VOTING AND EXCHANGE AGENCY AGREEMENT
THIS VOTING AND EXCHANGE AGENCY AGREEMENT is made as of the 22nd
day of November, 2002,
BETWEEN:
APTA HOLDINGS, INC., A CORPORATION INCORPORATED UNDER
THE LAWS OF THE STATE OF DELAWARE, HAVING ITS PRINCIPAL
OFFICE AT 215 WEST MAIN STREET, MAPLE SHARE, NEW
JERSEY, 08052,
("APTA")
- and -
RALPH EISENSCHMID IN TRUST FOR INTELISYS ACQUISITION
INC., a company to be incorporated pursuant to the laws
of the Province of New Brunswick with its principal
office at 815 Bombardier Street, Shediac, New
Brunswick, E4P 1H9,
("Exchangeco")
- and -
CARBONARO SUGAR SZWERAS LLP, a law firm carrying on the
practice of law in the Province of Ontario and having
its principal office at 390 Bay Street, Suite 1600,
Toronto, Ontario, M5H 2Y2,
(the "Agent")
WHEREAS pursuant to a Share Exchange Agreement dated as of the
date hereof (the "Share Exchange Agreement"), entered into
between Apta, Exchangeco, Ralph Eisenschmid in trust for
InteliSys (Nova Scotia) Company, an unlimited liability company
to be formed ("NovaScotiaco"), Convergix Inc. (the "Company"),
Harry J. Santoro, Stephen M. Robinson and Ralph Eisenschmid
(collectively the "Parties"), the Parties have agreed to the
acquisition of control of Company by Apta through Exchangeco and
NovaScotiaco;
AND WHEREAS pursuant to the Share Exchange Agreement,
shareholders of the Company will exchange their common shares in
the capital of the Company ("Common Shares"), for an equal number
of, either (i) common shares in the capital of Apta ("Apta Common
Shares") or (ii) exchangeable shares in the capital of Exchangeco
(the "Exchangeable Shares"), in accordance with the Share
Exchange Agreement;
AND WHEREAS in accordance with the Share Exchange Agreement, Apta
and Exchangeco have agreed to enter into a voting and exchange
agency agreement with a Agent appointed by the holders of such
Exchangeable Shares substantially in the form of this Agreement;
AND WHEREAS any statements of fact contained in this Agreement
are made by Apta and Exchangeco and not by the Agent;
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 hereto covenant and agree as
follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Agreement, the following terms shall have the following
meanings:
(a) "Affiliate" of any person means any other person directly or
indirectly controlled by, or under 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.
(b) "Agent" means Carbonaro Sugar Szweras LLP and, subject to
the provisions of Article 10, includes any successor Agent.
(c) "Automatic Exchange Rights" means the benefit of the
obligation of Apta to effect the automatic exchange of
Exchangeable Shares for Apta Common Shares pursuant to section
5.12.
(d) "Beneficiaries" means the registered holders from time to
time of Exchangeable Shares, other than Apta, its Affiliates and
the Agent.
(e) "Beneficiary Votes" has the meaning ascribed thereto in
section 4.2.
(f) "Board of Directors" means the board of directors of
Exchangeco.
(g) "Business Day" means any day on which commercial banks are
open for business in Toronto, Ontario, other than a Saturday, a
Sunday or a day observed as a holiday in Toronto, Ontario under
the laws of the Province of Ontario or the federal laws of
Canada.
(h) "Canadian Dollar Equivalent" means, in respect of an amount
expressed in a currency other than Canadian dollars (the "Foreign
Currency Amount") at any date, the product obtained by
multiplying (a) the Foreign Currency Amount by (b) the noon spot
exchange rate on such date for such foreign currency expressed in
Canadian dollars as reported by the Bank of Canada, or, in the
event such spot 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.
(i) "Current Market Price" means, in respect of a Apta Common
Share on any date, the Canadian Dollar Equivalent of the average
of the closing bid and ask prices of Apta Common Shares during a
period of twenty (20) consecutive trading days ending not more
than three (3) trading days before such date on such stock
exchange or automated quotation system on which Apta 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 in the opinion of the Board of Directors the
public distribution or trading activity of Apta Common Shares
during such period does not create a market which reflects the
fair market value of a Apta Common Share, then the Current Market
Price of a Apta Common Share shall be determined by the Board of
Directors, in good faith and in its sole discretion, and provided
further that any such selection, opinion or determination by the
Board of Directors shall be conclusive and binding.
(j) "Exchange Right" has the meaning ascribed thereto in section
5.1.
(k) "Exchangeable Shares" means the non-voting exchangeable
shares in the capital of Exchangeco.
(l) "Insolvency Event" means the institution by Exchangeco of
any proceeding to be adjudicated a bankrupt or insolvent or to be
wound up, or the consent of Exchangeco to the institution of
bankruptcy, insolvency 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 Exchangeco to contest in good faith any such
proceedings commenced in respect of Exchangeco within thirty (30)
days of becoming aware thereof, or the consent by Exchangeco to
the filing of any such petition or to the appointment of a
receiver, or the making by Exchangeco of a general assignment for
the benefit of creditors, or the admission in writing by
Exchangeco of its inability to pay its debts generally as they
become due, or Exchangeco not being permitted, pursuant to
solvency requirements of applicable law, to redeem any Retracted
Shares pursuant to section 7 of the Share Provisions.
(m) "Liquidation Call Right" has the meaning ascribed thereto in
section 8.1 of the Share Provisions.
(n) "Liquidation Event" has the meaning ascribed thereto in
section 5.12(b).
(o) "Liquidation Event Effective Date" has the meaning ascribed
thereto in section 5.12(c).
(p) "List" has the meaning ascribed thereto in section 4.6.
(q) "Officer's Certificate" means, with respect to Apta or
Exchangeco, as the case may be, a certificate signed by any one
of Chief Executive Officer, President or Chief Financial Officer
of Apta or Exchangeco, as the case may be.
(r) "Apta Common Share" means a share of common stock, par value
U.S. $0.0001, in the capital of Apta.
(s) "Apta Consent" has the meaning ascribed thereto in section
4.2.
(t) "Apta Meeting" has the meaning ascribed thereto in section
4.2.
(u) "Apta Successor" has the meaning ascribed thereto in section
11.1(a).
(v) "Person" includes an individual, partnership, corporation,
company, unincorporated syndicate or person organization, trust,
Agent, executor, administrator and other legal representative.
(w) "Share Provisions" means the rights, privileges,
restrictions and conditions attaching to the Exchangeable Shares,
as set out in the Articles of Incorporation of Exchangeco and
Schedule "A" to the Support Agreement.
(x) "Special Voting Share" means the one share of Series "A"
$0.001 par value preferred stock of Apta, which entitles the
holder of record to a number of votes at meetings of holders of
Apta Common Shares equal to the number of Exchangeable Shares
outstanding from time to time (other than Exchangeable Shares
held by Apta and Apta Affiliates), which share is to be issued
to, deposited with, and voted by, the Agent as described herein.
(y) "Support Agreement" means that certain exchangeable share
support agreement made as of even date herewith between Apta and
Exchangeco.
(z) "Voting Rights" means the voting rights attached to the
Special Voting Share.
1.2 Interpretation Not Affected by Headings, etc.
The division of this Agreement into Articles, sections and other
portions and the insertion of headings are for convenience of
reference only and should not affect the construction or
interpretation of this Agreement. Unless otherwise indicated,
all references to an "Article" or "section" followed by a number
and/or a letter refer to the specified Article or section of this
Agreement. The terms "this Agreement", "hereof" "herein", and
"hereunder" and similar expressions refer to this Agreement and
not to any particular Article, section or other portion hereof
and include any agreement or instrument supplementary or
ancillary hereto.
1.3 Number, Gender, etc.
Words in the singular number only shall include the plural and
vice versa. Words in one gender shall include all genders.
1.4 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
PURPOSE OF AGREEMENT
2.1 Establishment of Agency
The Agent will hold the Special Voting Share and the benefit of
the Support Agreement in order to enable the Agent to execute the
Voting Rights and will hold the Exchange Right and the Automatic
Exchange Rights in order to enable the Agent to exercise such
rights, in each case as Agent for and on behalf of the
Beneficiaries as provided in this Agreement.
ARTICLE 3
SPECIAL VOTING SHARE
3.1 Issue and Ownership of the Special Voting Share
Apta hereby issues to and deposits with the Agent, the Special
Voting Share to be hereafter held of record by the Agent as Agent
for and on behalf of, and for the use and benefit of, the
Beneficiaries and in accordance with the provisions of this
Agreement. Apta hereby acknowledges receipt from the Agent as
Agent for and on behalf of the Beneficiaries of good and valuable
consideration (and the adequacy thereof) for the issuance of the
Special Voting Share by Apta to the Agent. During the term of
this Agreement and subject to the terms and conditions of this
Agreement, the Agent shall possess and be vested with full legal
ownership of the Special Voting Share and shall be entitled to
exercise all of the rights and powers of an owner with respect to
the Special Voting Share provided that the Agent shall:
(a) hold the Special Voting Share and the legal title thereto as
Agent solely for the use and benefit of the Beneficiaries 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 Special Voting Share and the Special Voting
Share shall not be used or disposed of by the Agent for any
purpose other than the purposes set out in this Agreement.
3.2 Legended Share Certificates
Exchangeco shall cause each certificate representing Exchangeable
Shares to bear an appropriate legend notifying the Beneficiaries
of their right to instruct the Agent with respect to the exercise
of the Voting Rights in respect of the Exchangeable Shares of the
Beneficiaries.
3.3 Safe Keeping of Certificate
The certificate representing the Special Voting Share shall at
all times be held in safe keeping by the Agent.
ARTICLE 4
EXERCISE OF VOTING RIGHTS
4.1 Voting Rights
The Agent, as the holder of record of the Special Voting Share,
shall be entitled to all of the Voting Rights, including the
right to vote in person or by proxy the Special Voting Share on
any matters, questions, proposals or propositions whatsoever that
may properly come before the shareholders of Apta at a Apta
Meeting or in connection with a Apta Consent. The Voting Rights
shall be and remain vested in and exercised by the Agent.
Subject to section 7.14:
(a) the Agent shall exercise the Voting Rights only on the basis
of instructions received pursuant to this Article 4 from
Beneficiaries entitled to instruct the Agent as to the
voting thereof at the time at which the Apta Meeting is
held; and
(b) to the extent that no instructions are received from a
Beneficiary with respect to the Voting Rights to which such
Beneficiary is entitled, the Agent shall not exercise or
permit the exercise of such Voting Rights.
4.2 Number of Votes
With respect to all meetings of shareholders of Apta at which
holders of Apta Common Shares are entitled to vote (each, a "Apta
Meeting") and with respect to all written consents sought by Apta
from its shareholders including the holders of Apta Common Shares
(each, a "Apta Consent"), each Beneficiary shall be entitled to
instruct the Agent to cast and exercise one of the votes
comprised in the Voting Rights for each Exchangeable Share owned
of record by such Beneficiary on the record date established by
Apta or by applicable law for such Apta Meeting or Apta Consent,
as the case may be (the "Beneficiary Votes"), in respect of each
matter, question, proposal or proposition to be voted on at such
Apta Meeting or in connection with such Apta Consent.
4.3 Mailings to Beneficiaries
With respect to each Apta Meeting and Apta Consent, the Agent
shall mail or cause to be mailed (or otherwise communicate in the
same manner as Apta utilizes in communications to holders of Apta
Common Shares, subject to the Agent being advised in writing of
such method of communication and its ability to provide such
method) to each of the Beneficiaries named in the List referred
to in section 4.6, such mailing or communication to commence on
the same day as the mailing or notice (or other communication)
with respect thereto is commenced by Apta to its shareholders:
(a) a copy of such notice, together with any related materials
to be provided to shareholders of Apta;
(b) a statement that such Beneficiary is entitled to instruct
the Agent as to the exercise of the Beneficiary Votes with
respect to such Apta Meeting or Apta Consent or, pursuant to
section 4.7, to attend such Apta Meeting and to exercise
personally the Beneficiary Votes thereat;
(c) a statement as to the manner in which such instructions may
be given to the Agent, including an express indication that
instructions may be given to the Agent to give:
(i) a proxy to such Beneficiary or his designee to exercise
personally the Beneficiary Votes; or
(ii) a proxy to a designated agent or other representative of the
management of Apta to exercise such Beneficiary Votes;
(d) a statement that if no such instructions are received from
the Beneficiary, the Beneficiary Votes to which such
Beneficiary is entitled will not be exercised;
(e) a form of direction whereby the Beneficiary may so direct
and instruct the Agent as contemplated herein; and
(f) a statement of the time and date by which such instructions
must be received by the Agent in order to be binding upon
it, which in the case of a Apta Meeting shall not be earlier
than the close of business on the second Business Day prior
to such meeting, and of the method for revoking or amending
such instructions.
The materials referred to in sections 4.3(a) through 4.3(f)
inclusive shall be provided by Apta to the Agent.
For the purpose of determining Beneficiary Votes to which a
Beneficiary is entitled in respect of any Apta Meeting or Apta
Consent, the number of Exchangeable Shares owned of record by the
Beneficiary shall be determined at the close of business on the
record date established by Apta or by applicable law for purposes
of determining shareholders entitled to vote at such Apta Meeting
or to execute a Apta Consent. Exchangeco shall make such
determination and shall promptly advise the Agent of the number
of Beneficiaries entitled to vote and the number of Exchangeable
Shares held by each of them. Apta will notify the Agent of any
decision of the Board of Directors of Apta with respect to the
calling of any Apta Meeting or the seeking of a Apta Consent and
shall provide all necessary information and materials to the
Agent in each case promptly and in any event in sufficient time
to enable the Agent to perform its obligations contemplated by
this section 4.3.
4.4 Copies of Shareholder Information
Apta will deliver to the Agent copies of all proxy materials
(including notices of Apta Meetings but excluding proxies to vote
Apta Common Shares), information statements, reports (including
without limitation, all interim and annual financial statements)
and other written communications that, in each case, are to be
distributed from time to time to holders of Apta Common Shares in
sufficient quantities and in sufficient time so as to enable the
Agent to send those materials to each Beneficiary at the same
time as such materials are first sent to holders of Apta Common
Shares. The Agent will mail or otherwise send to each
Beneficiary, at the expense of Apta, copies of all such materials
(and all materials specifically directed to the Beneficiaries or
to the Agent for the benefit of the Beneficiaries by Apta)
received by the Agent from Apta contemporaneously with the
sending of such materials to holders of Apta Common Shares. The
Agent will also make available for inspection by any Beneficiary
at the Agent's principal business office in the City of Toronto
all proxy materials, information statements, reports and other
written communications that are:
(a) received by the Agent as the registered holder of the
Special Voting Share and made available by Apta generally to
the holders of Apta Common Shares; or
(b) specifically directed to the Beneficiaries or to the Agent
for the benefit of the Beneficiaries by Apta.
4.5 Other Materials
As soon as reasonably practicable after receipt by Apta or
shareholders of Apta (if such receipt is known by Apta) of any
material sent or given by or on behalf of a third party to
holders of Apta Common Shares generally, including without
limitation, dissident proxy and information circulars (and
related information and material) and tender and exchange offer
circulars (and related information and material), Apta shall
obtain and deliver to the Agent copies thereof in sufficient
quantities so as to enable the Agent to forward such material
(unless the same has been provided directly to Beneficiaries by
such third party) to each Beneficiary as soon as possible
thereafter. As soon as practicable following receipt thereof,
the Agent will mail or otherwise send to each Beneficiary, at the
expense of Apta, copies of all such materials received by the
Agent from Apta. The Agent will also make available for
inspection by any Beneficiary at the Agent's principal corporate
office in the City of Toronto copies of all such materials.
4.6 List of Persons Entitled to Vote
Exchangeco shall, (a) prior to each annual, general and special
Apta Meeting or the seeking of any Apta Consent and (b) forthwith
upon each request made at any time by the Agent, prepare or cause
to be prepared a list (a "List") of the names and addresses of
the Beneficiaries arranged in alphabetical order and showing the
number of Exchangeable Shares held of record by each such
Beneficiary, in each case at the close of business on the date
specified by the Agent in such request or, in the case of a List
prepared in connection with a Apta Meeting or a Apta Consent, at
the close of business on the record date established by Apta or
pursuant to applicable law for determining the holders of Apta
Common Shares entitled to receive notice of and/or to vote at
such Apta Meeting or to give consent in connection with such Apta
Consent. Each such List shall be delivered to the Agent promptly
after receipt by Exchangeco 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 to permit the Agent to
perform its obligations under this Agreement. Apta agrees to
give Exchangeco notice (with a copy to the Agent) of the calling
of any Apta Meeting or the seeking of any Apta Consent, together
with the record dates therefor, sufficiently prior to the record
date in connection with such meeting or seeking of such consent
so as to enable Exchangeco to perform its obligations under this
section 4.6.
4.7 Entitlement to Direct Votes
Any Beneficiary named in a List prepared in connection with any
Apta Meeting or Apta Consent will be entitled to (a) instruct the
Agent in the manner described in section 4.3 with respect to the
exercise of the Beneficiary Votes to which such Beneficiary is
entitled or (b) attend such meeting and personally exercise
thereat, as the proxy of the Agent, the Beneficiary Votes to
which such Beneficiary is entitled.
4.8 Voting by Agent and Attendance of Agent Representative at
Meeting
(a) In connection with each Apta Meeting and Apta Consent, the
Agent shall exercise, either in person or by proxy, in
accordance with the instructions received from a Beneficiary
pursuant to section 4.3, the Beneficiary Votes to which such
Beneficiary is entitled to direct the vote (or any lesser
number thereof as may be set forth in the instructions);
provided, however, that such written instructions are
received by the Agent from the Beneficiary prior to the time
and date fixed by the Agent for receipt of such instructions
in the notice given by the Agent to the Beneficiary pursuant
to section 4.3.
(b) The Agent shall cause a representative who is empowered by
it to sign and deliver, on behalf of the Agent, proxies for
Voting Rights to attend each Apta Meeting. Upon submission
by a Beneficiary (or its designee) of identification
satisfactory to the Agent's representative, and at the
Beneficiary's request, such representative shall sign and
deliver to such Beneficiary (or its designee) a proxy to
exercise personally the Beneficiary Votes as to which such
Beneficiary is otherwise entitled hereunder to direct the
vote, if such Beneficiary either (i) has not previously
given the Agent instructions pursuant to section 4.3 in
respect of such meeting or (ii) submits to such
representative written revocation of any such previous
instructions. At such meeting, the Beneficiary exercising
such Beneficiary Votes shall have the same rights as the
Agent to speak at the meeting in respect of any matter,
question, proposal or proposition, to vote by way of ballot
at the meeting in respect of any matter, question, proposal
or proposition, and to vote at such meeting by way of a show
of hands in respect of any matter, question or proposition.
Apta shall reimburse the Agent for any reasonable expenses
incurred in the course of attending or causing a
representative to attend each Apta Meeting.
4.9 Distribution of Written Materials
Any written materials distributed by the Agent pursuant to this
Agreement shall be sent by mail (or otherwise communicated in the
same manner as Apta utilizes in communications to holders of Apta
Common Shares subject to the Agent being advised in writing of
such method of communication and its ability to provide such
method) to each Beneficiary at its address as shown on the books
of Exchangeco. Exchangeco shall provide or cause to be provided
to the Agent for this purpose, on a timely basis and without
charge or other expense:
(a) a current List; and
(b) upon the request of the Agent, mailing labels to enable the
Agent to carry out its duties under this Agreement.
4.10 Termination of Voting Rights
All of the rights of a Beneficiary with respect to the
Beneficiary Votes exercisable in respect of the Exchangeable
Shares held by such Beneficiary, including the right to instruct
the Agent as to the voting of or to vote personally such
Beneficiary Votes, shall be deemed to be surrendered by the
Beneficiary to Apta, and such Beneficiary Votes and the Voting
Rights represented thereby shall cease immediately upon the
redemption or retraction of the Beneficiary's Exchangeable Shares
pursuant to section 6 or 7 of the Share Provisions, or upon the
effective date of the liquidation, dissolution or winding-up of
Exchangeco pursuant to section 5 of the Share Provisions or upon
the purchase of the Exchangeable Shares by NovaScotiaco pursuant
to the exercise by NovaScotiaco of the Liquidation Call Right,
Redemption Call Right or Retraction Call Right.
ARTICLE 5
EXCHANGE RIGHT AND AUTOMATIC EXCHANGE
5.1 Grant and Ownership of the Exchange Right; Automatic
Exchange Rights
Apta hereby grants to the Agent as Agent for and on behalf of,
and for the use and benefit of, the Beneficiaries the right (the
"Exchange Right"), upon the occurrence and during the continuance
of an Insolvency Event, to require Apta to purchase from each or
any Beneficiary all or any part of the Exchangeable Shares held
by the Beneficiary and the Automatic Exchange Rights, all in
accordance with the provisions of this Agreement. Apta hereby
acknowledges receipt from the Agent as Agent for and on behalf of
the Beneficiaries of good and valuable consideration (and the
adequacy thereof) for the grant of the Exchange Right and the
Automatic Exchange Rights by Apta to the Agent. During the term
of this Agreement and subject to the terms and conditions of this
Agreement, the Agent shall possess and be vested with full legal
ownership of the Exchange Right and the Automatic Exchange Rights
and shall be entitled to exercise all of the rights and powers of
an owner with respect to the Exchange Right and the Automatic
Exchange Rights, provided that the Agent shall:
(a) hold the Exchange Right and the Automatic Exchange Rights
and the legal title thereto as Agent solely for the use and
benefit of the Beneficiaries in accordance with the
provisions of this Agreement; and
(b) except as specifically authorized by this Agreement, have no
power or authority to exercise or otherwise deal in or with
the Exchange Right or the Automatic Exchange Rights, and the
Agent shall not exercise any such rights for any purpose
other than the purposes set out in this Agreement.
5.2 Legended Share Certificates
Exchangeco will cause each certificate representing Exchangeable
Shares to bear an appropriate legend notifying the Beneficiaries
of:
(a) their right to instruct the Agent with respect to the
exercise of the Exchange Right in respect of the
Exchangeable Shares held by a Beneficiary; and
(b) the Automatic Exchange Rights.
5.3 General Exercise of Exchange Right
The Exchange Right shall be and remain vested in and exercisable
by the Agent. Subject to section 7.14, the Agent shall exercise
the Exchange Right only on the basis of instructions received
pursuant to this Article 5 from Beneficiaries entitled to
instruct the Agent as to the exercise thereof. To the extent
that no instructions are received from a Beneficiary with respect
to the Exchange Right, the Agent shall not exercise or permit the
exercise of the Exchange Right.
5.4 Purchase Price
The purchase price payable by Apta for each Exchangeable Share to
be purchased by Apta under the Exchange Right shall be an amount
per share equal to (a) the Current Market Price of a Apta Common
Share on the last Business Day prior to the day of closing of the
purchase and sale of such Exchangeable Share under the Exchange
Right, which shall be satisfied in full by Apta causing to be
sent to such holder one Apta Common Share for each Exchangeable
Share, plus (b) to the extent not paid by Exchangeco, an
additional amount equivalent to the full amount of all declared
and unpaid dividends on each such Exchangeable Share held by such
holder on any dividend record date which occurred prior to the
closing of the purchase and sale. The purchase price for each
such Exchangeable Share so purchased may be satisfied only by
Apta issuing and delivering or causing to be delivered to the
Agent, on behalf of the relevant Beneficiary, one Apta Common
Share and on the applicable payment date a cheque for the
balance, if any, of the purchase price without interest (but less
any amounts withheld pursuant to section 5.13).
5.5 Exercise Instructions
Subject to the terms and conditions herein set forth, a
Beneficiary shall be entitled, upon the occurrence and during the
continuance of an Insolvency Event, to instruct the Agent to
exercise the Exchange Right with respect to all or any part of
the Exchangeable Shares registered in the name of such
Beneficiary on the books of Exchangeco. To cause the exercise of
the Exchange Right by the Agent, the Beneficiary shall deliver to
the Agent, in person or by certified or registered mail, at its
principal corporate office in Toronto, Ontario or at such other
places in Canada as the Agent may from time to time designate by
written notice to the Beneficiaries, the certificates
representing the Exchangeable Shares which such Beneficiary
desires Apta to purchase, duly endorsed in blank for transfer,
and accompanied by such other documents and instruments as may be
required to effect a transfer of Exchangeable Shares under the
Business Corporations Act (New Brunswick) and the articles and by-
laws of Exchangeco and such additional documents and instruments
as the Agent may reasonably require together with (a) a duly
completed form of notice of exercise of the Exchange Right,
contained on the reverse of or attached to the Exchangeable Share
certificates, stating (i) that the Beneficiary thereby instructs
the Agent to exercise the Exchange Right so as to require Apta to
purchase from the Beneficiary the number of Exchangeable Shares
specified therein, (ii) that such Beneficiary has good title to
and owns all such Exchangeable Shares to be acquired by Apta free
and clear of all liens, claims and encumbrances, (iii) the names
in which the certificates representing Apta Common Shares
issuable in connection with the exercise of the Exchange Right
are to be issued, (iv) the names and addresses of the persons to
whom such Apta Common Share certificates should be delivered, and
(v) payment (or evidence satisfactory to the Agent, Exchangeco
and Apta of payment) of the taxes (if any) payable as
contemplated by section 5.8 of this Agreement. If only a portion
of the Exchangeable Shares represented by any certificate or
certificates delivered to the Agent are to be purchased by Apta
under the Exchange Right, a new certificate for the balance of
such Exchangeable Shares shall be issued to the holder at the
expense of Exchangeco.
5.6 Delivery of Apta Common Shares; Effect of Exercise
Promptly after receipt of the certificates representing the
Exchangeable Shares which the Beneficiary desires Apta to
purchase under the Exchange Right, together with such documents
and instruments of transfer and a duly completed form of notice
of exercise of the Exchange Right (and payment of taxes, if any,
payable as contemplated by section 5.8 or evidence thereof), duly
endorsed for transfer to Apta, the Agent shall notify Apta and
Exchangeco of its receipt of the same, which notice to Apta and
Exchangeco shall constitute exercise of the Exchange Right by the
Agent on behalf of the holder of such Exchangeable Shares, and
Apta shall promptly thereafter deliver or cause to be delivered
to the Agent, for delivery to the Beneficiary of such
Exchangeable Shares (or to such other persons, if any, properly
designated by such Beneficiary) the number of Apta Common Shares
issuable in connection with the exercise of the Exchange Right,
and on the applicable payment date cheques for the balance, if
any, of the total purchase price therefor without interest (but
less any amounts withheld pursuant to section 5.13); provided,
however, that no such delivery shall be made unless and until the
Beneficiary requesting the same shall have paid the taxes (or
provided evidence satisfactory to the Agent, Exchangeco and Apta
of the payment of the taxes, if any, payable) as contemplated by
section 5.8 of this Agreement. Immediately upon the giving of
notice by the Agent to Apta and Exchangeco of the exercise of the
Exchange Right as provided in this section 5.6, the closing of
the transaction of purchase and sale contemplated by the Exchange
Right shall be deemed to have occurred and the holder of such
Exchangeable Shares shall be deemed to have transferred to Apta
all of such holder's right, title and interest in and to such
Exchangeable Shares and the related interest in the Special
Voting Share and the benefit of the Support Agreement and shall
cease to be a holder of such Exchangeable Shares and shall not be
entitled to exercise any of the rights of a holder in respect
thereof, other than the right to receive his proportionate part
of the total purchase price therefor, unless the requisite number
of Apta Common Shares is not allotted, issued and delivered by
Apta to the Agent within five Business Days of the date of the
giving of such notice by the Agent, in which case the rights of
the Beneficiary shall remain unaffected until such Apta Common
Shares are so allotted, issued and delivered by Apta. Upon
delivery by Apta to the Agent of such Apta Common Shares, the
Agent shall deliver such Apta Common Shares to such Beneficiary
(or to such other persons, if any, properly designated by such
Beneficiary). Concurrently with such Beneficiary ceasing to be a
holder of Exchangeable Shares, the Beneficiary shall be
considered and deemed for all purposes to be the holder of Apta
Common Shares delivered to it pursuant to the Exchange Right.
5.7 Exercise of Exchange Right Subsequent to Retraction
In the event that a Beneficiary has exercised its right under
section 6 of the Share Provisions to require Exchangeco to redeem
any or all of the Exchangeable Shares held by the Beneficiary
(the "Retracted Shares") and is notified by Exchangeco pursuant
to section 6.6 of the Share Provisions that Exchangeco will not
be permitted as a result of solvency requirements of applicable
law to redeem all such Retracted Shares, and provided that
NovaScotiaco shall not have exercised the Retraction Call Right
with respect to the Retracted Shares and that the Beneficiary has
not revoked the retraction request delivered by the Beneficiary
to Exchangeco pursuant to section 6.7 of the Share Provisions,
the retraction request will constitute and will be deemed to
constitute notice from the Beneficiary to the Agent instructing
the Agent to exercise the Exchange Right with respect to those
Retracted Shares that Exchangeco is unable to redeem. In any
such event, Exchangeco hereby agrees with the Agent and in favour
of the Beneficiary promptly to forward or cause to be forwarded
to the Agent all relevant materials delivered by the Beneficiary
to Exchangeco or to the transfer agent of the Exchangeable Shares
(including without limitation, a copy of the retraction request
delivered pursuant to section 6.1 of the Share Provisions) in
connection with such proposed redemption of the Retracted Shares
and the Agent will thereupon exercise the Exchange Right with
respect to the Retracted Shares that Exchangeco is not permitted
to redeem and will require Apta to purchase such shares in
accordance with the provisions of this Article 5.
5.8 Stamp or Other Transfer Taxes
Upon any sale of Exchangeable Shares to Apta pursuant to the
Exchange Right or the Automatic Exchange Rights, the share
certificate or certificates representing Apta Common Shares to be
delivered in connection with the payment of the total purchase
price therefor shall be issued in the name of the Beneficiary of
the Exchangeable Shares so sold or in such names as such
Beneficiary may otherwise direct in writing without charge to the
holder of the Exchangeable Shares so sold; provided, however,
that such Beneficiary (a) shall pay (and none of Apta, Exchangeco
or the Agent shall be required to pay) any documentary, stamp,
transfer 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 Beneficiary or (b) shall have evidenced to
the satisfaction of the Agent, Apta and Exchangeco that such
taxes, if any, have been paid.
5.9 Notice of Insolvency Event
As soon as practicable following the occurrence of an Insolvency
Event or any event that with the giving of notice or the passage
of time or both would be an Insolvency Event, Exchangeco and Apta
shall give written notice thereof to the Agent. As soon as
practicable following the receipt of notice from Exchangeco and
Apta of the occurrence of an Insolvency Event, or upon the Agent
becoming aware of an Insolvency Event, the Agent will mail to
each Beneficiary, at the expense of Apta, a notice of such
Insolvency Event, which notice shall contain a brief statement of
the rights of the Beneficiaries with respect to the Exchange
Right.
5.10 Qualification of Apta Common Shares
Apta covenants that if any Apta Common Shares to be issued and
delivered pursuant to the Exchange Right or the Automatic
Exchange Rights require registration or qualification with or
approval of or the filing of any document, including any
prospectus or similar document, or the taking of any proceeding
with or the obtaining of any order, ruling or consent from any
governmental or regulatory authority under any Canadian or United
States federal, provincial or state law or regulation or pursuant
to the rules and regulations of any regulatory authority or the
fulfillment of any other Canadian or United States federal,
provincial or state legal requirement before such shares may be
issued and delivered by Apta to the initial holder thereof or in
order that such shares may be freely traded thereafter (other
than any restrictions under Rule 144 or of general application on
transfer by reason of a holder being a "control person" of Apta
for purposes of Canadian provincial securities law or an
"affiliate" of Apta for purposes of United States federal or
state securities law), Apta will in good faith expeditiously take
all such actions and do all such things as are necessary or
desirable to cause such Apta Common Shares to be and remain duly
registered, qualified or approved. Apta will in good faith
expeditiously take all such actions and do all such things as are
reasonably necessary or desirable to cause all Apta Common Shares
to be delivered pursuant to the Exchange Right or the Automatic
Exchange Rights to be listed, quoted or posted for trading on all
stock exchanges and quotation systems on which outstanding Apta
Common Shares have been listed by Apta and remain listed and are
quoted or posted for trading at such time.
5.11 Apta Common Shares
Apta hereby represents, warrants and covenants that the Apta
Common Shares issuable as described herein will be duly
authorized and validly issued as fully paid and non-assessable
and shall be free and clear of any lien, claim or encumbrance.
5.12 Automatic Exchange on Liquidation of Apta
(a) Apta will give the Agent written notice of each of the
following events at the time set forth below:
(i) in the event of any determination by the board of
directors of Apta to institute voluntary liquidation,
dissolution or winding-up proceedings with respect to
Apta or to effect any other distribution of assets of
Apta among its shareholders for the purpose of winding
up its affairs, at least 60 days prior to the proposed
effective date of such liquidation, dissolution,
winding-up or other distribution; and
(ii) as soon as practicable following the earlier of (A)
receipt by Apta of notice of, and (B) Apta 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
Apta or to effect any other distribution of assets of
Apta among its shareholders for the purpose of winding
up its affairs, in each case where Apta has failed to
contest in good faith any such proceeding commenced in
respect of Apta within 30 days of becoming aware
thereof.
(b) As soon as practicable following receipt by the Agent from
Apta of notice of any event (a "Liquidation Event")
contemplated by section 5.12(a)(i) or 5.12(a)(ii) above, the
Agent will give notice thereof to the Beneficiaries. Such
notice will be provided by Apta to the Agent and shall
include a brief description of the automatic exchange of
Exchangeable Shares for Apta Common Shares provided for in
section 5.12(c).
(c) In order that the Beneficiaries will be able to participate
on a pro rata basis with the holders of Apta Common Shares
in the distribution of assets of Apta in connection with a
Liquidation Event, on the fifth Business Day prior to the
effective date (the "Liquidation Event Effective Date") of a
Liquidation Event all of the then outstanding Exchangeable
Shares shall be automatically exchanged for Apta Common
Shares. To effect such automatic exchange, Apta shall
purchase on the fifth Business Day prior to the Liquidation
Event Effective Date each Exchangeable Share then
outstanding and held by Beneficiaries, and each Beneficiary
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 a Apta Common Share on the fifth Business
Day prior to the Liquidation Event Effective Date, which
shall be satisfied in full by Apta issuing to the
Beneficiary one Apta Common Share, and (b) to the extent not
paid by Exchangeco, an additional amount equivalent to the
full amount of all declared and unpaid dividends on each
such Exchangeable Share held by such holder on any dividend
record date which occurred prior to the date of the
exchange.
(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 Apta Common Shares shall be deemed
to have occurred, and each Beneficiary shall be deemed to
have transferred to Apta all of the Beneficiary's right,
title and interest in and to such Beneficiary's Exchangeable
Shares and the related interest in the Special Voting Share
and the benefit of the Support Agreement and shall cease to
be a holder of such Exchangeable Shares and Apta shall issue
to the Beneficiary the Apta Common Shares issuable upon the
automatic exchange of Exchangeable Shares for Apta Common
Shares and on the applicable payment date shall deliver to
the Agent for delivery to the Beneficiary a cheque for the
balance, if any, of the total purchase price for such
Exchangeable Shares without interest but less any amounts
withheld pursuant to section 5.13. Concurrently with such
Beneficiary ceasing to be a holder of Exchangeable Shares,
the Beneficiary shall be considered and deemed for all
purposes to be the holder of Apta Common Shares issued
pursuant to the automatic exchange of Exchangeable Shares
for Apta Common Shares and the certificates held by the
Beneficiary previously representing the Exchangeable Shares
exchanged by the Beneficiary with Apta pursuant to such
automatic exchange shall thereafter be deemed to represent
Apta Common Shares issued to the Beneficiary by Apta
pursuant to such automatic exchange. Upon the request of a
Beneficiary and the surrender by the Beneficiary of
Exchangeable Share certificates deemed to represent Apta
Common Shares, duly endorsed in blank and accompanied by
such instruments of transfer as Apta may reasonably require,
Apta shall deliver or cause to be delivered to the
Beneficiary certificates representing Apta Common Shares of
which the Beneficiary is the holder.
5.13 Withholding Rights
Apta and Exchangeco shall be entitled to deduct and withhold from
any consideration otherwise payable under this Agreement to any
holder of Exchangeable Shares or Apta Common Shares such amounts
as Apta or Exchangeco is required or permitted to deduct and
withhold with respect to such payment under the Income Tax Act
(Canada), the United States Internal Revenue Code or any
provision of provincial, state, local or foreign tax law, in each
case as amended or succeeded. To the extent that amounts are so
withheld, such withheld amounts shall be treated for all purposes
as having been paid to the holder 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 holder
exceeds the cash portion of the consideration otherwise payable
to the holder, Apta and Exchangeco are hereby authorized to sell
or otherwise dispose of such portion of the consideration as is
necessary to provide sufficient funds to Apta or Exchangeco, as
the case may be, to enable it to comply with such deduction or
withholding requirement and Apta or Exchangeco shall notify the
holder thereof and remit to such holder any unapplied balance of
the net proceeds of such sale. Apta represents and warrants
that, based upon facts currently known to it, it has no current
intention, as at the date of this Agreement, to deduct or
withhold from any dividend paid to holders of Exchangeable Shares
any amounts under the United States Internal Revenue Code.
ARTICLE 6
RESTRICTIONS ON ISSUE OF SPECIAL VOTING SHARE
6.1 Issue of Additional Shares
During the term of this Agreement, Apta shall not, without the
consent of the holders at the relevant time of Exchangeable
Shares, given in accordance with subsection 11.2 of the Share
Provisions, issue any additional Special Voting Shares.
ARTICLE 7
CONCERNING THE AGENT
7.1 Powers and Duties of the Agent
The rights, powers, duties and authorities of the Agent under
this Agreement, in its capacity as Agent, shall include:
(a) receipt and deposit of the Special Voting Share from Apta as
Agent for and on behalf of the Beneficiaries in accordance
with the provisions of this Agreement;
(b) granting proxies and distributing materials to Beneficiaries
as provided in this Agreement;
(c) voting the Beneficiary Votes in accordance with the
provisions of this Agreement;
(d) receiving the grant of the Exchange Right and the Automatic
Exchange Rights from Apta as Agent for and on behalf of the
Beneficiaries in accordance with the provisions of this
Agreement;
(e) exercising the Exchange Right and enforcing the benefit of
the Automatic Exchange Rights, in each case in accordance
with the provisions of this Agreement, and in connection
therewith receiving from Beneficiaries Exchangeable Shares
and other requisite documents and distributing to such
Beneficiaries Apta Common Shares and cheques, if any, to
which such Beneficiaries are entitled upon the exercise of
the Exchange Right or pursuant to the Automatic Exchange
Rights, as the case may be;
(f) holding title to the Special Voting Share and the benefit of
the Support Agreement;
(g) taking action on its own initiative or at the direction of a
Beneficiary or Beneficiaries to enforce the obligations of
Apta and Exchangeco under this Agreement and the Support
Agreement; and
(h) taking such other actions and doing such other things as are
specifically provided in this Agreement.
In the exercise of such rights, powers, duties and authorities,
the Agent shall have (and is granted) such incidental and
additional rights, powers, duties and authority not in conflict
with any of the provisions of this Agreement as the Agent, acting
in good faith and in the reasonable exercise of its discretion,
may deem necessary, appropriate or desirable to effect the
purpose of this Agreement. Any exercise of such discretionary
rights, powers, duties and authorities by the Agent shall be
final, conclusive and binding upon all persons.
The Agent in exercising its rights, powers, duties and
authorities hereunder shall act honestly and in good faith and
with a view to the best interests of the Beneficiaries and shall
exercise the care, diligence and skill that a reasonably prudent
Agent would exercise in comparable circumstances.
7.2 No Conflict of Interest
The Agent represents to Apta and Exchangeco that at the date of
execution and delivery of this Agreement there exists no material
conflict of interest in the role of the Agent as a fiduciary
hereunder and the role of the Agent in any other capacity. The
Agent shall, within ninety (90) days after it becomes aware that
such material conflict of interest exists, either eliminate such
material conflict of interest or resign in the manner and with
the effect specified in Article 10 herein. If, notwithstanding
the foregoing provisions of this section 7.2, the Agent has such
a material conflict of interest, the validity and enforceability
of this Agreement shall not be affected in any manner whatsoever
by reason only of the existence of such material conflict of
interest. If the Agent contravenes the foregoing provisions of
this section 7.2, any interested party may apply to the Ontario
Court of Justice (General Division) for an order that the Agent
be replaced as Agent hereunder.
7.3 Dealings with Transfer Agents, Registrars, etc.
Apta and Exchangeco irrevocably authorize the Agent, from time to
time, to:
(a) consult, communicate and otherwise deal with the respective
registrars and transfer agents, and with any such subsequent
registrar or transfer agent, of the Exchangeable Shares and
Apta Common Shares; and
(b) requisition from time to time, (i) from any such registrar
or transfer agent any information readily available from the
records maintained by it which the Agent may reasonably
require for the discharge of its duties and responsibilities
under this Agreement and (ii) from the transfer agent of
Apta Common Shares, and any subsequent transfer agent of
such shares, the share certificates issuable upon the
exercise from time to time of the Exchange Right and
pursuant to the Automatic Exchange Rights.
Apta and Exchangeco irrevocably authorize their respective
registrars and transfer agents to comply with all such requests.
Apta covenants that it will supply its transfer agent with duly
executed share certificates for the purpose of completing the
exercise from time to time of the Exchange Right and the
Automatic Exchange Rights.
7.4 Books and Records
The Agent shall keep available for inspection by Apta and
Exchangeco at the Agent's principal business office in Toronto,
Ontario correct and complete books and records of account
relating to the agency created by this Agreement, including
without limitation, all relevant data relating to mailings and
instructions to and from Beneficiaries. On or before September
30, 2002, and on or before September 30 in every year thereafter,
so long as the Special Voting Share is on deposit with the Agent,
the Agent shall transmit to Apta and Exchangeco a brief report,
dated as of the preceding June 30t, with respect to:
(a) the number of exercises of the Exchange Right, if any, and
the aggregate number of Exchangeable Shares received by the
Agent on behalf of the Beneficiaries in consideration of the
issuance by Apta of Apta Common Shares in connection with
the Exchange Right, during the calendar year ended on such
June 30t; and
(b) any action taken by the Agent in the performance of its
duties under this Agreement which it had not previously
reported and which, in the Agent's opinion, materially
affects the Special Voting Share and the benefit of the
Support Agreement.
7.5 Indemnification Prior to Certain Actions by Agent
The Agent 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 Beneficiary upon such Beneficiary
furnishing to the Agent reasonable security or indemnity (as
determined by the Agent in its sole discretion) against the
costs, expenses and liabilities which may be incurred by the
Agent therein or thereby, provided that no Beneficiary shall be
obligated to furnish to the Agent any such security or indemnity
in connection with the exercise by the Agent of any of its
rights, duties, powers and authorities with respect to the
Special Voting Share pursuant to Article 4, subject to section
7.14. None of the provisions contained in this Agreement shall
require the Agent to expend or risk its own funds or otherwise
incur financial liability in the exercise of any of its rights,
powers, duties, or authorities unless funded, given security and
indemnified as aforesaid.
7.6 Action of Beneficiaries
No Beneficiary shall have the right to institute any action, suit
or proceeding or to exercise any other remedy authorized by this
Agreement for the purpose of enforcing any of its rights
hereunder or in connection with the Exchangeable Shares or for
the execution of any trust or power hereunder unless the
Beneficiary has requested the Agent to take or institute such
action, suit or proceeding and furnished the Agent with the
security or indemnity referred to in section 7.5 and the Agent
shall have failed to act within a reasonable time thereafter. In
such case, but not otherwise, the Beneficiary shall be entitled
to take proceedings in any court of competent jurisdiction such
as the Agent might have taken; it being understood and intended
that no one or more Beneficiaries shall have any right in any
manner whatsoever to affect, disturb or prejudice the rights
hereby created by any such action, or to enforce any right
hereunder or the Voting Rights, except subject to the conditions
and in the manner herein provided, and that all powers hereunder
shall be exercised and all proceedings at law shall be
instituted, had and maintained by the Agent, except only as
herein provided, and in any event for the equal benefit of all
Beneficiaries.
7.7 Reliance Upon Declarations
The Agent shall not be considered to be in contravention of any
its rights, powers, duties and authorities hereunder if, when
required, it acts and relies in good faith upon statutory
declarations, certificates, opinions or reports furnished
pursuant to the provisions hereof or required by the Agent to be
furnished to it in the exercise of its rights, powers, duties and
authorities hereunder if such statutory declarations,
certificates, opinions or reports comply with the provisions of
section 7.8, if applicable, and with any other applicable
provisions of this Agreement.
7.8 Evidence and Authority to Agent
(a) Apta and/or Exchangeco shall furnish to the Agent evidence
of compliance with the conditions provided for in this
Agreement relating to any action or step required or
permitted to be taken by Apta and/or Exchangeco or the Agent
under this Agreement or as a result of any obligation
imposed under this Agreement, including, without limitation,
in respect of the Voting Rights or the Exchange Right or the
Automatic Exchange Rights and the taking of any other action
to be taken by the Agent at the request of or on the
application of Apta and/or Exchangeco promptly if and when:
(i) such evidence is required by any other section of this
Agreement to be furnished to the Agent in accordance
with the terms of this section 7.8; or
(ii) the Agent, in the exercise of its rights, powers,
duties and authorities under this Agreement, gives Apta
and/or Exchangeco written notice requiring it to
furnish such evidence in relation to any particular
action or obligation specified in such notice.
(b) Such evidence shall consist of an Officer's Certificate of
Apta and/or Exchangeco or 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.
(c) Whenever such evidence relates to a matter other than the
Voting Rights or the Exchange Right or the Automatic
Exchange Rights or the taking of any other action to be
taken by the Agent at the request or on the application of
Apta and/or Exchangeco, and except as otherwise specifically
provided herein, such evidence may consist of a report or
opinion of any solicitor, attorney, 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 Apta and/or
Exchangeco it shall be in the form of an officer's
certificate or a statutory declaration.
(d) Each statutory declaration, officer's certificate, opinion
or report furnished to the Agent as evidence of compliance
with a condition provided for in this Agreement shall
include a statement by the person giving the evidence:
(i) declaring that he has read and understands the
provisions of this Agreement relating to the condition
in question;
(ii) describing the nature and scope of the examination or
investigation upon which he based the statutory
declaration, certificate, statement or opinion; and
(iii) 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.
7.9 Experts, Advisers and Agents
The Agent may:
(a) in relation to these presents act and rely on the opinion or
advice of or information obtained from any solicitor,
attorney, auditor, accountant, appraiser, valuator, engineer
or other expert, whether retained by the Agent or by Apta
and/or Exchangeco 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;
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)
and compensation for all disbursements, costs and expenses
made or incurred by it in the discharge of its duties
hereunder.
7.10 Investment of Moneys Held by Agent
Unless otherwise provided in this Agreement, any moneys held by
or on behalf of the Agent which under the terms of this Agreement
may or ought to be invested or which may be in the hands of the
Agent may be deposited in the name of the Agent in any loan or
trust company authorized to accept deposits under the laws of
Canada or any province thereof at the rate of interest then
current on similar deposits.
7.11 Agent Not Required to Give Security
The Agent shall not be required to give any bond or security in
respect of the execution of the rights, duties, powers and
authorities of this Agreement or otherwise in respect of the
premises.
7.12 Agent Not Bound to Act on Request
Except as in this Agreement otherwise specifically provided, the
Agent shall not be bound to act in accordance with any direction
or request of Apta and/or Exchangeco or of the directors thereof
until a duly authenticated copy of the instrument or resolution
containing such direction or request shall have been delivered to
the Agent, and the Agent shall be empowered to act upon any such
copy purporting to be authenticated and believed by the Agent to
be genuine.
7.13 Authority to Carry on Business
The Agent represents to Apta and Exchangeco that at the date of
execution and delivery by it of this Agreement it is authorized
to carry on business in the Province of Ontario but if,
notwithstanding the provisions of this section 7.13, it ceases to
be so authorized to carry on business, the validity and
enforceability of this Agreement and the Voting Rights, the
Exchange Right and the Automatic Exchange Rights shall not be
affected in any manner whatsoever by reason only of such event
but the Agent shall, within 90 days after ceasing to be
authorized to carry on business in the Province of Ontario,
either become so authorized or resign in the manner and with the
effect specified in Article 10.
7.14 Conflicting Claims
If conflicting claims or demands are made or asserted with
respect to any interest of any Beneficiary 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 Beneficiary in any Exchangeable
Shares, resulting in conflicting claims or demands being made in
connection with such interest, then the Agent shall be entitled,
at its sole discretion, to refuse to recognize or to comply with
any such claims or demands. In so refusing, the Agent may elect
not to exercise any Voting Rights, Exchange Rights or Automatic
Exchange Rights subject to such conflicting claims or demands
and, in so doing, the Agent 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 Agent
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
Voting Rights, 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 Voting Rights, 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 Agent shall have been furnished with an
executed copy of such agreement certified to be in full
force and effect.
If the Agent 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 Agent as it shall deem
appropriate to fully indemnify it as between all conflicting
claims or demands.
7.15 Acceptance of Appointment
The Agent hereby accepts its appointment as Agent pursuant to
this Agreement and agrees to perform the same upon the terms and
conditions herein set forth, subject to all the terms and
conditions herein set forth.
7.16 Liability of Agent
(a) The Agent shall incur no liability with respect to the
delivery or non-delivery of any certificate or certificates
whether delivered by hand, mail or any other means.
(b) The Agent in its personal or any other capacity, may buy,
lend upon and deal in securities of Apta or Exchangeco and
generally may contract and enter into financial transactions with
Apta or Exchangeco or any of their Affiliates without being
liable to account for any profit made thereby.
(c) The Agent shall not be bound to give any notice or do or
take any act, action or proceeding by virtue of the powers
conferred on it hereby unless and until it shall be specifically
required to do so under the terms hereof; nor shall the Agent be
required to take any notice of, or to do so 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
Agent and in the absence of such notice the Agent may for all
purposes of this agreement to 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.
(d) The Agent shall not be obligated to disburse any funds
beyond those which have been provided to it for forwarding to
Beneficiaries.
(e) The Agent shall not be responsible for the validity or
quantity of shares or securities that it receives as a result of
exchange.
ARTICLE 8
COMPENSATION
8.1 Fees and Expenses of the Agent
Apta and Exchangeco jointly and severally agree to pay the Agent
reasonable compensation for all of the services rendered by it
under this Agreement and will reimburse the Agent for all
reasonable expenses (including taxes other than taxes based on
the net income of the Agent) and disbursements, including the
fees and expenses of experts, advisers and agents retained
pursuant to section 7.9, and including the cost and expense of
any suit or litigation of any character and any proceedings
before any governmental agency reasonably incurred by the Agent
in connection with its duties under this Agreement; provided that
Apta and Exchangeco shall have no obligation to reimburse the
Agent for any expenses or disbursements paid, incurred or
suffered by the Agent in any suit or litigation in which the
Agent is determined to have acted in bad faith or with
negligence, recklessness or willful misconduct.
ARTICLE 9
INDEMNIFICATION AND LIMITATION OF LIABILITY
9.1 Indemnification of the Agent
(a) Apta and Exchangeco jointly and severally agree to indemnify
and hold harmless the Agent and each of its partners, associates,
employees, directors, officers and agents appointed and acting in
accordance with this Agreement (collectively, the "Indemnified
Parties") against all claims, losses, damages, reasonable costs,
penalties, fines and reasonable expenses (including reasonable
expenses of the Agent's legal counsel) which, without fraud or
wilful misconduct on the part of such Indemnified Party, may be
paid, incurred or suffered by the Indemnified Party by reason or
as a result of the Agent's acceptance its appointment as Agent,
its compliance with its duties set forth in this Agreement, or
any written or oral instruction delivered to the Agent by Apta or
Exchangeco pursuant hereto.
(b) In no case shall Apta or Exchangeco be liable under this
indemnity for any claim against any of the Indemnified Parties
unless Apta and Exchangeco shall be notified by the Agent of the
written assertion of a claim or of any action commenced against
the Indemnified Parties, promptly after any of the Indemnified
Parties shall have received any such written assertion of a claim
or shall have been served with a summons or other first legal
process giving information as to the nature and basis of the
claim. Subject to (ii) below, Apta and Exchangeco shall be
entitled to participate at their own expense in the defence and,
if Apta and Exchangeco 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. The Agent 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 Agent unless: (i) the employment of such
counsel has been authorized by Apta or Exchangeco, such
authorization not to be unreasonably withheld; (ii) the named
parties to any such suit include both the Agent and Apta or
Exchangeco and the Agent shall have been advised by counsel
acceptable to Apta or Exchangeco that there may be one or more
legal defences available to the Agent that are different from or
in addition to those available to Apta or Exchangeco and that, in
the judgment of such counsel, would present a conflict of
interest were a joint representation to be undertaken (in which
case Apta and Exchangeco shall not have the right to assume the
defence of such suit on behalf of the Agent but shall be liable
to pay the reasonable fees and expenses of counsel for the
Agent); or (iii) Apta and/or Exchangeco shall not have retained
legal counsel on behalf of the Agent within a reasonable amount
of time after it has given them notice of a written assertion of
a claim or action against any indemnified party. Such
indemnification shall survive the resignation and removal of the
Agent and termination of this agreement.
9.2 Limitation of Liability
The Agent shall not be held liable for any loss which may occur
by reason of depreciation of the value of any part of the Special
Voting Share and the benefit of the Support Agreement or any loss
incurred on any investment of funds pursuant to this Agreement,
except to the extent that such loss is attributable to fraud or
wilful misconduct on the part of the Agent.
ARTICLE 10
CHANGE OF AGENT
10.1 Resignation
The Agent, or any Agent hereafter appointed, may at any time
resign by giving written notice of such resignation to Apta and
Exchangeco specifying the date on which it desires to resign,
provided that such notice shall not be given less than one month
before such desired resignation date unless Apta and Exchangeco
otherwise agree and provided further that such resignation shall
not take effect until the date of the appointment of a successor
Agent and the acceptance of such appointment by the successor
Agent. Upon receiving such notice of resignation, Apta and
Exchangeco shall, with the approval of a majority of the holders
of Exchangeable Shares in accordance with section 11.2 of the
Share Provisions, promptly appoint a successor Agent by written
instrument in duplicate, one copy of which shall be delivered to
the resigning Agent and one copy to the successor Agent. Failing
acceptance by a successor Agent, a successor Agent may be
appointed by an order of the Superior Court of Justice of Ontario
upon application of one or more of the Parties hereto.
10.2 Removal
The Agent, or any Agent hereafter appointed, may (provided a
successor Agent is appointed) be removed at any time on not less
than thirty (30) days' prior written notice by affirmative vote
of a majority of holders of Exchangeable Shares in accordance
with section 11.2 of the Share Provisions.
10.3 Successor Agent
Any successor Agent appointed as provided under this Agreement
shall execute, acknowledge and deliver to Apta and Exchangeco and
to its predecessor Agent an instrument accepting such
appointment. Thereupon the resignation or removal of the
predecessor Agent shall become effective and such successor
Agent, 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 the like effect as if
originally named as Agent in this Agreement. However, on the
written request of Apta and Exchangeco or of the successor Agent,
the Agent 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 Agent all
the rights and powers of the Agent so ceasing to act. Upon the
request of any such successor Agent, Apta, Exchangeco and such
predecessor Agent shall execute any and all instruments in
writing for more fully and certainly vesting in and confirming to
such successor Agent all such rights and powers.
10.4 Notice of Successor Agent
Upon acceptance of appointment by a successor Agent as provided
herein, Apta and Exchangeco shall cause to be mailed notice of
the succession of such Agent hereunder to each Beneficiary
specified in a List. If Apta or Exchangeco shall fail to cause
such notice to be mailed within 10 days after acceptance of
appointment by the successor Agent, the successor Agent shall
cause such notice to be mailed at the expense of Apta and
Exchangeco.
ARTICLE 11
APTA SUCCESSORS
11.1 Certain Requirements in Respect of Combination, etc.
Apta and Exchangeco shall not consummate 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, but may do so
if:
(a) such other person or continuing corporation (herein called
the "Apta 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 Agent, acting reasonably, and in the
opinion of legal counsel to the Agent are reasonably
necessary or advisable to evidence the assumption by the
Apta Successor of liability for all moneys payable and
property deliverable hereunder and the covenant of such Apta
Successor to pay and deliver or cause to be delivered the
same and its agreement to observe and perform all the
covenants and obligations of Apta under this Agreement; and
(b) such transaction shall, to the satisfaction of the Agent,
acting reasonably, and in the opinion of legal counsel to
the Agent, be upon such terms and conditions as
substantially to preserve and not to impair in any material
respect any of the rights, duties, powers and authorities of
the Agent or of the Beneficiaries hereunder.
11.2 Vesting of Powers in Successor
Whenever the conditions of section 11.1 have been duly observed
and performed, the Agent and, if required by section 11.1, Apta
Successor and Exchangeco or Apta, as the case may be, shall
execute and deliver the supplemental Agreement provided for in
Article 12 and thereupon Apta Successor shall possess and from
time to time may exercise each and every right and power of
Exchangeco or Apta, as the case may be, under this Agreement in
the name of Apta or otherwise any act or proceeding by any
provision of this Agreement required to be done or performed by
the Board of Directors of Apta or any officers of Apta may be
done and performed with like force and effect by the directors or
officers of such Apta Successor.
11.3 Wholly-Owned Subsidiaries
Nothing herein shall be construed as preventing the amalgamation
or merger of any wholly-owned direct or indirect subsidiary of
Apta, except Exchangeco, with or into Apta or the winding-up,
liquidation or dissolution of any wholly-owned subsidiary of
Apta, other than Exchangeco, provided that all of the assets of
such subsidiary are transferred to Apta or another wholly-owned
direct or indirect subsidiary of Apta, except Exchangeco, and any
such transactions are expressly permitted by this Article 11.
ARTICLE 12
AMENDMENTS AND SUPPLEMENTAL AGREEMENTS
12.1 Amendments, Modifications, etc.
This Agreement may not be amended or modified except by an
agreement in writing executed by Apta, Exchangeco and the Agent
and approved by the Beneficiaries in accordance with subsection
11.2 of the Share Provisions.
12.2 Ministerial Amendments
Notwithstanding the provisions of section 12.1, the Parties may
in writing, at any time and from time to time, without the
approval of the Beneficiaries, amend or modify this Agreement for
the purposes of:
(a) adding to the covenants of any or all parties hereto for the
protection of the Beneficiaries hereunder provided that the
Board of Directors of each of Exchangeco and Apta and the
Agent and its counsel shall be of the good faith opinion
that such additions will not be prejudicial to the rights or
interests of the Beneficiaries;
(b) making such amendments or modifications not inconsistent
with this Agreement as may be necessary or desirable with
respect to matters or questions which, in the good faith
opinion of the Board of Directors of each of Apta and
Exchangeco and in the opinion of the Agent and its counsel,
having in mind the best interests of the Beneficiaries it
may be expedient to make, provided that such Boards of
Directors and the Agent shall be of the opinion that such
amendments and modifications will not be prejudicial to the
interests of the Beneficiaries; or
(c) making such changes or corrections which, on the advice of
counsel to Apta, Exchangeco and the Agent and its counsel,
are required for the purpose of curing or correcting any
ambiguity or defect or inconsistent provision or clerical
omission or mistake or manifest error, provided that the
Agent and the Board of Directors of each of Apta and
Exchangeco shall be of the opinion that such changes or
corrections will not be prejudicial to the rights and
interests of the Beneficiaries.
12.3 Meeting to Consider Amendments
Exchangeco, at the request of Apta, shall call a meeting or
meetings of the Beneficiaries 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 articles and by-laws of Exchangeco, the Share
Provisions and all applicable laws.
12.4 Changes in Capital of Apta and Exchangeco
At all times after the occurrence of any event contemplated
pursuant to section 2.7 or 2.8 of the Support Agreement or
otherwise, as a result of which either Apta 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, with
appropriate changes to all new securities into which Apta 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 evidencing such necessary amendments and
modifications.
12.5 Execution of Supplemental Agreements
No amendment to or modification or waiver of any of the
provisions of this Agreement otherwise permitted hereunder shall
be effective unless made in writing and signed by all of the
Parties hereto. From time to time Exchangeco (when authorized by
a resolution of its Board of Directors), Apta (when authorized by
a resolution of its board of directors) and the Agent 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 Apta Successors and the
covenants of and obligations assumed by each such Apta
Successor in accordance with the provisions of Article 11
and the successors of any successor Agent 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 Voting Rights, the
Exchange Right or the Automatic Exchange Rights which, in
the opinion of the Agent and its counsel, will not be
prejudicial to the interests of the Beneficiaries or are, in
the opinion of counsel to the Agent, necessary or advisable
in order to incorporate, reflect or comply with any
legislation the provisions of which apply to Apta,
Exchangeco, the Agent 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
Agent and its counsel, the rights of the Agent and
Beneficiaries will not be prejudiced thereby.
ARTICLE 13
TERMINATION
13.1 Term
This Agreement shall continue until the earliest to occur of the
following events:
(a) no outstanding Exchangeable Shares are held by a
Beneficiary; and
(b) each of Apta and Exchangeco elects in writing to terminate
this Agreement and such termination is approved by the
Beneficiaries in accordance with subsection 11.2 of the
Share Provisions.
13.2 Survival
The provisions of Articles 8 and 9 shall survive any termination
of 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 Enurement
This Agreement shall be binding upon and enure to the benefit of
the Parties and their respective successors and permitted assigns
and to the benefit of the Beneficiaries. Upon the incorporation
of Exchangeco, all rights and obligations of Ralph Eisenschmid
acting in trust for Exchangeco shall be automatically assigned to
Exchangeco, and Ralph Eisenschmid shall be automatically released
from all obligations undertaken in trust for Exchangeco under
this Agreement.
14.3 Notices to Parties
All notices, requests, demands and other communications hereunder
must be made in writing and will be deemed to have been duly
given if delivered by courier, sent by prepaid registered mail
addressed to the addressee at the address appearing on the first
page hereof or to such other address as may be given in writing
by the Party, or sent by facsimile transmission to the fax number
of the addressee given below or to such other fax number as may
be given in writing by the Party:
(a) to Apta or Exchangeco: (856) 727-0128
with a copy to:
Stephen M. Robinson, Esq.
Stephen M. Robinson, P.A.
126 Wharton Court
Shamong, New Jersey, 08088
Tel: (856) 596-8660
Direct Tell: (856) 268-0588
Fax: (856) 596-8662
Direct Fax: (856) 268-5615
(b) to Agent: (416) 368-0909
Any notice given by personal delivery shall be deemed to be
received on the date of delivery. Any notice sent by courier
shall be deemed to be received on the next Business Day following
the deposit of the communication with the courier service. Any
notice sent by prepaid registered mail shall be deemed to be
received on the fifth (5th) day other than a Saturday, Sunday or
statutory holiday in New Brunswick, following the deposit of the
communication in the mail. If the party giving any Communication
knows or ought reasonably to know of any difficulties with the
postal system which might affect the delivery of mail, any such
Communication may not be mailed but must be given by personal
delivery or by electronic communication. Any notice sent by
facsimile or similar method of recorded communication shall be
deemed to have been received on the date of its transmission if
transmitted before 4:30 p.m. (Toronto time), and on the next
Business Day following the date of its transmission if
transmitted after that time.
14.4 Notice to Beneficiaries
Any and all notices to be given and any documents to be sent to
any Beneficiaries may be given or sent to the address of such
Beneficiary shown on the register of holders of Exchangeable
Shares in any manner permitted by the articles and by-laws of
Exchangeco 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 Beneficiaries.
14.5 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.
14.6 Jurisdiction
This Agreement shall be construed and enforced in accordance with
the laws of the Province of Ontario and the laws of Canada
applicable therein.
14.7 Attornment
Each of the Agent and Apta and Exchangeco agrees that any action
or proceeding arising out of or relating to this Agreement may be
instituted in the courts of Ontario, waives any objection which
it may have now or hereafter to the venue of any such action or
proceeding, irrevocably submits to the jurisdiction of the said
courts in any such action or proceeding, agrees to be bound by
any final 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 and hereby appoints the Agent at
its registered office in the Province of Ontario as attorney for
service of process.
IN WITNESS WHEREOF the parties hereto have caused this Agreement
to be duly executed as of the date first above written.
APTA HOLDINGS, INC.
Per:______________________________
Authorized Signing Officer
I have authority to bind the
corporation
_________________________________
RALPH EISENSCHMID IN TRUST FOR
INTELISYS ACQUISITION INC.,
A COMPANY TO BE INCORPORATED
CARBONARO SUGAR SZWERAS LLP
Per:______________________________
Authorized Partner
I have authority to bind the
partnership