SUPPORT AGREEMENT
THIS AGREEMENT is dated for reference the 29th day of February 2000.
BETWEEN:
EFINANCIAL XXXXX.XXX, INC. (A DELAWARE CORPORATION)
150-1875 Century Park Xxxx
Xxxxxxx Xxxx, Xxxxxxxxxx, X.X.X. 00000
(hereinafter referred to as "Pubco")
OF THE FIRST PART,
- and -
WESTCOR MORTGAGE INC. (AN ALBERTA CORPORATION)
#000, 0000 - 00xx Xxxxxx XX
Xxxxxxx, Xxxxxxx X0X 0X0
(hereinafter referred to as "Westcor")
OF THE SECOND PART.
WHEREAS pursuant to the provisions of a share purchase agreement between
Pubco and the shareholders of Westcor dated for reference February 29, 2000,
(hereinafter referred to as the "Share Purchase Agreement") the parties thereto
agreed that Pubco and Westcor would deliver this Support Agreement; and,
WHEREAS pursuant to the provisions of the Share Purchase Agreement, the
shareholders of Westcor represented that the articles of Westcor would authorize
an infinite number of Exchangeable Shares having the attributes as set out in
the restated articles and articles of amendment of Westcor (the "Exchangeable
Share Provisions"); and,
WHEREAS the parties hereto wish to provide for and establish a procedure
whereby Pubco will take certain actions and make certain payments and deliveries
necessary to ensure that Westcor will be able to make certain payments and to
deliver or cause to be delivered shares of Pubco Common Stock in satisfaction of
the obligations of Westcor under the Exchangeable Share Provisions with respect
to the payment and satisfaction of dividends, Liquidation Amounts, Retraction
Prices, and Redemption Prices all in accordance with the Exchangeable Share
Provisions;
NOW THEREFORE in consideration of the respective covenants and agreements
provided in this Agreement and for other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties agree as
follows:
1. Definitions and Interpretation
(1) Defined Terms. Each term denoted herein by initial capital letters and
not otherwise defined herein shall have the meaning attributed thereto in the
Exchangeable Share Provisions, unless the context requires otherwise.
(2) Interpretation Not Affected by Headings, etc. The division of this
Agreement into articles, sections and paragraphs and the insertion of headings
are for convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
(3) Number, Gender, etc. Words importing the singular number only shall
include the plural and vice versa. Words importing the use of any gender shall
include all genders.
(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.
2. Covenants of Pubco and Westcor
(1) Covenants of Pubco Regarding Exchangeable Shares. Pubco covenants and
agrees that so long as any Exchangeable Shares are outstanding, it will:
(1) not declare or pay any dividend on Pubco Common Stock unless (A)
Westcor will have sufficient assets, funds and other property available to
enable the due declaration and the due and punctual payment in accordance with
applicable law of an equivalent dividend on the Exchangeable Shares and Westcor
does simultaneously declare or pay, as the case may be, an equivalent dividend
on the Exchangeable Shares, in each case in accordance with the Exchangeable
Share Provisions, or (B) it provides the holder of each Exchangeable Share with
a benefit that in Pubco's reasonable opinion is equivalent to the dividend on
each share of Pubco Common Stock, and it provides a description of this benefit
to each holder of Exchangeable Shares 15 days prior to the declaration or
payment of any dividend;
(2) advise Westcor sufficiently in advance of the declaration by Pubco of
any dividend on Pubco Common Stock and take all such other actions as are
necessary, in cooperation with Westcor, to ensure that the respective
declaration date, record date and payment date for a dividend on the
Exchangeable Shares shall be the same as the record date, declaration date and
payment date for the corresponding dividend on Pubco Common Stock;
(3) ensure that the record date for any dividend declared on Pubco Common
Stock is not less than 10 calendar days after the declaration date for such
dividend;
(4) take all such actions and do all such things as are necessary or
desirable to enable and permit Westcor, in accordance with applicable law, to
pay and otherwise perform its obligations with respect to the satisfaction of
the Liquidation Amount in respect of each issued and outstanding Exchangeable
Share upon the liquidation, dissolution or winding-up of Westcor, including
without limitation all such actions and all such things as are necessary or
desirable to enable and permit Westcor to cause to be delivered shares of Pubco
Common Stock to the holders of Exchangeable Shares in accordance with the
provisions of Article 3.6 of the Exchangeable Share Provisions;
(5) take all such actions and do all such things as are necessary or
desirable to enable and permit Westcor, in accordance with applicable law, to
pay and otherwise perform its obligations with respect to the satisfaction of
the Retraction Price and the Redemption Price, including without limitation all
such actions and all such things as are necessary or desirable to enable and
permit Westcor to cause to be delivered shares of Pubco Common Stock to the
holders of Exchangeable Shares, upon the retraction or redemption of the
Exchangeable Shares in accordance with the provisions of Article 3.7 or Article
3.8 of the Exchangeable Share Provisions, as the case may be; and
(6) not exercise its vote as a direct or indirect shareholder to initiate
the voluntary liquidation, dissolution or winding-up of Westcor nor take any
action or omit to take any action that is designed to result in the liquidation,
dissolution or winding-up of Westcor.
(2) Reservation of Shares of Pubco Common Stock. Pubco hereby represents,
warrants and covenants that it has irrevocably reserved for issuance and will at
all times keep available, free from preemptive and other rights, out of its
authorized and unissued capital stock such number of shares of Pubco Common
Stock (or other shares or securities into which Pubco Common Stock may be
reclassified or changed as contemplated by section 2(5) hereof) (i) as is equal
to the sum of (A) the number of Exchangeable Shares issued and outstanding from
time to time and (B) the number of Exchangeable Shares issuable upon the
exercise of all rights to acquire Exchangeable Shares outstanding from time to
time and (ii) as are now and may hereafter be required to enable and permit
Westcor to meet its obligations hereunder, under the Voting Trust and Exchange
Agreement, under the Exchangeable Share Provisions and under any other security
or commitment pursuant to the Share Purchase Agreement with respect to which
Pubco may now or hereafter be required to issue shares of Pubco Common Stock.
(3) Notification of Certain Events. In order to assist Pubco to comply with
its obligations hereunder, Westcor covenants and agrees to give Pubco notice of
each of the following events at the time set forth below:
(1) in the event of any determination by the Board of Directors of Westcor
to institute voluntary liquidation, dissolution or winding-up proceedings with
respect to Westcor or to effect any other distribution of the assets of Westcor
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;
(2) immediately, upon the earlier of (A) receipt by Westcor of notice of, or
(B) Westcor 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 Westcor or to effect any other distribution of the
assets of Westcor among its shareholders for the purpose of winding-up its
affairs;
(3) Immediately, upon receipt by Westcor of a Retraction Request (as defined
in the Exchangeable Share Provisions); and,
(4) as soon as practicable upon the issuance by Westcor of any Exchangeable
Shares or rights to acquire Exchangeable Shares.
(4) Delivery of Shares of Pubco Common Stock. In furtherance of its
obligations hereunder, upon notice of any event which requires Westcor to cause
to be delivered shares of Pubco Common Stock to any holder of Exchangeable
Shares, Pubco shall and covenants and agrees to forthwith issue and deliver the
requisite shares of Pubco Common Stock to or to the order of the former holder
of the surrendered Exchangeable Shares, as Westcor shall direct. All such shares
of Pubco Common Stock shall be duly issued as fully paid and non-assessable and
shall be free and clear of any lien, claim, encumbrance, security interest or
adverse claim.
(5) Equivalence.
(1) Pubco covenants and agrees that it will not without the prior approval
of Westcor and the prior approval of the holders of the Exchangeable Shares
given in accordance with Section 3.10(b) of the Exchangeable Share Provisions:
(1) issue or distribute shares of Pubco Common Stock (or securities
exchangeable for or convertible into or carrying rights to acquire shares of
Pubco Common Stock) to the holders of all or substantially all of the then
outstanding Pubco Common Stock by way of stock dividend or other distribution;
or
(2) issue or distribute rights, options or warrants to the holders of all or
substantially all of the then outstanding shares of Pubco Common Stock entitling
them to subscribe for or to purchase shares of Pubco Common Stock (or securities
exchangeable for or convertible into or carrying rights to acquire shares of
Pubco Common Stock); or
(3) issue or distribute to the holders of all or substantially all of the
then outstanding shares of Pubco Common Stock (1) shares or securities of Pubco
of any class other than Pubco Common Stock (other than shares convertible into
or exchangeable for or carrying rights to acquire shares of Pubco Common Stock),
(II) rights, options or warrants other than those referred to in subsection 2
(5) (1) (2) above, (III) evidences of indebtedness of Pubco or (IV) assets of
Pubco;
unless
(4) Westcor is permitted under applicable law to issue or distribute the
economic equivalent on a per share basis of such rights, options, securities,
shares, evidences of indebtedness or other assets to holders of the Exchangeable
Shares; and Westcor shall issue or distribute the economic equivalent on a per
share basis of such rights, options, securities, shares, evidences of
indebtedness or other assets simultaneously to holders of the Exchangeable
Shares; or
(5) doing so will not, in the reasonable opinion of Pubco, adversely affect
the rights of any holder of Exchangeable Shares, and Pubco provides to each
holder of Exchangeable Shares 15 days notice of such intended action.
(2) Pubco will not without the prior approval of Westcor and the prior
approval of the holders of the Exchangeable Shares given in accordance with
Section 3.10(b) of the Exchangeable Share Provisions:
(1) subdivide, divide or change the then outstanding shares of Pubco Common
Stock into a greater number of shares of Pubco Common Stock; or
(2) reduce, combine or consolidate or change the then outstanding shares of
Pubco Common Stock into a lesser number of shares of Pubco Common Stock; or
(3) reclassify or otherwise change the shares of Pubco Common Stock or
effect an amalgamation, merger, reorganization or other transaction affecting
the shares of Pubco Common Stock;
unless
(4) Westcor is permitted under applicable law to simultaneously make the
same or an equivalent change to, or in the rights of holders of, the
Exchangeable Shares, and the same or an equivalent change is made to, or in the
rights of the holders of, the Exchangeable Shares; or
(5) doing so will not, in the reasonable opinion of Pubco, adversely affect
the rights of any holder of Exchangeable Shares, and Pubco provides to each
holder of Exchangeable Shares 15 days notice of such intended action.
(3) Pubco will ensure that the record date for any event referred to in
section 2(5) (1) or 2 (5) (2) above, or (if no record date is applicable for
such event) the effective date for any such event, is not less than 10 calendar
days after the date on which such event is declared or announced by Pubco (with
simultaneous notice thereof to be given by Pubco to Westcor).
(6) Tender Offers, etc. In the event that a tender offer, share exchange
offer, issuer bid, take-over bid or similar transaction with respect to Pubco
Common Stock (an "Offer") is proposed by Pubco or is proposed to Pubco or its
shareholders and is recommended by the Board of Directors of Pubco, or is
otherwise effected or to be effected with the consent or approval of the Board
of Directors of Pubco, Pubco shall take all such actions and do all such things
as are necessary or desirable to enable and permit holders of Exchangeable
Shares to participate in such Offer to the same extent and on an equivalent
basis as the holders of shares of Pubco Common Stock, without discrimination,
including, without limiting the generality of the foregoing, Pubco will use its
good faith efforts expeditiously to (and shall, in the case of a transaction
proposed by Pubco or where Pubco is a participant in the negotiation thereof)
ensure that holders of Exchangeable Shares may participate in all such Offers
without being required to retract Exchangeable Shares as against Westcor (or, if
so required, to ensure that any such retraction shall be effective only upon,
and shall be conditional upon, the closing of the Offer and only to the extent
necessary to tender or deposit to the Offer).
(7) Ownership of Outstanding Shares. Without the prior approval of Westcor
and the prior approval of the holders of the Exchangeable Shares given in
accordance with Section 3.10(b) of the Exchangeable Share Provisions, Pubco
covenants and agrees in favour of Westcor that, as long as any outstanding
Exchangeable Shares are owned by any person or entity other than Pubco or any of
its Subsidiaries, Pubco will be and remain the direct or indirect beneficial
owner of all issued and outstanding shares in the capital of Westcor and all
outstanding securities of Westcor carrying or otherwise entitled to voting
rights in any circumstances, in each case other than the Exchangeable Shares,
unless not being and remaining so will not, in the reasonable opinion of Pubco,
adversely affect the rights of any holder of Exchangeable Shares, and Pubco has
provided to each holder of Exchangeable Shares 15 days notice of Pubco's
intention to no longer be or remain the direct or indirect beneficial owner of
all issued and outstanding shares in the capital of Westcor carrying and all
outstanding securities of Westcor or otherwise entitled to voting rights in any
circumstances, in each case other than the Exchangeable Shares.
(8) Pubco Not to Vote Exchangeable Shares. Pubco covenants and agrees that
it will appoint and cause to be appointed proxyholders with respect to all
Exchangeable Shares held by Pubco and its Subsidiaries for the sole purpose of
attending each meeting of holders of Exchangeable Shares in order to be counted
as part of the quorum for each such meeting. Pubco further covenants and agrees
that it will not, and will cause its Subsidiaries not to, exercise any voting
rights which may be exercisable by holders of Exchangeable Shares from time to
time pursuant to the Exchangeable Share Provisions or pursuant to the provisions
of any corporate statute by which Westcor may be governed with respect to any
Exchangeable Shares held by it or by its Subsidiaries in respect of any matter
considered at any meeting of holders of Exchangeable Shares.
(9) Due Performance. On and after the Effective Date, Pubco shall duly and
timely perform all of its obligations provided for under the Share Purchase
Agreement, this agreement and all of the agreements to which it is a party in
connection with the transactions contemplated under the Share Purchase Agreement
including any obligations that may arise upon the exercise of Pubco's rights
under the Exchangeable Share Provisions.
3. General
(1) Term. This Agreement shall come into force and be effective as of the
date hereof and shall terminate and be of no further force and effect at such
time as no Exchangeable Shares (or securities or rights convertible into or
exchangeable for or carrying rights to acquire Exchangeable Shares) are held by
any party other than Pubco and any of its Subsidiaries.
(2) Changes in Capital of Pubco and Westcor. Notwithstanding the provisions
of section 3 (4) hereof, at all times after the occurrence of any event effected
pursuant to section 2 (5) or 2 (6) hereof, as a result of which either Pubco
Common Stock or the Exchangeable Shares or both are in any way changed, this
Agreement shall forthwith be amended and modified as necessary in order that it
shall apply with full force and effect, mutatis mutandis, to all new securities
into which Pubco Common Stock or the Exchangeable Shares or both are so changed
and the parties hereto shall execute and deliver an agreement in writing giving
effect to and evidencing such necessary amendments and modifications.
(3) 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 this Agreement shall be carried out as nearly as possible in accordance with
its original terms and conditions.
(4) Amendments, Modifications, etc. This Agreement may not be amended or
modified except by an agreement in writing executed by Westcor and Pubco and
approved by the holders of the Exchangeable Shares in accordance with Section
3.10(b) of the Exchangeable Share Provisions.
(5) Ministerial Amendments. Notwithstanding the provisions of section 3(4),
the parties to this Agreement may in writing, at any time and from time to time,
without the approval of the holders of the Exchangeable Shares, amend or modify
this Agreement for the purposes of.
(1) adding to the covenants of either or both parties for the protection of
the holders of the Exchangeable Shares;
(2) 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 opinion of the board of directors of each of Westcor and Pubco, it
may be expedient to make, provided that each such board of directors shall be of
the opinion that such amendments or modifications will not be prejudicial to the
interests of the holders of the Exchangeable Shares; or
(3) making such changes or corrections which, on the advice of counsel to
Westcor and Pubco, 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 boards of directors of each of Westcor and
Pubco shall be of the opinion that such changes or corrections will not be
prejudicial to the interests of the holders of the Exchangeable Shares.
(6) Meeting to Consider Amendments. Westcor, at the request of Pubco, shall
call a meeting or meetings of the holders of the Exchangeable Shares for the
purpose of considering any proposed amendment or modification requiring approval
of such shareholders. Any such meeting or meetings shall be called and held in
accordance with the by-laws of Westcor, the Exchangeable Share Provisions and
all applicable laws.
(7) Amendments Only in Writing. 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 both of the parties hereto.
(8) Enurement. This Agreement shall be binding upon and enure to the benefit
of the parties hereto and the holders, from time to time, of Exchangeable Shares
and each of their respective heirs, successors and assigns.
(9) Notices to Parties. All notices and other communications between the
parties shall be in writing and shall be deemed to have been given if delivered
personally or by confirmed telecopy to the parties at the following addresses
(or at such other address for either such party as shall be specified in like
notice):
(1) if to Pubco at:
EFinancial Xxxxx.xxx, Inc. (a Delaware corporation)
150-1875 Xxxxxxx Xxxx Xxxx
Xxxxxxx Xxxx, Xxxxxxxxxx, X.X.X. 00000
Attention: President
Fax: 000-000-0000
(2) if to Westcor at:
Westcor Mortgage Inc.
#000, 0000 - 00xx Xxxxxx XX
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: President
Fax: 000.000.0000
Any notice or other communication given personally shall be deemed to have been
given and received upon delivery thereof and if given by telecopy shall be
deemed to have been given and received on the date of confirmed receipt thereof
unless such day is not a Business Day in which case it shall be deemed to have
been given and received upon the immediately following Business Day.
(10) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, and all of which taken together shall
constitute one and the same instrument.
(11) Jurisdiction. This Agreement shall be construed and enforced in
accordance with the laws of the Province of Alberta and the laws of Canada
applicable therein.
(12) Recitals. The recitals form part of this agreement.
(13) Attornment. Pubco agrees that any action or proceeding arising out of
or relating to this Agreement may be instituted in the courts of Alberta, 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 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 Westcor at
its registered office in the Province of Alberta as Pubco's attorney for service
of process.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to take
effect as of the date first above written.
E-FINANCIAL XXXXX.XXX, INC.
(A DELAWARE CORPORATION)
Per: /s/ Xxxx Xxxxxx
WESTCOR MORTGAGE INC.
Per: /s/ Xxxxxxxx Xxxxxxx
