FORM C
ESCROW AGREEMENT
(Performance Escrow Agreement)
THIS AGREEMENT made effective this 30th day of April, 1997.
ALPHA VENTURES INC. (herein called the "Issuer")
OF THE FIRST PART
- and -
MONTREAL TRUST COMPANY OF CANADA
(herein called the "Trustee")
OF THE SECOND PART
- and -
KRAFT INVESTMENTS CORP., 1077431 ONTARIO LIMITED, RRSP#
009516S FIRST MARATHON SECURITIES LIMITED(Michael P. Kraft,
Beneficiary) AND RRSP# 371-05025 NESBITT BURNS INC.
(Richard Sherman, Beneficiary)(herein collectively called the
"Security Holders")
OF THE THIRD PART
WHEREAS certain of the Security Holders and the Issuer entered into a
Pre-Tender Agreement dated the 28th day of October, 1996.
AND WHEREAS the Issuer has made a Take-Over Bid for up to all the shares of
Alpha Corporation ("AC") for the consideration for such property being at least
in part the allotment of securities in the Issuer to the Security Holders and
the other shareholders of AC, the property and the number of securities and the
names of the Security Holders presently owning or about to receive such
securities being respectively and more particularly described in Schedule "A"
attached to and forming part of this agreement;
AND WHEREAS to comply with the requirements of The Alberta Stock Exchange,
the Security Holders are desirous of depositing in escrow certain securities in
the Issuer owned or to be received by them;
AND WHEREAS the Parties hereto have concurrently entered into a Form A
Escrow Agreement with other former shareholders of AC;
AND WHEREAS the Trustee has agreed to undertake and perform its duties to
the terms and conditions thereof,
NOW THEREFORE this agreement witnesses that, in consideration of the sum of
one dollar ($1.00) paid by the parties to each other, receipt of this sum being
acknowledged by each of the parties to each other, the Security Holders jointly
and severally covenant and agree with the Issuer and with the Trustee, and the
Issuer and the Trustee covenant and agree each with the other and with the
Security Holders jointly and severally as follows:
1. Where used in this agreement, or in any amendment of supplement hereto,
unless the context otherwise requires, the following words and phrases shall
have the following ascribed to them below:
a. "Cash Flow" means net income derived from the business of the Issuer, as
shown on the audited financial statements or verified by Issuer's auditors,
adjusted for the following add backs:
i. depreciation,
ii. depletion,
iii deferred taxes,
iv. amortization of goodwill, and
v. amortization of research and development costs.
b. "Related Party" means promoters, officers, directors, other insiders of
the Issuer and any associates or affiliates of the foregoing.
2. Each of the Security Holders hereby places and deposits in escrow with
the Trustee those of his securities in the Issuer which are represented by the
certificates described in Schedule "X" and the Trustee hereby acknowledges
receipt of those certificates. The Security Holders agree to deposit in escrow
any further certificates representing securities in the Issuer which he may
receive as a stock dividend on securities hereby escrowed, and to deliver to the
Trustee immediately on receipt thereof the certificates for any such further
securities and any replacement certificates which may at any time be issued for
any escrowed securities.
3. The Parties hereby agree that, subject to the provisions of paragraph 6
herein, the securities and the beneficial ownership of or any interest in them
and the certificate representing them (including any replacement securities or
certificates) shall not be sold, assigned, hypothecated, alienated, released
from escrow, transferred within escrow, or otherwise in any manner dealt with,
without the written consent of The Alberta Stock Exchange (hereinafter referred
to as the "Exchange") given to the Trustee or except as may be required by
reason of the death or bankruptcy of any Security Holder, in which case the
Trustee shall hold the said certificates subject to this agreement, for whatever
person, or company shall be legally entitled to become the registered owner
thereof
4. The Security Holders direct the Trustee to retain their respective
securities and the certificates (including any replacement securities or
certificates) representing them and not to do or cause anything to be done to
release them from escrow or to allow any transfer, hypothecation or alienation
thereof, without the written consent of the Exchange. The Trustee accepts the
responsibilities placed on it by this agreement and agrees to perform them in
accordance with the terms of this Agreement and the written consent, orders or
directions of the Exchange.
5. Any Security Holder may apply to the Exchange for a consent for a
transfer within escrow and shall, before applying, give reasonable notice in
writing of its intention to the Issuer and the Trustee.
6. (a) The Exchange will consent to the release from escrow of one share
for each $0.20 of Cash Flow.
(b) Any release from escrow under this paragraph 6 shall be made pursuant
to a written application of behalf of the Issuer or the Security Holders, which
application shall be accompanied by evidence of the Cash Flow received in a form
satisfactory to the Exchange. Application for release may only be made once per
year and may only relate to Cash Flow received in the preceding fiscal year or
the fiscal years of the Issuer since the last release from escrow pursuant to
this agreement, whichever is greater. All shares released from escrow shall,
unless otherwise directed by the Exchange, be distributed pro-rata to all
Security Holders.
(c) Notwithstanding subparagraph (b) above, the maximum number of shares to
be released from escrow in any year to a Security Holder who is a Related Party
shall be one-third of the original number of shares held in escrow on behalf of
such Security Holder.
7. A release from escrow of all or part of the escrowed securities shall
terminate this agreement only in respect to those securities so released. For
greater certainty this paragraph does not apply to securities transferred within
escrow.
8. The Security Holders shall, if a dividend is declared while the escrowed
securities or any of them continue to be held in escrow under this Agreement,
renounce and release any right to receive payment of the dividend on the shares
then held in escrow.
9. If the Issuer is wound up and any securities remain in escrow under this
agreement at the time when a distribution of assets to holders of securities is
made by the liquidator, the Security Holders shall assign their right to receive
that part of the distribution which is attributable to the escrowed securities
to the Trustee, for the benefit of, and in trust for the persons and companies
who are then holders of free securities in the Issuer rateably in proportion to
their holdings.
10. a. In the event that any or all of the business of the Issuer has
become of little value or no value, the Issuer shall declare the occurrence of
that event, with full particulars thereof, to the Exchange by a resolution of
its directors and those Security Holders who are directors from time to time
hereby agree to cause such resolution to be passed and certified to the
satisfaction of the Exchange;
b. The Security Holder jointly and severally agree with the Issuer and the
Trustee that in the event of such diminution of value, the securities held
in escrow shall not be cancelled or released from escrow, in whole or in
part, except with the consent of the Exchange.
c. The Exchange may, in its sole discretion, having regard to the value of
the business of the Issuer as ultimately established and such other
circumstances as it may consider relevant, determine the number of
securities to be cancelled or released and shall communicate its decision
in writing to the Trustee. If the Exchange determines that less than all
the securities then held in escrow shall be cancelled or released shall be
taken rateably from the escrowed security holding of each of the Security
Holders, unless the Exchange otherwise directs or the Security Holders,
with the consent of the Exchange, otherwise agree in writing.
d. On receipt by the Trustee of a determination to cancel, each of the
Security Holders shall tender the required number of escrowed securities to
the Issuer by way of gift for cancellation and, the Issuer shall thereupon
take the necessary action, by way of reduction of capital or otherwise, to
cancel them, and the certificates for these securities shall be delivered
up for cancellation.
e. Each of the Security Holders undertakes and agrees to vote and cause to
be voted their respective securities in a manner consistent with the terms,
conditions and intent of this agreement in relation to the aforesaid
gifting back of securities for cancellation.
11. Notwithstanding paragraphs 6 and 10, any shares remaining in escrow on
the fifth anniversary of the date of this agreement, unless otherwise exempted
in writing by the Exchange, shall be cancelled by the Trustee within 6 months of
the said fifth anniversary.
12. All voting rights attached to the escrowed securities shall at all
times be exercised by the respective registered owners thereof.
13. The Security Holders and the Issuer hereby jointly and severally agree
to and do hereby release and indemnify and save harmless the Trustee from and
against all claims, suits, demands, costs, damages and expenses which may be
occasioned by reason of the Trustee's compliance in good faith with the terms
hereof.
14. The Issuer hereby acknowledges the terms and conditions of this
Agreement and agrees to take all reasonable steps to facilitate its performance
and to pay the Trustee's proper charges for its services as trustee of this
escrow.
15.If the Trustee should wish to resign, it shall give at least 3 months'
notice to the Issuer which may, with the written consent of the Exchange, by
writing appoint another Trustee in its place and such appointment shall be
binding on the Security Holders, and the new Trustee shall assume and be bound
by the obligations of the Trustee hereunder.
16. The covenants of the Security Holders with the Issuer in this agreement
are made with Issuer both in its own right and as trustee for the holders from
time to time of free securities in the Issuer, and may be enforced not only by
the Issuer but also by any holder of free securities.
17. This agreement may be executed in several parts of the same form and
the parts as so executed shall together constitute one original agreement, and
the parts, if more than one, shall be read together and construed as if all the
signing parties hereto had executed one copy of this agreement.
18. Wherever the singular or masculine is used, the same shall be construed
to include the plural or feminine or neuter where the context so requires.
19. This agreement shall ensure to the benefit of and be binding on the
parties to this agreement and each of their heirs, executors, administrators,
successors and assigns.
IN WITNESS WHEREOF the Issuer and Trustee have caused their respective
corporate seals to be hereto affixed and the Security Holders have hereto set
their respective hands and seals.
ALPHA VENTURES INC.
per: ______________________________
per: ______________________________
MONTREAL TRUST COMPANY OF CANADA
per: ______________________________
per: ______________________________
SIGNED, SEALED AND DELIVERED by the respective Security Holders whose names are
subscribed in the right-hand column below in the presence of the respective
persons whose names are subscribed in the left-hand column.
KRAFT INVESTMENTS CORP.
per: _________________________________
1077431 ONTARIO LIMITED
per: _________________________________
- ------------------------- -------------------------------------
Witness RRSP #009516S First Marathon Securities Limited
(Michael P. Kraft beneficiary)
- ------------------------- -------------------------------------
Witness RRSP #371-05025 Nesbitt Burns Inc.
(Richard Sherman beneficiary)
SCHEDULE"A"
to the Form C Performance Escrow Agreement dated the 30th day of April, 1997
and made among Alpha Ventures Inc. therein called the "Issuer", Montreal Trust
Company of Canada, therein called the "Trustee", and certain security holders of
the Issuer, therein called the "Security Holders".
Certificate
Numbers
Name of Security Holder Type of Number of of Escrowed
and address Securities Securities Escrowed Securities
- --------------------------------------------------------------------------------
RRSP #009516S Common 86,649
First Marathon Securities
Limited In Trust
Toronto, Ontario
(Michael P. Kraft,
Beneficiary)
Kraft Investments Corp. Common 1,315,132
RRSP #371-05025 Common 32,675
Nesbitt Burns Inc.
Toronto, Ontario
(Richard Sherman,
Beneficary)
1077431 Ontario Limited Common 1,426,082
Total 2,860,538
Such shares are issued in relation to the sale by the Security Holders of their
shares of Alpha Corporation, which acquisition is the Major Transaction of the
Issuer.