICE TENDER
|
SHARE AT WHICH SHARES ARE
|
|
|
BEING DEPOSITED.
|
|
This box MUST be completed if Common
Shares are
|
|
|
being deposited pursuant to a Purchase
Price
Tender.
|
|
|
|
This box MUST be completed if Common Shares are
|
|
The undersigned either
(check one):
|
being deposited pursuant to an Auction
Tender.
|
|
[ ]
|
is depositing ___________ Common Shares beneficially owned by
the undersigned, or
|
Check the appropriate box to indicate the
|
|
Auction Tender Price.
|
|
[ ]
|
is a broker, investment dealer, bank, trust company or other
nominee that is depositing, for the beneficial owners thereof, __________
Common Shares with respect to which it is the owner of record.
|
|
|
CHECK ONLY ONE BOX.
|
|
|
|
Failure to specify any price below will
result in Common
Shares being deemed to have been deposited pursuant
to a
Purchase Price Tender. If you specify more than one price
below, you will be deemed to have deposited your Shares
at the
lowest applicable price indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BOX D
|
IF
PORTIONS OF SHAREHOLDINGS ARE
BEING
DEPOSITED
AT DIFFERENT PRICES, USE A
SEPARATE NOTICE OF GUARANTEED DELIVERY
FOR EACH PRICE SPECIFIED
(SEE INSTRUCTIONS 5 AND
6 IN THE LETTER OF TRANSMITTAL).
|
|
ODD LOTS
|
|
(See Instruction 8 in the Letter of
Transmittal)
|
|
|
|
To be completed ONLY if Shares are being
|
|
deposited by or on behalf of persons
beneficially owning
|
[ ]
|
Cdn$1.35
|
[ ]
|
Cdn$1.48
|
|
an aggregate of fewer than 100
|
[ ]
|
Cdn$1.36
|
[ ]
|
Cdn$1.49
|
|
Common Shares as of the close of business
on the Expiration Date.
|
[ ]
|
Cdn$1.37
|
[ ]
|
Cdn$1.50
|
|
|
[ ]
|
Cdn$1.38
|
[ ]
|
Cdn$1.51
|
|
The undersigned either
(check one):
|
[ ]
|
Cdn$1.39
|
[ ]
|
Cdn$1.52
|
|
[ ]
|
will be the beneficial owner of an aggregate of fewer than 100
Common Shares as of the close of business on the Expiration Date, all of
which are being deposited, or
|
[ ]
|
Cdn$1.40
|
[ ]
|
Cdn$1.53
|
|
[ ]
|
Cdn$1.41
|
[ ]
|
Cdn$1.54
|
|
[ ]
|
is a broker, investment dealer, bank, trust
company or other nominee that (i) is depositing, for the beneficial owners
thereof, Common Shares with respect to which it is the record owner, and
(ii) believes, based upon representations made to it by each such beneficial
owner, that such beneficial owner will own an aggregate of fewer than 100
Common Shares as of the close of business on the Expiration Date and is
depositing all of such Common Shares.
|
[ ]
|
Cdn$1.42
|
[ ]
|
Cdn$1.55
|
|
[ ]
|
Cdn$1.43
|
[ ]
|
Cdn$1.56
|
|
[ ]
|
Cdn$1.44
|
[ ]
|
Cdn$1.57
|
|
[ ]
|
Cdn$1.45
|
[ ]
|
Cdn$1.58
|
|
[ ]
|
Cdn$1.46
|
[ ]
|
Cdn$1.59
|
|
[ ]
|
Cdn$1.47
|
[ ]
|
Cdn$1.60
|
|
THE GUARANTEE ON PAGE 4 OF THIS NOTICE OF GUARANTEED
DELIVERY
MUST BE COMPLETED BY AN ELIGIBLE INSTITUTION.
|
- 3 -
GUARANTEE
(Not to be used for signature guarantees)
The undersigned, a Canadian schedule 1 chartered bank, a member
of the Securities Transfer Agent Medallion Program (STAMP), a member of the
Stock Exchanges Medallion Program (SEMP) or a member of the New York Stock Exchange
Inc. Medallion Signature Program (MSP) (each an Eligible Institution)
guarantees delivery
to the Depositary of the certificates representing
the Common Shares deposited hereby, in proper form for transfer with a properly
completed and duly executed Letter of Transmittal in the form enclosed herewith
or an originally signed facsimile copy thereof, and all other documents required
by the Letter of Transmittal, all on or before 5:00 p.m. (Toronto time) on the
third trading day on The Toronto Stock Exchange (the TSX) after
the Expiration Date. As used herein, a trading day means a day on
which trading occurs on the TSX.
Name of Firm: ________________________________
|
|
Authorized Signature: ________________________
|
|
|
|
Address of Firm: ______________________________
|
|
Name: ____________________________________
|
|
|
(Please type or print)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Title: _____________________________________
|
(Postal Code or Zip code)
|
|
|
|
|
|
Area Code and Telephone No.: __________________________
|
|
Dated: ____________________________________
|
|
|
|
4
PART III
UNDERTAKING AND CONSENT T O
SERVICE OF PROCESS
Item 1.
Undertakings.
(a) The Issuer undertakes to make
available, in person or by telephone, representatives to respond to inquiries
made by the Commission staff, and to furnish promptly, when requested to do so
by the Commission staff, information relating to this Schedule or to
transactions in said securities.
(b) The Issuer also undertakes to
disclose in the United States, on the same basis as it is required to make such
disclosure pursuant to any applicable Canadian federal and/or provincial or
territorial laws, regulations or policies, or otherwise discloses, information
regarding purchases of the issuers securities in connection with the cash
tender offer covered by this Schedule. Such information shall be set forth in
amendments to this Schedule.
Item 2.
Consent to Service of Process.
(a) Concurrently with the filing
of this Schedule, the Issuer is filing with the Commission a written irrevocable
consent and power of attorney on Form F-X.
(b) Any change to the name or
address of the Issuers agent for service shall be communicated promptly to the
Commission by amendment to Form F-X referencing the file number of the
Issuer.
PART IV
SIGNATURES
After due inquiry and to the best
of my knowledge and belief, I certify that the information set forth in this
statement is true, complete and correct.
|
By:
|
/s/ Brian E. Bayley
|
|
|
Brian E. Bayley
|
|
|
President and Chief Executive Officer
|
Date: July 22, 2010
Quest (AMEX:QCC)
Historical Stock Chart
From Sep 2024 to Oct 2024
Quest (AMEX:QCC)
Historical Stock Chart
From Oct 2023 to Oct 2024