Exhibit - 21.00 - Formation of Subsidary - Ptarmigan
PTARMIGAN BUSINESS AGREEMENT
SHAREHOLDERS' AGREEMENT entered into on February 19, 2002,
in the Province of Quebec.
BETWEEN: EXPERTS CONSEILS XXXXXXX INC., a legal
person duly incorporated under the
Canada Business Corporations Act, having
its head office at 000, xxxxxx
XxXxxxxxx, Xxxxxxxxx, Xxxxxxxx xx
Xxxxxx, X0X 0X0, represented by
Xxxxxxxxx Xxxx, its president, duly
authorised for the purposes hereof as he
so declares;
(hereinafter referred to as "Xxxxxxx")
AND: GROUPE ENVITECH INC., a legal person
duly incorporated under the Canada
Business Corporations Act, having its
head office at 000, Xxxxxxxxx xxxxxxxxx,
Xxxxxx-Xxxxxx, Xxxxxxxx xx Xxxxxx,
X0X 0X0, represented by Xxxxxx Xxxxxxxx,
its president, duly authorised for the
purposes hereof as he so declares;
(hereinafter referred to as "Envitech")
AND: XXXXXXX XXXXXXX & ASSOCIES, a legal
person duly incorporated under the
Canada Business Corporations Act, having
its head office at 0000, Xxxxxxxxxx
Xxxx, Val d'Or, Province of Quebec,
J9P 5H4, represented by Xxxxxxx Xxxxxxx,
its president, duly authorised for the
purposes hereof as he so declares;
(hereinafter referred to as "LGA")
AND INTERVENTOR: PTARMIGAN ENERGIE INC., a legal person
duly incorporated under the Canada
Business Corporations Act, having its
head office at 000, Xxxxxxxxx Xx. Xxxx,
Xxxxx-Xxxxxxx, represented by Xxxxxx X.
Xxxxxx, its president in counsel, duly
authorized as he so declares;
(hereinafter referred to as the
"Corporation")
PREAMBLE
THE PARTIES, BEFORE CONCLUDING THE AGREEMENT HEREINAFTER
ESTABLISHED DECLARE THE FOLLOWING:
WHEREAS on the date hereof, the authorized capital of the
Corporation consists of an unlimited number of common and
preferred shares, all without par value;
WHEREAS the total number of issued and outstanding shares of the
capital of the Corporation is distributed among the following
persons and in the following proportions:
Shareholders Class of Shares No of Shares Percentage of
Held Voting Rights
Xxxxxxx common 6,250 62.5
Envitech common 1,875 18.75
LGA common 1,875 18.75
WHEREAS it is the Shareholders' intention that the strategies of
their association be implemented in such manner as to confer to
them the best possible tax advantages and in such manner as to
ensure that the present agreement will not impose upon them any
further financial burdens;
WHEREAS the Shareholders wish to agree on various other
conditions to govern their mutual relations;
IN CONSIDERATION OF THE RECIPROCAL COMMITMENTS AND WHAT IS
RELATED HEREAFTER, THE PARTIES MUTUALLY AGREE TO THE FOLLOWING:
1. DEFINITIONS
In this Agreement and in any document pertaining or referring
thereto, unless the context requires or indicates a different
meaning, the following expressions or terms, when written with
their initials capitalized, shall have the meaning given to them
hereafter:
1.1
"Additional Offer": shall have the meaning given to this
expression under Article 6.7 hereof;
1.2
"Additional Subscription Offer": shall have the meaning given to
this expression under Article 7.3 hereof;
1.3
"Beneficiaries": the Offeror's co-shareholders;
1.4
"Book Value": designates the book value of the Retired Shares, as
established in accordance with consistently applied generally
accepted accounting principles. The Book Value shall be
determined by the Corporation's auditors, shall be irrevocable
and shall bind the parties;
1.5
"Business Day": designates any day of the week, except for a
Saturday, a Sunday and any other day during which the main
Canadian chartered banks are not open in the City of Montreal
during their normal business hours;
1.6
"Case of Withdrawal": shall have the meaning given to this
expression under Article 9.1 hereof;
1.7
"Control" : regarding a corporation on a given date, designates
the fact that a natural or legal person is the beneficial owner,
directly or indirectly, in any manner whatsoever, of a number of
outstanding shares of the capital of the Corporation which allows
it to exercise, on that date, over fifty percent (50%) of the
voting rights attached to the outstanding shares of all classes
of the Corporation, including on that date the right to vote in
all circumstances or involving the rights to vote under special
circumstances or conditions which, on that given date, find
application and allow this person to vote;
1.8
"Enterprise": the supply of independent energy management systems
including power generators, batteries and renewable sources of
energy;
1.9
"Fair Market Value": designates the fair market value of the
Retired Shares as established by an independent Valuator who must
remain independent during the term of this Agreement. The
Valuator shall be named in a unanimous agreement by the
Shareholders; if the parties cannot come to such agreement prior
to the expiration of a fifteen (15) Business Day period from the
event which requires that the Fair Market Value be determined,
each party shall designate a Valuator and the determination of
the Fair Market Value shall be equal to the mean of the values
determined by each Valuator authorized under this Article. The
determination of the Fair Market Value by each Valuator shall be
completed and forwarded to the parties in writing within thirty
(30) days of the nomination of said Valuator. In the case where
one of the parties does not designate a Valuator within thirty
(30) Business Days of the event requiring the determination of
the Fair Market Value, then the Fair Market Value shall be
determined by the Valuator designated by the other party as per
this Article. In determining the Fair Market Value each Valuator
shall follow "the rules of art" but shall not take into account
proceeds from life insurance or from any asset resulting from the
proceeds of life insurance. Each Valuator shall be entitled to
communicate with the controllers of the Corporation who have
access to their files and the parties shall use their best
efforts to make available any reasonable information that a
Valuator determines to be relevant to his evaluation. The
decision of the Valuator or the determination obtained from the
decisions of each Valuator nominated under the present Article,
as the case may be, shall be final, without appeal and shall
definitively bind each of the concerned parties;
1.10
"Good Faith Offer": the written Offer submitted in good faith by
a Shareholder or by a third party pertaining to the purchase of
Shares held by a Shareholder of the Corporation;
1.11
"Notice of Option": shall have the meaning given to this
expression under Article 9.4 hereof;
1.12
"Offer": the written offer sent to the Beneficiaries under
Article 6.3 hereof;
1.13
"Offered Shares" shall have the meaning given to this expression
under Article 6.1 hereof;
1.14
"Offeror": either a party or several parties acting jointly in
this Agreement, having received a Good Faith Offer and wishing to
sell his or her Shares;
1.15
"Option to Purchase": shall have the meaning given to this
expression under Article 9.5 hereof;
1.16
"Proportional Basis": means the percentage obtained by dividing
the number of shares of a specified class held by a Shareholder
by the total number of outstanding shares of this class. However,
in the case of alienation of shares, the Offered Shares shall be
deducted from the total number of outstanding shares of the
specified class for purposes of determining the percentage
sought;
1.17
"Remaining Shareholders": shall have the meaning given to this
expression under Article 9.4 hereof;
1.18
"Retired Shares": shall have the meaning given to this expression
under Article 9.2 hereof;
1.19
"Securities": shall have the meaning given to this term under
Article 7.1 hereof;
1.20
"Shareholder": means any natural or legal person who holds
Shares, namely on the date hereof, Xxxxxxx, Envitech and LGA;
1.21
"Shares": the shares of any class of the Corporation;
1.22
"Valuator": means any expert in business evaluation properly
designated under Article 1.9 hereunder;
1.23
"Voting Shares" designates the shares of all classes of the
Corporation that confer upon their holder the right to vote at
any Shareholders' meeting.
2.
THE CORPORATION'S MISSION
2.1
The Shareholders agree that the Corporation's mission is to
supply independent energy management systems using power
generators, batteries and renewable energy sources.
3.
SHAREHOLDERS' COMMITMENTS CONCERNING THE ELECTION OF DIRECTORS
3.1
During the term of the Agreement, the Shareholders agree to
exercise the voting rights attached to their Shares so that each
Shareholder has the following number of representatives on the
Corporation's Board of Directors: two (2) representatives for
Xxxxxxx, one (1) representative for LGA and one (1)
representative for Envitech.
3.2
The quorum at any Shareholders' meeting shall be three (3)
Shareholders.
4.
COMPOSITION AND PROCEDURES OF THE BOARD OF DIRECTORS
4.1
For the term of the Agreement, the Corporation's Board of
Directors shall be made up of four (4) directors.
4.2
The Shareholders shall be entitled to revoke any person they
designate to sit on the Corporation's Board of Directors and to
designate any other person in replacement thereof. Any vacancy
created on the Corporation's Board of Directors as a result of
the revocation or resignation of the representative designated by
the Shareholder shall be filled promptly by the person designated
by the Shareholder who had designated that seat on the
Corporation's Board of Directors.
4.3
The parties hereto undertake to ensure that the Corporation
purchases a directors' liability insurance policy and maintains
it in force for the entire term of this Agreement.
5.
PROHIBITION TO SELL OR ENCUMBER THE SHARES
5.1
The Shareholders undertake not to sell, transfer, assign or
otherwise alienate all or part of the Shares, whether for or
without value, except in accordance with the provisions hereof.
5.2
Each Shareholder undertakes not to hypothecate all or part of its
Shares, without the written consent of the other Shareholders,
who will have the right to make the hypothecation of such Shares
conditional upon any terms they judge to be beneficial.
5.3
It is expressly agreed by the parties hereto that any Shareholder
may assign, sell, convey or alienate in any manner whatsoever the
Shares it holds, in favour of any other Corporation it
designates, provided that immediately after such transfer and at
any time thereafter, this Shareholder holds the Control of this
Corporation and also provided that, as a precondition to the
transfer of the Corporation's Shares, the assignee Corporation
becomes a party to this Agreement and accepts all its terms and
conditions, failing which the assignment of Shares shall be null
and void. The Shareholder who has assigned its Shares in the
aforesaid manner shall remain bound by this Agreement.
6.
RIGHT OF FIRST REFUSAL
6.1
Subject to the provisions of Article 5.3 above, if one of the
Shareholders (the "Offeror") wishes, for any reason whatsoever,
to sell, dispose of or otherwise alienate to a third party all or
part of the Shares it holds in the capital of the Corporation
(the "Offered Shares"), following receipt of a Good Faith Offer
it shall first advise the Corporation of any such projected
transaction (the "Offer to the Corporation") to give the
Corporation the opportunity to acquire the Offered Shares. This
Offer to the Corporation shall be sent to the Corporation by
registered mail and shall detail the number of Offered Shares,
the price (which may only be payable in cash), and the terms and
conditions of the Good Faith Offer.
6.2
Within fifteen (15) days of receipt of the Offer to the
Corporation, the Corporation shall advise the Offeror in writing
of its acceptance or its refusal of the Offer to the Corporation.
In the event that the Corporation does not advise the Offeror in
writing within the prescribed deadline of its acceptance or
refusal of the Offer to the Corporation, it shall be deemed to
have refused it.
6.3
In the event that the Offer to the Corporation is refused by the
Corporation, the Offeror shall advise in writing its Co-
Shareholders (the "Beneficiaries") of the Good Faith Offer in
order to give them the opportunity to acquire the Offered Shares
(the "Offer").
6.4
Within fifteen (15) days of receipt of the Offer, the
Beneficiaries shall advise the Offeror in writing of its
acceptance or its refusal of the Offer. In the event of
acceptance of the Offer, the Shareholders shall indicate the
number of Offered Shares that they wish to purchase.
6.5
In the event that a Beneficiary to whom the Offer is thus made
does not advise the Offeror in writing within the prescribed
deadline of his acceptance or refusal of the Offer it shall be
deemed to have refused it.
6.6
In the event that the Offer is accepted by all the Beneficiaries,
the Offeror shall transfer the Offered Shares to the
Beneficiaries within thirty (30) days of the date of the last
acceptance.
6.7
In the event that one or more of the Beneficiaries does not take
advantage of the Offer or is deemed to have refused it within the
prescribed deadline, its Proportional Basis of the Offered Shares
or the balance thereof shall accrue to the other Beneficiaries (
the "Additional Offer"). If applicable, the Offeror shall advise
the Beneficiaries who have accepted the Offer within ten (10)
days of the deadline mentioned at Article 6.4. They will benefit
from an additional deadline of ten (10) days to accept this
Additional Offer on a Proportional Basis and advise the Offeror
thereof in writing, failing which they shall be deemed to have
refused the Additional Offer.
6.8
In the event of acceptance of the Additional Offer, the Offeror
shall then transfer the Offered Shares within fifteen (15) days
of the expiration of the additional ten (10) day deadline
mentioned in Article 6.7.
6.9
Upon the expiration of the fifteen (15) day deadline mentioned in
Article 6.4, if no Beneficiary takes advantage of the Offer, or
at the expiration of the original deadline of twenty (20)
Business Days mentioned in Article 6.7, if all the Offered Shares
have not found a taker (in which case the Offeror shall not be
bound by any acceptance of its Offer by one or more
Beneficiaries), the Offeror shall then have the option of selling
them to a third party, the contents of whose Offer has been
submitted to them in advance, but for the same price, and on the
same terms and conditions as those stipulated in the Offer.
However, this sale shall be completed within no more than sixty
(60) days following the expiration of said deadlines.
6.10
The sale of the Offered Shares in favour of a third party may
only be completed by the Offeror if this third party undertakes
to be bound by each of the provisions hereof as if he were an
original party to the Agreement and to abide by all its terms and
conditions. Unless these commitments are obtained in writing, any
sale of the Offered Shares in favour of a third party shall be
null and void.
6.11
If the Offeror wishes to sell the Offered Shares at prices, terms
and conditions less onerous than those stipulated in the Offer,
it shall again and on each occasion offer them to the
Beneficiaries according to the conditions of this Section 6.
6.12
Upon expiration of the deadlines mentioned in Article 6.9, a
Shareholder who wishes for any reason whatsoever to sell, dispose
of or otherwise alienate the Shares he holds in the Corporation
shall again and on each occasion comply with the provisions of
Articles 6.1 to 6.11 inclusive.
7.
PREEMPTIVE RIGHT
7.1
If the Corporation wishes to issue new Shares, subscription
rights or other securities (the "Securities"), it shall advise
all the Shareholders in writing of the terms, prices and
conditions of said issue (the "Subscription Offer") at least
fifteen (15) days before the date of this issue. The Shareholders
shall then have the right, within this fifteen (15) day deadline,
to subscribe to and purchase the Securities that shall thus be
issued on a Proportional Basis.
7.2
In the event that a Shareholder to whom the Subscription Offer
has been made does not advise the Corporation in writing, within
the prescribed deadline, of its acceptance or refusal, it shall
be deemed to have refused it.
7.3
In the event that one or more of the Shareholders does not take
advantage of the Subscription Offer in whole or in part, it shall
accrue in favour of the other Shareholders who may exercise their
subscription right to the Securities (the "Additional
Subscription Offer"). They shall then have an additional deadline
of fifteen (15) days following the notice given by the
Corporation to this effect, to take advantage of this accrual, by
means of a written notice to this effect addressed to the
Corporation, failing which they shall be deemed to have refused
the Additional Subscription Offer.
7.4
If these other Shareholders do not wish to take advantage of the
Additional Subscription Offer, the Corporation may issue the
unsubscribed Securities to persons who are not shareholders of
the Corporation, but at the same prices and conditions (including
payment of the price in cash).
7.5
If the Securities that the Corporation thus intends to issue have
not been issued within a ninety (90) day deadline, calculated
from the date of the Subscription Offer, the Corporation shall
again and on each occasion comply with the provisions of the
foregoing Articles 7.1 to 7.4, before proceeding with any issue
of Securities.
7.6
The Corporation shall not be bound to issue fractions of
Securities, it being understood that in the event that it
proposes to effect a new issue, the number of Securities that it
proposes to issue shall permit the subscription by each
Shareholder to a sufficient number of Securities to permit it to
maintain the Proportional Basis of Shares that it holds at the
time of said issue.
8.
CONDUCT OF THE CORPORATION'S BUSINESS
8.1
Decisions of the Board of Directors
In relation to the following matters the Corporation shall
require a majority of seventy-five percent (75%) of the
lawful directors of the Corporation to pass a resolution
of the Board of Directors, and the directors shall not
give effect to such resolution unless it has been so
approved:
8.1.1
the redemption or purchase of any Share by the Corporation;
8.1.2
any loan or commitment for the purposes of borrowing or the
granting of security on the assets of the Corporation;
8.1.3
any capital expenditure when this expenditure does not appear in
the Corporation's annual budget;
8.1.4
the fact that the Corporation makes a loan to a third party or
stands as guarantor for a third party;
8.1.5
the fixing and payment of bonuses, the fixing of salaries of the
directors of the Corporation, and the fact that the Corporation
extends loans or cash advances, directly or indirectly, to a
Shareholder or a director or to any person related to a
Shareholder or a director or stands as guarantor for a person out
of the normal course of business of the Corporation;
8.1.6
the adoption of hiring policies for executives and key employees
of the Corporation or a subsidiary and the budget envelope for
their remuneration;
8.1.7
a declaration of bankruptcy, assignment of property to creditors
in general for the filing of a holding proposal or a notice of
intention under the terms of the Bankruptcy and Insolvency Act
(Canada) or the filing of an arrangement under the Companies'
Creditors Arrangement Act (Canada) or the recourse to any other
law relating to insolvency by the Corporation or one of its
subsidiaries;
8.1.8
the acquisition, disposal or leasing by the Corporation or one of
its subsidiaries of any real or intellectual property (excluding
any licence granted in the normal course of the Corporation's
business), of any business or any security (except for treasury
bills) when this acquisition, disposal or leasing does not appear
in the Corporation's consolidated annual operating and capital
budget; and
8.1.9
the execution of any contract for an amount greater than FIFTY
THOUSAND DOLLARS ($50,000.00) on a cumulative basis by financial
year outside of the normal course of business of the Corporation
or its subsidiaries.
8.2
Decisions by the Shareholders
The following resolutions shall be adopted by a majority
of seventy-five percent (75%) of the Shareholders in order
to be valid:
8.2.1
any "special resolution" of the Shareholders as such term is
defined in the Canada Business Corporations Act;
8.2.2
any amendment or change to the articles of incorporation of the
Corporation;
8.2.3
any merger, association or corporate reorganization or any
amalgamation under any form whatsoever of the Corporation with
another corporation;
8.2.4
any reduction in the authorized capital account of the
Corporation;
8.2.5
a voluntary liquidation, abandonment of the charter or any other
form of dissolution of the Corporation;
8.2.6
any issue or distribution of shares, warrants, options,
subscription rights or other securities convertible into shares
of the capital of the Corporation;
8.2.7
any subdivision, consolidation, re-designation or conversion of
outstanding shares of the Corporation or the increase of
reduction of the issued and paid-up capital of the Corporation;
8.2.8
the declaration of dividends and distribution of the property or
funds of the Corporation;
8.2.9
the sale of all or a substantial part of the property or assets
of the Corporation or granting of an option to this effect;
8.2.10
any decision involving a major change in orientation of the
activities, objectives or policies of the Corporation; and
8.2.11
any amendment, adoption or repeal of the bylaws of the
Corporation.
9.
WITHDRAWAL FROM BUSINESS
9.1
Each of the Shareholders irrevocably offers to sell, by the
following, to its Co-Shareholders who irrevocably accept to buy
pursuant hereto, all and not less than all of the Shares (in this
Article, the "Offered Shares") at the price determined in Section
9.2 and pursuant to the terms and conditions (in the present
Article, the "Offer") in the event that one of the events
described in this Article occurs, this irrevocable offer to sell
being conditional upon the occurrence of said event. Under
Section 9, a Shareholder shall be deemed to have withdrawn from
the business of the Corporation in the following cases ("Case of
Withdrawal"):
9.1.1
if a Shareholder or a director or officer of the Shareholder
systematically refuses or neglects, without valid cause, to
suitably fulfil the functions or obligations he undertook to
fulfil for the benefit of the Corporation or of one of its
subsidiaries, as the case may be, and does not remedy this
default within fifteen (15) days of receipt of a notice to this
effect transmitted by the Corporation;
9.1.2
if a Shareholder or a director, officer or director of the
Shareholder is found guilty of theft, fraud or embezzlement
against the Corporation or a subsidiary;
9.1.3
if a Shareholder or a director or officer of the Shareholder
breaches his non-solicitation, non-competition or confidentiality
covenants under the terms hereof and does not remedy this default
within five (5) days of receipt of a notice to this effect
transmitted by the Corporation;
9.1.4
if a Shareholder does not observe or take action to exempt
himself from a provision of this Agreement and does not remedy
this default within five (5) days of receipt of a notice to this
effect transmitted by the Corporation;
9.1.5
(i) if a Shareholder is declared bankrupt or insolvent under the
terms of the Bankruptcy and Insolvency Act (Canada), makes a
voluntary assignment of his property for the benefit of his
creditors or takes advantage of legislation passed for the
protection of insolvent debtors, (ii) if a corporation of which
the Shareholder holds Control and which holds Shares, directly or
indirectly, is declared bankrupt or insolvent under the terms of
the Bankruptcy and Insolvency Act (Canada), makes a voluntary
assignment of its property for the benefit of its creditors or
takes advantage of legislation passed for the protection of
insolvent debtors, or (iii) if the Shares the Shareholder holds,
directly or indirectly, or the shares of a Corporation mentioned
in (ii) are the object of a seizure not legally contested;
9.1.6
if the Shareholder liquidates, dissolves, or sequesters the
Corporation or has a fiduciary named in order to administer its
property.
9.2
If a Shareholder withdraws from the Corporation's business for
one of the reasons mentioned in Article 9.1, the Corporation
shall have the option as it wishes to purchase from this
Shareholder (the "Vendor") all of the Shares then held by the
Vendor (the "Retired Shares") and if the Corporation exercises
its option to purchase, the Vendor shall have the obligation to
sell the Retired Shares at a price equal to fifty percent (50%)
of the Book Value of the Retired Shares in the event that there
be withdrawal from business under Article 9.1.
9.3
For the purposes of this Section 9, payment by the Corporation of
the selling price of the Retired Shares, if applicable, shall be
made in the following manner:
9.3.1
a first capital payment equal to one-third (1/3) of the selling
price shall be payable in cash, by certified cheque or bank
draft, on the agreed closing date (but no later than sixty (60)
days of the date of establishment of the purchase price of the
Retired Shares);
9.3.2
the balance of the sale shall be payable in two (2) equal and
consecutive annual instalments of the capital, the first payment
becoming due and payable one (1) year after the closing date;
9.3.3
the balance of the sale shall bear interest effective from the
closing date at the benchmark interest rate established by the
Corporation's bank and in force on the closing date, as revised
annually on the closing anniversary date of each year, said
interest being payable annually at the same time as the capital.
9.4
The Secretary of the Corporation, within three days of acquiring
knowledge of the occurrence of one of the events described in
Article 9.1, shall advise the other shareholders (the "Remaining
Shareholders") in writing. Moreover, within forty-five (45) days
of knowledge of the occurrence of one of the Cases of Withdrawal,
the Secretary of the Corporation shall advise the Remaining
Shareholders of the Corporation's decision to exercise or not
exercise its option to purchase the Retired Shares under the
foregoing Article 9.2 (the "Notice of Option").
9.5
If the Corporation does not exercise its option to purchase the
Retired Shares, then each of the Remaining Shareholders shall
have the option to purchase them on a Proportional Basis (the
"Option to Purchase").
9.6
Within thirty (30) days of receipt of the Notice of Option, the
Remaining Shareholders shall advise the Secretary of the
Corporation in writing of their acceptance or refusal of the
Option to Purchase.
9.7
In the event that a Remaining Shareholder does not advise the
Secretary of the Corporation in writing of its acceptance or
refusal of the Option to Purchase within the prescribed deadline,
it shall be deemed to have refused to exercise it.
9.8
In the event that one or more of the Remaining Shareholders does
not take advantage of the Option to Purchase or is deemed to have
refused it within the prescribed deadline, its Proportional Basis
of the Remaining Shares shall accrue to the other Remaining
Shareholders (the "Additional Option to Purchase"). If
applicable, the Secretary of the Corporation shall advise the
Remaining Shareholders who have exercised the Option to Purchase
within ten (10) days of expiration of the deadline to exercise
the Option to Purchase. They shall then benefit from an
additional twenty (20) day deadline to exercise this Additional
Option to Purchase on a Proportional Basis and advise the
Secretary of the Corporation in writing, failing which they shall
be deemed to have refused to exercise the Additional Option to
Purchase.
9.9
In the event that the Remaining Shareholders exercise the Option
to Purchase or the Additional Option to Purchase, the purchase
price of the Retired Shares shall be the one stipulated in
Article 9.2 and the conditions of payment shall be at Article
9.3.
10.
CHANGE IN CONTROL AMONGST SHAREHOLDERS
No change in Control amongst Shareholders can be undertaken
without the prior written consent of the other Shareholders,
which consent shall not be unreasonably withheld. If the other
Shareholders do not consent to such change in Control in writing,
this event will constitute a Case of Withdrawal as defined in
Article 9.1 and the other Shareholders will have the choice
either to buy the Shares of the Shareholder on a Proportional
Basis or ensure that the Corporation purchases such Shares.
In this case, however, the price of the Shares shall be their
Fair Market Value.
11.
CLOSING
11.1
At the closing of any transaction involving the acquisition of
Shares by a third party or by a party under the present
Agreement:
(a)
the selling Shareholder must remit share certificates
representing all the sold Shares, duly endorsed to permit
their transferring;
(b)
the selling Shareholder must guarantee to the buyer that
he is the owner of the Shares sold, having good and valid
title thereto, and being free and clear of all hypothecs
and that said Shareholder has the capacity, power and
authority to sell the Shares and to transfer them to their
buyer and that all required corporate obligations for such
transfer by the selling Shareholder have been validly
taken and adopted; and
(c)
the buyer must, if he is not a Shareholder, simultaneously
become a party to this Agreement.
11.2
A Shareholder that disposes of Shares must hand over at the
closing, the written and unconditional resignation of the person
that he designated as director of the Corporation and, as the
case may be, the resignation of this person as director of the
Corporation, administrator or director of a subsidiary of the
Corporation or of any other entity that the Corporation or the
subsidiary of the Corporation has an interest, as the case may
be, and hand over to the Corporation a discharge for all debts or
obligations flowing from this or these functions, save the
remuneration owing for the work executed up until the date of
said resignation.
12.
RELEASE OF ENDORSEMENTS
As an essential pre-condition to the conveyance of Shares, save
for the cases mentioned in Articles 9.1, the purchasing
Shareholders must ensure that the selling Shareholder obtains
full releases of his endorsements, suretyships or personal
guarantees involving the affairs of the Corporation at the date
of closing.
13.
PLEDGED SHARES
13.1
In order to guarantee to the selling Shareholder the payment for
the Shares sold in accordance with the clauses under the present
Agreement, the purchasing Shareholders of the Shares shall, upon
request by the selling Shareholder pledge all Shares sold, as
well as those held by the purchasing Shareholders, into the hands
of an escrow agent accepted by the selling Shareholder until full
and final payment of the purchase price of the Shares has been
made, unless the purchasing Shareholders give to the selling
Shareholder other guarantees which the selling Shareholder deems
satisfactory.
13.2
In the event that the selling Shareholders require that the
Shares be pledged, the Shareholders agree that all required and
necessary documents for the valid constitution of said pledge
shall be signed by the parties to the transaction. The
Shareholders agree that the failure to constitute or maintain the
above-mentioned pledge, that has not been remedied within six (6)
days of reception by the purchasing or remaining Shareholders of
a notice by the selling Shareholder, shall constitute a
forfeiture of the benefit of the term. The same consequences
shall flow from the fact of one or the other purchasing
Shareholders permitting that a hypothec without delivery be taken
on the pledged Shares or any part of said Shares, without the
written consent of the selling Shareholder or said Shareholder's
succession.
14.
PROTECTION OF SELLER
14.1
As long as the Shareholder selling his Shares to the Corporation
under the present Agreement has not received full payment of the
amounts owing to said Shareholder, the purchasing Shareholders
and the Corporation undertake that:
(a)
the Corporation shall not declare or distribute any
dividends, shall not buy or redeem or pay out in any other
manner from its share capital and it shall not consent to
offering any financial aid to its shareholders or related
persons thereto without having obtained the prior express
consent of the selling Shareholder;
(b)
the selling Shareholder will have the right to receive, as
soon as available, the annual and periodic financial
statements of the Corporation;
(c)
the Corporation shall give the selling Shareholder or its
authorized representative access to, on demand and during
normal business hours, its books and corporate register,
including the minutes of shareholder and meetings and
accounting ledgers.
14.2
The Shareholders agree that any breach of their obligations under
the present Article that the Corporation has not remedied within
five (5) days of the reception of a written notice by the selling
Shareholder informing it of such breach shall constitute a
forfeiture of the benefit of the term.
14.3
In addition, the Shareholders agree that the obligations of the
Shareholders purchasing the shares or remainders shall be
solidary, indivisible, and the forfeiture of benefit of the term
for one of them shall cause the forfeiture of the benefit of the
term for each of them.
15.
PROPORTION OF INCOME
15.1
The Shareholders agree that the income they receive from the
Corporation, under any form whatsoever, shall be proportional to
their ownership of Common Shares, except dividends on Preferred
Shares as well as remuneration granted by the Board of Directors
for the performance of determined functions.
16.
NON-COMPETITION AND NON-SOLICITATION AND CONFIDENTIALITY
16.1
Each Shareholder covenants and commits for the benefit of the
Corporation, or a period commencing on the date hereof and
terminating three (3) years after he ceases to be a Shareholder
of the Corporation, to not, directly or indirectly, do the
following:
(a)
carry on a business alone or jointly with any other
person, or do any work whatsoever or become a shareholder,
associate, lender, investor, agent, employee,
administrator, consultant or have any interest whatsoever
in a business similar to that of the Corporation and in
the following territory: the World;
(b)
higher or solicit to hire any person employed by the
Corporation unless the Corporation has terminated such
person's employment with the Corporation or its
subsidiaries before such an approach is made;
(c)
solicit any Customers of the Corporation in order to
supply such Customer similar services or goods as those
offered by the Corporation in the territory in which the
Corporation does business or ask that the Customer cease
to do business with the Corporation (such solicitation or
demand being referred to as an "Illegal Operation" in the
present Article);
in the present Article, the term "Customer" means (i) any
person that is a customer of the Corporation at the time
of the Illegal Operation, (ii) any person that was a
client of the Corporation at any time during a one year
period prior to the Illegal Operation, or (iii) any person
that is a potential client of the Corporation and to which
a presentation or a similar offer as that made in the
Illegal Operation and for a period one hundred and eighty
(180) days immediately prior to the Illegal Period was
made.
16.2
Each of the Shareholders acknowledges that the commercial secrets
and confidential information as well as all other information or
elements relating to the intellectual property of the Corporation
(the "Confidential Information") are unique assets; consequently,
each Shareholder covenants not to use or divulge or discuss the
Confidential Information to or with any third party, it being
understood that this covenant does not apply with respect to
Confidential Information that: (i) becomes public knowledge
without their being any breach of the covenant in the present
Article 16.2 or (ii) acquired independently or developed by one
or the other Shareholder, without contravening this Article, or
(iii) according to the law must be divulged, the person being
required to divulge such information having taken all reasonable
means to prevent disclosure or limit such disclosure.
16.3
Without limiting the scope of Article 20.4, in the event that all
or part of any of Articles 16.1 or 16.2 are held by a competent
Court to be null or void, it shall not effect their validity nor
their execution thereof with respect to any other part of these
Articles and they shall have continue to have full effect,
notwithstanding the portion judged to be invalid or inoperative.
If any portion of Articles 16.1 or 16.2 or any portion of them
are held to be inoperative by reason of the period of time
referred to therein, to the territory they cover or to the types
of activity that they prohibit, the parties agree that the
competent Court that renders such decision shall have the power
to modify the length of time, the territory or any term of such
articles in order to make such modified article operative and to
give it full effect.
16.4
Each Shareholder acknowledges that its covenants under the
present Article and their modalities are essential to the
protection, maintenance and safe-guarding of the interests and
survival of the business of the Corporation and of the other
Shareholders. Each Shareholder acknowledges that any legal action
for any violation or threatened violation of the present Article
by him or her, shall be obsolescent and, consequently, the
Corporation or its other Shareholders, as the case may be may, in
addition to any legal action it has the right to take, notably
invoke the penal clause stipulated under Article 16.5 hereunder,
or take proceedings for an injunction or any other mandatory
recourse.
16.5
Each Shareholder acknowledges that any breach of Article 16 by it
triggers the obligation to pay to the Corporation a penalty of
$1,000.00 per day during which a breach of any of the covenants
under Article 16 continues.
16.6
The Corporation and the Shareholders acknowledge that if the
scope of any restriction contained in this Article 16 is deemed
to be unreasonable to allow its full applicability, such
restriction shall then be applicable up to the maximum permitted
by the laws of the Province of Quebec, and the Corporation and
its Shareholders hereby consent and accept that the scope of this
restriction may be modified accordingly, if applicable, by the
arbitration board or by the Court within the framework of any
procedure filed to enforce and give effect to this restriction.
17.
ARBITRATION
17.1
In the event of a disagreement or dispute between the parties to
this Agreement, be it in relation to its interpretation or
operation or as to the rights and obligations of the signatories
to this Agreement, this disagreement or dispute shall, at the
exclusion of any other recourse before the Court (but without
limiting the rights of the parties to make a motion to the Court
for seizure before judgement, the granting of an interim,
interlocutory or permanent injunction, or that party's right to
an extraordinary recourse, as this term is defined in the Code of
Civil Procedure of Quebec) be subject to arbitration as defined
by the Code of Civil Procedure of Quebec, save for the following
modifications:
(a)
the party requesting arbitration must send the other party
an arbitration notice which shall include the name of the
arbitrator it proposes;
(b)
all substantially identical or related matters shall be
heard and judged at the same time as the matter contained
in the arbitration notice sent by the party requesting
arbitration;
(c)
within seven (7) Business Days of the reception of the
arbitration notice sent by the petitioner, the other
parties shall together designate and communicate in
writing the name of the person they have designated to be
the second member of the arbitration tribunal. Failure to
do so within the said period will result in this person
being chosen, at the request of one of the parties, by a
Judge of the Superior Court of the District of Montreal;
(d)
the two arbitrators shall choose a third arbitrator within
five (5) Business Days following the selection of the
second arbitrator; if they cannot agree on such a matter,
one of the parties may request that a Judge of the
Superior Court of the District of Montreal appoints such
arbitrator; the third arbitrator shall be the president of
the arbitration tribunal;
(e)
the arbitration sessions shall be held in Montreal;
(f)
the arbitration tribunal shall have the power to establish
its own procedure and may render its decision in writing
in any form that it decides;
(g)
the allocation of the arbitration fees shall be as
determined by the judgement;
(h)
the arbitration tribunal shall render a decision and
advise the parties within thirty (30) Business Days of the
date on which the disagreement or dispute was submitted
thereto, unless another term is fixed pursuant to the
mutual agreement of the parties;
(i)
the decision of the arbitration tribunal shall be final
and not subject to appeal and shall be binding on the
parties, and the provisions of the Code of Civil Procedure
of Quebec concerning the homologation or arbitration
awards shall be applicable; and
(j)
the arbitrator shall settle the dispute according to the
rules of law.
18.
PREFERRED SUPPLIERS
18.1
The Shareholders agree that each of LGA and Envitech shall be a
preferred supplier of goods and services to the Corporation for a
particular mandate or project provided that the following
conditions are met:
(a)
LGA or Envitech, as the case may be, must have the
necessary competence and expertise for the mandate or
project in question; and
(b)
LGA or Envitech, as the case may be, must provide such
goods or services to the Corporation at competitive prices
in relation to the market and the industry.
18.2
The Shareholders agree that Xxxxxxx shall be a preferred supplier
of vertical axis wind turbines and related technology and know-
how to the Corporation.
19.
RETURN OF ENVITECH AND LGA'S INVESTMENT
In the event Envitech and LGA's participation in the share
capital of the Corporation is diluted due to the investment in
the Corporation by any new shareholder, Xxxxxxx undertakes to
reimburse each of Envitech and LGA the difference between the
initial value of their capitalization, that is, $25,000, and the
value of their capitalization following dilution.
20.
GENERAL PROVISIONS AND INTERPRETATION
20.1
Notices
If it becomes necessary or useful to give a notice
hereunder, this notice shall be given by registered or
certified mail, delivered by hand or transmitted by fax
(on condition that a copy follows by messenger and that
its receipt is ensured). If the notice is given by
registered or certified mail, it shall be deemed to have
been received five (5) business days after the mailing
date. In the case of hand delivery, this notice shall be
deemed to have been received the same day. In the case of
transmittal by fax, this notice shall be deemed to behave
been received the first business day following its
transmittal and, if applicable, following receipt of the
response code. If the postal service is interrupted by a
strike, a slowdown, a case of superior force or any other
cause, the party sending the notice shall use a service
that is not interrupted or shall deliver such notice so
that such notice is received as soon as possible. Any
notice required or permitted hereunder shall be
communicated in writing and shall be deemed to have been
sufficiently and validly given if it is delivered by hand
to its addressee or mailed by registered or certified
mail, postage paid.
20.2
Mailing addresses
Any notice given hereunder shall be delivered or handed or
served to the addresses mentioned below for each party
hereto:
Dermond:
000, xxxxxx XxXxxxxxx
Xxxxxxxxx, Xxxxxx
X0X 0X0
Envitech:
000 Xxxxxxxxx Xxxxxxxxx
Xxxxxx Xxxxxx, Xxxxxx
X0X 0X0
LGA:
0000 xx xx Xxxxxxxxxx Xxxxxx
Xxx x'Xx, Xxxxxx
X0X 0X0
These addresses may be changed from time to time by
written notice given in accordance with the provisions of
the foregoing Article 20.1.
20.3
Laws applicable to the place of signing
This Agreement shall be governed, in every respect, by the
laws of Quebec and the laws of Canada applicable thereto.
20.4
Nullity of a provision
If any provision of this agreement proves to be null and
void or illegal or is declared as such following a
decision of a court, the other provisions forming the
shareholders agreement shall remain valid and enforceable.
20.5
Amendment to the Agreement
Any amendment to this Agreement or waiver of a right
arising therefrom shall be null and void if this waiver or
this amendment is not explicit and established by a
document signed by all of the Shareholders and the
Corporation.
20.6
Priority of the Agreement
The provisions hereof shall take precedence, insofar as
the parties hereto are concerned, over any provisions of
the articles of incorporation, the articles of amendment
and the by-laws of the Corporation that are not compatible
with it, as well as all previous agreements concerning the
same object made among them or some of them and which are
hereby cancelled effective today.
20.7
Formal notice
The Corporation, its subsidiaries and all the parties
hereto shall be on notice solely by the passage of time,
without any formal warning being required.
20.8
Assignability
The rights of the Corporation, under the terms of the non-
competition and confidentiality commitments stipulated in
Article 16 hereof shall be fully assignable in favour of
any acquiror of a substantial part or all of the
Corporation's assets.
21.
TERM OF THE AGREEMENT
21.1
Concerning each of the Shareholders, this Agreement shall remain
in force and with full effect, subject to Article 21.2, as long
as each of the Shareholders has not assigned all of its Shares in
accordance with this agreement. It shall then terminate
automatically and become null and void except with regard to its
obligations prescribed in Article 16 hereof.
21.2
This Agreement shall terminate automatically and become null and
void with respect to all of the Shareholders:
21.2.1
if the Corporation is declared bankrupt or insolvent under the
terms of the Bankruptcy and Insolvency Act (Canada), makes a
voluntary assignment of its property for the benefit of its
creditors, takes advantage of legislation passed to protect
insolvent debtors or is dissolved or liquidated voluntarily; and
21.2.2
if all the Shareholders agree to terminate it by mutual consent.
22.
SHARE CERTIFICATES
22.1
All Share certificates issued or to be issued by the Corporation
to the Shareholders shall bear the mention that the Shares they
represent are subject to the terms and conditions of this
Agreement and that these Shares may only be assigned or alienated
by abiding by the provisions of this Agreement.
23.
INTERVENTION
The Corporation, by intervening in this Agreement, undertakes and
obliges itself to abide by and fulfil each of the every one of
the conditions and obligations incumbent upon it hereunder.
24.
ENGLISH LANGUAGE
The Parties have required that this Agreement and all related
documents be drafted in English; les parties ont requis que cet
acte ainsi que tous documents s'y rapportant soient rediges en
anglais.
IN WITNESS WHEREOF, THE PARTIES HAVE SIGNED THIS _______, 2002.
EXPERTS CONSEILS XXXXXXX GROUPE ENVITECH INC.
INC.
per per:
:
Xxxxxxxxx Xxxx, President Xxxxxx Xxxxxxxx, President
XXXXXXX XXXXXXX & ASSOCIES
INC.
per
:
Xxxxxxx Xxxxxxx, President
INTERVENTION
PTARMIGAN ENERGIE INC.
per
:
Xxxxxx X. Xxxxxx, Chairman
of the Board
