Arrangement Agreement dated as of March 3, 2003

Exhibit 2.1

EXECUTION COPY

ARRANGEMENT AGREEMENT

TABLE OF CONTENTS

ARRANGEMENT AGREEMENT

                               THIS AGREEMENT dated as of March 3, 2003 is made

A M O N G:

     WHEREAS, the parties wish to effect a business combination by way of an Arrangement under Section 192 of the CBCA on the terms and subject to the conditions set forth herein;

     WHEREAS, concurrently with the execution of this Agreement, and as a condition of Parentco’s entering into this Agreement, the Principal Securityholders are entering into the Support Agreements with Parentco;

     NOW, THEREFORE, in consideration of the mutual benefits to be derived and the representations, warranties, conditions and promises herein contained and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged by the Parties) and intending to be legally bound hereby, the Parties agree as follows:

ARTICLE I

GENERAL

Section 1.01 Defined Terms

Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in Schedule A.

Section 1.02 Plan of Arrangement

On the terms and subject to the conditions set forth herein, the Parties agree to effect the Arrangement in accordance with the Plan of Arrangement.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF PARENTCO AND SUBCO

     Parentco and Subco hereby jointly and severally represent and warrant to and in favour of Zemex as follows and acknowledge that Zemex is relying on such representations and warranties in entering into this Agreement and completing the transactions contemplated herein:

Section 2.01 Organization and Good Standing

Section 2.02 Consents, Authorizations and Binding Effect

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ARTICLE III

REPRESENTATIONS AND WARRANTIES OF ZEMEX

     Zemex hereby represents and warrants to Parentco and Subco as follows and acknowledges that each is relying on such representations and warranties in entering into this Agreement and completing the transactions contemplated herein. All such representations and warranties are qualified in their entirety by the matters disclosed in the Zemex Disclosure Letter. Each exception noted in the Zemex Disclosure Letter shall be numbered to correspond to the applicable section of this Article III to which such exception refers, and each such exception shall apply only in respect of such section except to the extent it is obvious from the face of the disclosure contained in such exception that it should also apply to another section of this Article III.

Section 3.01 Organization and Good Standing

Section 3.02 Consents, Authorizations, and Binding Effect

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Section 3.03 Public Filings; Financial Statements

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Section 3.04 Determination by the Board

The Board of Directors (after receiving financial advice including the Fairness Opinion, legal advice and after considering other factors), by a unanimous vote, has determined and resolved (i) that the entering into of this Agreement, the performance by Zemex of its obligations hereunder, and the Arrangement, are in the best interests of Zemex and its Securityholders (other than Dundee), (ii) that the Arrangement is fair to the Securityholders (other than Dundee) and (iii) to recommend that the Securityholders approve the Arrangement.

Section 3.05 Insurance

Schedule 3.05 to the Zemex Disclosure Letter sets forth the following information with respect to each insurance policy (including policies providing property, casualty, liability and workers’ compensation coverage and bond and surety arrangements) to which any Zemex Group Member is a party, a named insured or otherwise the beneficiary of coverage and which is in effect on the date hereof:

All premiums which are due and payable under such policies of insurance have been paid in full. All policies of insurance which are currently maintained by the Zemex Group Members provide adequate coverage with reputable insurers for all normal risks incident to the Zemex Group’s assets, properties and business operations and are in character and amount consistent with that carried by Persons engaged in a business subject to the same or similar risks, perils or hazards and in the same industry and markets. None of the Zemex Group Members has any self-insurance or co-insurance programs. There is no material claim by any Zemex Group Member pending under any of such insurance policies or bonds as to which coverage has been questioned, denied or disputed by the underwriters of such policies or bonds.

Section 3.06 Litigation and Compliance

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Section 3.07 Taxes

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Section 3.08 Pension and Other Employee Plans and Agreements

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Section 3.09 Labour Relations

Section 3.10 Contracts, Etc.

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Section 3.11 Absence of Certain Changes, Etc.

Except as described in Schedule 3.11 to the Zemex Disclosure Letter, since December 31, 2002:

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Section 3.12 Subsidiaries

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Section 3.13 Capitalization

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Section 3.14 Environmental Matters

Except as set forth in Schedule 3.14 to the Zemex Disclosure Letter:

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Section 3.15 Permits; Ownership

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Section 3.16 MSHA, OSHA Matters

Each Zemex Group Member is in compliance with the requirements of each of the Federal Mine Safety and Health Act of 1977, as amended, and the regulations promulgated thereunder, the Occupational Safety and Health Act of 1970, as amended, and the regulations promulgated thereunder and any similar Laws of any foreign, state, provincial or local jurisdiction (collectively, the “Safety Acts”), except for any matter disclosed on Schedule 3.16 to the Disclosure Letter and except for any non-compliance which would not be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect. No Zemex Group Member has received any citation from the Mine Safety and Health Administration, the Occupational Safety and Health Administration or any other Governmental Entity setting forth any respect in which the facilities or operations of such Zemex Group Member are not in compliance with the Safety Acts, or the regulations under such acts, which non-compliance has not been corrected or remedied to the satisfaction of such Governmental Entity, except in all such cases for any non-compliance that would not be reasonably likely to to have, individually or in the aggregate, a Material Adverse Effect.

Section 3.17 [Reserved]

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Section 3.18 Brokers

Except as disclosed on Schedule 3.18 to the Zemex Disclosure Letter, no Zemex Group Member or their respective Advisers have retained any broker or finder in connection with the Arrangement or the other transactions contemplated hereby, nor have any of the foregoing incurred any Liability to any broker or finder by reason of any such transaction.

Section 3.19 Books and Records

The financial books, records and accounts of Zemex and the other Zemex Group Members: (a) have been maintained in accordance with generally accepted accounting practices on a basis consistent with prior years; (b) are stated in reasonable detail and accurately and fairly reflect the transactions and dispositions of the assets of Zemex and the other Zemex Group Members; and (c) accurately reflect all material transactions to which each Zemex Group Member has been a party. The books and records of the Zemex Group made available to Parentco or its Advisers in connection with their due diligence investigations are the original books and records of such entities and contain copies of all proceedings of the directors, shareholders and other Securityholders of such entities (or certified copies thereof).

Section 3.20 Undisclosed Liabilities

Except as disclosed on Schedule 3.20 to the Zemex Disclosure Letter, there are no material Liabilities of the Zemex Group of any kind whatsoever, whether known or unknown, and whether or not accrued and whether or not determined or determinable, in respect of which any Zemex Group Member may become liable on or after the consummation of the transactions contemplated hereby other than:

Section 3.21 Intellectual Property

The Zemex Group owns, licenses or otherwise has the right to use all patents, copyrights, trademarks, trade names and other intellectual property currently used or necessary for the conduct of its business as now conducted without any known conflict with the rights of others, which conflict, if decided adversely to the Zemex Group, would be reasonably likely to have a Material Adverse Effect.

Section 3.22 Fairness Opinion

The Board of Directors has received an opinion from TD Securities, Inc. that the transactions contemplated by this Agreement and the other Transaction Documents are fair from a financial point of view to the Shareholders other than Dundee (the “Fairness Opinion”).

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Section 3.23 Affiliated Transactions

Except as described in Schedule 3.23 to the Zemex Disclosure Letter, none of the Zemex Group Members is a party to or bound by any contractual obligation with any of the stockholders, directors, officers, employees or consultants of any of the Zemex Group Members or with any of their Affiliates or any member of their respective immediate families (each, an “Insider”), other than ordinary employment arrangements in the ordinary course of business, and no Insider owns or otherwise has any rights to or interests in any asset, tangible or intangible, which is used in any business of any of the Zemex Group Members. Section 3.23 of the Zemex Disclosure Letter describes all services provided to or for the benefit of any of the Zemex Group Members by any Insider (other than ordinary employment services in the ordinary course of business) and the costs and expenses charged to any of the Zemex Group Members in respect thereof.

Section 3.24 No Illegal Payments

To the knowledge of Zemex, none of the Zemex Group Members, or any of the directors, officers, employees or agents of any of the Zemex Group Members, has (a) directly or indirectly given or agreed to give any illegal gift, contribution, payment, bribe, kick-back or similar benefit to any supplier, customer, governmental official or employee or other person who was, is or may be in a position to help or hinder any Zemex Group Member (or assist in connection with any actual or proposed transaction) or made or agreed to make any illegal contribution, or reimbursed any illegal political gift or contribution made by any other person, to any candidate for federal, state, local or foreign public office or (b) established or maintained any unrecorded fund or asset or made any false entries on any books or records for any purpose, in each case, which would have been illegal under the Foreign Corrupt Practices Act or any other requirement of Law. To the knowledge of Zemex, none of the Zemex Group Members, or any current director, officer, agent, employee or other Person acting on behalf of any of them, has accepted or received any unlawful contribution, payment, gift, entertainment or expenditure in connection with his employment by any Zemex Group Member.

Section 3.25 Customers and Suppliers

During the fiscal year ended December 31, 2002, no customer or related group of customers accounted for more than 10% of the consolidated gross revenues of the Zemex Group. Zemex has no knowledge that the benefits of any relationship with any customer or supplier of the Zemex Group whose purchases from or sales to the Zemex Group during the fiscal year ended December 31, 2002 exceeded $250,000 will not continue after the date hereof in substantially the same manner as prior to the date hereof, including assuming the completion of the transactions contemplated hereby.

Section 3.26 Parentco Financing Commitments

Zemex acknowledges that it has received a copy of the financing commitments of Parentco referred to in Section 2.02(h) and that Zemex is satisfied with the terms and conditions of such financing commitments.

Section 3.27 No Misrepresentations; Accuracy of Copies

The representations and warranties of Zemex in this Agreement, including the Zemex Disclosure Letter, do not omit to state a material fact necessary in order to make the representations and warranties contained herein (including the matters set forth in the Zemex Disclosure Letter) in light of the circumstances in which they have been made, not misleading. All copies of documents which Zemex has furnished or made available to Parentco are accurate and complete.

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ARTICLE IV

COVENANTS OF PARENTCO AND SUBCO

Parentco and Subco hereby covenant that from and after the Closing Date:

Section 4.01 Continuance of Indemnification and Exculpation Rights

Section 4.02 Employee Benefits; Certain Benefits

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ARTICLE V

PRE-CLOSING COVENANTS

     From and after the date hereof and until the first to occur of the Closing Date or the date on which this Agreement is terminated pursuant to Section 10.02, unless Parentco (in the case of covenants of Zemex) or Zemex (in the case of covenants of Parentco) shall otherwise agree in writing:

Section 5.01 Access

Subject to Parentco’s continuing compliance with the Confidentiality Agreement, Zemex shall permit, and shall cause each other Zemex Group Member to permit:

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Section 5.02 Ordinary Course

Zemex shall, and shall cause each other Zemex Group Member to, conduct its business only in the ordinary course and use all commercially reasonable efforts to preserve its business organizations intact and its existing relations with customers, suppliers, employees and business associates, and, except as otherwise provided in this Agreement or as required by applicable Law, Zemex shall not (and shall cause each other Zemex Group Member not to) do any of the following without the prior written consent of Parentco:

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Section 5.03 Insurance

Zemex shall take commercially reasonable steps to ensure that the Zemex Group and all Zemex Properties continue to be insured substantially in the manner and to the extent they are currently insured.

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Section 5.04 Closing Conditions

Section 5.05 Securityholder Approval

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Section 5.06 Defense of Proceedings

Zemex, on the one hand, and Parentco, on the other hand, shall vigorously defend, or shall cause to be vigorously defended, any lawsuits or other legal proceedings brought against (x) any Zemex Group Member or their respective officers, directors or shareholders, or (y) Parentco, Subco or their respective officers, directors or shareholders, challenging this Agreement or the completion of the Arrangement, and the Parties shall cooperate with each other in all respects in such defense. Neither Parentco nor Zemex shall compromise or settle any claim brought in connection with the Arrangement, without the prior written consent of the other Party.

Section 5.07 No Shop

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Section 5.08 Zemex Option Plan and Zemex Share Purchase Plans

Section 5.09 Additional Reports

Zemex shall promptly furnish to Parentco copies of any reports of any kind that it files with the SEC on or after the date hereof. Zemex agrees that as of the respective dates thereof, such reports will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statement therein, in light of the circumstances under which it was made, not misleading; provided, that the foregoing shall not apply to the financial statements contained therein (which are covered by the following sentence). Any consolidated financial statements included in such reports (including any related notes and schedules) will fairly present, in all material respects, the financial position of Zemex and its consolidated Subsidiaries as of the dates thereof and their results of operations and cash flows or other information included therein for the periods or as of the date then ended (subject, where appropriate, to normal year end adjustments), in each case in accordance with GAAP consistently applied during the periods involved (except as otherwise disclosed in the notes thereto and except to the extent that such financial statements do not include all of the notes required by GAAP).

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Section 5.10 Confidentiality Agreement

Parentco, Subco, Zemex and their respective officers, directors, Advisers and Affiliates, shall continue to be bound by, and shall abide by, the Confidentiality Agreement.

ARTICLE VI

OTHER COVENANTS OF THE PARTIES

Section 6.01 Consents and Notices

Promptly after the date hereof:

Section 6.02 Comfort Letter

If Zemex is unable, or chooses not, to obtain the exemptions referred to in Section 5.05(f), Zemex shall use all reasonable efforts to cause a “comfort” letter of Deloitte & Touche LLP or other nationally recognized certified public accounting firm to be delivered to Parentco, dated the date of the Circular and addressed to Parentco, in form and substance reasonably satisfactory to Parentco and reasonably customary in scope and substance for letters delivered by independent public accountants in connection with transactions such as the Arrangement.

Section 6.03 Press Releases

Before issuing any press release or otherwise making any public statements with respect to this Agreement or the Arrangement, Zemex and Parentco shall consult with each other and shall undertake commercially reasonable efforts to agree upon the terms of such press release, and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by applicable Law or by obligations pursuant to any listing agreement with, or rules of, any stock exchange.

ARTICLE VII

CONDITIONS TO OBLIGATIONS OF PARENTCO AND SUBCO

Section 7.01 Conditions Precedent to Completion of Arrangement

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     The obligation of Parentco and Subco to complete the Arrangement is subject to the satisfaction of the following conditions on or prior to the Closing Date, each of which may be waived by Parentco:

ARTICLE VIII

CONDITIONS TO OBLIGATIONS OF ZEMEX

Section 8.01 Conditions Precedent to Completion of Arrangement

The obligation of Zemex to consummate the Arrangement is subject to the satisfaction of the following conditions on or prior to the Closing Date, each of which may be waived by Zemex:

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ARTICLE IX

CONDITIONS TO OBLIGATIONS OF ALL PARTIES

Section 9.01 Mutual Conditions Precedent

The obligations of Parentco, Subco and Zemex to complete the Arrangement are subject to the satisfaction of the following conditions on or prior to the Closing Date, each of which may be waived only with the consent in writing of Parentco and Zemex:

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ARTICLE X

CLOSING AND TERMINATION

Section 10.01 Closing

Section 10.02 Termination of this Agreement

This Agreement may be terminated at any time prior to the Effective Time:

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Section 10.03 Certain Effects of Termination

In the event of termination of this Agreement as provided in Section 10.02:

Section 10.04 Termination Fee

Section 10.05 Walk-Away Fee

In the event Zemex terminates this Agreement in accordance with Section 10.02(c), Parentco shall promptly (but not later than the first Business Day following such termination) pay to Zemex, by wire

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transfer of immediately available funds, the sum of $3,000,000 (the “Walk-Away Fee”). Parentco and Zemex each acknowledges that the Walk-Away Fee constitutes liquidated damages which are a genuine pre-estimate of the damages which Zemex will suffer or incur as a result of the event giving rise to such damages and the resultant termination of this Agreement and are not penalties. Parentco irrevocably waives any right it may have to raise a defence that any such liquidated damages are excessive or punitive.

Section 10.06 Survival of Representations and Warranties

The representations and warranties of the Parties set forth in Articles II and III shall not survive the Closing.

ARTICLE XI

MISCELLANEOUS

Section 11.01 Further Actions

From time to time, as and when requested by any Party, the other Parties shall execute and deliver, and use all reasonable efforts to cause to be executed and delivered, such documents and instruments and shall take, or cause to be taken, such further or other actions as may reasonably be requested in order to:

Section 11.02 Expenses

In the event that the Arrangement and the other transactions contemplated herein are completed in accordance with the terms of this Agreement and the other Transaction Documents, the reasonable legal fees and other costs and expenses, including expenses relating to due diligence, of Parentco and Zemex with respect to the negotiation, execution and delivery of this Agreement, the other Transaction Documents and completion of the Arrangement and the other transactions contemplated thereby and hereby shall be paid by Zemex. In all other events, each Party shall bear its own costs and expenses which are incurred in connection with the transaction contemplated hereby.

Section 11.03 Entire Agreement

This Agreement, the other Transaction Documents, the other instruments to be delivered by the Parties pursuant to the provisions hereof, and the Confidentiality Agreement, constitute the entire agreement between the Parties and shall be binding upon and inure to the benefit of the Parties and their respective legal representatives, successors and permitted assigns. Each Exhibit and the Zemex Disclosure Letter shall be considered incorporated into this Agreement. Any amendments, or alternative or supplementary provisions, to this Agreement must be made in writing and duly executed by an authorized representative or agent of each of the Parties hereto. The inclusion of any item in the Zemex Disclosure Letter is not necessarily evidence of the materiality of such item for the purposes of this Agreement. The Parties make no representations or warranties to each other, except as contained in this Agreement, and any and all prior representations and warranties made by any Party or its representatives, whether verbally or in

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writing, are deemed to have been merged into this Agreement, it being intended that no such prior representations or warranties shall survive the execution and delivery of this Agreement; provided, however, that this sentence and the following sentence shall not apply to any fraudulent misrepresentations. Parentco further acknowledges that it has conducted an independent investigation of the financial condition, assets, liabilities, properties and projected operations of the Zemex Group in making its determination as to the propriety of the transaction contemplated by this Agreement, and in entering into this Agreement, has relied solely on the results of said investigation and on the representations and warranties of Zemex expressly contained in this Agreement and in the Securities Documents.

Section 11.04 Descriptive Headings

The descriptive headings of this Agreement are for convenience only and shall not control or affect the meaning or construction of any provision of this Agreement.

Section 11.05 Notices

All notices or other communications which are required or permitted hereunder shall be in writing and sufficient if delivered personally or sent by telecopier, nationally recognized overnight courier or registered or certified mail, postage prepaid, addressed as follows:

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Any such notices or communications shall be deemed to have been received: (i) if delivered personally or sent by telecopier (with transmission confirmed) or nationally recognized overnight courier, on the date of such delivery or (ii) if sent by registered or certified mail, on the third Business Day following the date on which such mailing was postmarked. Any Party may by notice change the address to which notices or other communications to it are to be delivered or mailed.

Section 11.06 Governing Law

This Agreement shall be governed by and construed in accordance with the Laws of the Province of Ontario. Any action, suit or other proceeding initiated by Parentco, Subco or Zemex in connection with this Agreement shall be brought solely in any court in the City of Toronto, having jurisdiction over the subject matter thereof. Parentco, Subco and Zemex hereby submit themselves to the jurisdiction of any

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such court for the purpose of any such action and agree that service of process on them in any such action, suit or proceeding may be effected by the means by which notices are to be given to it under this Agreement.

Section 11.07 Assignability

This Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the Parties and their respective successors and permitted assigns, provided that this Agreement shall not be assignable otherwise than by operation of law by any Party without the prior written consent of the other Parties, and any purported assignment by any Parties without the prior written consent of the other Party shall be void.

Section 11.08 Remedies

Except to the extent provided in Section 10.04 and 10.05, the Parties acknowledge that the remedy at law for any breach of the obligations undertaken by the Parties is and shall be insufficient and inadequate and that the Parties shall be entitled to equitable relief, in addition to remedies at law. In the event of any action to enforce the provisions of this Agreement, each of the Parties waive the defense that there is an adequate remedy at law. Without limiting any remedies any Party may otherwise have, in the event any other Party refuses to perform its obligations under this Agreement, the Parties shall have, in addition to any other remedy at law or in equity, the right to specific performance. The Parties agree that the receipt by Parentco of the Termination Fee pursuant to Section 10.04 or the receipt by Zemex of the Walk-Away Fee pursuant to Section 10.05, as the case may be, shall constitute the exclusive remedy of Parentco and Zemex, respectively, for the breaches or events giving rise to its entitlement to receive such Fee.

Section 11.09 Waivers and Amendments

Any waiver of any term or condition of this Agreement, or any amendment or supplementation of this Agreement, shall be effective only if in writing. A waiver of any breach or failure to enforce any of the terms or conditions of this Agreement shall not in any way affect, limit or waive a Party’s rights hereunder at any time to enforce strict compliance thereafter with every term or condition of this Agreement.

Section 11.10 Illegality

In the event that any provision contained in this Agreement shall be determined to be invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and the remaining provisions of this Agreement shall not, at the election of the Party for whose benefit the provision exists, be in any way impaired.

Section 11.11 Currency

Except as otherwise set forth herein, all references to amounts of money in this Agreement are to United States Dollars.

Section 11.12 Counterparts

This Agreement may be executed in any number of counterparts, each of which will be an original as regards any party whose signature appears thereon and all of which together will constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, bears the signatures of all the parties reflected hereon as signatories. Facsimile signatures shall have the same legal effect as manual signatures.

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Section 11.13 Parentco Guaranty

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     IN WITNESS WHEREOF, the undersigned have executed and delivered this Agreement as of the day and year first above written.

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SCHEDULE A

CERTAIN DEFINITIONS

     “Advisers” when used with respect to any Person, shall mean such Person’s directors, officers, employees, representatives, agents, counsel, accountants, advisers, engineers and consultants, but such term does not include the Board of Directors.

     “Affiliate” shall mean, as to any Person, any other Person which directly or indirectly controls, or is under common control with, or is controlled by, such Person and, if such Person is an individual, any member of the immediate family (including parents, spouse, children and grandchildren) of such individual and any trust whose principal beneficiary is such individual or one or more members of such immediate family and any Person who is controlled by any such member or trust. As used in this definition, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) shall mean possession, directly or indirectly, of power to direct or cause the direction of the management or policies (whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise).

     “Arrangement” shall mean an arrangement under Section 192 of the CBCA, on the terms and subject to the conditions set out in the Plan of Arrangement, subject to any amendments or variations thereto made in accordance with the provisions of this Agreement or Section 6.3 of the Plan of Arrangement, or made at the direction of the Court in the Final Order.

     “Arrangement Resolution” shall mean a special resolution of the holders of Shares and of Zemex Options, voting as a single class, approving the Plan of Arrangement, as required by the Interim Order and applicable Law, substantially in the form of Exhibit A hereto.

     “Articles of Arrangement” shall mean Articles of Arrangement containing the Plan of Arrangement and containing such other provisions as are required under the CBCA.

     “Associate” shall have the meaning ascribed to such term in the Securities Act (Ontario).

     “Board of Directors” shall mean the board of directors of Zemex, as constituted from time to time.

     “Breaching Party” shall have the meaning ascribed to that term in Section 10.02.

     “Business Day” shall mean any day other than a Saturday, Sunday or other day on which commercial banks located in the City of Toronto are required or permitted to close.

     “Canadian Securities Laws” shall mean the Securities Act (Ontario) and the respective regulations under such legislation together with applicable rules, regulations, published policy statements, national instruments and memoranda of understanding of the Canadian Securities Administrators.

     “CBCA” shall mean the Canada Business Corporations Act, in effect on the date hereof and as amended from time to time prior to the Effective Date.

     “CCRA” shall mean the Canada Customs and Revenue Agency, or any successor thereto.

     “CFIUS” shall mean the Committee on Foreign Investment in the United States or any Governmental Entity that succeeds to its functions.

     “Circular” shall mean the notice of the Special Meeting and the accompanying management proxy circular of Zemex to be sent to Securityholders in connection with the Special Meeting.

     “Closing” shall mean the consummation of the Arrangement in accordance with the provisions of this Agreement.

     “Closing Date” shall mean the date on which the Closing occurs.

     “Competing Proposal” shall have the meaning ascribed to such term in Section 5.07.

     “Competing Transaction Agreement” shall have the meaning ascribed to such term in Section 5.07.

     “Confidentiality Agreement” shall mean the Confidentiality Agreement dated November 21, 2002 made between Parentco and Zemex and all extensions or amendments thereto.

     “Constating Documents” shall mean, with respect to any Person, the certificate or articles of incorporation, by-laws, articles and memorandum of association, letters patent, limited liability company agreement, partnership agreement, formation agreement, joint venture agreement, unanimous shareholders agreement or other similar governing documents of such Person, each as amended.

     “Contract” shall mean any contract, lease, agreement, instrument, license, commitment, order or quotation, written or oral.

     “Court” shall mean the Superior Court of Justice of the Province of Ontario.

     “Depositary” shall have the meaning set forth in Section 1.1 of the Plan of Arrangement.

     “Director” shall mean the Director appointed pursuant to Section 260 of the CBCA.

     “Dissent Rights” shall mean the right of dissent in respect of the Arrangement Resolution provided to Shareholders in the Interim Order and in Section 4.1 of the Plan of Arrangement.

     “Dissenting Shareholder” shall mean any Shareholder who dissents from the Arrangement Resolution in compliance with the dissent procedures set forth in the Interim Order and the Plan of Arrangement.

     “Dundee” shall mean The Dundee Bank.

     “Effective Date” shall mean the date shown on the certificate of arrangement to be issued by the Director to give effect to the Arrangement.

     “Effective Time” shall mean 12:01 a.m. (Toronto time) on the Effective Date.

     “Employee Plans” shall mean all plans, arrangements, agreements, programs or policies, whether funded or unfunded, maintained for employees of any Zemex Group Member, excluding the Foreign Plans, and including:

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     “Environmental Condition” shall mean and include the presence in the environment (including ambient air, surface water, groundwater or land) of any Hazardous Substance as to which Remedial Action is required under any Environmental Laws or as to which any Liability is currently or in the future imposed on any Zemex Group Member based on the actions, omissions or status prior to the Closing of any Person (or its predecessors) with respect to any Hazardous Substance or reporting with respect thereto.

     “Environmental Laws” shall mean all Laws relating to pollution or protection of the environment, natural resources or human health and safety, in effect on the date hereof, including laws relating to Releases or threatened Releases of Hazardous Substances (including Releases to ambient air, surface water, groundwater, land, surface and subsurface strata) or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, Release, transport, disposal or handling of Hazardous Substances, including, but not limited to: the Canadian Environmental Protection Act (1999, C-15.31); the Canada Water Act (R.S. 1985, c. C-11); the Canada Wildlife Act (R.S. 1985, c. W-9); the Canadian Fisheries Act (R.S. 1985, c. F-14); the Canadian Hazardous Products Act (R.S. 1985, c. H-3); the Canadian Migratory Birds Convention Act (1994, c. 22); the US Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq.; the US Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq.; the US Clean Water Act, 33 U.S.C. § 1251 et seq.; the US Clean Air Act, 42 U.S.C. § 7401 et seq.; the US Hazardous Materials Transportation Act, 49 U.S.C. § 1471 et seq.; the US Toxic Substances Control Act, 15 U.S.C. §§ 2601 through 2629; the US Oil Pollution Act, 33 U.S.C. § 2701 et seq.; the US Emergency Planning and Community Right-to-Know Act, 42 U.S.C. § 11001 et seq.; the US Safe Drinking Water Act, 42 U.S.C. §§ 300f through 300j; the US Occupational Safety and Health Act, 29 U.S.C. § 651 et seq.; the US Surface Mining Control and Reclamation Act of 1977, 30 U.S.C. § 1201 et seq.; or any similar federal, state, provincial, local or other Laws having jurisdiction over any Zemex Properties or its owners or operators.

     “ERISA” shall mean the U.S. Employee Retirement Income Security Act of 1974, as amended.

     “ERISA Affiliate” of any entity shall mean any other entity that, together with such entity would be treated as a single employer under Section 414(b), (c), (m) or (o) of the Tax Code.

     “ERISA Affiliate Plan” shall mean an Employee Plan, which is (a) a “pension plan” within the meaning of Section 3(2) of ERISA; and (b) maintained or contributed to by an ERISA Affiliate of any entity.

     “Exon-Florio Amendment” shall mean Section 721 of the United States Defense Production Act of 1950, as amended, and the regulations promulgated thereunder.

     “Fairness Opinion” shall have the meaning ascribed to such term in Section 3.22.

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     “Final Order” shall mean the final order of the Court approving the Arrangement, as such order may be amended by the Court at any time before the Effective Time or, if appealed, unless that appeal is withdrawn or denied, as affirmed or as amended on appeal.

     “Fiscal 2002 Financial Statements” shall have the meaning set forth in Section 3.03(b).

     “Foreign Plan” shall mean any plan, arrangement or contract or other program maintained by any Zemex Group Member outside of the United States for the purpose of providing or otherwise making available retirement or other benefits to employees, including group registered retirement savings plans and, where applicable, statutory plans.

     “GAAP” shall mean generally accepted accounting principles in Canada, consistently applied.

     “Governmental Entity” shall mean: (a) any multinational, federal, provincial, territorial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, board, bureau or agent, domestic or foreign; (b) any subdivision, agent, commission, board or authority of any of the foregoing; or (c) any quasi-governmental or private body exercising any regulatory, expropriation or Taxing authority under, or for the account of, any of the foregoing.

     “Hazardous Substance” shall mean any chemical, material or substance in any form, whether solid, liquid, gaseous, semisolid or any combination thereof, whether waste material, raw material, finished product, intermediate product, byproduct or any other material or article, that is listed or regulated under any Environmental Laws as a hazardous substance, toxic substance, waste or contaminant or is otherwise listed or regulated under any Environmental Laws because it poses a hazard to human health or the environment, including petroleum products, asbestos, PCBs, urea formaldehyde foam insulation and lead-containing paints or coatings.

     “holders” shall mean, when used with reference to the securities of any Person, the holders of such securities shown from time to time in the register maintained by or on behalf of such Person in respect of such securities.

     “including” shall mean including, without limitation.

     “Income Tax” shall mean any Tax based on or measured by income (including based on net income, gross income, income as specifically defined, earnings, profits or selected items of income, earnings or profits) and any interest, penalties and additions to tax with respect to any such tax (or any estimate or payment thereof).

     “Insider” shall have the meaning ascribed thereto in Section 3.23.

     “Interim Order” shall mean an interim order of the Court, as it may be amended, providing for, among other things, the calling and holding of the Special Meeting, in form and substance acceptable to all Parties, acting reasonably.

     “IRS” shall mean the Internal Revenue Service of the United States.

     “knowledge”, when applied with reference to the knowledge of Zemex, shall mean the actual knowledge of the directors and executive officers of the Zemex Group, after due inquiry.

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     “Law” shall mean all laws, statutes, codes, ordinances, decrees, rules, regulations, by-laws, statutory rules, principles of law, published policies and guidelines having the force of law, judicial or arbitral or administrative or ministerial or departmental or regulatory judgments, orders, decisions, rulings or awards, including general principles of common and civil law, and terms and conditions of any grant of approval, permission, authority or licence of any Governmental Entity, statutory body (including the Toronto Stock Exchange and the New York Stock Exchange) or self-regulatory authority, and the term “applicable” with respect to such Laws and in the context that refers to one or more Persons, means that such Laws apply to such Person or Persons or its or their business, undertaking, property or securities and emanate from a Governmental Entity having jurisdiction over the Person or Persons or its or their business, undertaking, property or securities.

     “Liability” of any Person shall mean and include:

     “Liens” shall mean liens, encumbrances, licenses, claims, security interests, mortgages, pledges, charges, escrows, options or rights of first refusal or offer.

     “Materially Adverse”, “Material Adverse Change” or “Material Adverse Effect” shall, subject to the remainder of this paragraph, mean, when used with respect to Zemex, the Zemex Group or any Zemex Group Member, a material adverse change in, or a material adverse effect on, the business, properties, assets, liabilities, results of operations or financial condition of the Zemex Group, taken as a whole. Without limiting the generality of the preceding sentence, a Material Adverse Change or Material Adverse Effect shall be deemed to have occurred with respect to an event or change occurring after the date hereof and prior to the Termination Date (as such date may be adjusted pursuant to Section 10.02(f)), if (x) such change or effect does not have a continuing impact on the Zemex Group after the date of occurrence of such event and results in a reduction of the consolidated stockholders’ equity of the Zemex Group as of such date of $1,000,000 or more, or (y) if such change or effect would have a continuing effect on the Zemex Group during the 12 month period commencing May 1, 2003 and it is reasonably likely to result in a reduction of the consolidated stockholders’ equity of the Zemex Group of $1,000,000 or more during such period. Notwithstanding the preceding provisions of this paragraph, the foregoing defined terms shall not include any change or effect attributable to changes in the economy of Canada, the United States or any other country generally, or changes in the industries in which the Zemex Group engages.

     “Option Agreement” shall mean an agreement pursuant to which Zemex Options are granted under the Zemex Option Plans.

     “Optionee” shall mean a holder of a Zemex Option.

     “OSC” shall mean the Ontario Securities Commission.

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     “Parties” and “Party” shall mean the parties to this Agreement.

     “Permits” shall have the meaning ascribed to such term in Section 3.15 hereof.

     “Person” shall mean any corporation, partnership, limited liability company or partnership, joint venture, trust, unincorporated association or organization, business, enterprise or other entity, any individual and any Governmental Entity.

     “Plan of Arrangement” shall mean the plan of arrangement substantially in the form and content of Exhibit B hereto, and any amendments or variations thereto made in accordance with this Agreement or Section 6.3 of the Plan of Arrangement or made at the direction of the Court in the Final Order.

     “Principal Securityholders” shall mean Dundee, each director and officer of Zemex and the chief executive officer of any other Zemex Group Member.

     “Release” shall mean any release, spill, leak, discharge, abandonment, disposal, pumping, pouring, emitting, emptying, injecting, leaching, dumping, depositing, dispersing, passive migration, allowing to escape or migrate into or through the environment (including ambient air, surface water, ground water, land surface and subsurface strata or within any building, structure, facility or fixture) of any Hazardous Substance, including the abandonment or discarding of Hazardous Substances in barrels, drums, tanks or other containers, regardless of when discovered.

     “Remedial Action” shall mean any investigation, feasibility study, monitoring, testing, sampling, removal (including removal of underground storage tanks), restoration, clean-up, remediation, closure, site restoration, remedial response or remedial work with respect to any Environmental Condition.

     “Safety Acts” shall have the meaning ascribed to such term in Section 3.16.

     “SEC” shall mean the Securities and Exchange Commission of the United States of America, or any successor agency.

     “Securities Documents” shall have the meaning ascribed to such term in Section 3.03.

     “Securityholders” shall mean the holders of Shares and the holders of Zemex Options.

     “Share” shall mean a common share of the capital of Zemex.

     “Shareholders” shall mean Persons who are holders of issued and outstanding Shares.

     “Securityholder Approval” shall mean the approval of the Arrangement Resolution by the affirmative vote of not less than 66 2/3% of the votes cast by the Securityholders in person or by proxy at the Special Meeting, voting as a single class, as provided in the Interim Order.

     “Special Meeting” shall mean the special meeting of the Securityholders to be called and held to consider and, if thought appropriate, approve the Arrangement Resolution and any and all adjournments or postponements thereof.

     “Subsidiary” shall mean any corporation, corporate entity, partnership or company of which more than fifty per cent (50%) of the outstanding shares or ownership interests ordinarily entitled to elect a majority of the board of directors thereof, or the equivalent thereto (whether or not shares of any other

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class or classes shall or might be entitled to vote upon the happening of any event or contingency) are at the time owned directly or indirectly by Zemex.

     “Superior Proposal” shall have the meaning ascribed to such term in Section 5.07.

     “Support Agreement” shall mean an agreement entered into by a Principal Securityholder, in the form of Exhibit C (in the case of Dundee) and Exhibit D (in the case of each other Principal Securityholder).

     “Tax” shall mean any tax, levy, charge or assessment imposed by or due any Tax Authority, together with any interest, penalties and additions to tax relating thereto, including any of the following:

     “Tax Authority” shall mean CCRA, the tax authority or authorities of, and any Person authorized to receive the payment of Tax on behalf of, any province of Canada or any political subdivision thereof, the IRS, and the Tax authority or authorities of, and any person authorized to receive the payment of Tax on behalf of, any state, territory or possession of the United States of America or any political subdivision thereof, the District of Columbia or Puerto Rico.

     “Tax Code” shall mean the Internal Revenue Code of 1986 of the United States of America, as amended, and the regulations, rulings and memoranda promulgated thereunder and any case law applicable thereto.

     “Tax Return” shall mean all returns, amended returns and reports (including elections, declarations, disclosures, schedules, estimates and information returns) required to be supplied to a Tax Authority in Canada or the United States.

     “Termination Date” shall have the meaning ascribed to such term in Section 10.02(f).

     “Transaction Documents” shall mean this Agreement, the Plan of Arrangement, the Support Agreements, and the other documents, instruments and agreements executed and delivered pursuant hereto, and “Transaction Document” means any one of them.

     “US Securities Laws” shall mean the U.S. Securities Act of 1933, as amended, the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations made thereunder and shall include, to the extent applicable, any state securities or “blue sky” legislation in the United States.

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     “Zemex Disclosure Letter” shall mean the disclosure letter provided by Zemex to Parentco detailing exceptions to the representations and warranties set forth herein, which letter is dated and is effective as of the date of this Agreement.

     “Zemex Group” shall mean all of the Zemex Group Members collectively.

     “Zemex Group Member” shall mean Zemex and any of its Subsidiaries.

     “Zemex Option Plan” shall mean the Zemex 1999 Share Option Plan, as amended and restated as of June 29, 2001, that provides for the issuance of options to purchase Shares, and any agreements evidencing options granted under such plan.

     “Zemex Options” shall mean options to purchase Shares which are granted under the Zemex Option Plans, and the related Option Agreements evidencing and setting forth the terms of such grants.

     “Zemex Properties” shall mean all lands and premises which are owned by a Zemex Group Member or leased or subleased from a third party by a Zemex Group Member and all fixtures and improvements on such lands and premises.

     “Zemex Share Purchase Plans” shall have the meaning ascribed to such term in Section 3.13(c)

     “Zemex US” shall mean Zemex US Corporation, a Delaware corporation and wholly-owned subsidiary of Zemex.

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