1
Exhibit 3r
PERFORMANCE SHARES ESCROW AGREEMENT
THIS AGREEMENT is dated for reference the 17th day of
August, 1995 and made
AMONG:
MONTREAL TRUST COMPANY OF CANADA, of Montreal Trust Company of
Canada, 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X
0X0
(the "Escrow Agent")
AND:
MINCO MINING AND METALS CORPORATION, a British Columbia
company, having its registered and records office at Xxxxx
0000, 0000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx,
X0X 0X0;
(the "Issuer")
AND:
EACH SHAREHOLDER, as defined in this Agreement;
(collectively, the "Parties").
WHEREAS the Shareholder has acquired or is about to acquire
shares of the Issuer;
AND WHEREAS the Escrow Agent has agreed to act as escrow agent
in respect of the shares upon the acquisition of the shares by the Shareholder;
NOW THEREFORE in consideration of the covenants contained in
this agreement and other good and valuable consideration (the receipt and
sufficiency of which is acknowledged), the Parties agree as follows:
1. INTERPRETATION
In this agreement:
(a) "Acknowledgement" means the acknowledgement and agreement to
be bound in the form attached as Schedule "A" to this
agreement;
(b) "Act" means the Securities Act, S.B.C. 1985, c. 83;
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(c) "Exchange" means the Vancouver Stock Exchange;
(d) "IPO" means the initial public offering of common shares of
the Issuer under a prospectus which has been filed with, and
for which a receipt has been obtained from, the Superintendent
under section 42 of the Act;
(e) "Local Policy Statement 3-07" means the Local Policy Statement
3-07 in effect as of the date of reference of this agreement
and attached as Schedule "B" to this agreement;
(f) "Shareholder" means a holder of shares of the Issuer who
executes this agreement or an Acknowledgement;
(g) "Shares" means the shares of the Shareholder described in
Schedule "C" to this agreement, as amended from time to time
in accordance with section 9;
(h) "Superintendent" means the Superintendent of Brokers appointed
under the Act; and
(i) "Superintendent or the Exchange" means the Superintendent, if
the shares of the Issuer are not listed on the Exchange, or
the Exchange, if the shares of the Issuer are listed on the
Exchange.
2. PLACEMENT OF SHARES IN ESCROW
The Shareholder places the Shares in escrow with the Escrow
Agent and shall deliver the certificates representing the Shares to the Escrow
Agent as soon as practicable.
3. VOTING OF SHARES IN ESCROW
Except as provided by section 4(a), the Shareholder may
exercise all voting rights attached to the Shares.
4. WAIVER OF SHAREHOLDER'S RIGHTS
The Shareholder waives the rights attached to the Shares
(a) to vote the Shares on a resolution to cancel any of the
Shares,
(b) to receive dividends, and
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(c) to participate in the assets and property of the Issuer on a
winding up or dissolution of the Issuer.
5. ABSTENTION FROM VOTING AS A DIRECTOR
A Shareholder that is or becomes a director of the Issuer
shall abstain from voting on a directors' resolution to cancel any of the
Shares.
6. TRANSFER WITHIN ESCROW
(a) The Shareholder shall not transfer any of the Shares except in
accordance with Local Policy Statement 3-07 and with the
consent of the Superintendent or the Exchange.
(b) The Escrow Agent shall not effect a transfer of the Shares
within escrow unless the Escrow Agent has received
(i) a copy of an Acknowledgement executed by the person
to whom the Shares are to be transferred, and
(ii) a letter from the Superintendent or the Exchange
consenting to the transfer.
(c) Upon the death or bankruptcy of a Shareholder, the Escrow
Agent shall hold the Shares subject to this agreement for the
person that is legally entitled to become the registered owner
of the Shares.
(d) In the event the Shareholder ceases to be a principal or a
promoter of the Issuer, he shall be entitled to retain all of
the Shares and shall not be obligated to sell, transfer or
otherwise assign the Shares to anyone.
7. RELEASE FROM ESCROW
(a) The Shareholder irrevocably directs the Escrow Agent to retain
the Shares until the Shares are released from escrow pursuant
to subsection (2) or surrendered for cancellation pursuant to
section 8.
(b) The Escrow Agent shall not release the Shares from escrow
unless the Escrow Agent has received a letter from the
Superintendent or the Exchange consenting to the release.
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(c) The approval of the Superintendent or the Exchange to a
release from escrow of any of the Shares shall terminate this
agreement only in respect of the Shares so released.
8. SURRENDER FOR CANCELLATION
The Shareholder shall surrender the Shares for cancellation
and the Escrow Agent shall deliver the certificates representing the Shares to
the Issuer
(a) at the time of a major reorganization of the Issuer, if
required as a condition of the consent to the reorganization
by the Superintendent or the Exchange,
(b) where the Issuer's shares have been subject to a cease trade
order issued under the Act for a period of 2 consecutive
years,
(c) any shares not released from the escrow hereby created before
the expiration of five years from the date the Exchange
accepts this agreement for filing shall be surrendered by the
shareholder for cancellation forthwith and the Company and the
Escrow Agent hereby agree to take all such actions as may be
necessary to expeditiously effect such cancellation,
(d) where required by section 6(4).
9. AMENDMENT OF AGREEMENT
(a) Subject to subsection (2), this agreement may be amended only
by a written agreement among the Parties and with the written
consent of the Superintendent or the Exchange.
(b) Schedule "C" to this agreement shall be amended upon
(i) a transfer of Shares pursuant to section 6,
(ii) a release of Shares from escrow pursuant to section
7, or
(iii) a surrender of Shares for cancellation pursuant to
section 8,
and the Escrow Agent shall note the amendment on the Schedule
"C" in its possession.
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10. INDEMNIFICATION OF ESCROW AGENT
The Issuer and the Shareholders, jointly and severally,
release, indemnify and save harmless the Escrow Agent from all costs, charges,
claims, demands, damages, losses and expenses resulting from the Escrow Agent's
compliance in good faith with this agreement.
11. RESIGNATION OF ESCROW AGENT
(a) If the Escrow Agent wishes to resign as escrow agent in
respect of the Shares, the Escrow Agent shall give notice to
the Issuer.
(b) If the Issuer wishes the Escrow Agent to resign as escrow
agent in respect of the Shares, the Issuer shall give notice
to the Escrow Agent.
(c) A notice referred to in subsection (1) or (2) shall be in
writing and delivered to
(i) the Issuer at Xxxxx 0000, 0000 Xxxx Xxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0; or
(ii) the Escrow Agent at 830 - 000 Xxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxx Xxxxxxxx, X0X 0X0
and the notice shall be deemed to have been received on the
date of delivery. The Issuer or the Escrow Agent may change
its address for notice by giving notice to the other party in
accordance with this subsection.
(d) A copy of a notice referred to in subsection (1) or (2) shall
concurrently be delivered to the Superintendent or the
Exchange.
(e) The resignation of the Escrow Agent shall be effective and the
Escrow Agent shall cease to be bound by this agreement on the
date that is 180 days after the date of receipt of the notice
referred to in subsection (1) or (2) or on such other date as
the Escrow Agent and the Issuer may agree upon (the
"resignation date").
(f) The Issuer shall, before the resignation date and with the
written consent of the Superintendent or the Exchange, appoint
another escrow agent and that appointment shall be binding on
the Issuer and the Shareholders.
12. FURTHER ASSURANCES
The Parties shall execute and deliver any documents and
perform any acts necessary to carry out the intent of this agreement.
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13. TIME
Time is of the essence of this agreement.
14. GOVERNING LAWS
This agreement shall be construed in accordance with and
governed by the laws of British Columbia and the laws of Canada applicable in
British Columbia.
15. COUNTERPARTS
This agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original and all of which shall
constitute one agreement.
16. LANGUAGE
Wherever a singular expression is used in this agreement, that
expression is deemed to include the plural or the body corporate where required
by the context.
17. ENUREMENT
This agreement enures to the benefit of and is binding on the
Parties and their heirs, executors, administrators, successors and permitted
assigns.
The Parties have executed and delivered this agreement as of
the date of reference of this agreement.
THE COMMON SEAL of MONTREAL )
TRUST COMPANY OF CANADA was )
hereto affixed in the presence of: )
)
) c/s
)
/s/illegible )
____________________________________ )
Authorized Signatory )
)
/s/X. Xxxxxxx )
____________________________________ )
Authorized Signatory )
)
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THE COMMON SEAL of MINCO )
MINING AND METALS )
CORPORATION was hereto affixed in the )
presence of: )
) c/s
)
/s/XXXXX X. XXXXXXXX )
____________________________________ )
Authorized Signatory )
)
/s/XXXXX XXXXXXXXX )
____________________________________ )
Authorized Signatory )
)
SIGNED, SEALED and DELIVERED by )
XXXXX X. XXXXXXXX in the presence of: )
)
)
XXXXX XXXXXX ) /s/XXXXX X. XXXXXXXX
____________________________________ ) ______________________________
Name ) XXXXX X. XXXXXXXX
)
000-000 X. 00XX XX. X. XxX. XX )
____________________________________ )
Address )
)
BUSINESS WOMAN )
____________________________________ )
Occupation )
)
SIGNED, SEALED and DELIVERED by )
XXXX XXXX in the presence of: )
)
)
XXXXXX BEER ) /s/XXXX XXXX
____________________________________ ) ______________________________
Name ) XXXX XXXX
)
0000 XXXXXX, XXXXXXXXXXX )
____________________________________ )
Address )
)
RETIRED )
____________________________________ )
Occupation )
)
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SIGNED, SEALED and DELIVERED by )
XXXXXX XXXXXXXXX in the )
presence of: )
)
)
/s/X. XXXXXXXXX ) /s/XXXXXX XXXXXXXXX
____________________________________ ) ______________________________
Name ) XXXXXX XXXXXXXXX
)
0 XXXXXXX XX XXXXXX 00000 XXXXXX )
____________________________________ )
Address )
)
ENGINEER )
____________________________________ )
Occupation )
)
SIGNED, SEALED and DELIVERED by
PETROS X.X. XXXXXXXX in the
presence of:
)
)
/s/XXXXX XXXXXXXXX ) /s/PETROS X.X. XXXXXXXX
____________________________________ ) ______________________________
Name ) PETROS X.X. XXXXXXXX
)
0000 XXXXXXX XX. XXXXXXXXX X.X. )
____________________________________ )
Address )
)
GEOLOGIST )
____________________________________ )
Occupation )
)
SIGNED, SEALED and DELIVERED by
XXXXX XxXXXXXXX in the
presence of:
)
)
/s/XXXXXX XXXXXXXX ) /s/XXXXX XxXXXXXXX
____________________________________ ) ______________________________
Name ) XXXXX XxXXXXXXX
)
4112 PUGET DR. VANCOUVER, B.C. )
____________________________________ )
Address )
)
ENGINEER )
____________________________________ )
Occupation )
)
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SCHEDULE "A" TO ESCROW AGREEMENT
ACKNOWLEDGEMENT AND AGREEMENT TO BE BOUND
To: Superintendent of Brokers or Vancouver Stock Exchange
#0000 - 000 Xxxxxx Xxxxxx 000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, B. C. Vancouver, B. C.
V6Z 2H4 V7Y 1H1
(if the shares are not (if the shares are listed
listed on the Vancouver on the Vancouver Stock
Stock Exchange) Exchange)
I acknowledge that
(a) I have entered into an agreement with ____________________, under which
___________ shares of MINCO MINING AND METALS CORPORATION (the
"Shares") will be transferred to me upon receipt of regulatory
approval, and
(b) the Shares are held in escrow subject to an escrow agreement dated for
reference _______, 19_ (the "Escrow Agreement"), a copy of which is
attached as Schedule "A" to this acknowledgement.
In consideration of $1.00 and other good and valuable consideration (the receipt
and sufficiency of which is acknowledged) I agree, effective upon receipt of
regulatory approval of the transfer to me of the Shares, to be bound by the
Escrow Agreement in respect of the Shares as if I were an original signatory to
the Escrow Agreement.
Dated at ___________________, on ____________________, 19____
SIGNED, SEALED and DELIVERED by )
*TRANSFEREE in the presence of: )
)
)
_____________________________________ )
Name ) ________________________
) * transferee
)
)
_____________________________________ )
Address )
)
)
_____________________________________ )
Occupation )
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SCHEDULE "B" TO ESCROW AGREEMENT
--------------------------------
[LOGO]
Province of
British Columbia BRITISH COLUMBIA SECURITIES COMMISSION
OFFICE OF THE
CHAIRMAN
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LOCAL POLICY STATEMENT 3-07
POLICY GUIDELINES RESPECTING TRADING SHARES,
PERFORMANCE SHARES AND OTHER CONSIDERATION
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TABLE OF CONTENTS
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PART TITLE PAGE
---- ----- ----
1. IMPLEMENTATION 1
2. APPLICATION 1
2.1 Pre-prospectus
2.2 Reactivations and reorganizations
3. TRANSITION 2
3.1 Agreements made under former policy statement
3.2 Option of conforming with new policy statement
4. DEFINITIONS 2
4.1 Defined terms
4.2 Terms defined in legislation
5. GENERAL MATTERS 5
5.1 Review of opinions and reports
5.2 Requirement for valuation opinion
5.3 Out of pocket costs
5.4 Confirmation of fair value
6. ISSUANCE OF TRADING SHARES 6
6.1 Minimum price and maximum aggregate value
6.2 Interest in operating subsidiary
6.3 Value assigned to non-cash assets
6.4 Purchase of interest in mineral property
6.5 Accumulated deficit related to issuer's stated business
6.6 Exclusion of amounts by Superintendent
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PART TITLE PAGE
---- ----- ----
7. ISSUANCE OF PERFORMANCE SHARES 8
7.1 Issuance to principals
7.2 Natural resource issuer
7.3 Industrial issuer
7.4 Escrow requirement
7.5 Escrow agreement
7.6 Limitations on rights of holders of performance shares
7.7 Rights on ceasing to be a principal
7.8 Undertaking of holding company
8. TRANSFER OF PERFORMANCE SHARES WITHIN ESCROW 10
8.1 Permitted transferees
8.2 Request for consent to transfer
8.3 Documents to be filed with request for
consent to transfer
8.4 Letter of consent or objection
8.5 No transfer during period between prospectus
receipt and listing
9. RELEASE OF PERFORMANCE SHARES FROM ESCROW 11
9.1 Release of shares of natural resource issuer
9.2 Reduction in release for natural resource issuer
9.3 Release of shares of industrial issuer
9.4 Adjustment of release calculation
9.5 Requirements for release
9.6 Annual release based on annual audited
financial statements
9.7 Request for consent to release
9.8 Documents to be filed with request for
consent to release
9.9 Letter of consent or objection
9.10 Request by holder of performance shares for
consent to release
10. SURRENDER OF PERFORMANCE SHARES FOR CANCELLATION 14
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PART TITLE PAGE
---- ----- ----
11. OTHER CONSIDERATION 14
11.1 Natural resource issuer
11.2 Industrial issuer
Appendix A Escrow Agreement
Appendix B Examples of earn-out prices for performance
shares issued by an industrial issuer
Appendix C Undertaking Required from Non-Reporting or
Closely Held Company
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LPS 3-07
PART 1 IMPLEMENTATION
1.1 The following local policy statements are hereby rescinded and this
local policy statement substituted therefor, effective March 1, 1990:
(a) Local Policy Statement 3-07, dated February 6, 1987 (the
"Former Policy Statement"), and
(b) Local Policy Statements 3-08, 3-09 and 3-10, each dated
February 1, 1987.
PART 2 APPLICATION
2.1 Pre-prospectus--This local policy statement sets out guidelines for
issuance of shares and payment of consideration for assets by an issuer
intending to do an initial public offering and obtain a listing on the
Vancouver Stock Exchange. This local policy statement addresses
(a) the issuance of trading shares, which are common shares issued as
consideration for cash or assets contributed to the issuer and, in
certain cases, expenses incurred to advance the business of the
issuer,
(b) the issuance of and escrow restrictions imposed on performance
shares, which are common shares issued to directors, officers,
promoters and other principals of the issuer to provide them with
both a reasonable assurance of control during the formative stages
of the issuer's development and an incentive to support the issuer,
and
(c) the payment of other consideration by the issuer for assets or
services.
2.2 Reactivations and reorganizations--This local policy statement applies,
with the necessary changes, to
(a) the reactivation of an issuer by way of a prospectus, carried out
in accordance with Local Policy Statement 3-35 and the policies of
the Vancouver Stock Exchange, and
December 21, 1989
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LPS 3-07
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(b) a major reorganization of an issuer, including a reverse take over,
carried out in accordance with the policies of the British Columbia
Securities Commission and the Vancouver Stock Exchange.
PART 3 TRANSITION
3.1 Agreements made under former policy statement--Subject to section 3.2,
shares issued in accordance with the Former Policy Statement will
continue to be governed by any agreements made in accordance with the
Former Policy Statement. Such shares, however, will be subject to the
transfer restrictions and procedures set out in Part 8 and the release
criteria and procedures set out in sections 9.5 through 9.10 of this
local policy statement.
3.2 Option of conforming with new policy statement--An issuer that has
issued shares in accordance with the Former Policy Statement may
reorganize its capital to fully conform with this local policy
statement. Before doing so, the issuer must obtain the approval of its
shareholders and the written consent of the Superintendent of Brokers,
if the issuer's shares are not listed on the Vancouver Stock Exchange,
or the Vancouver Stock Exchange, if the issuer's shares are listed on
that exchange. Both the approval and consent must be obtained by March
1, 1991.
PART 4 DEFINITIONS
4.1 Defined terms--In this local policy statement:
"Act" means the Securities Act, S.B.C. 1985, c. 83;
"arm's length transaction" means a transaction other than a non-arm's
length transaction;
"cash flow" means net income or loss before tax, adjusted to add back
the following expenses:
(a) depreciation,
(b) amortization of goodwill and deferred research and development
costs, excluding general and administrative costs,
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LPS 3-07
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(c) expensed research and development costs, excluding general and
administrative costs, and
(d) any other amounts permitted or required by the Superintendent:
"cumulative cash flow" means, at any time, the aggregate cash flow of an issuer
up to that time from a date no earlier than the issuer's financial year end
immediately preceding the date of its IPO, net of any negative cash flow;
"earn-out factor" means the number obtained by squaring the performance share
percentage, expressed as a decimal, and multiplying by four;
"earn-out price" means the IPO price multiplied by the earn-out factor;
"escrow agreement" means an agreement in the form attached as Appendix A to this
local policy statement;
"Exchange" means the Vancouver Stock Exchange;
"industrial issuer" means an issuer other than a natural resource issuer;
"IPO" means the initial public offering of common shares of an issuer under a
prospectus which has been filed with, and for which a receipt has been obtained
from, the Superintendent under section 42 of the Act;
"IPO price" means the price per share paid by the public on an issuer's IPO;
"non-arm's length transaction" means a transaction between the issuer and a
person that, at any time from the date of the transaction until the date of
completion of the issuer's IPO, is
(a) an insider, associate, affiliate or principal of the issuer,
(b) a person that
(i) has a control person, insider or promoter that is a
control person, insider or promoter of the issuer; or
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(xx) has a control person, insider or promoter that is an associate or
affiliate of a control person, insider or promoter of the issuer
except where the person's insiders that are described in paragraphs (i)
and (ii) hold in total less than 10% of the voting securities of the
person, or
(c) determined by the Superintendent not to be at arm's length to the
issuer;
"performance shares" means common shares of an issuer issued in accordance with
Part 7 of this local policy statement, so long as they are held in escrow in
accordance with this local policy statement;
"performance share percentage" means the percentage, determined on the date the
issuer's shares are listed, posted and called for trading on the Exchange, that
the issued performance shares of the issuer are of the total issued and
outstanding voting securities of the issuer;
"principal" means, in relation to an issuer,
(a) a promoter of the issuer,
(b) a director of the issuer or of an operating subsidiary of the issuer,
(c) a full time management employee of the issuer, or of an operating
subsidiary of the issuer, whose direct or indirect employment is with
the issuer or the subsidiary,
(d) a person who has provided key services or contributed a fundamental
asset to the issuer and has elected to be treated as a principal, or
(e) a company all the voting securities of which are owned by one or more of
the persons referred to in subsections (a) through (d);
"Regulation" means the Securities Regulation, B.C. Reg. 270/86;
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LPS 3-07
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"Superintendent or the Exchange" means the Superintendent, if the
issuer's shares are not listed on the Exchange, and the Exchange, if the
issuer's shares are listed on the Exchange;
"trading shares" means shares of the class of common shares issued on an
issuer's IPO, excluding performance shares issued in accordance with
Part 7 of this local policy statement;
"valuation opinion" means, in respect of
(a) a natural resource issuer, a written opinion prepared by a
qualified expert as to the fair market value of a resource
property, determined either through the computation of present
value or some other recognized method of valuation acceptable to
the Superintendent, and
(b) an industrial issuer, a written opinion prepared in accordance with
generally applied valuation approaches by a Chartered Business
Valuator, or another expert acceptable to the Superintendent, as
to the highest price available for the issuer's business, assets or
shares in an open and unrestricted market between informed, prudent
parties, acting at arm's length and under no compulsion to act,
expressed in terms of money or money's worth.
4.2 TERMS DEFINED IN LEGISLATION - Subject to section 4.1, terms defined in
the Act, the Regulation and the Interpretation Act, R.S.B.C. 1979, c.
206 and used in this local policy statement have the same meaning as in
the Act, the Regulation and the Interpretation Act.
PART 5 GENERAL MATTERS
5.1 REVIEW OF OPINIONS AND REPORTS - The Superintendent may, with the
agreement of an issuer, seek the opinion of an engineer, appraiser,
business valuator, accountant or other expert to determine the
acceptability of a valuation opinion or other report filed pursuant to
this local policy statement and, in such circumstances, the issuer will
be liable for the fees charged by such person in connection with
providing the opinion.
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LPS 3-07
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5.2 REQUIREMENT FOR VALUATION OPINION - The Superintendent may, at the time of
reviewing an issuer's prospectus for its IPO, require a valuation opinion
in support of the value attributed to any non-cash assets.
5.3 OUT OF POCKET COSTS - Where this local policy statement provides that the
value of trading shares issued or other consideration paid to a person by
an issuer for a non-cash asset must be calculated on the basis of the out
of pocket costs incurred by the person in respect of the non-cash asset,
those out of pocket costs must
(a) be reasonable,
(b) have contributed or be reasonably expected to contribute to the future
operations of the issuer,
(c) be supported by an audited statement of costs, and
(d) in respect of a resource property, be restricted to acquisition costs
and such other costs as are necessary to secure a preliminary
evaluation of the resource property and to lead to the identification
of exploration targets.
5.4 CONFIRMATION OF FAIR VALUE - The onus will be on an issuer, if questioned,
to satisfy the Superintendent that fair value was received for costs or
expenditures associated with a non-arm's length transaction.
PART 6 ISSUANCE OF TRADING SHARES
6.1 MINIMUM PRICE AND MAXIMUM AGGREGATE VALUE - Although in most cases trading
shares will be paid for in cash, trading shares may be issued for
consideration other than cash. Subject to sections 6.2 through 6.6, an
issuer may issue trading shares at a minimum price of $.25 per share up to
an aggregate value equal to:
(a) the amount of cash paid in as share capital; plus
(b) the fair market value of any non-cash assets contributed as share
capital; plus
(c) the issuer's retained earnings, if any; less
(d) where the issuer has an accumulated deficit, that portion of the
accumulated deficit that does not directly relate to the issuer's
stated business purpose at the time of its IPO.
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LPS 3-07
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6.2 INTEREST IN OPERATING SUBSIDIARY -- Where an issuer has an
operating subsidiary, or is proposing to issue trading shares
in order to acquire an operating subsidiary, and the value of
that operating subsidiary is not supported by a current
valuation opinion, the principles of this Part will apply to
the operating subsidiary for the purpose of determining the
number of trading shares that may be issued by the issuer in
respect of its interest in the operating subsidiary.
6.3 VALUE ASSIGNED TO NON-CASH ASSETS -- For the purpose of section
6.1(b), where non-cash assets are contributed to an issuer by a
person in a non-arm's length transaction, the fair market value
attributed to the non-cash assets must be either
(a) supported by a valuation opinion, or
(b) limited to an amount equal to the out of pocket
costs incurred by the person in respect of the
non-cash assets, determined in accordance with
section 5.3.
6.4 PURCHASE OF INTEREST IN MINERAL PROPERTY -- A natural resource
issuer that, in an arm's length transaction, agrees to issue
trading shares as consideration for a mineral property or an
option on a mineral property, the value of which is not
supported by a current valuation opinion, will generally be
required to meet the following conditions:
(a) The consideration must consist of not more than 200,000
trading shares issuable in no fewer than four blocks, each
block consisting of not more than 50,000 trading shares.
(b) One block of shares may be issued prior to the date the
issuer's shares are listed, posted and called for trading
on the Exchange.
(c) The remaining blocks of shares may be issued in stages
upon the filing with the Exchange of engineering reports,
acceptable to the Exchange, recommending further work on
the mineral property.
6.5 ACCUMULATED DEFICIT RELATED TO ISSUER'S STATED BUSINESS
PURPOSE -- For the purpose of section 6.1(d), that portion of
the issuer's accumulated deficit that directly relates to the
issuer's stated business purpose at the time of its IPO includes
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LPS 3-07
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(a) for a natural resource issuer, expenses incurred
(i) in exploring and developing the resource
properties upon which the issuer's IPO
proceeds are to be spent, and
(ii) in exploring and developing other resource
properties, provided that these expenses do
not exceed the expenses referred to in paragraph
(i), and
(b) for an industrial issuer, expenses incurred in respect
of the project or business to be financed by the issuer's
IPO proceeds.
6.6 EXCLUSION OF AMOUNTS BY SUPERINTENDENT -- The Superintendent may
require that an amount be excluded from the determination of the
number of trading shares that may be issued under this Part if in
the circumstances he considers that to include any such amount
would be inappropriate or unconscionable. For example, the
Superintendent would question the appropriateness of issuing
trading shares for non-cash assets unrelated to the issuer's
stated business purpose at the time of its IPO or for excessive
administrative expenses.
PART 7 ISSUANCE OF PERFORMANCE SHARES
7.1 ISSUANCE TO PRINCIPALS -- Performance shares may be issued for cash
to the principals of an issuer
(a) to provide the principals with a measure of control to
facilitate the development of the issuer in an orderly
fashion,
(b) to provide an incentive for the principals to diligently
support the affairs of the issuer, and
(c) to provide an incentive for the principals to contribute
management services or fundamental assets to the issuer.
7.2 NATURAL RESOURCE ISSUER -- A natural resource issuer may issue to
its principals up to a total of 750,000 performance shares, at a
minimum price of $.01 per share.
7.3 INDUSTRIAL ISSUER -- An industrial issuer may issue performance
shares to its principals, at a minimum price of $.01 per share,
provided that the resulting performance share percentage does not
exceed 65%.
21
LPS 3-07
-9-
7.4 ESCROW REQUIREMENT -- Performance shares are required to be
escrowed. It should be noted that the higher the performance
share percentage, the more difficult it becomes to obtain a
release of the performance shares from escrow. The table attached
as Appendix B to this local policy statement provides some
examples of the operation of the release provisions for industrial
issuers set out in Part 9 of this local policy statement.
7.5 ESCROW AGREEMENT -- Prior to or at the time of acquiring performance
shares, principals must execute an escrow agreement. The
certificates representing the performance shares must be registered
in the names of the holders of the shares and deposited with the
escrow agent in accordance with the terms of the escrow agreement.
Only a trust company carrying on business in British Columbia or a
company approved by the Superintendent may act as an escrow agent.
7.6 LIMITATIONS ON RIGHTS OF HOLDERS OF PERFORMANCE SHARES -- The escrow
agreement requires that the parties to it set out in the agreement
any rights or obligations of a person who ceases to be a principal,
dies or becomes bankrupt to retain, transfer or surrender to the
issuer for cancellation any performance shares then held by the
person.
7.7 RIGHTS ON CEASING TO BE A PRINCIPAL -- The escrow agreement
requires that the parties to it set out in the agreement any rights
or obligations of a person who ceases to be a principal, dies or
becomes bankrupt to retain, transfer or surrender to the issuer for
cancellation any performance shares then held by the person.
7.8 UNDERTAKING OF HOLDING COMPANY -- Where performance shares are to
be issued to a non-reporting or closely held company, wherever
situate, rather than to an individual, the company must, prior to or
at the time of acquiring the performance shares, execute an
undertaking in the form attached as Appendix C to this local policy
statement. In the undertaking, the company agrees not to effect or
permit any transfer of ownership of shares of the company nor to
issue further shares of any class in the company without the consent
of the Superintendent or the Exchange, so long as the company
continues to hold any of the issuer's performance shares. An
application for consent should be made in the same manner as an
application for consent to a transfer of performance shares pursuant
to Part 8 of this local policy statement.
22
-10- LPS 3-07
PART 8 TRANSFER OF PERFORMANCE SHARES WITHIN ESCROW
8.1 Permitted transferees - Performance shares may be transferred only to
(a) other principals, including incoming principals,
(b) the issuer of the performance shares, or
(c) an offeror under a formal bid (as defined in section 74 of the Act).
8.2 Request for consent to transfer - In order to transfer performance shares,
the holder of performance shares must deliver to the Superintendent or the
Exchange a written request for consent to the transfer. The request for
consent to the transfer must include:
(a) the name of the escrow agent and the reference date of the escrow
agreement,
(b) an explanation of the reason for the transfer,
(c) a description of the consideration to be paid for the performance
shares,
(d) where the performance shares are to be transferred to a principal,
confirmation that the transferee is a principal or will become a
principal on or before the date of the proposed transfer, and
(e) a description of the exemptions in the Act or the Regulation, if any,
being relied upon to make the transfer.
8.3 Documents to be filed with request for consent to transfer - The request
for consent to the transfer must be accompanied by:
(a) a copy of the transfer agreement,
(b) an acknowledgement and agreement to be bound in the form attached as
Schedule A to the escrow agreement, executed by the transferee,
(c) where the performance shares are to be transferred to a non-reporting
or closely held company, wherever situate, rather than to an
individual, an undertaking by the company in the form attached as
Appendix C to this local policy statement,
23
LPS 3-07 -11-
(d) where applicable, evidence that the proposed change of control has
been approved by the shareholders of the issuer, and
(e) the appropriate application fee.
8.4 Letter of consent or objection - Upon receiving a request for consent to a
transfer and accompanying documents that comply with sections 8.2 and 8.3,
the Superintendent or the Exchange will issue to the applicant a letter
that either consents or objects to the transfer. A letter consenting to the
transfer will be copied to the escrow agent.
8.5 No transfer during period between prospectus receipt and listing - The
Superintendent will generally refuse to consent to a transfer of
performance shares during the period between the date of the receipt for
the issuer's prospectus for its IPO and the date the issuer's securities
are listed, posted and called for trading on the Exchange.
PART 9 RELEASE OF PERFORMANCE SHARES FROM ESCROW
9.1 Release of shares of natural resource issuer - Holders of performance
shares of a natural resource issuer will be entitled to the pro-rata
release of those performance shares on the basis of 15% of the original
number of performance shares for every $100,000 expended on exploration and
development of a resource property by
(a) the issuer, or
(b) a person other than the issuer in order to earn an interest in the
resource property, but only in respect of that proportion of the
expenditure equal to the issuer's remaining proportionate interest in
the resource property after the person's interest has been earned,
provided that
(c) no more than 50% of the original number of performance shares may be
released in any 12 month period, and
(d) no expenditure on exploration and development made prior to the date
of the receipt for the issuer's prospectus for its IPO may be
included.
December 21, 1989
24
-12- LPS 3-07
9.2 Reduction in release for natural resource issuer - Where administrative
expenses exceed 33% of total expenditures during the period on which the
calculation in section 9.1 is based,
(a) the pro-rata release factor of 15% will be reduced to 7.5%, and
(b) the percentage of the original number of performance shares available
for release in any 12 month period will be reduced to 25%.
9.3 Release of shares of industrial issuer - Holders of performance shares of
an industrial issuer will be entitled to the pro-rata release of a number
of performance shares equal to the amount of cumulative cash low, not
previously applied towards release, divided by the earn-out price.
9.4 Adjustment of release calculation - On a consolidation, subdivision,
amalgamation or reclassification of the issuer's shares, the release
calculation must be adjusted so that the proportion of the outstanding
performance shares available for release is unaffected by the
consolidation, subdivision, amalgamation or reclassification.
9.5 Requirements for release - No performance shares may be released from
escrow unless, at the time of the application for release,
(a) the issuer is meeting its current obligations in the ordinary course
of business as they generally become due, as evidenced by a statutory
declaration of the president or chief financial officer of the issuer,
(b) the issuer's shares are listed, posted and called for trading on all
stock exchanges having jurisdiction over it, as evidenced by letters
from those stock exchanges,
(c) the issuer is not in default of any requirement of the Act or the
Regulation, as evidenced by a certificate issued by the Commission,
and
25
LPS 3-07 -13-
(d) the issuer is in good standing with respect to its filing of returns
with the Registrar of Companies under the Company Act or, if the
issuer is incorporated, organized or continued in a jurisdiction other
than British Columbia, with the registrar of companies or similar
authority in that jurisdiction, as evidenced by a certificate issued
by the Registrar of Companies or by that similar authority.
9.6 Annual release based on annual audited financial statements - Performance
shares may be released only once during an issuer's financial year. The
release calculation must be based on the issuer's annual audited financial
statements for the year or years during which the release requirements were
met in respect of the performance shares to be released.
9.7 Request for consent to release - In order to obtain a release of
performance shares, the issuer must deliver to the Superintendent or the
Exchange a written request for consent to the release. The request for
consent to the release must include the name of the escrow agent and the
reference date of the escrow agreement.
9.8 Documents to be filed with request for consent to release - The request for
consent to the release must be accompanied by:
(a) written evidence of compliance with the requirements of section 9.5,
(b) annual audited financial statements of the issuer for the financial
year or years during which the release requirements were met in
respect of the performance shares to be released,
(c) where expenditures on a resource property were made by a person other
than the issuer, an audited statement of costs,
(d) a calculation, prepared by the issuer's auditor, of the number of
performance shares to be released, and
(e) the appropriate application fee.
26
-14- LPS 3-07
9.9 Letter of consent or objection - Upon receiving a request for consent to a
release and accompanying documents that comply with sections 9.7 and 9.8,
the Superintendent or the Exchange will issue to the issuer a letter that
either consents or objects to the release. A letter consenting to the
release will be copied to the escrow agent.
9.10 Request by holder of performance shares for consent to release - A holder
of performance shares may apply to the Superintendent or the Exchange for
release where the issuer is unable or unwilling to do so. If the president
or chief financial officer of the issuer refuses to provide the statutory
declaration referred to in section 9.5(a), the Superintendent or the
Exchange may waive that requirement.
PART 10 SURRENDER OF PERFORMANCE SHARES FOR CANCELLATION
10.1 Performance shares must be surrendered to the issuer for cancellation
(a) at the time of a major reorganization of the issuer, if required as a
condition of the consent to the reorganization by the Superintendent
or the Exchange,
(b) where the issuer's shares have been subject to a cease trade order
issued under the Act for a period of 2 consecutive years, or
(c) 10 years from the later of the date of issue of the performance shares
and the date of the receipt for the issuer's prospectus for its IPO.
PART 11 OTHER CONSIDERATION
11.1 Natural resource issuer - Where a natural resource issuer proposes to
acquire from a person a resource property or an option on a resource
property, the value of which is not supported by a valuation opinion, the
following principles apply:
(a) In an arm's length transaction, the issuer may pay the person cash
consideration.
27
LPS 3-07 -15-
(b) In an arm's length transaction, the issuer may agree to pay the person
additional consideration at such time as the resource property
commences commercial production. Such additional consideration may,
depending on the circumstances, consist of cash consideration,
reasonable payments from net profits, securities, or any combination
of these.
(c) In a non-arm's length transaction, the issues may pay the person cash
consideration up to the amount of the out of pocket costs incurred by
the person in respect of the resource property, determined in
accordance with section 5.3.
(d) In a non-arm's length transaction, the issuer may agree to pay the
person additional consideration at such time as the resource property
commences commercial production, where the person has carried out
extensive exploration with results that indicate that the resource
property appears to have substantial merit. The extent of the person's
effort, skill and risk in developing the resource property will be
taken into account by the Superintendent in determining whether
additional consideration is justified. Such additional consideration
may, depending on the circumstances, consist of cash consideration,
reasonable payments from net profits, securities, or any combination
of these. A 15% net profits interest would normally be considered
reasonable.
11.2 Industrial issuer - Where an industrial issuer proposes to acquire from a
person non-cash assets, the value of which are not supported by a valuation
opinion, the following principles apply:
(a) In an arm's length transaction, the issuer may pay the person cash
consideration, a royalty or a combination of these.
(b) In a non-arm's length transaction, the issuer may pay the person cash
consideration up to the amount of the out of pocket costs incurred by
the person in respect of the non-cash assets, determined in accordance
with section 5.3.
DATED at Vancouver, British Columbia, this 21st day of December 1989.
/s/ XXXXXXX X. XXXXXXX
Xxxxxxx X. Xxxxxxx
Chairman
28
LPS 3-07
APPENDIX A TO LOCAL POLICY STATEMENT 3-07
ESCROW AGREEMENT
THIS AGREEMENT is dated for reference ________________, 19___ and made
AMONG:
(the "Escrow Agent");
AND:
(the "Issuer");
AND: EACH SHAREHOLDER, as defined in this Agreement
(collectively, the "Parties").
WHEREAS the Shareholder has acquired or is about to acquire shares of the
Issuer;
AND WHEREAS the Escrow Agent has agreed to act as escrow agent in respect of
the shares upon the acquisition of the shares by the Shareholder;
NOW THEREFORE in consideration of the covenants contained in this agreement and
other good and valuable consideration (the receipt and sufficiency of which is
acknowledged), the Parties agree as follows:
1. INTERPRETATION
In this agreement:
(a) "ACKNOWLEDGEMENT" means the acknowledgement and agreement to be bound in the
form attached as Schedule A to this agreement;
(b) "ACT" means the Securities Act, S.B.C. 1985, c. 83;
(c) "EXCHANGE" means the Vancouver Stock Exchange;
29
LPS 3-07
-2-
(d) "IPO" means the initial public offering of common shares of the Issuer under
a prospectus which has been filed with, and for which a receipt has been
obtained from, the Superintendent under section 42 of the Act;
(e) "LOCAL POLICY STATEMENT 3-07" means the Local Policy Statement 3-07 in
effect as of the date of reference of this agreement and attached as
Schedule B to this agreement;
(f) "SHAREHOLDER" means a holder of shares of the Issuer who executes this
agreement or an Acknowledgement;
(g) "SHARES" means the shares of the Shareholder described in Schedule C to this
agreement, as amended from time to time in accordance with section 9;
(h) "SUPERINTENDENT" means the Superintendent of Brokers appointed under the
Act; and
(i) "SUPERINTENDENT OR THE EXCHANGE" means the Superintendent, if the shares of
the Issuer are not listed on the Exchange, or the Exchange, if the shares of
the Issuer are listed on the Exchange.
2. PLACEMENT OF SHARES IN ESCROW
The Shareholder places the Shares in escrow with the Escrow Agent and shall
deliver the certificates representing the Shares to the Escrow Agent as soon
as practicable.
3. VOTING OF SHARES IN ESCROW
Except as provided by section 4(a), the Shareholder may exercise all voting
rights attached to the Shares.
4. WAIVER OF SHAREHOLDER'S RIGHTS
The Shareholder waives the rights attached to the Shares
(a) to vote the Shares on a resolution to cancel any of the Shares,
(b) to receive dividends, and
December 21, 1989
30
LPS 3-07
-3-
(c) to participate in the assets and property of the Issuer on a winding up or
dissolution of the Issuer.
5. ABSTENTION FROM VOTING AS A DIRECTOR
A Shareholder that is or becomes a director of the Issuer shall abstain from
voting on a directors' resolution to cancel any of the Shares.
6. TRANSFER WITHIN ESCROW
(1) The Shareholder shall not transfer any of the Shares except in accordance
with Local Policy Statement 3-07 and with the consent of the Superintendent
or the Exchange.
(2) The Escrow Agent shall not effect a transfer of the Shares within escrow
unless the Escrow Agent has received
(a) a copy of an Acknowledgement executed by the person to whom the Shares
are to be transferred, and
(b) a letter from the Superintendent or the Exchange consenting to the
transfer.
(3) Upon the death or bankruptcy of a Shareholder, the Escrow Agent shall hold
the Shares subject to this agreement for the person that is legally
entitled to become the registered owner of the Shares.
(4) [SET OUT IN THIS SUBSECTION THE RIGHTS AND OBLIGATIONS OF A SHAREHOLDER
WHO CEASES TO BE A PRINCIPAL, AS THAT TERM IS DEFINED IN LOCAL POLICY
STATEMENT 3-07, DIES, OR BECOMES BANKRUPT, TO RETAIN, TRANSFER OR
SURRENDER TO THE ISSUER FOR CANCELLATION ANY SHARES HELD BY THE
SHAREHOLDER.]
7. RELEASE FROM ESCROW
(1) The Shareholder irrevocably directs the Escrow Agent to retain the Shares
until the Shares are released from escrow pursuant to subsection (2) or
surrendered for cancellation pursuant to section 8.
December 21, 1989
31
-4-
(2) The Escrow Agent shall not release the Shares from escrow unless the
Escrow Agent has received a letter from the Superintendent or the
Exchange consenting to the release.
(3) The approval of the Superintendent or the Exchange to a release from
escrow of any of the Shares shall terminate this agreement only in
respect of the Shares so released.
8. SURRENDER FOR CANCELLATION
The Shareholder shall surrender the Shares for cancellation and the Escrow
Agent shall deliver the certificates representing the Shares to the Issuer
(a) at the time of a major reorganization of the Issuer, if required
as a condition of the consent to the reorganization by the
Superintendent or the Exchange,
(b) where the Issuer's shares have been subject to a cease trade
order-issued under the Act for a period of 2 consecutive years,
(c) 10 years from the later of the date of issue of the Shares and
the date of the receipt for the Issuer's prospectus on its IPO,
or
(d) where required by section 6(4).
9. AMENDMENT OF AGREEMENT
(1) Subject to subsection (2), this agreement may be amended only by a
written agreement among the Parties and with the written consent of the
Superintendent or the Exchange.
(2) Schedule C to this agreement shall be amended upon
(a) a transfer of Shares pursuant to section 6,
(b) a release of Shares from escrow pursuant to section 7, or
32
-5-
(c) a surrender of Shares for cancellation pursuant to section 8,
and the Escrow Agent shall note the amendment on the Schedule C in its
possession.
10. INDEMNIFICATION OF ESCROW AGENT
The Issuer and the Shareholders, jointly and severally, release, indemnify and
save harmless the Escrow Agent from all costs, charges, claims, demands,
damages, losses and expenses resulting from the Escrow Agent's compliance in
good faith with this agreement.
11. RESIGNATION OF ESCROW AGENT
(1) If the Escrow Agent wishes to resign as escrow agent in respect of the
Shares, the Escrow Agent shall give notice to the Issuer.
(2) If the Issuer wishes the Escrow Agent to resign as escrow agent in
respect of the Shares, the Issuer shall give notice to the Escrow Agent.
(3) A notice referred to in subsection (1) or (2) shall be in writing and
delivered to
(a) the Issuer at _________________________________, or
(b) the Escrow Agent at _______________________________
and the notice shall be deemed to have been received on the date of
delivery. The Issuer or the Escrow Agent may change its address for
notice by giving notice to the other party in accordance with this
subsection.
(4) A copy of a notice referred to in subsection (1) or shall concurrently
be delivered to the Superintendent or the Exchange.
(5) The resignation of the Escrow Agent shall be effective and the Escrow
Agent shall cease to be bound by this agreement on the date that is 180
days after the date of receipt of the notice referred to in subsection
(1) or (2) or on such other date as the Escrow Agent and the Issuer may
agree upon (the "resignation date").
33
-6-
(6) The Issuer shall, before the resignation date and with the written
consent of the Superintendent or the Exchange, appoint another escrow agent and
that appointment shall be binding on the Issuer and the Shareholders.
12. FURTHER ASSURANCES
The Parties shall execute and deliver any documents and perform any acts
necessary to carry out the intent of this agreement.
13. TIME
Time is of the essence of this agreement.
14. GOVERNING LAWS
This agreement shall be construed in accordance with and governed by the laws
of British Columbia and the laws of Canada applicable in British Columbia.
15. COUNTERPARTS
This agreement may be executed in two or more counterparts, each of which shall
be deemed to be an original and all of which shall constitute one agreement.
16. LANGUAGE
Wherever a singular expression is used in this agreement, that expression is
deemed to include the plural or the body corporate where required by the
context.
17. ENUREMENT
This Agreement enures to the benefit of and is binding on the Parties and their
heirs, executors, administrators, successors and permitted assigns.
34
LPS 3-07
-7-
The Parties have executed and delivered this agreements as of the date of
reference of this agreement.
The Corporate/Common Seal of )
[Escrow Agent] was affixed )
in the presence of: )
)
_______________________________ ) c/s
Authorized signatory )
)
_______________________________ )
Authorized signatory )
The Corporate/Common Seal of )
[Issuer] was affixed )
in the presence of: )
)
_______________________________ ) c/s
Authorized signatory )
)
_______________________________ )
Authorized signatory )
Where the Shareholder is an individual:
Signed, sealed and delivered by )
[Shareholder] in the presence of:)
)
_______________________________ )
Name )
)
_______________________________ )
Address ) _________________________________
) [Shareholder]
_______________________________ )
)
)
_______________________________ )
Occupation
December 21, 1989
35
LPS 3-07
- 8 -
Where the Shareholder is a company:
The Corporate/Common Seal of )
[Shareholder] was affixed )
in the presence of; )
)
_______________________________ ) c/s
Authorized signatory )
)
_______________________________ )
Authorized signatory )
December 21, 1987
36
LPS 3-07
SCHEDULE A TO ESCROW AGREEMENT
ACKNOWLEDGEMENT AND AGREEMENT TO BE BOUND
To: Superintendent of Brokers or Vancouver Stock Exchange
#0000 - 000 Xxxxxx Xxxxxx 609 Granville Street
Vancouver, B.C. Xxxxxxxxx, X.X.
X0X 0X0 X0X 0X0
(if the shares are not (if the shares are listed
listed on the Vancouver on the Vancouver Stock
Stock Exchange) Exchange)
I acknowledge that
(a) I have entered into an agreement with ______________________________
under which _____________ shares of ________________ (the "Shares")
will be transferred to me upon receipt of regulatory approval,
and
(b) the Shares are held in escrow subject to an escrow agreement dated
for reference ______________________, 19__ (the "Escrow Agreement"),
a copy of which is attached as Schedule A to this acknowledgement.
In consideration of $1.00 and other good and valuable consideration (the
receipt and sufficiency of which is acknowledged) I agree, effective upon
receipt of regulatory approval of the transfer to me of the Shares, to be
bound by the Escrow Agreement in respect of the Shares as if I were an
original signatory to the Escrow Agreement.
Dated at __________________________________ on _________________ 19___.
Where the transferee is an individual:
Signed, sealed and delivered by )
[transferee] in the presence of: )
)
________________________________ )
Name )
)
________________________________ ) __________________________________
Address ) [transferee]
)
________________________________ )
)
)
________________________________ )
Occupation
December 21, 1989
37
LPS 3-07
Where the transferee is a company:
The Corporate/Common Seal of )
[transferee] was affixed )
in the presence of: )
)
________________________________ ) c/s
Authorized signatory )
)
________________________________ )
Authorized signatory )
December 21, 1989
38
LPS 3-07
SCHEDULE C TO ESCROW AGREEMENT
--------------------------------------------------------------------------------
NAME OF SHAREHOLDER NUMBER OF SHARES HELD IN ESCROW
--------------------------------------------------------------------------------
DECEMBER 21, 1989
39
LPS 0-00
XXXXXXXX X TO LOCAL POLICY STATEMENT 3-07
EXAMPLES OF EARN-OUT PRICES FOR PERFORMANCE SHARES
ISSUED BY AN INDUSTRIAL ISSUER
--------------------------------------------------
EARN-OUT PRICES IN DOLLARS
--------------------------------------------------------------------------------
PERFORMANCE SHARE
PERCENTAGE 5% 25% 45% 65%
--------------------------------------------------------------------------------
EARN-OUT FACTOR .01x .25x .81x 1.69x
--------------------------------------------------------------------------------
I
P $0.40 .004 .10 .324 .676
O
$0.60 .006 .15 .486 1.014
P
R $0.80 .008 .20 .648 1.352
I
C $1.00 .010 .25 .810 1.690
E
--------------------------------------------------------------------------------
The earn-out price represents the amount of cash flow that must be generated to
release one performance share from escrow. The following definitions are
applicable to the calculation.
Earn-out Price:
The IPO price multiplied by the earn-out factor.
IPO Price:
The price per share paid by the public on the issuer's IPO.
Earn-out Factor:
The number obtained by squaring the performance share percentage,
expressed as a decimal, and multiplying the result by four.
Performance Share Percentage:
The percentage, determined on the date the issuer's shares are listed,
posted and called for trading on the Exchange, that the issued
performance shares of the issuer are of the total issued and outstanding
voting securities of the issuer.
December 21, 1989
40
LPS 3-07
APPENDIX C TO LOCAL POLICY STATEMENT 3-07
UNDERTAKING REQUIRED FROM NON-REPORTING
OR CLOSELY HELD COMPANY
---------------------------------------
To: Superintendent of Brokers or Vancouver Stock Exchange
#0000 - 000 Xxxxxx Xxxxxx 609 Granville Street
Vancouver, B.C. Xxxxxxxxx, X.X.
X0X 0X0 X0X 0X0
(if the Issuer's shares (if the Issuer's shares
are not listed on the are listed on the
Vancouver Stock Exchange) Vancouver Stock Exchange)
_____________________________ (the "Company") undertakes, for the duration of
the time that the Company is the registered owner of escrowed shares of
_____________________________ (the "Issuer"),
(a) to effect or permit transfer of ownership in the shares of the Company,
or
(b) to allot and issue further shares of any class of shares of the Company
only upon receipt of the written consent of the Superintendent of Brokers, if
the Issuer's shares are not listed on the Vancouver Stock Exchange (the
"Exchange"), or the Exchange, if the Issuer's shares are listed on the Exchange.
Dated at ____________________________________ on ________________________ 19___.
The Corporate/Common Seal of )
[Company] was affixed )
in the presence of: )
)
_______________________________________ )
Authorized signatory ) c/s
)
_______________________________________ )
Authorized signatory )
December 21, 1989
41
SCHEDULE "C" TO ESCROW AGREEMENT
--------------------------------------------------------------------------------
NAME AND ADDRESS NUMBER OF SHARES
OF SHAREHOLDER HELD IN ESCROW
--------------------------------------------------------------------------------
XXXXX X. XXXXXXXX 262,500
0000 Xxxx Xxxxx Xxxxxxx
Xxxxxxx, X.X.
X0X 0X0
XXXX XXXX 90,000
Apt. 316 - 000 Xxxx 00xx Xxxxxx
Xxxxx Xxxxxxxxx, X.X.
XXXXXX XXXXXXXXX 60,000
00 Xxxxxxxxxx Xxxxxx
00000 Xxxx Xxxxxxxxx
XXXXXX X.X. XXXXXXXX 60,000
0000 Xxxxx Xxxxx
Xxxxxxxxx, X.X.
X0X 0X0
XXXXX XxXXXXXXX 90,000
0000 Xxxxxxx Xxxxx
Xxxx Xxxxxxxxx, X.X.
X0X 0X0 -------
TOTAL: 562,500
=======
