EXCHANGE AND VOTING AGREEMENT
MEMORANDUM OF AGREEMENT made as of the 10th day of October 2000.
AMONG:
TECE INC. (FORMERLY INTERNET FOOD CO. INC.), a
corporation subsisting under the laws of the
State of Nevada;
(hereinafter referred to as the "Parent")
AND:
3786137 CANADA INC., a corporation incorporated
under the laws of Canada;
(hereinafter referred to as the "Purchaser"),
AND:
PIERRE BARNARD, attorney, having a business
address at De Grandpre Chaurette Levesque, 2000
McGill College Avenue, suite 1600, Montreal,
Quebec H3B 3H3
(hereinafter referred to as the "Trustee").
AND:
TEC TECHNOLOGYVALUATION.COM CORPORATION, a
corporation incorporated under the laws of the
Province of Quebec;
(hereinafter referred to as the "Tec")
W H E R E A S:
A. The Purchaser is a subsidiary of the Parent;
B. Pursuant to the Share Exchange Agreement, the Purchaser agreed to
acquire Tec Common Shares in consideration of among other things: (i)
the Shareholders of Tec receiving one Exchangeable Non-Voting Share (as
herein defined) of Purchaser for each two Tec Common Share held by them
immediately before the Share Exchange and (ii) the Parent, granting to
each Shareholder Voting Rights (as herein defined) in the Parent on the
basis of each Shareholder having an equivalent number of votes in the
Parent as the number of Exchangeable Shares held by such Shareholder;
C. As security for the Parent's covenant to exchange common shares in its
capital stock for Exchangeable Shares, Parent agreed to issue a number
of shares of its Common Stock (as herein defined as the "Parent Common
Shares") to the Trustee corresponding to the number
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of issued and outstanding Exchangeable Shares;
D. In accordance with the Share Exchange Agreement and the Exchangeable
Share Provisions, this Agreement stipulates the means by which: (i) the
Shareholders have voting rights in the Parent; ii) the Trustee holds
Parent Common Shares for the Shareholders; (iii) the Shareholders
exercise their rights of exchange of the Exchangeable Shares; and (iv)
the Parent exercises its Call Right.
E. As consideration for the grant by the Parent of the above rights to the
Shareholders, the Shareholders who have intervened to this Agreement
have granted to the Parent a right to acquire the Exchangeable Shares
tendered by them for Retraction (the "Call Right");
NOW THEREFORE in consideration of the respective covenants and agreements
provided in this Agreement and for other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties agree as
follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
DEFINITIONS. In this Agreement, the following terms shall have the following
meanings:
"AFFILIATE" of any person means any other person directly or indirectly
controlled by, or under common control of, that person. For the purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control of"), as applied to any person, means
the possession by another person, directly or indirectly, of the power to direct
or cause the direction of the management and policies of that first mentioned
person, whether through the ownership of voting securities, by contract or
otherwise.
"AUTOMATIC EXCHANGE RIGHTS" means the benefit of the obligation of Parent to
effect the automatic exchange of Exchangeable Shares for Parent Common Shares
pursuant to Section 4.11 hereof.
"BOARD OF DIRECTORS" means the Board of Directors of Purchaser.
"BUSINESS DAY" means a day other than a Saturday, Sunday or a day when banks are
not open for business in Quebec;
"CALL RIGHT" means the right of the Parent to acquire in certain circumstances
described in the statutes of Purchaser, Exchangeable Shares from the holders
thereof who have intervened to this Agreement, on the basis of one Parent Common
Share for each Exchangeable Share so tendered.
"CANADIAN DOLLAR EQUIVALENT" means in respect of an amount expressed in a
foreign currency (the "Foreign Currency Amount") at any date the product
obtained by multiplying (a) the
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Foreign Currency Amount by (b) the exchange rate on such date for such foreign
currency expressed in Canadian dollars as reported in The Wall Street Journal
under "Currency Trading; Exchange Rates" or, in the event such exchange rate is
not available, such exchange rate on such date for such foreign currency
expressed in Canadian dollars as may be deemed by the Board of Directors to be
appropriate for such purpose.
"CURRENT MARKET PRICE" means, in respect of a Parent Common Share on any date,
the Canadian Dollar Equivalent of closing price of Parent Common Shares on the
day before such date, on such stock exchange or automated quotation system on
which the Parent Common Shares are listed or quoted, as the case may be, as may
be selected by the Board of Directors for such purpose; provided, however, that
if there is no public distribution or trading activity of Parent Common Shares
during such period, then the Current Market Price of a Parent Common Share shall
be determined by the Board of Directors based upon the advice of such qualified
independent financial advisors as the Board of Directors may deem to be
appropriate, and provided further that any such selection, opinion or
determination by the Board of Directors shall be conclusive and binding.
"EXCHANGEABLE SHARES" means the Exchangeable Shares without par value in the
capital stock of Purchaser issuable under the Share Exchange Agreement.
"EXCHANGEABLE SHARE PROVISIONS" means the rights, privileges, restrictions and
conditions attached to the Exchangeable Shares as set forth in the Share
Exchange Agreement.
"INSOLVENCY EVENT" means the institution by Purchaser of any proceeding to be
adjudicated bankrupt or insolvent or to be dissolved or wound up, or the consent
of Purchaser to the institution of bankruptcy, insolvency, dissolution or
winding up proceedings against it, or the filing of a petition, answer or
consent seeking dissolution or winding up under any bankruptcy, insolvency or
analogous laws, including without limitation the Companies Creditors'
Arrangement Act (Canada) and the Bankruptcy and Insolvency Act (Canada), and the
failure by Purchaser to contest in good faith any such proceedings commenced in
respect of Purchaser within fifteen (15) days of becoming aware thereof, or the
consent by Purchaser to the filing of any such petition or to the appointment of
a receiver, or the making by Purchaser of a general assignment for the benefit
of creditors, or the admission in writing by Purchaser of its inability to pay
its debts generally as they become due, or Purchaser not being permitted,
pursuant to solvency requirements of applicable law, to redeem any Retracted
Shares pursuant to section 6 of the Exchangeable Share Provisions.
"INSOLVENCY EXCHANGE RIGHT" has the meaning ascribed thereto in Section 4.1.
"LIQUIDATION EVENT" has the meaning ascribed thereto in Section 4.11.
"LIQUIDATION EVENT EFFECTIVE DATE" has the meaning ascribed thereto in Section
4.11(c).
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"LIST" has the meaning ascribed thereto in Section 3.8.
"OFFICER'S CERTIFICATE" means, with respect to the Parent or Purchaser, as the
case may be, a certificate signed by any one of the Chairman of the Board, the
Vice-Chairman of the Board, the President, any Vice-President or any other
officer of the Parent or Purchaser, as the case may be.
"PARENT COMMON SHARES" means the shares of common stock of the Parent having
voting rights of one vote per share, and any other securities into which such
shares may be changed.
"PARENT CONSENT" has the meaning ascribed thereto in Section 3.2.
"PARENT MEETING" has the meaning ascribed in Section 3.2.
"PARENT SUCCESSOR" has the meaning ascribed thereto in Section 11.1(a).
"PERSON" includes an individual, partnership, corporation, company,
unincorporated syndicate or organization, trust, trustee, executor,
administrator and other legal representative.
"RETRACTED SHARES" has the meaning ascribed thereto in Section 4.6.
"SHARE EXCHANGE AGREEMENT" means the Agreement dated October 10, 2000 between
the Parent, the Purchaser and Tec, as amended and restated on the date hereof.
"SHAREHOLDERS" means the registered holders from time to time of Exchangeable
Shares, other than the Parent and its Affiliates.
"SHAREHOLDER VOTES" has the meaning ascribed thereto in Section 3.2.
"SUPPORT AGREEMENT" means that certain support agreement made as of the same
date hereof between Purchaser and Parent.
"TRUST" means the trust created by this Agreement.
"TRUST ESTATE" means the Trust Shares and any other securities, money or other
property which may be held by the Trustee from time to time pursuant to this
Agreement.
"TRUST SHARES" has the meaning ascribed thereto in Section 2.2.
"VOTING RIGHTS" has the meaning ascribed thereto in Section 3.1.
INTERPRETATION NOT AFFECTED BY HEADINGS, ETC. The division of this Agreement
into articles, sections and paragraphs and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
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NUMBER, GENDER, ETC. Words importing the singular number only shall include the
plural and vice versa. Words importing the use of any gender shall include all
genders.
DATE FOR ANY ACTION. If any date on which any action is required to be taken
under this Agreement is not a Business Day, such action shall be required to be
taken on the next succeeding Business Day.
ARTICLE 2
TRUST SHARES
2.1 ESTABLISHMENT OF TRUST. The Parent hereby establishes a Trust for the
benefit of the Shareholders, as herein provided. The Trustee will hold
the Parent Common Shares acquired pursuant to the Share Exchange
Agreement, Exchangeable Share Provisions, Support Agreement and this
Agreement both to support the Parent's and Purchaser's obligations
thereunder in the event of default and to provide a mechanism for
Shareholders of Exchangeable Shares to direct the voting of a
corresponding number of Parent Common Share held by the Trustee.
2.2 ISSUE AND OWNERSHIP OF THE PARENT COMMON SHARES. Upon execution of this
Agreement and thereafter from time to time, the Parent shall issue in
the name of the Trustee a number of Parent Common Shares equal to the
number of Exchangeable Shares issued to Shareholders such shares to be
hereafter held of record by the Trustee as trustee for and on behalf
of, and for the use and benefit of, the Shareholders and in accordance
with the provisions of this Agreement. All Parent Common Shares so
issued by the Parent to the Trustee pursuant to this Section 3.1 shall
hereafter be referred to as the "Trust Shares". The Parent hereby
acknowledges receipt from the Trustee as trustee for and on behalf of
the Shareholders of good and valuable consideration (and the adequacy
thereof) for the issuance of the Trust Shares by the Parent to the
Trustee. During the term of the Trust and subject to the terms and
conditions of this Agreement, the Trustee shall possess and be vested
with full legal ownership of the Trust Shares and, subject to the terms
hereof, shall be entitled to exercise all of the rights and powers of
an owner with respect to the Trust Shares, provided that the Trustee
shall:
(a) hold the Trust Shares and the rights associated therewith as
conveyed by this Agreement as trustee solely for the use and
benefit of the Shareholders in accordance with the provisions
of this Agreement; and
(b) except as specifically authorized by this Agreement, have no
power or authority to sell, transfer, vote or otherwise deal
in or with the Trust Shares and the Trust Shares shall not be
used or disposed of by the Trustee for any purpose other than
the purposes for which this Trust is created pursuant to this
Agreement.
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ARTICLE 3
VOTING
3.1 VOTING RIGHTS. The Parent and the Trustee will grant to the
Shareholders the right for each Shareholder to receive notice and
attend each Parent Meeting and to consent to or to vote in person or by
proxy, on any matter, question or proposition whatsoever that may
properly come before the stockholders of the Parent at a Parent Meeting
or in connection with a Parent Consent (in each case, as hereinafter
defined) (the "Voting Rights") on the basis of one Voting Right for
every one Exchangeable Non-Voting Share held by a Shareholder, as if
and to the same extent and effect as if the Shareholder held an
equivalent number of Parent Common Shares. The Voting Rights shall be
and remain vested in and exercised by the Shareholders.
3.2 NUMBER OF VOTES. With respect to all meetings of stockholders of the
Parent at which holders of shares of Parent Common Shares are entitled
to vote (a "Parent Meeting") and with respect to all written consents
sought by the Parent from its stockholders including the holders of
shares of Parent Common Shares (a "Parent Consent"), each Shareholder
shall be entitled to cast and exercise, in the manner instructed, the
Voting Rights ordinarily attributable to one Parent Common Share for
each Exchangeable Share owned of record by such Shareholder on the
record date established by the Parent or by applicable law for such
Parent Meeting or Parent Consent, as the case may be (the "Shareholder
Votes") in respect of each matter, question or proposition to be voted
on at such Parent Meeting or to be consented to in connection with such
Parent Consent.
3.3 LEGENDED SHARES CERTIFICATES. Purchaser will cause each certificate
representing Exchangeable Shares to bear an appropriate legend
notifying the Shareholders of their right to a number of votes in the
Parent as is equal to the number of shares represented by the
Exchangeable Share certificates.
3.4 SAFEKEEPING OF CERTIFICATES. The certificate(s) representing the Trust
Shares shall at all times be held in safe keeping by the Trustee or its
agent.
3.5 MAILINGS TO SHAREHOLDERS OF EXCHANGEABLE SHARES. With respect to each
Parent Meeting and Parent Consent, the Parent will mail or cause to be
mailed (or otherwise communicate in the same manner as the Parent
utilizes in communications to holders of Parent Common Shares, to each
of the Shareholders named in the List (as defined below) on the same
day as the initial mailing or notice (or other communication) with
respect thereto is given by the Parent to its stockholders:
(a) a copy of such notice, together with any proxy or information
statement and related materials to be provided to stockholders
of the Parent;
(b) a statement that such Shareholder is entitled to the exercise
of the Shareholder Votes with respect to such Parent Meeting
or Parent Consent, as the case may be,
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and to attend such Parent Meeting and to exercise personally
the Shareholder Votes thereat;
(c) a statement as to the manner in which to give a proxy to the
Trustee or a designated agent or other representative of the
management of the Parent to exercise such Shareholder Votes;
and
(d) a statement of (i) the time and date by which such must be
received by the Parent in order to be binding upon it, which
in the case of a Parent Meeting shall not be earlier than the
close of business on the second Business Day prior to such
meeting, and (ii) the method for revoking or amending such
proxies.
For the purpose of determining Shareholder Votes to which a Shareholder is
entitled in respect of any such Parent Meeting or Parent Consent, the number of
Exchangeable Shares owned of record by the Shareholder shall be determined at
the close of business on the record date established by the Parent or by
applicable law for purposes of determining stockholders entitled to vote at such
Parent Meeting or to give written consent in connection with such Parent
Consent.
3.6 COPIES OF STOCKHOLDER INFORMATION. The Parent will deliver to the
Shareholders copies of all proxy materials (including notices of Parent
Meetings), information statements, reports (including without
limitation all interim and annual financial statements) and other
written communications that are to be distributed from time to time to
holders of Parent Common Shares.
3.7 OTHER MATERIALS. Immediately after receipt by the Parent or any
stockholder of the Parent of any material sent or given generally to
the holders of Parent Common Shares by or on behalf of a third party,
including without limitation dissident proxy and information circulars
(and related information and material) and tender and exchange offer
circulars (and related information and material), the Parent shall use
its best efforts to obtain and deliver copies thereof to each
Shareholder as soon as possible thereafter.
3.8 LIST OF PERSONS ENTITLED TO VOTE. Purchaser shall (a) prior to each
annual, general and special Parent Meeting or the seeking of any Parent
Consents and (b) forthwith upon each request made at any time by the
Trustee or the Parent in writing, prepare or cause to be prepared a
list (a "List") of the names and addresses of the Shareholders arranged
in alphabetical order and showing the number of Exchangeable Shares
held of record by each such Shareholder, in each case at the close of
business on the date specified by the Trustee in such request or, in
the case of a List prepared in connection with a Parent Meeting or a
Parent Consent, at the close of business on the record date established
by the Parent or pursuant to applicable law for determining the holders
of Parent Common Shares entitled to receive notice of and/or to vote at
such Parent Meeting or to give consent in connection with such Parent
Consent. Each such List shall be delivered to the Parent promptly after
receipt by Purchaser of such request or the record date for such
meeting or seeking of consent, as the case may be, and in any event
within sufficient time as to enable the Parent
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to perform its obligations under this Agreement. The Parent agrees to
give Purchaser written notice (with a copy to the Trustee) of the
calling of any Parent Meeting or the seeking of any Parent Consent,
together with the record dates therefor, sufficiently prior to the date
of the calling of such meeting or seeking of such consent so as to
enable Purchaser to perform its obligations under this Section 3.8.
3.9 DISTRIBUTION OF WRITTEN MATERIALS. Any written materials to be
distributed by the Parent to the Shareholders pursuant to this
Agreement shall be delivered or sent by mail (or otherwise communicated
in the same manner as the Parent utilizes in communications to holders
of Parent Common Shares) to each Shareholder at its address as shown on
the books of Purchaser. Purchaser shall provide or cause to be provided
to the Parent for this purpose, on a timely basis and without charge or
other expense current lists of the Shareholders.
3.10 TERMINATION OF VOTING RIGHTS. All of the rights of a Shareholder with
respect to the Shareholder Vote exercisable in respect of each
Exchangeable Non-Voting Share held by such Shareholder shall be deemed
to be surrendered by the Shareholder to the Parent and such Shareholder
Votes and the Voting Rights represented thereby shall cease immediately
upon the exchange, retraction or redemption of the Exchangeable Shares
by or from the Shareholder.
3.11 ALTERNATIVE VOTING RIGHTS. The Trustee shall exercise the Voting Rights
only on the basis of instructions received from Shareholders entitled
to instruct the Trustee as to the voting thereof at the time at which
the Parent Consent is sought or the Parent Meeting is held. To the
extent that no instructions are received from a Shareholder with
respect to the Voting Rights to which such Shareholder is entitled, the
Trustee shall not exercise or permit the exercise of such Shareholder's
Voting Rights and shall not otherwise exercise the Voting Rights
attached to the Trust Shares.
Any Shareholder named in a List prepared in connection with any Parent
Meeting or any Parent Consent will be entitled (a) to instruct the
Trustee with respect to the exercise of the Shareholder Votes to which
such Shareholder is entitled or (b) to attend such meeting and
personally to exercise thereat (or to exercise with respect to any
written consent), as the proxy of the Trustee, the Shareholder Votes to
which such Shareholder is entitled except, in each case, to the extent
that such Shareholder has transferred the ownership of any Exchangeable
Shares in respect of which such Shareholder is entitled to Shareholder
Votes after the close of business on the record date for such meeting
or seeking of consent.
In connection with each Parent Meeting and Parent Consent, the Trustee
shall exercise, either in person or by proxy, in accordance with the
instructions received from a Shareholder , the Shareholder Votes as to
which such Shareholder is entitled to direct the Voting Rights (or any
lesser number thereof as may be set forth in the instructions);
provided, however, that such written instructions are received by the
Trustee from the Shareholder prior to the time and date fixed by it for
receipt of such instructions in the
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notice given by the Trustee to the Shareholder.
The Trustee shall cause such representatives as are empowered by it to
sign and deliver, on behalf of the Trustee, proxies for Voting Rights
to attend each Parent Meeting. Upon submission by a Shareholder (or its
designee) of identification satisfactory to the Trustee's
representatives, and at the Shareholder's request, such representatives
shall sign and deliver to such Shareholder (or its designee) a proxy to
exercise personally the Shareholder Votes as to which such Shareholder
is otherwise entitled hereunder to direct the vote, if such Shareholder
either (i) has not previously given the Trustee instructions in respect
of such meeting, or (ii) submits to the Trustee's representatives
written revocation of any such previous instructions. At such meeting,
the Shareholder exercising such Shareholder Votes shall have the same
rights as the Trustee to speak at the meeting in respect of any matter,
question or proposition, to vote by way of ballot at the meeting in
respect of any matter, question or proposition and to vote at such
meeting by way of a show of hands in respect of any matter, question or
proposition.
ARTICLE 4
EXCHANGE RIGHT AND AUTOMATIC EXCHANGE
4.1 GRANT AND OWNERSHIP OF THE EXCHANGE RIGHT. The Parent hereby grants to
the Shareholders the right, upon the occurrence and during the
continuance of an Insolvency Event, to require the Parent to purchase
from each or any Shareholder all or any part of the Exchangeable Shares
held by the Shareholder in accordance with the provisions of this
Agreement (the "Insolvency Exchange Right"). The Parent hereby
acknowledges receipt from the Shareholders of good and valuable
consideration (and the adequacy thereof) for the issuance of the
Insolvency Exchange Right to them.
4.2 LEGENDED SHARE CERTIFICATES. Purchaser will cause each certificate
representing Exchangeable Shares to bear an appropriate legend
notifying the Shareholders of:
(a) their right with respect to the exercise of the Insolvency
Exchange Right in respect of the Exchangeable Shares held by a
Shareholder; and
(b) the Automatic Exchange Rights.
4.3 PURCHASE PRICE. The purchase price payable by the Parent for each
Exchangeable Non-Voting Share to be purchased by the Parent under the
Insolvency Exchange Right shall be an amount per share equal to (a) the
Current Market Price of a Parent Common Share on the last Business Day
prior to the day of closing of the purchase and sale of such
Exchangeable Non-Voting Share under the Insolvency Exchange Right plus
(b) an additional amount equivalent to the full amount of all dividends
declared and unpaid on each such Exchangeable Non-Voting Share and all
dividends declared on Parent Common Shares which have not been declared
on such Exchangeable Shares in accordance with the
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Exchangeable Share Provisions (provided that if the record date for any
such declared and unpaid dividends occurs on or after the day of
closing of such purchase and sale the purchase price shall not include
such additional amount equivalent to such declared and unpaid
dividends). In connection with each exercise of the Insolvency Exchange
Right, the Parent will provide to the shareholders an Officer's
Certificate setting forth the calculation of the purchase price for
each Exchangeable Non-Voting Share. The purchase price for each such
Exchangeable Non-Voting Share so purchased may be satisfied only by
delivering or causing the Trustee to deliver out of the Trust Shares to
the relevant Shareholder, one Parent Common Share and a check for the
balance, if any, of the purchase price without interest.
4.4 EXERCISE INSTRUCTIONS. Subject to the terms and conditions set forth
herein, a Shareholder shall be entitled, upon the occurrence and during
the continuance of an Insolvency Event, to exercise the Insolvency
Exchange Right with respect to all or any part of the Exchangeable
Shares registered in the name of such Shareholder on the books of
Purchaser. To cause the exercise of the Insolvency Exchange Right, the
Shareholder shall deliver to the Parent, in person or by certified or
registered mail the certificates representing the Exchangeable Shares
which such Shareholder desires the Parent to purchase, duly endorsed in
blank, and accompanied by such other documents and instruments as may
be required to effect a transfer of Exchangeable Shares under the Act,
and the articles of Purchaser and such additional documents and
instruments as the Parent may reasonably require together with (a) a
duly completed form of notice of exercise of the Insolvency Exchange
Right, contained on the reverse of or attached to the Exchangeable
Non-Voting Share certificates, stating (i) that the Shareholder elects
to exercise the Insolvency Exchange Right so as to require the Parent
to purchase from the Shareholder the number of Exchangeable Shares
specified therein, (ii) that such Shareholder has good title to and
owns all such Exchangeable Shares to be acquired by Parent free and
clear of all liens, claims and encumbrances, (iii) the name in which
the certificates representing Parent Common Shares deliverable in
connection with the exercise of the Insolvency Exchange Right are to be
issued and (iv) the names and addresses of the persons to whom such new
certificates should be delivered, and (b) payment (or evidence
satisfactory to Purchaser and the Parent of payment) of the taxes (if
any) payable as contemplated by Section 4.7 of this Agreement. If only
a part of the Exchangeable Shares represented by any certificate or
certificates delivered to the Trustee are to be purchased by the Parent
under the Insolvency Exchange Right, a new certificate for the balance
of such Exchangeable Shares shall be issued to the Shareholder at the
expense of Purchaser.
4.5 DELIVERY OF PARENT COMMON SHARES; EFFECT OF EXERCISE. Promptly, and as
soon as reasonably practicable after receipt of the certificates
representing the Exchangeable Shares which the Shareholder desires the
Parent to purchase under the Insolvency Exchange Right, together with
such documents and instruments of transfer and a duly completed form of
notice of exercise of the Insolvency Exchange Right (and payment of
taxes, if any, or evidence thereof), duly endorsed for transfer to the
Parent, the Parent shall immediately thereafter upon receipt of such
notice deliver or cause the Trustee
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to deliver out of the Trust Shares, to the Shareholder of such
Exchangeable Shares (or to such other persons, if any, properly
designated by such Shareholder), the certificates for the number of
Parent Common Shares deliverable in connection with the exercise of the
Insolvency Exchange Right, which shares shall be duly issued as fully
paid and non- assessable and shall be free and clear of any lien, claim
or encumbrance, and checks for the balance, if any, of the total
purchase price therefor. The Parent shall, immediately upon receipt of
such certificates representing the Exchangeable Shares from the
Shareholder, deliver the certificates to the registered office of
Purchaser for cancellation. Immediately upon the giving of notice by
the Shareholder to the Parent of the exercise of the Insolvency
Exchange Right, as provided in this Section 4.5, the closing of the
transaction of purchase and sale contemplated by the Insolvency
Exchange Right shall be deemed to have occurred, and the Shareholder of
such Exchangeable Shares shall be deemed to have transferred to the
Parent its right, title and interest in and to such Exchangeable Shares
and shall cease to be a Shareholder of such Exchangeable Shares and
shall not be entitled to exercise any of the rights of a Shareholder in
respect thereof, other than the right to receive his proportionate part
of the total purchase price therefor, unless the requisite number of
Parent Common Shares (together with a check for the balance, if any, of
the total purchase price therefor) is not allotted, issued and
delivered to such Shareholder (or to such other persons, if any,
properly designated by such Shareholder), within five (5) Business Days
of the date of the giving of such notice by the Shareholder, in which
case the rights of the Shareholder shall remain unaffected until such
Parent Common Shares are so allotted, issued and delivered by the
Parent and any such check is so delivered and paid. Concurrently with
such Shareholder ceasing to be a Shareholder of Exchangeable Shares,
the Shareholder shall be considered and deemed for all purposes to be
the holder of Parent Common Shares delivered to it pursuant to the
Insolvency Exchange Right.
4.6 EXERCISE OF INSOLVENCY EXCHANGE RIGHT SUBSEQUENT TO RETRACTION. In the
event that a Shareholder has exercised its right under Article 6 of the
Exchangeable Share Provisions to require Purchaser to redeem any or all
of the Exchangeable Shares held by the Shareholder (the "Retracted
Shares") and is notified by Purchaser pursuant to section 6.6 of the
Exchangeable Share Provisions that Purchaser will not be permitted as a
result of solvency requirements of applicable law to redeem all such
Retracted Shares, and the Shareholder has not revoked the retraction
request delivered by the Shareholder to Purchaser pursuant to section
6.7 of the Exchangeable Share Provisions, the retraction request will
constitute and will be deemed to constitute notice from the Shareholder
to the Parent to exercise the Insolvency Exchange Right with respect to
those Retracted Shares which Purchaser is unable to redeem. In any such
event, Purchaser hereby agrees with the Shareholder immediately to
notify the Parent of such prohibition against Purchaser redeeming all
of the Retracted Shares and immediately to forward or cause to be
forwarded to the Parent all relevant materials delivered by the
Shareholder to Purchaser of the Exchangeable Shares (including without
limitation a copy of the retraction request delivered pursuant to
section 6.1 of the Exchangeable Share Provisions) in connection with
such proposed redemption of the Retracted Shares and the Parent will
thereupon exercise the Insolvency Exchange Right with respect to the
Retracted Shares that Purchaser is not
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permitted to redeem and will purchase such shares in accordance with
the provisions of this Article 4.
4.7 STAMP OR OTHER TRANSFER TAXES. Upon any sale of Exchangeable Shares to
the Parent pursuant to the Insolvency Exchange Right or the Automatic
Exchange Rights, the share certificate or certificates representing
Parent Common Shares to be delivered in connection with the payment of
the total purchase price therefor shall be issued in the name of the
Shareholder of the Exchangeable Shares so sold without charge to the
Shareholder of the Exchangeable Shares so sold; provided, however that
such Shareholder (a) shall pay (and neither the Parent, Purchaser nor
the Trustee shall be required to pay) any documentary, stamp, transfer,
withholding or other taxes that may be payable in respect of any
transfer involved in the issuance or delivery of such shares to a
person other than such Shareholder, or (b) shall have established to
the satisfaction of the Trustee, the Parent and Purchaser that such
taxes, if any, have been paid.
4.8 NOTICE OF INSOLVENCY EVENT. Immediately upon the occurrence of an
Insolvency Event or any event which with the giving of notice or the
passage of time or both would be an Insolvency Event, Purchaser and the
Parent shall give written notice thereof to the Trustee and the
Shareholders, which notice shall contain a brief statement of the right
of the Shareholders with respect to the Insolvency Exchange Right.
4.9 QUALIFICATION OF PARENT COMMON SHARES. The Parent represents and
warrants that it has taken all actions and done all things as are
necessary under any United States or Canadian federal, provincial or
state law or regulation or pursuant to the rules and regulations of any
regulatory authority or the fulfilment of any other legal requirement
(collectively, the "Applicable Laws") as they exist on the date hereof
and will in good faith expeditiously take all such actions and do all
such things as are necessary under Applicable Laws as they may exist in
the future to cause the Parent Common Shares to be issued and delivered
pursuant to the Exchangeable Share Provisions, the Insolvency Exchange
Right or the Automatic Exchange Rights; provided that all Parent Common
Shares will be subject to such resale restrictions as imposed by
applicable securities legislation.
4.10 RESERVATION OF PARENT COMMON SHARES. The Parent hereby represents,
warrants and covenants that it has irrevocably reserved for issuance
and will at all times keep available, free from preemptive and other
rights, out of its authorized and unissued capital stock such number of
Parent Common Shares (a) as is equal to the sum of (i) the number of
Exchangeable Shares issued and outstanding from time to time and (ii)
the number of Exchangeable Shares issuable upon the exercise of all
rights to acquire Exchangeable Shares outstanding from time to time and
(b) as are now and may hereafter be required to enable and permit
Purchaser and the Parent to meet their respective obligations
hereunder, under the Support Agreement, under the Exchangeable Share
Provisions and under any other security or commitment pursuant to which
the Parent may now or hereafter be required to issue Parent Common
Shares. To the extent permitted under Applicable Laws, the Trust Shares
may be used to satisfy the Parent's obligations
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under this Section 4.10.
4.11 AUTOMATIC EXCHANGE ON LIQUIDATION OF THE PARENT
(a) The Parent will give the Trustee and the Shareholders notice
of each of the following events (each a "Liquidation Event")
at the time set forth below:
(i) in the event of any determination by the board of
directors of the Parent to institute voluntary
liquidation, dissolution or winding-up proceedings
with respect to the Parent or to effect any other
distribution of assets of the Parent among its
shareholders for the purpose of winding up its
affairs, at least sixty (60) days prior to the
proposed effective date of such liquidation,
dissolution, winding-up or other distribution; or
(ii) immediately, upon the earlier of (A) receipt by the
Parent of notice of or (B) the Parent otherwise
becoming aware of any threatened or instituted claim,
suit, petition or other proceedings with respect to
the involuntary liquidation, dissolution or winding-up
of the Parent or to effect any other distribution of
assets of the Parent notifying its shareholders for
the purpose of winding up its affairs.
(b) Such notice shall include a brief description of the automatic
exchange of Exchangeable Shares for Parent Common Shares
provided for in Section 4.11(c) and the ability of a
Shareholder not to participate in such automatic exchange.
(c) In order that the Shareholders will be able to participate on
a pro rata basis with the holders of Parent Common Shares in
the distribution of assets of the Parent in connection with a
Liquidation Event, on the fifth Business Day prior to the
effective date of a Liquidation Event (the "Liquidation Event
Effective Date") all of the then outstanding Exchangeable
Shares shall be automatically exchanged for Parent Common
Shares. To effect such automatic exchange the Parent shall
purchase each Exchangeable Non-Voting Share outstanding on the
fifth Business Day prior to the Liquidation Event Effective
Date and held by Shareholders, and each Shareholder shall sell
the Exchangeable Shares held by it at such time, for a
purchase price per share equal to (a) the Current Market Price
of one (1) Parent Common Share on the fifth Business Day prior
to the Liquidation Event Effective Date, which shall be
satisfied in full by the Parent delivering or causing the
Trustee to deliver out of the Trust Shares to the Shareholder
one Parent Common Share, plus (b) an additional amount
equivalent to the full amount of all dividends declared and
unpaid on each such Exchangeable Non-Voting Share and all
dividends declared on Parent Common Shares which have not been
declared on such Exchangeable Shares in accordance with
section 3 of the Exchangeable Share Provisions (provided that
if the record date for any such declared and unpaid dividends
occurs on or after the day of closing of such purchase and
sale the purchase price shall not include such
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additional amount equivalent to such declared and unpaid
dividends). In connection with such automatic exchange, the
Parent will provide to the Shareholders an Officer's
Certificate setting forth the calculation of the purchase
price for each Exchangeable Non-Voting Share, together with a
notice of the anticipated Liquidation Event Effective Date.
(d) On the fifth Business Day prior to the Liquidation Event
Effective Date, the closing of the transaction of purchase and
sale contemplated by the automatic exchange of Exchangeable
Shares for Parent Common Shares shall be deemed to have
occurred, and each Shareholder shall be deemed to have
transferred to the Parent all of the Shareholder's right,
title and interest in and to its Exchangeable Shares and shall
cease to be a Shareholder of such Exchangeable Shares and the
Parent shall deliver or cause the Trustee to deliver out of
the Trust Shares to the Shareholder Parent Common Shares
deliverable upon the automatic exchange of Exchangeable Shares
for Parent Common Shares and shall deliver to the Shareholder
a check for the balance, if any, of the total purchase price
for such Exchangeable Shares. Concurrently with such
Shareholder ceasing to be a Shareholder, the Shareholder shall
be considered and deemed for all purposes to be the holder of
Parent Common Shares issued to it pursuant to the automatic
exchange of Exchangeable Shares for Parent Common Shares and
the certificates held by the Shareholder previously
representing the Exchangeable Shares exchanged by the
Shareholder with the Parent pursuant to such automatic
exchange shall thereafter be deemed to represent Parent Common
Shares delivered to the Shareholder by the Parent pursuant to
such automatic exchange prior to the surrender by the
Shareholder of the Exchangeable Non-Voting Share certificates.
Upon the request of a Shareholder and the surrender by the
Shareholder of Exchangeable Non-Voting Share certificates
deemed to represent Parent Common Shares, duly endorsed in
blank and accompanied by such instruments of transfer as the
Parent may reasonably require, the Parent shall deliver or
cause to be delivered to the Shareholder certificates
representing Parent Common Shares of which the Shareholder is
the holder.
4.12 WITHHOLDING RIGHTS. The Parent will retain tax counsel to advise the
Parent and the Trustee on all income tax and withholding obligations of
the Parent, the Trust and the Trustee. The Parent and the Trustee shall
be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any Shareholder such amounts as
the Parent or the Trustee is required or permitted to deduct and
withhold with respect to the making of such payment under the United
States Internal Revenue Code of 1986 as amended (the "Code"), the
Income Tax Act (Canada) or any provision of state, local, provincial or
foreign tax law. To the extent that amounts are so withheld, such
withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the Shareholder of the shares in respect of which
such deduction and withholding was made, provided that such withheld
amounts are actually remitted to the appropriate taxing authority. To
the extent that the amount so required or permitted to be deducted or
withheld from any payment to a Shareholder exceeds the cash portion of
the consideration
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otherwise payable to the Shareholder, the Parent or the Trustee is
hereby authorized to sell or otherwise dispose of at fair market value
such portion of the consideration as is necessary to provide sufficient
funds to the Parent or the Trustee, as the case may be, in order to
enable it to comply with such deduction or withholding requirement and
shall account to the relevant Shareholder for any balance of such sale
proceeds.
ARTICLE 5
DIVIDENDS
5.1 The holders of Exchangeable Shares will be entitled to participate in
all dividends declared by Purchaser, in accordance with the provisions
of the Exchangeable Share Provisions and the Support Agreement.
5.2 The Trustee hereby expressly waives, for and on its own behalf and on
behalf of all Shareholders, all rights to receive dividends of every
nature as may be payable to it as holder of the Trust Shares, and the
parties acknowledge that the Parent need not include the Trust Shares
in its calculations for purposes of determining the payment of
dividends, and need not pay or distribute any dividends (either in
cash, shares or otherwise) to the Trustee as holder of the Trust
Shares, provided however that such waiver may be rescinded by the
Trustee upon receipt of notice from a Shareholder that Purchaser has
omitted to pay any dividends otherwise payable or that either the
Parent or Purchaser contests the right of the holders of Exchangeable
Shares to receive dividends, or the right to receive dividends on the
Exchangeable Shares that are otherwise in doubt whereupon the Parent
will pay and the Trustee shall collect all dividends paid on the Trust
Shares from time to time until the Trustee receives an Officer's
Certificate from Purchaser certifying that Purchaser is in compliance
with its obligations to pay dividends in accordance with the
Exchangeable Share Provisions. Any dividends received by the Trustee on
the Trust Shares shall be paid to the Shareholders in the same manner
as dividends would have been paid by Purchaser to the holders of
Exchangeable Shares.
5.3 For clarity, the Voting Rights and exchange rights granted by the
Parent to the Shareholders hereunder do not in any manner confer any
additional rights to the Shareholders, including, but subject to the
provisions of the Support Agreement, any rights to receive or
participate in dividends declared or paid by the Parent.
ARTICLE 6
SUPPORT PROVISIONS
6.1 USE OF TRUST SHARES IN CONNECTION WITH SUPPORT AGREEMENT. Pursuant
to section 2.11 of the Support Agreement, the Trust Shares provide
additional security for the Parent's and Purchaser's obligations under
the Share Exchange Agreement, the Exchangeable Share Provisions and the
Support Agreement. In the event that Purchaser and the Parent both
default on their obligations to acquire the Exchangeable Shares
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pursuant to the Exchangeable Share Provisions, the Support Agreement,
or Article 4 of this Agreement, a Shareholder may provide written
notice to the Parent, Purchaser and the Trustee of such default. If
such default is not cured within ten (10) Business Days, the
Shareholder may provide written notice to the Trustee of such failure
to cure. The Trustee shall then use the Trust Shares to satisfy the
Parent's obligation to acquire the Exchangeable Shares as if the Parent
had instructed the Trustee to use the Trust Shares for such purpose
pursuant to this Agreement. The Exchangeable Shares acquired by the
Trustee in such transaction shall be distributed to the Parent. In the
event that the Trustee uses the Trust Shares to so acquire Exchangeable
Shares, and if the Parent is obligated to pay any declared but unpaid
dividends (or dividends declared on Parent Common Shares which have not
been declared on such Exchangeable Shares in accordance with section 3
of the Exchangeable Share Provisions), the Parent shall remain
obligated to pay such amount to the Shareholder.
6.2 APPLICATION OF TRUST SHARES. At such time as either Purchaser or Parent
acquires Exchangeable Shares from a Shareholder, it shall provide the
Trustee with an Officer's Certificate specifying (i) the former
Shareholder, (ii) the number of Exchangeable Shares acquired, (iii) the
form of the acquisition, designated by the provision of the applicable
agreement (Exchangeable Share Provisions, Support Agreement or this
Agreement) and (iv) the date of such acquisition. If such certification
is made, the Trustee shall distribute to the Parent a number of Trust
Shares equal to the number of Exchangeable Shares so acquired by the
Parent (or, if so requested by the Parent, distribute such Parent
Common Shares to the former Shareholder on behalf of the Parent).
ARTICLE 7
CONCERNING THE TRUSTEE
7.1 POWERS AND DUTIES OF THE TRUSTEE. The rights, powers and authorities of
the Trustee under this Agreement, in its capacity as trustee of the
Trust, shall include:
(a) receiving and depositing the Trust Shares from the Parent as
trustee for and on behalf of the Shareholders in accordance
with the provisions of this Agreement;
(b) distributing materials to Shareholders as provided in this
Agreement;
(c) holding title to the Trust Estate;
(d) investing any moneys forming, from time to time, a part of the
Trust Estate as provided in this Agreement; and
(e) taking such other actions and doing such other things as are
specifically provided in this Agreement.
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In the exercise of such rights, powers and authorities the Trustee
shall have (and is granted) such incidental and additional rights,
powers and authority not in conflict with any of the provisions of this
Agreement as the Trustee, acting in good faith and in the reasonable
exercise of its discretion, may deem necessary or appropriate to effect
the purpose of the Trust. Any exercise of such discretionary rights,
powers and authorities by the Trustee shall be final, conclusive and
binding upon all persons. Notwithstanding anything to the contrary
herein, the Trustee shall have no obligation to exercise any discretion
in the performance of its obligations hereunder and shall only be
required to act upon the express written instructions of the Parent,
Purchaser or the Shareholders. For greater certainty, the Trustee shall
have only those duties as are set out specifically in this Agreement.
The Trustee in exercising its rights, powers, duties and authorities
hereunder shall act honestly and in good faith and in accordance with
its fiduciary duties to the Shareholders and shall exercise the care,
diligence and skill that a reasonably prudent trustee would exercise in
comparable circumstances. The Trustee shall not be required to take any
notice of, or to do or to take any act, action or proceeding as a
result of any default or breach of any provision hereunder, unless and
until notified in writing of such default or breach, which notice shall
distinctly specify the default or breach desired to be brought to the
attention of the Trustee and, in the absence of such notice, the
Trustee may for all purposes of this Agreement conclusively assume that
no default or breach has been made in the observance or performance of
any of the representations, warranties, covenants, agreements or
conditions contained herein.
7.2 NO CONFLICT OF INTEREST. The Trustee represents to the Purchaser and
the Parent that at the date of execution and delivery of this Agreement
there exists no material conflict of interest in the role of the
Trustee as a fiduciary hereunder and the role of the Trustee in any
other capacity. The Trustee shall, within ninety (90) days after it
becomes aware that such a material conflict of interest exists, either
eliminate such material conflict of interest or resign in the manner
and with the effect specified in Article 9.
7.3 DEALINGS WITH THIRD PARTIES. The Purchaser and the Parent irrevocably
authorize the Trustee, from time to time, to:
(a) consult, communicate and otherwise deal with any respective
registrars, transfer agents, payment agents or any other
person or entity appointed from time to time by the Parent in
connection with any matter relating to the Exchangeable Shares
and Parent Common Shares; and
(b) requisition, from time to time, (i) from any such registrar,
transfer agent payment agent or other person or entity,
appointed from time to time by the Parent, as applicable, any
information readily available from the records maintained by
it which the Trustee may reasonably require for the discharge
of its duties and responsibilities under this Agreement; and
(ii) from Purchaser, the holder of Parent Common Shares, and
any subsequent holder or agent of such shares, the share
18
certificates issuable upon the exercise from time to time of
the Insolvency Exchange Right and pursuant to the Automatic
Exchange Rights in the manner specified in Article 4 hereof.
The Purchaser and the Parent irrevocably authorize their
respective payment agent, or any other authorized agent
appointed from time to time by the Parent to comply with all
such requests.
7.4 BOOKS AND RECORDS. The Trustee shall keep available for inspection,
during normal business hours, by the Parent and Purchaser, at the
Trustee's principal office, correct and complete books and records of
account relating to the Trustee's actions under this Agreement,
including without limitation all information relating to mailings and
instructions to and from Shareholders.
7.5 INCOME TAX RETURNS AND REPORTS. The Trustee will allocate and
distribute all income and losses of the Trust to the Shareholders in
each year such that the Trust is not in a position to pay any tax or
file any tax returns. Shareholders will be individually and personally
responsible for all income and losses incurred by the Trust. In this
regard, the Parent will retain tax counsel on behalf of the Trust, and
agrees to prepare and distribute to each Shareholder all necessary tax
forms for them to complete their United States and Canadian tax
returns. The Shareholders may obtain the advice and assistance of such
experts as they may consider necessary or advisable.
7.6 INDEMNIFICATION PRIOR TO CERTAIN ACTIONS BY TRUSTEE. The Trustee shall
exercise any or all of the rights, duties, powers or authorities vested
in it by this Agreement at the request, order or direction of any
Shareholder upon such Shareholder furnishing to the Trustee reasonable
funding, security and indemnity against the costs, expenses and
liabilities which may be incurred by the Trustee therein or thereby.
The Trustee shall not be required to expend any of its own funds or
otherwise incur any financial liability in the exercise of any of its
rights, powers, duties or authorities, but instead shall be entitled to
be fully funded, given security and indemnity in advance as aforesaid.
7.7 ACTIONS BY SHAREHOLDERS. Shareholders shall be entitled to take
proceedings in any court of competent jurisdiction to enforce any of
their rights hereunder as against Purchaser and the Parent.
7.8 RELIANCE UPON DECLARATIONS. The Trustee shall not be considered to be
in contravention of any of its rights, powers, duties and authorities
hereunder if, when required, it acts and relies in good faith upon
lists, mailing labels, notices, statutory declarations, certificates,
opinions, reports or other papers or documents furnished pursuant to
the provisions hereof or required by the Trustee to be furnished to it
in the exercise of its rights, powers, duties and authorities
hereunder.
7.9 EVIDENCE AND AUTHORITY TO TRUSTEE. Purchaser and the Parent shall
furnish
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to the Trustee evidence of compliance with the conditions provided for
in this Agreement relating to any action or step required or permitted
to be taken by Purchaser and/or the Parent for the Trustee under this
Agreement or as a result of any obligation imposed under this Agreement
including, without limitation, in respect of the Insolvency Exchange
Right or the Automatic Exchange Rights and the taking of any other
action to be taken by the Trustee at the request of or on the
application of Purchaser and the Parent forthwith if and when:
(a) such evidence is required by any other section of this
Agreement to be furnished to the Trustee in accordance with
the terms of this Section 7.9; or
(b) the Trustee, in the exercise of its rights, powers, duties and
authorities under this Agreement, gives Purchaser and/or the
Parent written notice requiring it to furnish such evidence in
relation to any particular action or obligation specified in
such notice.
Such evidence shall consist of an Officer's Certificate of Purchaser
and/or the Parent, a statutory declaration or a certificate made by
persons entitled to sign an Officer's Certificate stating that any such
condition has been complied with in accordance with the terms of this
Agreement.
Whenever such evidence relates to a matter other than the Voting
Rights, the Insolvency Exchange Right or the Automatic Exchange Rights
and, except as otherwise specifically provided herein, such evidence
may consist of a report or opinion of any solicitor, auditor,
accountant, appraiser, valuer, engineer or other expert or any other
person whose qualifications give authority to a statement made by him,
provided that if such report or opinion is furnished by a director,
officer or employee of Purchaser and/or the Parent shall be in the form
of an Officer's Certificate or a statutory declaration.
Each statutory declaration, certificate, opinion, report or other paper
or document furnished to the Trustee as evidence of compliance with a
condition provided for in this Agreement shall include a statement by
the person giving the evidence:
(a) declaring that he has read and understands the provisions of
this Agreement relating to the condition in question;
(b) describing the nature and scope of the examination or
investigation upon which he based the statutory declaration,
certificate, statement or opinion; and
(c) declaring that he has made such examination or investigation
as he believes is necessary to enable him to make the
statements or give the opinions contained or expressed
therein.
7.10 EXPERTS, ADVISORS AND AGENTS. The Trustee may:
20
(a) in relation to these presents, act and rely on the opinion or
advice of or information obtained from any solicitor, auditor,
accountant, appraiser, valuer, engineer or other expert,
whether retained by the Trustee or by Purchaser and/or the
Parent or otherwise, and may employ such assistants as may be
necessary to the proper discharge of its powers and duties and
determination of its rights hereunder and may pay proper and
reasonable compensation for all such legal and other advice or
assistance as aforesaid without taxation for costs and fees;
and
(b) employ such agents and other assistants as it may reasonably
require for the proper discharge of its powers and duties
hereunder, and may pay reasonable remuneration for all
services performed for it, (and shall be entitled to receive
reasonable remuneration for all services performed by it) in
the discharge of the trusts hereof and compensation for all
disbursements, costs and expenses made or incurred by it in
the discharge of its duties hereunder and in the management of
the Trust without taxation for costs and fees, which
compensation reimbursement may be requested to be received in
advance prior to undertaking any actions hereunder.
7.11 INVESTMENT OF MONEYS HELD BY THE TRUSTEE. Unless otherwise provided in
this Agreement, any moneys held by or on behalf of the Trustee which
under the terms of this Agreement may or ought to be invested or which
may be on deposit with the Trustee or which may be in the hands of the
Trustee may be invested and reinvested in the name or under the control
of the Trustee in securities in which, under the laws of the State of
Pennsylvania, trustees are authorized to invest trust moneys, provided
that such securities are stated to mature within two (2) years after
their purchase by the Trustee, and the Trustee shall so invest such
moneys on the written direction of Purchaser. Pending the investment of
any moneys as hereinbefore provided, such moneys may be deposited in
the name of the Trustee in any bank, loan or trust company authorized
to accept deposits under the laws of the United States, Canada or any
state or province thereof, at the rate of interest then current on
similar deposits.
7.12 TRUSTEE NOT REQUIRED TO GIVE SECURITY. The Trustee shall not be
required to give any bond or security in respect of the execution of
the trusts, rights, duties, powers and authorities of this Agreement or
otherwise in respect of the premises.
7.13 TRUSTEE NOT BOUND TO ACT ON CORPORATION'S REQUEST. Except as in this
Agreement or otherwise specifically provided, the Trustee shall not be
bound to act in accordance with any direction or request of Purchaser
and/or the Parent or the directors thereof until a duly authenticated
copy of the instrument or resolution containing such direction or
request shall have been delivered to the Trustee and the Trustee shall
be empowered to act and rely upon any such copy purporting to be
authenticated and believed by the Trustee to be genuine.
7.14 CONFLICTING CLAIMS. If conflicting claims or demands are made or
asserted with
21
respect to any interest of any Shareholder in any Exchangeable Shares,
including any disagreement between the heirs, representatives,
successors or assigns succeeding to all or any part of the interest of
any Shareholder in any Exchangeable Shares resulting in conflicting
claims or demands being made in connection with such interest, then the
Trustee shall be entitled, at its sole discretion, to refuse to
recognize or to comply with any such claim or demand. In so refusing,
the Trustee may elect not to exercise any Insolvency Exchange Right or
Automatic Exchange Rights subject to such conflicting claims or demands
and in so doing, the Trustee shall not be or become liable to any
person on account of such election or its failure or refusal to comply
with any such conflicting claims or demands. The Trustee shall be
entitled to continue to refrain from acting and to refuse to act until:
(a) the rights of all adverse claimants with respect to the
Insolvency Exchange Right or Automatic Exchange Rights subject
to such conflicting claims or demands have been adjudicated by
a final judgment of a court of competent jurisdiction; or
(b) all differences with respect to the Insolvency Exchange Right
or Automatic Exchange Rights subject to such conflicting
claims or demands have been conclusively settled by a valid
written agreement binding on all such adverse claimants, and
the Trustee shall have been furnished with an executed copy of
such agreement. If the Trustee elects to recognize any claim
or comply with any demand made by any such adverse claimant,
it may in its discretion require such claimant to furnish such
surety bond or other security satisfactory to the Trustee as
it shall deem appropriate fully to indemnify it as between all
conflicting claims or demands.
7.15 ACCEPTANCE OF TRUST. The Trustee hereby accepts the Trust created and
provided for by and in this Agreement and agrees to perform the same
upon the terms and conditions set forth herein and to hold all rights,
privileges and benefits conferred hereby and by law in trust for the
various persons who shall from time to time be Shareholders, subject to
all the terms and conditions set forth herein.
7.16 VALIDITY OF CERTIFICATES. If at any time in the performance of its
duties under this Agreement, it shall be necessary for the Trustee to
receive, accept, act or rely upon any certificate, notice, request,
waiver, consent, receipt, direction, affidavit or other paper, writing
or document furnished to it and purporting to have been executed or
issued by Purchaser, the Parent or the Shareholders or their authorized
officers or attorneys, the Trustee shall be entitled to rely and act
upon the genuineness and authenticity of any such writing submitted to
it. It shall not be necessary for the Trustee to ascertain whether or
not the persons who have executed, signed or otherwise issued,
authenticated or receipted such papers, writings or documents have
authority to do so or that they are the same persons named therein or
otherwise to pass upon any requirement of such papers, writing or
documents that may be essential for their validity or effectiveness or
upon the truth and acceptability of any information contained therein
which the Trustee in good faith believes to be genuine.
22
ARTICLE 8
COMPENSATION
8.1 FEES AND EXPENSES OF THE TRUSTEE. The Parent, Purchaser and the
Shareholders jointly and severally agree to pay to the Trustee
reasonable compensation for all of the services rendered by it under
this Agreement and will reimburse the Trustee for all reasonable
expenses and disbursements, including, without limitation, legal fees
and expenses and the reasonable compensation and disbursements all
other advisors, agents and assistants not regularly in its employ and
the cost and expense of any suit or litigation of any character and any
proceedings before any governmental agency reasonably incurred by the
Trustee in connection with its rights and duties under this Agreement;
provided that the Parent and Purchaser shall have no obligation to
reimburse the Trustee for any expenses or disbursements paid, incurred
or suffered by the Trustee in any suit or litigation in which the
Trustee is determined to have acted fraudulently or in bad faith or
with gross negligence or willful misconduct. The Trustee shall be
obliged to provide only one account or invoice to the Parent from time
to time during this Agreement in connection with any services rendered
by it under this Agreement on behalf of any of the parties.
ARTICLE 9
INDEMNIFICATION AND LIMITATION OF LIABILITY
9.1 INDEMNIFICATION OF THE TRUSTEE. The Parent, Purchaser and the
Shareholders jointly and severally agree to indemnify and hold harmless
the Trustee and each of its directors, officers, partners, employees
and agents appointed and acting in accordance with this Agreement
(collectively, the "Indemnified Parties") against all claims, losses,
damages, costs, penalties, fines and reasonable expenses (including
reasonable expenses of the Trustee's legal counsel) which, without
fraud, gross negligence, willful misconduct or bad faith on the part of
such Indemnified Party, may be paid, incurred or suffered by the
Indemnified Party by reason of or as a result of the Trustee's
acceptance or administration of the Trust, its compliance with its
duties set forth in this Agreement, or any written or oral instructions
delivered to the Trustee by the Parent or Purchaser pursuant hereto.
Subject to (ii), below, the Parent and Purchaser shall be entitled to
participate at their own expense in the defence and, if the Parent and
Purchaser so elect at any time after receipt of such notice, either of
them may assume the defence of any suit brought to enforce any such
claim. In the event the Parent and/or Purchaser assume the defence of
the Trustee, no settlement of any claim shall be entered into without
the prior approval of the Trustee; and the Trustee shall have the right
to re-assume the defence of any suit if the Parent or Purchaser fail to
actively continue such defence so assumed. The Trustee shall have the
right to employ separate counsel in any such suit and participate in
the defence thereof but the fees and expenses of such counsel shall be
at the expense of the Trustee unless: (i) the employment of such
counsel has been authorized by the Parent or Purchaser; or (ii) the
named parties to any such suit include both the Trustee and the Parent;
or (iii) Purchaser
23
and the Trustee shall have been advised by counsel acceptable to the
Parent or Purchaser that there may be one or more legal defences
available to the Trustee which are different from or in addition to
those available to the Parent or Purchaser (in which case Purchaser
shall not have the right to assume the defence of such suit on behalf
of the Trustee but shall be liable to pay the reasonable fees and
expenses of counsel for the Trustee).
9.2 LIMITATION OF LIABILITY. The Trustee shall not be liable for any act or
omission by it except where such act or omission occurs as a result of
the Trustee's gross negligence or willful misconduct. The Trustee shall
not be liable for any losses or damages due to the acts or omissions of
third parties, including without limitation, the failure by the Parent
and/or Purchaser to comply with its obligations under this Agreement,
as the case may be. Under no circumstances shall the Trustee be liable
for any special, indirect or consequential losses or damages (including
without limitation loss of profits and penalties) whether caused by the
Trustee's negligence or that of its employees, agents or otherwise. The
Trustee shall not be held liable for any loss which may occur by reason
of depreciation of the value of any part of the Trust Estate or any
loss incurred on any investment of funds pursuant to this Agreement
except to the extent that such loss is attributable to the fraud, gross
negligence, willful misconduct or bad faith on the part of the Trustee.
ARTICLE 10
CHANGE OF TRUSTEE
10.1 RESIGNATION. The Trustee, or any trustee hereafter appointed, may at
any time resign by giving written notice of such resignation to the
Parent and Purchaser specifying the date on which it desires to resign,
provided that such notice shall never be given less than thirty (30)
days before such desired resignation date unless the Parent and
Purchaser otherwise agree and provided further that such resignation
shall not take effect until the date of the appointment of a successor
trustee and the acceptance of such appointment by the successor
trustee. Upon receiving such notice of resignation, the Parent and
Purchaser shall promptly appoint a successor trustee by written
instrument in duplicate, one copy of which shall be delivered to the
resigning trustee and one copy to the successor trustee.
10.2 REMOVAL. The Trustee, or any trustee hereafter appointed at any time on
thirty (30) days' prior notice by written instrument executed by the
Parent and Purchaser, in duplicate, one copy of which shall be
delivered to the trustee so removed and one copy to the successor
trustee. Any successor trustee to be appointed upon the removal of the
Trustee shall be appointed in accordance with the provisions as
provided under Section 10.3 of this Agreement.
10.3 SUCCESSOR TRUSTEE. Any successor trustee appointed as provided under
this Agreement shall execute, acknowledge and deliver to the Parent and
Purchaser and to its predecessor trustee an instrument accepting such
appointment. Thereupon the resignation
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or removal of the predecessor trustee shall become effective and such
successor trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, duties and obligations of
its predecessor under this Agreement with like effect as if originally
named as trustee in this Agreement. However, on the written request of
the Parent and Purchaser or of the successor trustee, the trustee
ceasing to act shall, upon payment of any amounts then due it pursuant
to the provisions of this Agreement, execute and deliver an instrument
transferring to such successor trustee all of the rights and powers of
the trustee so ceasing to act. Upon the request of any such successor
trustee, the Parent and Purchaser and such predecessor trustee shall
execute any and all instruments in writing for more fully and certainly
vesting in and confirming to such successor trustee all such rights and
powers.
10.4 NOTICE OF SUCCESSOR TRUSTEE. Upon acceptance of appointment by a
successor trustee as provided herein the Parent and Purchaser shall
cause to be mailed notice of the succession of such trustee hereunder
to each Shareholder at the address of such Shareholder shown on the
register of Shareholders of Exchangeable Shares. If the Parent or
Purchaser shall fail to cause such notice to be mailed within ten (10)
days after acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be mailed at the expense
of the Parent and Purchaser.
ARTICLE 11
THE PARENT SUCCESSORS
11.1 CERTAIN REQUIREMENTS IN RESPECT OF COMBINATION, ETC. The Parent shall
not enter into any transaction (whether by way of reconstruction,
reorganization, consolidation, merger, transfer, sale, lease or
otherwise) whereby all or substantially all of its undertaking,
property and assets would become the property of any other person or,
in the case of a merger, of the continuing corporation resulting
therefrom unless:
(a) such other person or continuing corporation is a corporation
(herein called the "Parent Successor") incorporated under the
laws of any state of the United States or the laws of Canada
or any province thereof; and
(b) the Parent Successor, by operation of law, becomes, without
more, bound by the terms and provisions of this Agreement or,
if not so bound, executes, prior to or contemporaneously with
the consummation of such transaction a Agreement supplemental
hereto and such other instruments (if any) as are satisfactory
to the Trustee and in the opinion of legal counsel to the
Trustee are necessary or advisable to evidence the assumption
by the Parent Successor of liability for all moneys payable
and property deliverable hereunder and the covenant of such
Parent Successor to pay and deliver or cause to be delivered
the same and its agreement to observe and perform all of the
covenants and obligations of the Parent under this
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Agreement.
11.2 VESTING OF POWERS IN SUCCESSOR. Whenever the conditions of Section 11.1
hereof have been duly observed and performed, the Trustee, if required
by Section 11.1 hereof, the Parent Successor and Purchaser shall
execute and deliver the supplemental Agreement provided for in Article
12 and thereupon the Parent Successor shall possess and from time to
time may exercise each and every right and power of the Parent under
this Agreement in the name of the Parent or otherwise and any act or
proceeding by any provision of this Agreement required to be done or
performed by the board of directors of Parent or any officers of the
Parent may be done and performed with like force and effect by the
directors or officers of such the Parent Successor.
11.3 WHOLLY-OWNED SUBSIDIARIES. Nothing herein shall be construed as
preventing the share exchange, merger or sale of any wholly-owned
subsidiary of the Parent with or into the Parent, the winding-up or
merger of any wholly-owned subsidiary of the Parent with or into the
Parent, or the winding-up, liquidation or dissolution of any
wholly-owned subsidiary of the Parent, and nothing herein shall
prohibit the Parent in any manner whatsoever from selling, transferring
or otherwise disposing of any and all of the assets of the Parent
including, without limitation, any and all of the assets of such
subsidiary provided that all of the assets of such subsidiary are
transferred to the Parent or another wholly-owned subsidiary of the
Parent.
ARTICLE 12
AMENDMENTS AND SUPPLEMENTAL TRUST AGREEMENTS
12.1 AMENDMENTS, MODIFICATIONS, ETC. This Agreement may not be amended or
modified except by an agreement in writing executed by Purchaser and
the Parent.
12.2 MEETING TO CONSIDER AMENDMENTS. Purchaser, at the request of the Parent
shall call a meeting or meetings of the Shareholders for the purpose of
considering any proposed amendment or modification requiring approval
pursuant hereto. Any such meeting or meetings shall be called and held
in accordance with the by-laws of Purchaser, the Exchangeable Share
Provisions and all applicable laws.
12.3 CHANGES IN CAPITAL OF PARENT OR Purchaser. At all times after the
occurrence of any event effected pursuant to section 2.7 or 2.8 of the
Support Agreement, as a result of which either Parent Common Shares or
the Exchangeable Shares or both are in any way changed, this Agreement
shall forthwith be amended and modified as necessary in order that it
shall apply with full force and effect, mutatis mutandis, to all new
securities into which Parent Common Shares or the Exchangeable Shares
or both are so changed and the parties hereto shall execute and deliver
a supplemental Agreement giving effect to and
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evidencing such necessary amendments and modifications.
12.4 EXECUTION OF SUPPLEMENTAL AGREEMENTS. No amendment to or modification
or waiver of any of the provisions of this Agreement otherwise than as
permitted hereunder shall be effective unless made in writing and
signed by all of the parties hereto. From time to time the parties may,
subject to the provisions of these presents, and they shall, when so
directed by these presents, execute and deliver by their proper
officers, Agreements or other instruments supplemental hereto, which
thereafter shall form part hereof, for any one or more of the following
purposes:
(a) evidencing the succession of Parent Successors to the Parent
and the covenants of and obligations assumed by each such
Parent Successor in accordance with the provisions of Article
11 and the successor of any successor trustee in accordance
with the provisions of Article 10;
(b) making any additions to, deletions from or alterations of the
provisions of this Agreement or the Insolvency Exchange Right
or the Automatic Exchange Rights which, in the opinion of the
Parent and its counsel, will not be prejudicial to the
interests of the Shareholders as a whole or are in the opinion
of counsel to the Parent necessary or advisable in order to
incorporate, reflect or comply with any legislation the
provisions of which apply to the parties or this Agreement;
and
(c) for any other purposes not inconsistent with the provisions of
this Agreement, including without limitation to make or
evidence any amendment or modification to this Agreement as
contemplated hereby, provided that, in the opinion of the
Parent and its counsel, the rights of the Trustee and the
Shareholders as a whole will not be prejudiced thereby.
ARTICLE 13
TERMINATION
13.1 TERM. The Trust created by this Agreement shall continue until the
earliest to occur of the following events:
(a) no outstanding Exchangeable Shares are held by any
Shareholder;
(b) each of Purchaser and the Parent acts in writing to terminate
the Trust and such termination is approved by the Shareholders
of the Exchangeable Shares in accordance with section 10 of
the Exchangeable Share Provisions; and
(c) December 31, 2098.
13.2 SURVIVAL OF AGREEMENT. Subject to the provisions of Section 13.1(b)
hereof, this
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Agreement shall survive any termination of the Trust and shall continue
until there are no Exchangeable Shares outstanding held by any
Shareholder; and for clarity, that the provisions of Articles 8 and 9
shall survive any such termination of the Trust or this Agreement.
ARTICLE 14
GENERAL
14.1 SEVERABILITY. If any provision of this Agreement is held to be invalid,
illegal or unenforceable, the validity, legality or enforceability of
the remainder of this Agreement shall not in any way be affected or
impaired thereby and the agreement shall be carried out as nearly as
possible in accordance with its original terms and conditions.
14.2 INUREMENT. This Agreement shall be binding upon and endure to the
benefit of the parties hereto and their respective successors and
permitted assigns and to the benefit of the Shareholders.
14.3 NOTICES TO PARTIES. All notices and other communications between the
parties hereunder shall be in writing and shall be deemed to have been
given if delivered personally or by confirmed facsimile to the parties
at the following addresses (or at such other address for such party as
shall be specified in like notice):
if to the Parent or Purchaser:
Mr. Steve Saviuk
President
Manitex Capital Inc.
1 Place Ville-Marie, Suite 2001
Montreal (Quebec) H3B 2C4
with a copy to: Mr. David Perez
Manitex Capital Inc.
1 Place Ville-Marie, Suite 2001
Montreal (Quebec) H3B 2C4
if to the Trustee: Mr. Pierre Barnard
De Grandpre Chaurette Levesque
2000 McGill College Avenue
Suite 1600
Montreal (Quebec) H3B 3H3
Any notice or other communication given personally shall be deemed to
have been given and received upon delivery thereof and if given by
telecopy shall be deemed to have been given and received on the date of
receipt thereof unless such day is not a Business Day in
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which case it shall be deemed to have been given and received upon the
immediately following Business Day.
14.4 NOTICE OF SHAREHOLDERS. Any and all notices to be given and any
documents to be sent to any Shareholders may be given or sent to the
address of such Shareholder shown on the register of Shareholders in
any manner permitted by the by-laws of Purchaser from time to time in
force in respect of notices to shareholders and shall be deemed to be
received (if given or sent in such manner) at the time specified in
such by-laws, the provisions of which by-laws shall apply mutatis
mutandis to notices or documents as aforesaid sent to such
Shareholders.
14.5 RISK OF PAYMENTS BY MAIL. Whenever payments are to be made or documents
are to be sent to any Shareholder by the Trustee or by Purchaser, or by
such Shareholder to the Trustee or to the Parent or Purchaser, the
making of such payment or sending of such document sent through the
mail shall be at the risk of Purchaser, in the case of payments made or
documents sent by the Trustee or Purchaser, and the Shareholder, in the
case of payments made or documents sent by the Shareholder.
14.6 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which taken together
shall constitute one and the same instrument.
14.7 JURISDICTION. This Agreement shall be construed and enforced in
accordance with the laws of the Province of Quebec and the laws of
Canada applicable therein.
14.8 ATTORNMENT. The Parent and the Purchaser each agree that any action or
proceeding arising out of or relating to this Agreement may be
instituted in the courts of the Province of Quebec, each waives any
objection which it may have now or hereafter to the venue of any such
action or proceeding, irrevocably submits to the non-exclusive
jurisdiction of the said courts in any such action or proceeding,
agrees to be bound by any judgment of the said courts and not to seek,
and hereby waives, any review of the merits of any such judgment by the
courts of any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
TECE INC.
By: /s/ Pierre Barnard
---------------------
Name: Pierre Barnard
Title: Attorney
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3786137 CANADA INC.
By: /s/ Pierre Barnard
---------------------
Name: Pierre Barnard
Title: President
/s/ Pierre Barnard
---------------------
PIERRE BARNARD
TEC TECHNOLOGYVALUATON.COM CORPORATION
By: /s/ Illegible
---------------------
Name:
Title: