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EXHIBIT 4.2
VOTING, SUPPORT AND EXCHANGE TRUST AGREEMENT
THIS AGREEMENT made as of the 27th day of July, 1998
AMONG:
RAINTREE RESORTS INTERNATIONAL, INC., a corporation
existing under the laws of the State of Nevada
(hereinafter referred to as the "Parent")
OF THE FIRST PART
AND:
RAINTREE RESORTS INTERNATIONAL CANADA LTD., a corporation
existing under the laws of the Province of British Columbia
(hereinafter referred to as the "Company")
OF THE SECOND PART
AND:
RAINTREE RESORTS HOLDINGS ULC, an unlimited company
under the laws of the Province of Nova Scotia
(hereinafter referred to as "Holdco")
OF THE THIRD PART
AND:
RAINTREE RESORTS HOLDINGS ULC, an unlimited company under the
laws of the Province of Nova Scotia acting in its capacity as
the trustee hereunder
(hereinafter referred to as the "Trustee")
OF THE FOURTH PART
WHEREAS:
A. Pursuant to a stock purchase agreement dated as of the 27th day of
July, 1998 by and among the Parent; the Company; Raintree Resorts
Canada, LLC; G.B. Properties Ltd., K.B. Ventures Ltd., M.M. & M.
Management Ltd., Xxxxxxxx Enterprises Ltd., N. Xxxx Xxxxx, Xxxxxxxx X.
Xxxxx,
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Xxxxxxxxx X. Xxxxx, G. Xxxxxxx XxXxxxxx, Whiski Xxxx Resorts Ltd. and
Northface Realty Co. Ltd. (the "Sellers") and the shareholders of the
Sellers (such agreement as it may be amended or restated is hereinafter
referred to as the "Stock Purchase Agreement"), the Company issued
21,838 Convertible Shares in the capital of the Company at the Initial
Closing, and agreed to issue an additional number of Convertible Shares
at the Bonus Closing, if any, and an additional number of Convertible
Shares or Exchangeable Shares in the capital of the Company (the
"Exchangeable Shares") at the Second Closing (as those Closings are
defined in the Stock Purchase Agreement).
B. The Convertible Shares are convertible into Exchangeable Shares.
C. Holders of Exchangeable Shares will be entitled to redeem such
Exchangeable Shares and upon such redemption each Exchangeable Share
shall be exchanged by the Company for one Parent Common Share (as
hereinafter defined).
D. The Articles of the Company provide that each of the Parent, the
Company and Holdco shall have certain rights and obligations in certain
circumstances to acquire Exchangeable Shares from their Non-Affiliated
Holders (as hereinafter defined) and to deliver Parent Common Shares to
such holders in consideration therefor.
E. The Parent intends to grant to and in favour of Non-Affiliated Holders
from time to time of Exchangeable Shares the right, in the
circumstances set forth herein, to require the Parent or, at the option
of the Parent, Holdco to purchase from each Non-Affiliated Holder all
or any part of the Exchangeable Shares held by such Non-Affiliated
Holder.
F. The parties desire to make appropriate provision and to establish a
procedure whereby voting rights in the Parent shall be exercisable by
the Non-Affiliated Holders from time to time of Exchangeable Shares by
and through the Trustee, which will hold legal title to the Voting
Share (as hereinafter defined) to which voting rights attach for the
benefit of Non-Affiliated Holders, and whereby the rights to require
the Parent or, at the option of the Parent, Holdco to purchase
Exchangeable Shares from the Non-Affiliated Holders shall be
exercisable by Non-Affiliated Holders from time to time of Exchangeable
Shares by and through the Trustee, which will hold legal title to such
rights for the benefit of Non-Affiliated Holders.
G. The parties desire to make appropriate provision and to establish a
procedure whereby the Parent will take certain actions and make certain
payments and deliveries necessary to ensure that the Company and Holdco
will be able to make certain payments and to deliver or cause to be
delivered Parent Common Shares in satisfaction of the obligations of
the Company and/or Holdco under the Share Provisions (as hereinafter
defined) and this Trust Agreement.
H. These recitals and any statements of fact in this trust agreement are
made by the Parent, Holdco and the Company and not by the Trustee.
NOW THEREFORE, in consideration of the respective covenants and agreements
provided in this Trust Agreement and for other good and valuable consideration
(the receipt and sufficiency of which are hereby acknowledged), the parties
agree as follows:
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ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 Definitions. In this Trust Agreement, unless something in the subject
matter or context is inconsistent therewith or otherwise defined
herein, each term denoted by initial capital letters shall have the
meaning ascribed thereto in Section 26.4 of the Company's Articles. In
addition:
"BONUS CLOSING" has the meaning set out in Recital A.
"COMPANY'S ARTICLES" means the Articles of Association of the Company.
"COMPANY BOARD OF DIRECTORS" means the board of directors of the
Company.
"CONVERTIBLE SHARES" means the Convertible Shares in the capital of the
Company.
"EXCHANGE RIGHT" has the meaning set out in Section 5.1 hereof.
"EXCHANGEABLE SHARES" means the Exchangeable Shares in the capital of
the Company.
"INITIAL CLOSING" has the meaning set out in Recital A.
"INSOLVENCY EVENT" means the institution by the Company of any
proceeding to be adjudicated a bankrupt or insolvent or to be dissolved
or wound up, or the consent of the Company to the institution of
bankruptcy, insolvency, dissolution or winding-up proceedings against
it, or the filing by the Company of a petition, answer or consent
seeking dissolution or winding up under any bankruptcy, insolvency or
analogous laws, including without limitation the Companies Creditors'
Arrangement Act (Canada) and the Bankruptcy and Insolvency Act
(Canada), and the failure by the Company to contest in good faith any
such proceedings commenced by a third party in respect of the Company
within 15 days of becoming aware thereof, or the consent by the Company
to the filing of any such petition or to the appointment of a receiver,
or the making by the Company of a general assignment for the benefit of
creditors, or the admission in writing by the Company of its inability
to pay its debts generally as they become due, or the Company not being
permitted, pursuant to solvency requirements or other provisions of
applicable law, to redeem any Retracted Shares pursuant to Subsection
28.10(d) of the Share Provisions.
"LIST" has the meaning set out in Section 4.6 hereof.
"NON-AFFILIATED HOLDER VOTES" has the meaning set out in Section 4.2
hereof.
"NON-AFFILIATED HOLDERS" means the registered holders of Exchangeable
Shares other than the Parent and its Subsidiaries.
"OFFICER'S CERTIFICATE" means, with respect to the Parent or the
Company, as the case may be, a certificate signed by any one of the
Chairman of the Board, the President, any Vice-President or any other
senior officer of the Parent or the Company, as the case may be.
"PARENT BOARD OF DIRECTORS" means the board of directors of the Parent.
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"PARENT COMMON SHARES" means shares of the common stock of the Parent,
par value US$0.001.
"PARENT CONSENT" has the meaning set out in Section 4.2 hereof.
"PARENT MEETING" has the meaning set out in Section 4.2 hereof.
"PARENT SUCCESSOR" has the meaning set out in Section 11.1 hereof.
"PROMISSORY NOTES" means the promissory notes issued by the Company to
the Sellers at the Initial Closing pursuant to Section 2.2 of the Stock
Purchase Agreement.
"SECOND CLOSING" has the meaning set out in Recital A.
"SELLERS" has the meaning set out in Recital A.
"SHARE PROVISIONS" means the rights, privileges, restrictions and
conditions attaching to the Convertible Shares and Exchangeable Shares
as set out in Parts 26 through 32 of the Company's Articles.
"STOCK PURCHASE AGREEMENT" has the meaning set out in Recital A.
"SUBSIDIARY" of the Parent means any corporation more than 50% of the
outstanding stock of which, by vote or value, is owned, directly or
indirectly, by the Parent, by one or more other Subsidiaries of the
Parent or by the Parent and one or more other Subsidiaries of the
Parent.
"TRUST" means the trust created by this Trust Agreement.
"TRUST ESTATE" means the Voting Share, any other securities, the
Exchange Right and any money or other rights or assets that may be held
by the Trustee from time to time pursuant to this Trust Agreement.
"TRUSTEE" means Holdco in its capacity as the trustee hereunder and,
subject to the provisions of Article 10 hereof, includes any successor
trustee or permitted assigns.
"VOTING RIGHTS" means the voting rights attached to the Voting Share.
"VOTING SHARE" means the one share of Series B Preferred Stock par
value US$0.001 issued by the Parent to and deposited with the Trustee,
which entitles the holder of record to a number of votes at meetings of
holders of Parent Common Shares equal to the number of Exchangeable
Shares outstanding from time to time that are held by Non-Affiliated
Holders.
1.2 Interpretation Not Affected by Headings, etc. The division of this
Trust Agreement into articles and sections and the insertion of
headings are for reference purposes only and shall not affect the
interpretation of this Trust Agreement. Unless otherwise indicated, any
reference in this Trust Agreement to an article or section refers to
the specified article or section of this Trust Agreement.
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1.3 Number Gender and Persons. In this Trust Agreement, unless the context
otherwise requires, words importing the singular number include the
plural and vice versa, words importing any gender include all genders
and words importing persons include individuals, corporations,
partnerships, companies, associations, trusts, unincorporated
organizations, governmental bodies and other legal or business entities
of any kind.
1.4 Date for Any Action. If any date on which any action is required to be
taken under this Trust Agreement is not a Business Day, such action
shall be required to be taken on the next succeeding Business Day.
1.5 Payments. All payments to be made hereunder will be made without
interest and less any tax required by law to be deducted and withheld.
ARTICLE 2
TRUST
2.1 Establishment of Trust. One of the purposes of this Trust Agreement is
to create the Trust for the benefit of the Non-Affiliated Holders, as
herein provided. The Trustee will hold the Voting Share in order to
enable the Trustee to exercise the Voting Rights and will hold the
Exchange Right in order to enable the Trustee to exercise such right
and will hold the other rights granted in or resulting from the Trustee
being a party to this Trust Agreement in order to enable the Trustee to
exercise or enforce such rights, in each case as trustee for and on
behalf of the Non-Affiliated Holders as provided in this Trust
Agreement.
ARTICLE 3
VOTING SHARE
3.1 Issue and Ownership of the Voting Share. Simultaneously with the
execution and delivery of this Trust Agreement, the Parent will issue
to and deposit with the Trustee the Voting Share to be hereafter held
of record by the Trustee as trustee for and on behalf of, and for the
use and benefit of, the Non-Affiliated Holders, in accordance with the
provisions of this Trust Agreement. The Parent hereby acknowledges
receipt from the Trustee as trustee for and on behalf of the
Non-Affiliated Holders of good and valuable consideration (and the
adequacy thereof) for the issuance of the Voting Share by the Parent to
the Trustee. During the term of the Trust and subject to the terms and
conditions of this Trust Agreement, the Trustee shall possess and be
vested with full legal ownership of the Voting Share and shall be
entitled to exercise all of the rights and powers of an owner with
respect to the Voting Share, provided that the Trustee shall:
(a) hold the Voting Share and the legal title thereto as trustee
solely for the use and benefit of the Non-Affiliated Holders
in accordance with the provisions of this Trust Agreement; and
(b) except as specifically authorized by this Trust Agreement,
have no power or authority to sell, transfer, vote or
otherwise deal in or with the Voting Share and the Voting
Share shall not be used or disposed of by the Trustee for any
purpose other than the purposes for which the Trust is created
pursuant to this Trust Agreement.
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3.2 Legended Share Certificates. The Company will cause each certificate
representing Exchangeable Shares to bear an appropriate legend
notifying the Non-Affiliated Holders of their right to instruct the
Trustee with respect to the exercise of the Voting Rights with respect
to the Exchangeable Shares held by such Non-Affiliated Holder.
3.3 Safekeeping of Certificate. The certificate representing the Voting
Share shall at all times be held in safe keeping by the Trustee or its
agent.
ARTICLE 4
EXERCISE OF VOTING RIGHTS
4.1 Voting Rights. The Trustee, as the holder of record of the Voting
Share, shall be entitled to all of the Voting Rights, including the
right to consent to or to vote in person or by proxy the Voting Share,
on any matter, question or proposition whatsoever that may come before
the stockholders of the Parent at a Parent Meeting or in connection
with a Parent Consent. The Voting Rights shall be and remain vested in
and exercised by the Trustee. Subject to Section 7.15 hereof, the
Trustee shall exercise the Voting Rights only on the basis of
instructions received pursuant to this Article 4 from Non-Affiliated
Holders entitled to instruct the Trustee as to the voting thereof at
the time at which the Parent Consent is sought or the Parent Meeting is
held. To the extent that no instructions are received from a
Non-Affiliated Holder with respect to the Voting Rights to which such
Non-Affiliated Holder is entitled, the Trustee shall not exercise or
permit the exercise of the Voting Rights relating to such
Non-Affiliated Holder's Exchangeable Shares.
4.2 Number of Votes. With respect to all meetings of stockholders of the
Parent at which holders of Parent Common Shares are entitled to vote (a
"Parent Meeting") and with respect to all written consents sought from
the holders of Parent Common Shares (a "Parent Consent"), each
Non-Affiliated Holder shall be entitled to instruct the Trustee to cast
and exercise, in the manner instructed, one vote for each Exchangeable
Share owned of record by such Non-Affiliated Holder on the record date
established by the Parent or by applicable law for such Parent Meeting
or Parent Consent, as the case may be (the "Non-Affiliated Holder
Votes") in respect of each matter, question or proposition to be voted
on at such Parent Meeting or to be consented to in connection with such
Parent Consent.
4.3 Mailings to Shareholders. With respect to each Parent Meeting and
Parent Consent, the Trustee will mail or cause to be mailed (or
otherwise communicate in the same manner that the Parent utilizes in
communications to holders of Parent Common Shares, subject to the
Trustee being advised in writing of such method and its ability to
provide this method of communication) to each of the Non-Affiliated
Holders named in the List on the same day as the initial mailing or
notice (or other communication) with respect thereto is given by the
Parent to its stockholders:
(a) a copy of such notice, together with any proxy or information
statement and related materials to be provided to stockholders
of the Parent;
(b) a statement that such Non-Affiliated Holder is entitled,
subject to the provisions of Section 4.7 hereof, to instruct
the Trustee as to the exercise of the Non-Affiliated Holder
Votes with respect to such Parent Meeting or Parent Consent,
as the case may be, or,
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pursuant and subject to Section 4.7 hereof, to attend such
Parent Meeting and to exercise personally the Non-Affiliated
Holder Votes thereat;
(c) a statement as to the manner in which such instructions may be
given to the Trustee, including, in the case of a Parent
Meeting, an express indication that instructions may be given
to the Trustee to give:
(i) a proxy to such Non-Affiliated Holder or its designee
to exercise personally such holder's Non-Affiliated
Holder Votes; or
(ii) a proxy to a designated agent or other representative
of the management of the Parent to exercise such
Non-Affiliated Holder Votes;
(d) a statement that if no such instructions are received from the
Non-Affiliated Holder, the Non-Affiliated Holder Votes to
which such Non-Affiliated Holder is entitled will not be
exercised;
(e) a form of direction whereby the Non-Affiliated Holder may so
direct and instruct the Trustee as contemplated herein; and
(f) a statement of (i) the time and date by which such
instructions must be received by the Trustee in order to be
binding upon it, which in the case of a Parent Meeting shall
not be earlier than the close of business on the second
Business Day prior to such meeting, and (ii) the method for
revoking or amending such instructions.
The materials referred to above are to be provided by the Parent to the
Trustee, but shall be subject to review and comment by the Trustee. For
the purpose of determining Non-Affiliated Holder Votes to which a
Non-Affiliated Holder is entitled in respect of any such Parent Meeting
or Parent Consent, the number of Exchangeable Shares owned of record by
the Non-Affiliated Holder shall be determined at the close of business
on the record date established by the Parent or by applicable law for
purposes of determining stockholders entitled to vote at such Parent
Meeting or to give written consent in connection with such Parent
Consent. The Parent will notify the Trustee in writing of any decision
of the board of directors of the Parent with respect to the calling of
any such Parent Meeting or the seeking of any such Parent Consent and
shall provide all necessary information and materials to the Trustee in
each case promptly and in any event in sufficient time to enable the
Trustee to perform its obligations contemplated by this Section 4.3.
4.4 Copies of Stockholder Information. The Parent will deliver to the
Trustee copies of all proxy materials (including notices of Parent
Meetings but excluding proxies to vote Parent Common Shares),
information statements, reports (including without limitation all
interim and annual financial statements) and other written
communications that are to be distributed from time to time to holders
of Parent Common Shares in sufficient quantities and in sufficient time
so as to enable the Trustee to send those materials to each
Non-Affiliated Holder at the same time as such materials are first sent
to holders of Parent Common Share. The Trustee will mail or otherwise
send to each Non-Affiliated Holder, at the expense of Parent, copies of
all such materials (and all materials specifically directed to the
Non-Affiliated Holders or to the Trustee for the benefit of the
Non-Affiliated Holders by the Parent) received by the Trustee from the
Parent at the same
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time as such materials are first sent to holders of Parent Common
Shares. The Trustee will make copies of all such materials available
for inspection by any Non-Affiliated Holder at the Trustee's principal
office in Vancouver, British Columbia.
4.5 Other Materials. Immediately after receipt by the Parent or any
stockholder of the Parent of any material sent or given generally to
the holders of Parent Common Shares by or on behalf of a third party,
including without limitation dissident proxy and information circulars
(and related information and material) and tender and exchange offer
circulars (and related information and material), the Parent shall use
reasonable efforts to obtain and deliver to the Trustee copies thereof
in sufficient quantities so as to enable the Trustee to forward such
material (unless the same has been provided directly to Non-Affiliated
Holders by such third party) to each Non-Affiliated Holder as soon as
practicable thereafter. As soon as practicable after receipt thereof,
the Trustee will mail or otherwise send to each Non-Affiliated Holder,
at the expense of the Parent, copies of all such materials received by
the Trustee from the Parent. The Trustee will also make copies of all
such materials available for inspection by any Non-Affiliated Holder at
the Trustee's principal office in the Vancouver, British Columbia.
4.6 List of Persons Entitled to Vote. The Company shall:
(a) prior to each annual, general and special Parent Meeting or
the seeking of any Parent Consent; and
(b) forthwith upon each request made at any time by the Trustee in
writing, prepare or cause to be prepared a list (a "List") of
the names and addresses of the Non-Affiliated Holders arranged
in alphabetical order and showing the number of Exchangeable
Shares held of record by each such Non-Affiliated Holder, in
each case at the close of business on the date specified by
the Trustee in such request or, in the case of a List prepared
in connection with a Parent Meeting or a Parent Consent, at
the close of business on the record date established by the
Parent or pursuant to applicable law for determining the
holders of Parent Common Shares entitled to receive notice of
and/or to vote at such Parent Meeting or to give consent in
connection with such Parent Consent. Each such List shall be
delivered to the Trustee promptly after receipt by the Company
of such request or the record date for such meeting or seeking
of consent, as the case may be, and, in any event, within
sufficient time as to enable the Trustee to perform its
obligations under this Trust Agreement. The Parent agrees to
give the Company written notice (with a copy to the Trustee)
of the calling of any Parent Meeting or the seeking of any
Parent Consent, together with the record dates therefor,
sufficiently prior to the date of the calling of such meeting
or seeking of such consent so as to enable the Company to
perform its obligations under this Section 4.6.
4.7 Entitlement to Direct Votes. Any Non-Affiliated Holder named in a List
prepared in connection with any Parent Meeting or any Parent Consent
will be entitled:
(a) to instruct the Trustee in the manner described in Section 4.3
hereof with respect to the exercise of the Non-Affiliated
Holder Votes to which such Non-Affiliated Holder is entitled;
or
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(b) to attend such meeting and personally to exercise thereat (or
to exercise with respect to any written consent), as the proxy
of the Trustee, the Non-Affiliated Holder Votes to which such
Non-Affiliated Holder is entitled; or
(c) to appoint a third party as the proxy of the Trustee to attend
such meeting and exercise thereat the Non-Affiliated Holder's
voting rights to which such Non-Affiliated Holder is entitled
except, in each case, to the extent that such Non-Affiliated
Holder has transferred the ownership of any Exchangeable
Shares in respect of which such Non-Affiliated Holder is
entitled to Non-Affiliated Holder Votes after the close of
business on the record date for such meeting or seeking of
consent.
4.8 Voting by Trustee, and Attendance of Trustee Representative, at
Meeting.
(a) In connection with each Parent Meeting and Parent Consent, the
Trustee shall exercise, either in person or by proxy, in
accordance with the instructions received from a
Non-Affiliated Holder pursuant to Section 4.3 hereof, the
Non-Affiliated Holder Votes as to which such Non-Affiliated
Holder is entitled to direct the vote (or any lesser number
thereof as may be set forth in the instructions); provided,
however, that such written instructions are received by the
Trustee from the Non-Affiliated Holder prior to the time and
date fixed by it for receipt of such instructions in the
notice given by the Trustee to the Non-Affiliated Holder
pursuant to Section 4.3 hereof.
(b) The Trustee shall cause such representatives as are empowered
by it to sign and deliver, on behalf of the Trustee, proxies
for Voting Rights enabling a Non-Affiliated Holder to attend
each Parent Meeting. Upon submission by a Non-Affiliated
Holder (or its designee) of identification satisfactory to the
Trustee's representatives, and at the Non-Affiliated Holder's
request, such representatives shall sign and deliver to such
Non-Affiliated Holder (or its designee) a proxy to exercise
personally the Non-Affiliated Holder Votes as to which such
Non-Affiliated Holder is otherwise entitled hereunder to
direct the vote, if such Non-Affiliated Holder either (i) has
not previously given the Trustee instructions pursuant to
Section 4.3 hereof in respect of such meeting, or (ii) submits
to the Trustee's representatives written revocation of any
such previous instructions. At such meeting, the
Non-Affiliated Holder exercising such Non-Affiliated Holder
Votes shall have the same rights as the Trustee to speak at
the meeting in respect of any matter, question or proposition,
to vote by way of ballot at the meeting in respect of any
matter, question or proposition and to vote at such meeting by
way of a show of hands in respect of any matter, question or
proposition.
4.9 Distribution of Written Materials. Any written materials to be
distributed by the Trustee to the Non-Affiliated Holders pursuant to
this Trust Agreement shall be delivered or sent by mail (or otherwise
communicated in the same manner as the Parent utilizes in
communications to holders of Parent Common Shares, subject to the
Trustee being advised in writing of such method of communication and
its ability to provide same) to each Non-Affiliated Holder at its
address as shown on the books of the Company. The Company shall provide
or cause to be provided to the Trustee for this purpose, on a timely
basis and without charge or other expense:
(a) current lists of the Non-Affiliated Holders; and
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(b) upon the request of the Trustee, mailing labels to enable the
Trustee to carry out its duties under this Trust Agreement.
The materials referred to above are to be provided by the Parent to the
Trustee, but shall be subject to review and comment by the Trustee.
4.10 Termination of Voting Rights. All the rights of a Non-Affiliated Holder
with respect to the Non-Affiliated Holder Votes exercisable in respect
of the Exchangeable Shares held by such Non-Affiliated Holder,
including the right to instruct the Trustee as to the voting of or to
vote personally such Non-Affiliated Holder Votes, shall be deemed to be
surrendered by the Non-Affiliated Holder to the Parent and such
Non-Affiliated Holder Votes and the Voting Rights represented thereby
shall cease immediately upon the delivery by such Non-Affiliated Holder
to the Trustee of the certificates representing such Exchangeable
Shares in connection with the exercise by the Non-Affiliated Holder of
the Exchange Right or the occurrence of the automatic exchange of
Exchangeable Shares for Parent Common Shares, as specified in Article 5
hereof, or upon the redemption of Exchangeable Shares pursuant to
Article 28.10 or Article 28.12 of the Share Provisions, or upon the
effective date of the liquidation, dissolution or winding-up of the
Company or any other distribution of the assets of the Company among
its shareholders for the purpose of winding up its affairs pursuant to
Article 28.7 of the Share Provisions, or upon the purchase of
Exchangeable Shares from the holder thereof by the Parent or Holdco
pursuant to the due exercise by the Parent or Holdco of the Retraction
Call Right, the Redemption Call Right or the Liquidation Call Right.
ARTICLE 5
EXCHANGE RIGHT AND PARENT SUPPORT
5.1 Grant and Ownership of the Exchange Right. The Parent hereby grants to
the Trustee as trustee for and on behalf of, and for the use and
benefit of, the Non-Affiliated Holders the right (the "Exchange
Right"), upon the occurrence and during the continuance of an
Insolvency Event, to require the Parent to purchase or at the Parent's
option cause Holdco to purchase, from each or any Non-Affiliated Holder
all or any part of the Exchangeable Shares held by the Non-Affiliated
Holder, all in accordance with the provisions of this Trust Agreement.
The Parent hereby acknowledges receipt from the Trustee, as trustee for
and on behalf of the Non-Affiliated Holders, of good and valuable
consideration (and the adequacy thereof) for the grant of the Exchange
Right by the Parent to the Trustee. During the term of the Trust and
subject to the terms and conditions of this Trust Agreement, the
Trustee shall possess and be vested with full legal ownership of the
Exchange Right and shall be entitled to exercise all of the rights and
powers of an owner with respect to the Exchange Right, provided that
the Trustee shall:
(a) hold the Exchange Right and the legal title thereto as trustee
solely for the use and benefit of the Non-Affiliated Holders
in accordance with the provisions of this Trust Agreement; and
(b) except as specifically authorized by this Trust Agreement,
have no power or authority to exercise or otherwise deal in or
with the Exchange Right, and the Trustee shall not exercise
such right for any purpose other than the purposes for which
this Trust is created pursuant to this Trust Agreement.
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5.2 Legended Share Certificates. The Company will cause each certificate
representing Exchangeable Shares to bear an appropriate legend
notifying the Non-Affiliated Holders of their right to instruct the
Trustee with respect to the exercise of the Exchange Right in respect
of the Exchangeable Shares held by a Non-Affiliated Holder.
5.3 General Exercise of Exchange Right. The Exchange Right shall be and
remain vested in and exercisable by the Trustee. Subject to Section
7.15 hereof, the Trustee shall exercise the Exchange Right only on the
basis of instructions received pursuant to this Article 5 from
Non-Affiliated Holders entitled to instruct the Trustee as to the
exercise thereof. To the extent that no instructions are received from
a Non-Affiliated Holder with respect to the Exchange Right, the Trustee
shall not exercise or permit the exercise of the Exchange Right.
5.4 Purchase Price. The purchase price payable by the Parent or Holdco for
each Exchangeable Share to be purchased by the Parent or Holdco under
the Exchange Right shall be an amount per share equal to (a) the
Current Market Price of a Parent Common Share on the last Business Day
prior to the day of closing of the purchase and sale of such
Exchangeable Share under the Exchange Right, which shall be satisfied
in full by causing to be delivered to such holder one Parent Common
Share, plus (b) the Dividend Amount, if any. The purchase price for
each such Exchangeable Share so purchased may be satisfied only by the
Parent or Holdco delivering or causing to be delivered to the Trustee,
on behalf of the relevant Non-Affiliated Holder, one Parent Common
Share and a cheque for the balance, if any, of the purchase price.
5.5 Exercise Instructions. Subject to the terms and conditions herein set
forth, a Non-Affiliated Holder shall be entitled, upon the occurrence
and during the continuance of an Insolvency Event, to instruct the
Trustee to exercise the Exchange Right with respect to all or any part
of the Exchangeable Shares registered in the name of such
Non-Affiliated Holder on the books of the Company. To cause the
exercise of the Exchange Right by the Trustee, the Non-Affiliated
Holder shall deliver to the Trustee, in person or by certified or
registered mail, at its principal office in Vancouver, British Columbia
or at such other places in Canada as the Trustee may from time to time
designate by written notice to the Non-Affiliated Holders, the
certificates representing the Exchangeable Shares which such
Non-Affiliated Holder desires the Parent to purchase, duly endorsed in
blank, and accompanied by such other documents and instruments as may
be required to effect a transfer of Exchangeable Shares under the
Company Act, a No Transfer Declaration and such additional documents
and instruments as the Trustee or the Company may reasonably require
together with (a) a duly completed form of notice of exercise of the
Exchange Right, contained on the reverse of or attached to the
Exchangeable Share certificates, stating (i) that the Non-Affiliated
Holder thereby instructs the Trustee to exercise the Exchange Right so
as to require the Parent or Holdco to purchase from the Non-Affiliated
Holder the number of Exchangeable Shares specified therein, (ii) that
such Non-Affiliated Holder has good title to and owns all such
Exchangeable Shares to be acquired by the Parent or Holdco free and
clear of all liens, claims and encumbrances, (iii) the names in which
the certificates representing Parent Common Shares issuable in
connection with the exercise of the Exchange Right are to be issued and
(iv) the names and addresses of the persons to whom such new
certificates should be delivered and (b) payment (or evidence
satisfactory to the Trustee, the Company and the Parent of payment) of
the taxes (if any) payable as contemplated by Section 5.8 of this Trust
Agreement. If only a portion of the Exchangeable Shares represented by
any certificate delivered to the Trustee are to be purchased by the
Parent or Holdco under the
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12
Exchange Right, a new certificate for the balance of such Exchangeable
Shares shall be issued to the holder at the expense of the Company.
5.6 Delivery of Parent Common Shares; Effect of Exercise. Promptly after
receipt of the certificates representing the Exchangeable Shares that a
Non-Affiliated Holder desires the Parent or Holdco to purchase under
the Exchange Right (together with a No Transfer Declaration and such
documents and instruments of transfer and a duly completed form of
notice of exercise of the Exchange Right) duly endorsed for transfer to
the Parent or Holdco, the Trustee shall notify the Parent and the
Company of its receipt of the same, which notice to the Parent and the
Company shall constitute exercise of the Exchange Right by the Trustee
on behalf of the holder of such Exchangeable Shares, and the Parent
shall immediately thereafter deliver or cause Holdco to deliver to the
Trustee, for delivery to the Non-Affiliated Holder of such Exchangeable
Shares (or to such other persons, if any, properly designated by such
Non-Affiliated Holder), a certificate for the number of Parent Common
Shares deliverable in connection with such exercise of the Exchange
Right (which shares shall be duly issued as fully paid and
non-assessable and shall be free and clear of any lien, claim or
encumbrance, security interest or adverse claim) and a cheque for the
balance, if any, of the purchase price therefor; provided, however,
that no such delivery shall be made unless and until the Non-Affiliated
Holder requesting the same shall have paid (or provided evidence
satisfactory to the Trustee, the Company and the Parent of the payment
of) the taxes (if any) payable as contemplated by Section 5.8 of this
Trust Agreement. Immediately upon the giving of notice by the Trustee
to the Parent and the Company of the exercise of the Exchange Right, as
provided in this Section 5.6, the closing of the transaction of
purchase and sale contemplated by the Exchange Right shall be deemed to
have occurred, and the Non-Affiliated Holder of such Exchangeable
Shares shall be deemed to have transferred to the Parent (or, at the
Parent's option, to Holdco) all of its right, title and interest in and
to such Exchangeable Shares and the related interest in the Trust
Estate and shall not be entitled to exercise any of the rights of a
holder in respect thereof, other than the right to receive its
proportionate part of the total purchase price therefor, unless the
requisite number of Parent Common Shares (together with a cheque for
the balance, if any, of the total purchase price therefor) is not
delivered by the Parent or Holdco to the Trustee, for delivery to such
Non-Affiliated Holder (or to such other persons, if any, properly
designated by such Non-Affiliated Holder), within five Business Days of
the date of the giving of such notice by the Trustee, in which case the
rights of the Non-Affiliated Holder shall remain unaffected until such
Parent Common Shares are so delivered and any such cheque is so
delivered and paid. Concurrently with the closing of the transaction of
purchase and sale contemplated by the Exchange Right, such
Non-Affiliated Holder shall be considered and deemed for all purposes
to be the holder of the Parent Common Shares delivered to it pursuant
to the Exchange Right.
5.7 Exercise of Exchange Right Subsequent to Retraction. In the event that
a Non-Affiliated Holder has exercised its right under Article 28.10 of
the Share Provisions to require the Company to redeem any or all of the
Exchangeable Shares held by the Non-Affiliated Holder (the "Retracted
Shares") and is notified by the Company pursuant to Subsection 28.10(d)
of the Share Provisions that the Company will not be permitted as a
result of solvency requirements of applicable law to redeem all such
Retracted Shares, subject to receipt by the Trustee of written notice
to that effect from the Company and provided that neither the Parent
nor Holdco shall have exercised its Retraction Call Right with respect
to the Retracted Shares and that the Non-Affiliated Holder shall not
have revoked the retraction request delivered by the Non-Affiliated
Holder to the Company pursuant to Subsection 28.10(e) of the Share
Provisions, the retraction request will constitute and
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13
will be deemed to constitute notice from the Non-Affiliated Holder to
the Trustee instructing the Trustee to exercise the Exchange Right with
respect to those Retracted Shares that the Company is unable to redeem.
In any such event, the Company hereby agrees with the Trustee and in
favour of the Non-Affiliated Holder immediately to notify the Trustee
of such prohibition against the Company redeeming all of the Retracted
Shares and immediately to forward or cause to be forwarded to the
Trustee all relevant materials delivered by the Non-Affiliated Holder
to the Company (including without limitation a copy of the Retraction
Request delivered pursuant to Subsection 28.10(a) of the Share
Provisions) in connection with such proposed redemption of the
Retracted Shares and the Trustee will thereupon exercise the Exchange
Right with respect to the Retracted Shares that the Company is not
permitted to redeem and will require the Parent or, at the Parent's
option, Holdco, to purchase such shares in accordance with the
provisions of this Article 5.
5.8 Stamp or Other Transfer Taxes. Upon any sale of Exchangeable Shares to
the Parent or Holdco pursuant to the Exchange Right, the share
certificate or certificates representing the Parent Common Shares to be
delivered in connection with the payment of the total purchase price
therefor shall be issued in the name of the Non-Affiliated Holder of
the Exchangeable Shares so sold or in such names as such Non-Affiliated
Holder may otherwise direct in writing without charge to the holder of
the Exchangeable Shares so sold, provided, however, that such
Non-Affiliated Holder (a) shall pay (and none of the Parent, Holdco,
the Company or the Trustee shall be required to pay) any documentary,
stamp, transfer or other similar taxes that may be payable in respect
of any transfer involved in the issuance or delivery of such shares to
a person other than such Non-Affiliated Holder or (b) shall have
established to the satisfaction of the Trustee, the Parent, Holdco and
the Company that such taxes, if any, have been paid.
5.9 Notice of Insolvency Event. Immediately upon the occurrence of an
Insolvency Event or any event that with the giving of notice or the
passage of time or both would be an Insolvency Event, the Company and
the Parent shall give written notice thereof to the Trustee. As soon as
practicable after receiving notice from the Company or the Parent or
from any other person of the occurrence of an Insolvency Event, the
Trustee will mail to each Non-Affiliated Holder, at the expense of the
Parent, a notice of such Insolvency Event in the form provided by the
Parent, which notice shall contain a brief statement of the right of
the Non-Affiliated Holders with respect to the Exchange Right.
5.10 Parent Support of Holdco. Notwithstanding any of the other provisions
of this Trust Agreement, so long as any Convertible Shares or
Exchangeable Shares are outstanding, at least 50% of the common shares
of Holdco shall be owned, directly or indirectly, by the Parent and the
Parent will take all actions and do all such things as are necessary or
desirable to enable and permit Holdco, in accordance with applicable
law, to perform its obligations and exercise its rights with respect to
the satisfaction of the Liquidation Call Right, the Redemption Call
Right and the Retraction Call Right, including without limitation, all
such actions and all such things as are necessary or desirable to
enable and permit Holdco to cause to be delivered Parent Common Shares
to the holders of Exchangeable Shares in accordance with the Share
Provisions. In furtherance of the foregoing obligations, upon notice of
any event which requires Holdco to cause to be delivered Parent Common
Shares to any holder of Exchangeable Shares, the Parent shall, in any
manner deemed appropriate by it, provide such shares or cause such
shares to be provided to Holdco, which shall forthwith deliver the
requisite Parent Common Shares to or to the order of the former holder
of the surrendered Exchangeable Shares. All such Parent Common Shares
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14
shall be duly issued as fully paid, non-assessable, free of pre-emptive
rights and shall be free and clear of any lien, claim, encumbrance,
security interest or adverse claim.
5.11 Call Rights. The Liquidation Call Right, the Redemption Call Right, the
Retraction Call Right, the Exchange Right and the Automatic Exchange
Right are hereby agreed, acknowledged and confirmed, and it is agreed
and acknowledged that such rights are granted as part of the
consideration for the obligations of the Parent under this Trust
Agreement.
ARTICLE 6
COVENANTS, REPRESENTATIONS AND WARRANTIES
6.1 Covenants of Parent Regarding Exchangeable Shares. So long as any
Exchangeable Shares are outstanding, the Parent will:
(a) not declare or pay any dividend on the Parent Common Shares
unless (i) the Company will have sufficient money or other
assets or authorized but unissued securities 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 (ii) the Company shall
simultaneously declare or pay, as the case may be, an
equivalent dividend on the Exchangeable Shares;
(b) advise the Company sufficiently in advance of the declaration
by the Parent of any dividend on the Parent Common Shares and
take all such other actions as are necessary, in cooperation
with the Company, 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 declaration date,
record date and payment date for the corresponding dividend on
the Parent Common Shares and that such dividend on the
Exchangeable Shares shall correspond with any requirements of
the stock exchange on which the Exchangeable Shares are
listed;
(c) ensure that the record date for determining shareholders
entitled to receive any dividend declared on the Parent Common
Shares is not less than 10 Business Days after the declaration
date for such dividend or such shorter period within which
applicable law may be complied with;
(d) take all such actions and do all such things as are necessary
or desirable to enable and permit the Company, 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 the Company or any other distribution of the
assets of the Company among its shareholders for the purpose
of winding up its affairs, including without limitation all
such actions and all such things as are necessary or desirable
to enable and permit the Company to cause to be delivered
Parent Common Shares to the holders of Exchangeable Shares in
accordance with the provisions of Article 28.7 of the Share
Provisions;
(e) take all such actions and do all such things as are necessary
or desirable to enable and permit the Company, in accordance
with applicable law, to pay and otherwise perform
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15
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 the Company to
cause to be delivered Parent Common Shares to the holders of
Exchangeable Shares, upon the redemption of the Exchangeable
Shares in accordance with the provisions of Article 28.10 or
Article 28.11 of the Share Provisions, as the case may be;
(f) not exercise its vote as a shareholder to initiate the
voluntary liquidation, dissolution or winding up of the
Company or any other distribution of the assets of the Company
among its shareholders for the purpose of winding up its
affairs nor take any action or omit to take any action that is
designed to result in the liquidation, dissolution or winding
up of the Company or any other distribution of the assets of
the Company among its Shareholders for the purpose of winding
up its affairs.
6.2 Segregation of Funds. The Parent will cause the Company to deposit a
sufficient amount of funds in a separate account and segregate a
sufficient amount of such other assets as is necessary to enable the
Company to pay or otherwise satisfy the applicable dividends,
Liquidation Amount, Retraction Price or Redemption Price, once such
amounts become payable under the terms of this Trust Agreement or the
Share Provisions, in each case for the benefit of Non-Affiliated
Holders from time to time of the Exchangeable Shares, and to use such
funds and other assets so segregated exclusively for the payment of
dividends and the payment or other satisfaction of the Liquidation
Amount, the Retraction Price or the Redemption Price, as applicable.
6.3 Certain Representations. The Parent hereby represents, warrants and
covenants that it has irrevocably reserved for issuance and will at all
times keep available, free from pre-emptive and other rights, out of
its authorized and unissued capital stock such number of Parent Common
Shares (or other shares or securities into which the Parent Common
Shares may be reclassified or changed as contemplated by Section 6.7
hereof) (i) as is equal to the sum of (x) the number of Exchangeable
Shares issued and outstanding from time to time and (y) the number of
Exchangeable Shares issuable upon the exercise of all rights to acquire
Exchangeable Shares outstanding from time to time (including, without
limitation, the number of Exchangeable Shares into which the
Convertible Shares issued or to be issued under the Stock Purchase
Agreement may be converted in accordance with Part 27 of the Company's
Articles and into which the Promissory Notes may be converted in
accordance with their terms) and (ii) as is now and may hereafter be
required to enable and permit each of the Company, the Parent and
Holdco to meet its obligations hereunder, under the Share Provisions
and under any other security or commitment pursuant to which the
Company, the Parent or Holdco may now or hereafter be required to issue
and/or deliver Parent Common Shares.
6.4 Notification of Certain Events. In order to assist the Parent to comply
with its obligations hereunder, the Company will give the Parent notice
of each of the following events at the time set forth below:
(a) in the event of any determination by the Board of Directors to
institute voluntary liquidation, dissolution or winding-up
proceedings with respect to the Company or to effect any other
distribution of the assets of the Company 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;
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16
(b) immediately, upon the earlier of (i) receipt by the Company of
notice of, and (ii) the Company otherwise becoming aware of,
any threatened or instituted claim, suit, petition or other
proceeding with respect to the involuntary liquidation,
dissolution or winding up of the Company or to effect any
other distribution of the assets of the Company among its
shareholders for the purpose of winding up its affairs;
(c) immediately, upon receipt by the Company of a Retraction
Request (as defined in the Share Provisions);
(d) at least 10 days prior to any Automatic Redemption Date
determined by the Board of Directors in accordance with the
Share Provisions; and
(e) as soon as practicable upon the issuance by the Company of (i)
any Convertible Shares or Exchangeable Shares including,
without limitation, the issuance of Convertible Shares or
Exchangeable Shares at the Bonus Closing or the Second
Closing, and the issuance of Exchangeable Shares pursuant to a
conversion of Convertible Shares in accordance with Part 27 of
the Company's Articles or a conversion of the Promissory Notes
in accordance with their terms), or (ii) rights to acquire
Convertible Shares or Exchangeable Shares.
6.5 Delivery of Parent Common Shares. Upon notice of any event that
requires the Company or Holdco, as the case may be, to cause to be
delivered Parent Common Shares to any holder of Exchangeable Shares,
the Parent shall, in any manner deemed appropriate by it, provide such
shares or cause such shares to be provided to the Company or Holdco, as
the case may be, which shall forthwith deliver the requisite Parent
Common Shares to or to the order of the former holder of the
surrendered Exchangeable Shares, as the Company or Holdco, as the case
may be, shall direct. All such Parent Common Shares shall be duly
issued as fully paid, non-assessable, free of pre-emptive rights and
shall be free and clear of any lien, claim, encumbrance, security
interest or adverse claim.
6.6 Qualification of Parent Common Shares. The Parent covenants that it
will make such filings and seek such regulatory consents and approvals
as are necessary so that the Parent Common Shares to be issued on the
exchange of Exchangeable Shares will be issued in compliance with the
applicable securities laws in Canada and the United States and may be
freely traded on New York Stock Exchange or on such other United States
exchange as such shares may be listed, quoted or posted for trading
from time to time.
6.7 Economic Equivalence.
(a) The Parent will not without the prior approval of the Company
and the prior approval of the holders of the Exchangeable
Shares given in accordance with Article 30.4 of the Share
Provisions:
(i) issue or distribute Parent Common Shares (or
securities exchangeable for or convertible into or
carrying rights to acquire Parent Common Shares) to
the holders of all or substantially all of the then
outstanding Parent Common Shares by way of stock
dividend or other distribution, other than an issue
of Parent Common Shares (or securities exchangeable
for or convertible into or carrying rights to acquire
Parent Common Shares) to holders of Parent Common
Shares
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17
who exercise an option to receive dividends in Parent
Common Shares (or securities exchangeable for or
convertible into or carrying rights to acquire Parent
Common Shares) in lieu of receiving cash dividends;
(ii) issue or distribute rights, options or warrants to
the holders of all or substantially all of the then
outstanding Parent Common Shares entitling them to
subscribe for or to purchase Parent Common Shares (or
securities exchangeable for or convertible into or
carrying rights to acquire Parent Common Shares); or
(iii) issue or distribute to the holders of all or
substantially all of the then outstanding Parent
Common Shares: (1) shares or securities of the Parent
of any class other than Parent Common Shares (other
than shares convertible into or exchangeable for or
carrying rights to acquire Parent Common Shares), (2)
rights, options or warrants other than those referred
to in Section 6.7(a)(ii) above, (3) evidences of
indebtedness of the Parent or (4) assets of the
Parent;
unless (x) the Company 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 the holders of the
Exchangeable Shares and (y) the Company shall issue or
distribute such rights, options, securities, shares, evidences
of indebtedness or other assets simultaneously to the holders
of the Exchangeable Shares.
(b) The Parent will not without the prior approval of the Company
and the prior approval of the holders of the Exchangeable
Shares given in accordance with Article 30.4 of the Share
Provisions:
(i) subdivide, redivide or change the then outstanding
Parent Common Shares into a greater number of Parent
Common Shares; or
(ii) reduce, combine or consolidate or change the then
outstanding Parent Common Shares into a lesser number
of Parent Common Shares; or
(iii) reclassify or otherwise change the Parent Common
Shares or effect an amalgamation, merger,
reorganization or other transaction affecting the
Parent Common Shares;
unless (x) the Company is permitted under applicable law to
simultaneously make the same or an economically equivalent
change to, or in the rights of holders of, the Exchangeable
Shares and (y) the same or an economically equivalent change
is made to, or in the rights of the holders of, the
Exchangeable Shares.
(c) The Parent will ensure that the record date for any event
referred to in Section 6.7(a) or 6.7(b) above, or (if no
record date is applicable for such event) the effective date
for any such event, is not less than 10 days after the date on
which such event is declared or announced by the Parent (with
simultaneous notice thereof to be given by the Parent to the
Company).
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(d) The Company Board of Directors shall determine, in good faith
and in its sole discretion (with the assistance of such
reputable and qualified independent financial advisors and/or
other experts as the board may require), economic equivalence
for the purposes of any event referred to in Section 6.7(a) or
6.7(b) and each such determination shall be conclusive and
binding on the Parent. In making each such determination, the
following factors shall, without excluding other factors
determined by the board to be relevant, be considered by the
Company Board of Directors:
(i) in the case of any stock dividend or other
distribution payable in Parent Common Shares, the
number of such shares issued in proportion to the
number of Parent Common Shares previously
outstanding;
(ii) in the case of the issuance or distribution of any
rights, options or warrants to subscribe for or
purchase Parent Common Shares (or securities
exchangeable for or convertible into or carrying
rights to acquire Parent Common Shares), the
relationship between the exercise price of each such
right, option or warrant and the current market value
(as determined by the Board of Directors in the
manner above contemplated) of a Parent Common Share;
(iii) in the case of the issuance or distribution of any
other form of property (including without limitation
any shares or securities of the Parent of any class
other than Parent Common Shares, any rights, options
or warrants other than those referred to in Section
6.7(d)(ii) above, any evidences of indebtedness of
the Parent or any assets of the Parent), the
relationship between the fair market value (as
determined by the Company Board of Directors in the
manner above contemplated) of such property to be
issued or distributed with respect to each
outstanding Parent Common Share and the current
market value (as determined by the Board of Directors
in the manner above contemplated) of a Parent Common
Share; and
(iv) in the case of any subdivision, redivision or change
of the then outstanding Parent Common Shares into a
greater number of Parent Common Shares or the
reduction, combination or consolidation or change of
the then outstanding Parent Common Shares into a
lesser number of Parent Common Shares or any
amalgamation, merger, reorganization or other
transaction affecting the Parent Common Shares, the
effect thereof upon the then outstanding shares of
Parent Common Shares.
For purposes of the foregoing determinations, the current market value
of any security listed and traded or quoted on a securities exchange
shall be the average of the high and the low trade of such security (as
reported in the Wall Street Journal) for each of the 10 trading days
before the date of determination on the principal securities exchange
on which such securities are listed and traded or quoted; provided,
however, that if in the opinion of the Company Board of Directors the
public distribution or trading activity of such securities during such
period does not create a market that reflects the fair market value of
such securities, then the current market value thereof shall be
determined by the Company Board of Directors, in good faith and in its
sole discretion (with the assistance of such reputable and qualified
independent financial advisors and/or other
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19
experts as the board may require), and provided further that any such
determination by the Company Board of Directors shall be conclusive and
binding on the Parent.
6.8 Tender Offers, etc. In the event that a cash offer, share exchange
offer, issuer bid, take-over bid or similar transaction with respect to
Parent Common Shares (each, a "Tender Offer") is proposed by the Parent
or is proposed to the Parent or its shareholders and is recommended by
the Parent Board of Directors, or is otherwise effected or to be
effected with the consent or approval of the Parent Board of Directors,
the Parent will use reasonable efforts (to the extent, in the case of a
Tender Offer by a third party, within its control) expeditiously and in
good faith to 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 Tender Offer to the same extent and on an
economically equivalent basis as the holders of Parent Common Shares,
without discrimination, provided that if the holders of Exchangeable
Shares wish to participate in any such Tender Offer such holder shall
retract Exchangeable Shares as against the Company. Such retraction
shall be conditional upon and occur simultaneously with, the closing of
such Tender Offer.
6.9 Parent Not to Vote. The Parent covenants and agrees that it will
appoint and cause to be appointed proxyholders with respect to all
Convertible Shares or Exchangeable Shares held by the Parent and its
Subsidiaries for the sole purpose of attending each meeting of holders
of Convertible Shares or Exchangeable Shares in order to be counted as
part of the quorum for each such meeting. The Parent further covenants
and agrees that it will not, and will cause its Subsidiaries not to,
exercise any voting rights that may be exercisable by holders of
Convertible Shares or Exchangeable Shares from time to time pursuant to
the Share Provisions or pursuant to the provisions of the Company Act
(or any successor or other corporate statute by which the Company may
in the future be governed) with respect to any Convertible Shares or
Exchangeable Shares held by it or by its direct or indirect
Subsidiaries in respect of any matter considered at any meeting of
holders of Convertible Shares or Exchangeable Shares.
6.10 Due Performance. The Parent shall, and shall cause each of the Company
and Holdco to, duly and timely perform all of its respective
obligations provided for herein and that may arise under the Share
Provisions, and Parent shall be responsible for the due performance of
all of such obligations hereunder and under the Share Provisions.
6.11 Issue of Additional Shares. During the term of this Trust Agreement,
the Parent will not issue any shares of Series B Preferred Stock, par
value US$0.001 in addition to the Voting Share to be issued to the
Trustee hereunder.
ARTICLE 7
CONCERNING THE TRUSTEE
7.1 Powers and Duties of the Trustee. The rights, powers and authorities of
the Trustee under this Trust Agreement, in its capacity as trustee of
the Trust, shall include:
(a) receipt and deposit of the Voting Share from the Parent as
trustee for and on behalf of the Non-Affiliated Holders in
accordance with the provisions of this Trust Agreement;
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(b) granting proxies and distributing materials to Non-Affiliated
Holders as provided in this Trust Agreement;
(c) voting the Non-Affiliated Holder Votes in accordance with the
provisions of this Trust Agreement;
(d) receiving the grant of the Exchange Right from the Parent as
trustee for and on behalf of the Non-Affiliated Holders in
accordance with the provisions of this Trust Agreement;
(e) exercising the Exchange Right, in accordance with the
provisions of this Trust Agreement and in connection therewith
receiving from Non-Affiliated Holders Exchangeable Shares and
other requisite documents and distributing to such
Non-Affiliated Holders the Parent Common Shares and cheques,
if any, to which such Non-Affiliated Holders are entitled upon
the exercise of the Exchange Right;
(f) holding title to the Trust Estate;
(g) investing any money forming, from time to time, a part of the
Trust Estate as provided in this Trust Agreement;
(h) taking action at the direction of a Non-Affiliated Holder to
enforce the obligations of the Company, Holdco and/or the
Parent under this Trust Agreement and under the Share
Provisions; and
(i) taking such other actions and doing such other things as are
specifically provided in this Trust Agreement.
In the exercise of such rights, powers and authorities the Trustee
shall have (and is granted) such incidental and additional rights,
powers and authority not in conflict with any of the provisions of this
Trust Agreement as the Trustee, acting in good faith and in the
reasonable exercise of its discretion, may deem necessary, appropriate
or desirable to effect the purpose of the Trust. Any exercise of such
discretionary rights, powers and authorities by the Trustee shall be
final, conclusive and binding upon all persons. For greater certainty,
the Trustee shall have only those duties as are set out specifically in
this Trust Agreement. The Trustee in exercising its rights, powers,
duties and authorities hereunder shall act honestly and in good faith
with a view to the best interests of the Non-Affiliated Holders and
shall exercise the care, diligence and skill that a reasonably prudent
trustee would exercise in comparable circumstances. The Trustee shall
not be bound to give any notice or do or take any act, action or
proceeding by virtue of the powers conferred on it hereby unless and
until it shall be specifically required to do so under the terms
hereof; nor shall the Trustee be required to take any notice of, or to
do or to take any act, action or proceeding as a result of any default
or breach of any provision hereunder, unless and until notified in
writing of such default or breach, which notice shall distinctly
specify the default or breach desired to be brought to the attention of
the Trustee and in the absence of such notice the Trustee may for all
purposes of this Trust Agreement conclusively assume that no default or
breach has been made in the observance or performance of any of the
representations, warranties, covenants, agreements or conditions
contained herein.
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7.2 No Conflict of Interest. The Trustee represents to the Company and the
Parent that at the date of execution and delivery of this Trust
Agreement there exists no material conflict of interest in the role of
the Trustee as a fiduciary hereunder and the role of the Trustee in any
other capacity. The Trustee shall, within 90 days after it becomes
aware that such a material conflict of interest exists, either
eliminate such material conflict of interest or resign in the manner
and with the effect specified in Article 10 hereof. If, notwithstanding
the foregoing provisions of this Section 7.2, the Trustee has such a
material conflict of interest, the validity and enforceability of this
Trust Agreement shall not be affected in any manner whatsoever by
reason only of the existence of such material conflict of interest. If
the Trustee contravenes the foregoing provisions of this Section 7.2,
any interested party may apply to any court in British Columbia with
jurisdiction for an order that the Trustee be replaced as trustee
hereunder.
7.3 Dealings with Transfer Agents, Registrars, etc. The Company, Holdco and
the Parent irrevocably authorize the Trustee, from time to time, to:
(a) consult, communicate and otherwise deal with the respective
registrars and transfer agents, and with any such subsequent
registrar or transfer agent, of the Convertible Shares,
Exchangeable Shares and Parent Common Shares; and
(b) requisition, from time to time, from any such registrar or
transfer agent any information readily available from the
records maintained by it which the Trustee may reasonably
require for the discharge of its duties and responsibilities
under this Trust Agreement. The Parent covenants that it will
supply, and will cause Holdco to supply, the Trustee, or the
Company, as the case may be, in a timely manner with duly
executed share certificates for the purpose of completing the
exercise from time to time of all rights to acquire Parent
Common Shares hereunder, under the Share Provisions and under
any other security or commitment given to the Non-Affiliated
Holders pursuant thereto, in each case pursuant to the
provisions hereof or of the Share Provisions or otherwise.
7.4 Books and Records. The Trustee shall keep available for inspection by
the Parent and the Company, at the Trustee's principal office in
Vancouver, British Columbia, correct and complete books and records of
account relating to the Trustee's actions under this Trust Agreement,
including without limitation all information relating to mailings and
instructions to and from Non-Affiliated Holders and all transactions
pursuant to the Voting Rights and the Exchange Right for the term of
this Trust Agreement. On or before November 30, 1998, and on or before
November 30 in every year thereafter, so long as the Voting Share is on
deposit with the Trustee, the Trustee shall transmit to the Parent and
the Company a brief report, dated as of the preceding August 31, with
respect to: (a) the property and funds comprising the Trust Estate as
of that date; (b) the number of exercises of the Exchange Right, if
any, and the aggregate number of Exchangeable Shares received by the
Trustee on behalf of Non-Affiliated Holders in consideration of the
issue and delivery by the Parent or Holdco of Parent Common Shares in
connection with the Exchange Right, during the calendar year ended on
such date; and (c) all other actions taken by the Trustee in the
performance of its duties under this Trust Agreement which it had not
previously reported.
7.5 Income Tax Returns and Reports. The Trustee shall, to the extent
necessary, prepare and file on behalf of the Trust appropriate Canadian
and United States income tax returns and any other returns or reports
as may be required by applicable law or pursuant to the rules and
regulations
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of any securities exchange or other trading system through which the
Exchangeable Shares are traded and, in connection therewith, may obtain
the advice and assistance of such experts as the Trustee may consider
necessary or advisable. If requested by the Trustee, the Parent shall
retain such experts as may be required for the purposes of providing
such advice and assistance.
7.6 Indemnification Prior to Certain Actions by Trustee. The Trustee shall
exercise any or all of the rights, duties, powers or authorities vested
in it by this Trust Agreement at the request, order or direction of any
Non-Affiliated Holder upon such Non-Affiliated Holder furnishing to the
Trustee reasonable funding, security and indemnity against the costs,
expenses and liabilities that may be incurred by the Trustee therein or
thereby, provided that no Non-Affiliated Holder shall be obligated to
furnish to the Trustee any such funding, security or indemnity in
connection with the exercise by the Trustee of any of its rights,
duties, powers and authorities with respect to the Voting Share
pursuant to Article 4 hereof with respect to the Exchange Right
pursuant to Article 5 hereof, subject to the provisions of Section 7.15
hereof. None of the provisions contained in this Trust Agreement shall
require the Trustee to expend or risk its own funds or otherwise incur
financial liability in the exercise of any of its rights, powers,
duties or authorities unless given funds, security and indemnified as
aforesaid.
7.7 Actions by Non-Affiliated Holders. No Non-Affiliated Holder shall have
the right to institute any action, suit or proceeding or to exercise
any other remedy authorized by this Trust Agreement for the purpose of
enforcing any of its rights or for the execution of any trust or power
hereunder unless the Non-Affiliated Holder has requested the Trustee to
take or institute such action, suit or proceeding and furnished the
Trustee with the funding, security and indemnity referred to in Section
7.6 hereof and the Trustee shall have failed to act within a reasonable
time thereafter. In such case, but not otherwise, the Non-Affiliated
Holder shall be entitled to take proceedings in any court of competent
jurisdiction such as the Trustee might have taken; it being understood
and intended that no one or more Non-Affiliated Holders shall have any
right in any manner whatsoever to affect, disturb or prejudice the
rights hereby created by any such action, or to enforce any right
hereunder, including without limitation, under the Voting Rights or the
Exchange Right, except subject to the conditions and in the manner
herein provided, and that all powers and trusts hereunder shall be
exercised and all proceedings at law shall be instituted, had and
maintained by the Trustee, except only as herein provided, and in any
event for the equal benefit of all Non-Affiliated Holders.
7.8 Reliance upon Declarations. The Trustee shall not be considered to be
in contravention of any of its rights, powers, duties and authorities
hereunder if, when required, it acts and relies in good faith upon
lists, mailing labels, notices, statutory declarations, certificates,
opinions, reports or other papers or documents furnished pursuant to
the provisions hereof or required by the Trustee to be furnished to it
in the exercise of its rights, powers, duties and authorities hereunder
and such lists, mailing labels, notices, statutory declarations,
certificates, opinions, reports or other papers or documents comply
with the provisions of Section 7.9 hereof, if applicable, and with any
other applicable provisions of this Trust Agreement.
7.9 Evidence and Authority to Trustee. The Company, Holdco and/or the
Parent shall furnish to the Trustee evidence of compliance with the
conditions provided for in this Trust Agreement relating to any action
or step required or permitted to be taken by the Company, Holdco and/or
the Parent or the Trustee under this Trust Agreement or as a result of
any obligation imposed under this Trust Agreement, including, without
limitation, in respect of the Voting Rights or the Exchange
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Right and the taking of any other action to be taken by the Trustee at
the request of or on the application of the Company, Holdco and/or the
Parent forthwith if and when:
(a) such evidence is required by any other section of this Trust
Agreement to be furnished to the Trustee in accordance with
the terms of this Section 7.9; or
(b) the Trustee, in the exercise of its rights, powers, duties and
authorities under this Trust Agreement, gives the Company,
Holdco and/or the Parent written notice requiring it to
furnish such evidence in relation to any particular action or
obligation specified in such notice.
Such evidence shall consist of an Officer's Certificate of the Company,
Holdco and/or the Parent or a statutory declaration or a certificate
made by persons entitled to sign an Officer's Certificate stating that
any such condition has been complied with in accordance with the terms
of this Trust Agreement. Whenever such evidence relates to a matter
other than the Voting Rights or the Exchange Right and except as
otherwise specifically provided herein, such evidence may consist of a
report or opinion of any solicitor, auditor, accountant, appraiser,
valuer, engineer or other expert or any other person whose
qualifications give authority to a statement made by such person,
provided that if such report or opinion is furnished by a director,
officer or employee of the Company, Holdco and/or the Parent it shall
be in the form of an Officer's Certificate or a statutory declaration.
Each statutory declaration, certificate, opinion or report furnished to
the Trustee as evidence of compliance with a condition provided for in
this Trust Agreement shall include a statement by the person giving the
evidence:
(a) declaring that such person has read and understands the
provisions of this Trust Agreement relating to the condition
in question;
(b) describing the nature and scope of the examination or
investigation upon which such person based the statutory
declaration, certificate, statement or opinion; and
(c) declaring that such person has made such examination or
investigation as such person believes is necessary to enable
such person to make the statements or give the opinions
contained or expressed therein.
7.10 Experts, Advisers and Agents. The Trustee may:
(a) in relation to these presents act and rely on the opinion or
advice of or information obtained from or prepared by any
solicitor, auditor, accountant, appraiser, valuer, engineer or
other expert, whether retained by the Trustee or by the
Company, Holdco and/or the Parent or otherwise, and may employ
such assistants as may be necessary to the proper
determination and discharge of its powers and duties and
determination of its rights hereunder and may pay proper and
reasonable compensation for all such legal and other advice or
assistance as aforesaid; and
(b) employ such agents and other assistants as it may reasonably
require for the proper determination and discharge of its
powers and duties hereunder, and may pay reasonable
remuneration for all services performed for it (and shall be
entitled to receive reasonable remuneration for all services
performed by it) in the discharge of the trusts hereof and
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compensation for all disbursements, costs and expenses made or
incurred by it in the determination and discharge of its
duties hereunder and in the management of the Trust.
7.11 Investment of Money Held by Trustee. Unless otherwise provided in this
Trust Agreement, any money held by or on behalf of the Trustee which
under the terms of this Trust Agreement may or ought to be invested or
which may be on deposit with the Trustee or which may be in the hands
of the Trustee may be invested and reinvested in the name or under the
control of the Trustee in securities in which, under the laws of the
Province of British Columbia, trustees are authorized to invest trust
money, provided that such securities are stated to mature within two
years after their purchase by the Trustee, and the Trustee shall so
invest such money on the written direction of the Company. Pending the
investment of any money as herein before provided, such money may be
deposited in the name of the Trustee in any chartered bank in Canada
or, with the consent of the Company, in the deposit department of the
Trustee or any other loan or trust company authorized to accept
deposits under the laws of Canada or any province thereof at the rate
of interest then current on similar deposits.
7.12 Trustee Not Required to Give Security. The Trustee shall not be
required to give any bond or security in respect of the execution of
the trusts, rights, duties, powers and authorities of this Trust
Agreement or otherwise in respect of the premises.
7.13 Trustee Not Bound to Act on Company's Request. Except as in this Trust
Agreement otherwise specifically provided, the Trustee shall not be
bound to act in accordance with any direction or request of the
Company, Holdco and/or the Parent or of the directors thereof until a
duly authenticated copy of the instrument or resolution containing such
direction or request shall have been delivered to the Trustee, and the
Trustee shall be empowered to act and rely upon any such copy
purporting to be authenticated and believed by the Trustee to be
genuine.
7.14 Authority to Carry on Business. The Trustee represents to the Company,
Holdco and the Parent that at the date of execution and delivery by it
of this Trust Agreement it is authorized to carry on the business of a
trust company in the Province of British Columbia but if,
notwithstanding the provisions of this Section 7.14, it ceases to be so
authorized to carry on business, the validity and enforceability of
this Trust Agreement and the Voting Rights, the Exchange Right and the
other rights granted in or resulting from the Trustee being a party to
this Trust Agreement shall not be affected in any manner whatsoever by
reason only of such event but the Trustee shall, within 90 days after
ceasing to be authorized to carry on the business of a trust company in
the Province of British Columbia, either become so authorized or resign
in the manner and with the effect specified in Article 10 hereof.
7.15 Conflicting Claims. If conflicting claims or demands are made or
asserted with respect to any interest of any Non-Affiliated Holder in
any Exchangeable Shares, including any disagreement between the heirs,
representatives, successors or assigns succeeding to all or any part of
the interest of any Non-Affiliated Holder in any Exchangeable Shares
resulting in conflicting claims or demands being made in connection
with such interest, then the Trustee shall be entitled, at its sole
discretion, to refuse to recognize or to comply with any such claim or
demand. In so refusing, the Trustee may elect not to exercise any
Voting Rights, Exchange Right or other rights subject to such
conflicting claims or demands and, in so doing, the Trustee shall not
be or become liable to any person on account of such election or its
failure or refusal to comply with
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any such conflicting claims or demands. The Trustee shall be entitled
to continue to refrain from acting and to refuse to act until:
(a) the rights of all adverse claimants with respect to the Voting
Rights, Exchange Right or other rights subject to such
conflicting claims or demands have been adjudicated by a final
judgment of a court of competent jurisdiction; or
(b) all differences with respect to the Voting Rights, Exchange
Right or other rights subject to such conflicting claims or
demands have been conclusively settled by a valid written
agreement binding on all such adverse claimants, and the
Trustee shall have been furnished with an executed copy of
such agreement.
If the Trustee elects to recognize any claim or comply with any demand
made by any such adverse claimant, it may in its discretion require
such claimant to furnish such surety bond or other security
satisfactory to the Trustee as it shall deem appropriate fully to
indemnify it as between all conflicting claims or demands.
7.16 Acceptance of Trust. The Trustee hereby accepts the Trust created and
provided for by and in this Trust Agreement and agrees to perform the
same upon the terms and conditions herein set forth and to hold all
rights, privileges and benefits conferred hereby and by law in trust
for the various persons who shall from time to time be Non-Affiliated
Holders, subject to all the terms and conditions herein set forth.
ARTICLE 8
COMPENSATION
8.1 Fees and Expenses of the Trustee. The Parent and the Company jointly
and severally agree to pay to the Trustee reasonable compensation for
all of the services rendered by it under this Trust Agreement and will
reimburse the Trustee for all reasonable expenses (including but not
limited to taxes, compensation paid to experts, agents and advisors and
travel expenses) and disbursements, including the cost and expense of
any suit or litigation of any character and any proceedings before any
governmental agency reasonably incurred by the Trustee in connection
with its rights and duties under this Trust Agreement; provided that
the Parent, Holdco and the Company shall have no obligation to
reimburse the Trustee for any expenses or disbursements paid, incurred
or suffered by the Trustee in any suit or litigation in which the
Trustee is determined to have acted in bad faith or with negligence or
wilful misconduct.
ARTICLE 9
INDEMNIFICATION AND LIMITATION OF LIABILITY
9.1 Indemnification of the Trustee. The Parent, Holdco and the Company
jointly and severally agree to indemnify and hold harmless the Trustee
and each of its directors, officers, employees and agents appointed and
acting in accordance with this Trust Agreement (collectively, the
"Indemnified Parties") against all claims, losses, damages, costs,
penalties, fines and reasonable and necessary expenses (including
reasonable and necessary expenses of the Trustee's legal counsel)
which, without fraud, negligence, wilful misconduct or bad faith on the
part of such
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Indemnified Party, may be paid, incurred or suffered by the Indemnified
Party by reason of or as a result of the Trustee's acceptance or
administration of the Trust, its compliance with its duties set forth
in this Trust Agreement, or any written or oral instructions delivered
to the Trustee by the Parent, Holdco or the Company pursuant hereto. In
no case shall the Parent, Holdco or the Company be liable under this
indemnity for any claim against any of the Indemnified Parties if such
claim is incurred or suffered by reason of or as a result of the fraud,
gross negligence, wilful misconduct or bad faith of an Indemnified
Party and unless the Parent, Holdco and the Company shall be notified
by the Trustee of the written assertion of a claim or of any action
commenced against the Indemnified Parties, promptly after any of the
Indemnified Parties shall have received any such written assertion of a
claim or shall have been served with a summons or other first legal
process giving information as to the nature and basis of the claim.
Subject to Section 9.1(b), below, the Parent, Holdco and the Company
shall be entitled to participate at their own expense in the defence
and, if the Parent, Holdco or the Company so elect at any time after
receipt of such notice, any of them may assume the defence of any suit
brought to enforce any such claim. The Trustee shall have the right to
employ separate counsel in any such suit and participate in the defence
thereof but the fees and expenses of such counsel shall be at the
expense of the Trustee unless: (a) the employment of such counsel has
been authorized by the Parent, Holdco or the Company, such
authorization not to be unreasonably withheld; or (b) the named parties
to any such suit include both the Trustee and the Parent, Holdco or the
Company and the Trustee shall have been advised in writing by counsel
acceptable to the Parent, Holdco or the Company that there may be one
or more legal defences available to the Trustee that are different from
or in addition to those available to the Parent, Holdco or the Company
and that an actual or potential conflict of interest exists (in which
case the Parent, Holdco and the Company shall not have the right to
assume the defence of such suit on behalf of the Trustee but shall be
liable to pay the reasonable fees and expenses of counsel for the
Trustee). Such indemnification shall survive the resignation or removal
of the Trustee and the termination of this Trust Agreement.
9.2 Limitation of Liability. The Trustee shall not be held liable for any
loss which may occur by reason of depreciation of the value of any part
of the Trust Estate or any loss incurred on any investment of funds
pursuant to this Trust Agreement, except to the extent that such loss
is attributable to the fraud, gross negligence, wilful misconduct or
bad faith on the part of the Trustee.
ARTICLE 10
CHANGE OF TRUSTEE
10.1 Resignation. The Trustee, or any trustee hereafter appointed, may at
any time resign by giving written notice of such resignation to the
Parent, Holdco and the Company specifying the date on which it desires
to resign, provided that such notice shall never be given less than 60
days before such desired resignation date unless the Parent, Holdco and
the Company otherwise agree and provided further that such resignation
shall not take effect until the date of the appointment of a successor
trustee and the acceptance of such appointment by the successor
trustee. Upon receiving such notice of resignation, the Parent, Holdco
and the Company shall promptly appoint a successor trustee by written
instrument in duplicate, one copy of which shall be delivered to the
resigning trustee and one copy to the successor trustee. Failing
acceptance by a successor
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trustee, a successor trustee may be appointed by an order of any court
of British Columbia with jurisdiction upon application of one or more
of the parties hereto.
10.2 Removal. The Trustee, or any trustee hereafter appointed, may be
removed with or without cause, at any time on 60 days' prior notice by
written instrument executed by the Parent, Holdco and the Company, in
duplicate, one copy of which shall be delivered to the trustee so
removed and one copy to the successor trustee.
10.3 Successor Trustee. Any successor trustee appointed as provided under
this Trust Agreement shall execute, acknowledge and deliver to the
Parent, Holdco and the Company and to its predecessor trustee an
instrument accepting such appointment. Thereupon the resignation or
removal of the predecessor trustee shall become effective and such
successor trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, duties and obligations of
its predecessor under this Trust Agreement, with like effect as if
originally named as trustee in this Trust Agreement. However, on the
written request of the Parent, Holdco and the Company or of the
successor trustee, the trustee ceasing to act shall, upon payment of
any amounts then due it pursuant to the provisions of this Trust
Agreement, execute and deliver an instrument transferring to such
successor trustee all the rights and powers of the trustee so ceasing
to act. Upon the request of any such successor trustee, the Parent,
Holdco and the Company and such predecessor trustee shall execute any
and all instruments in writing for more fully and certainly vesting in
and confirming to such successor trustee all such rights and powers.
10.4 Notice of Successor Trustee. Upon acceptance of appointment by a
successor trustee as provided herein, the Parent, Holdco and the
Company shall cause to be mailed notice of the succession of such
trustee hereunder to each Non-Affiliated Holder specified in a List. If
the Parent, Holdco or the Company shall fail to cause such notice to be
mailed within 10 days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at
the expense of the Parent, Holdco and the Company.
ARTICLE 11
PARENT SUCCESSORS
11.1 Certain Requirements in Respect of Combination, etc. The Parent shall
not enter into any transaction (whether by way of reconstruction,
reorganization, consolidation, merger, transfer, sale, lease or
otherwise) whereby all or substantially all of its undertaking,
property and assets would become the property of any other person or,
in the case of a merger, of the continuing corporation resulting
therefrom unless, but may do so if:
(a) such other person or continuing corporation (the "Parent
Successor"), by operation of law, becomes, without more, bound
by the terms and provisions of this Trust Agreement or, if not
so bound, executes, prior to or contemporaneously with the
consummation of such transaction a trust agreement
supplemental hereto and such other instruments (if any) as are
satisfactory to the Trustee are necessary or advisable to
evidence the assumption by the Parent Successor of liability
for all money payable and property deliverable hereunder and
the covenant of such Parent Successor to pay and deliver or
cause to be delivered the same and its agreement to observe
and perform all the covenants and obligations of the Parent
under this trust agreement; and
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(b) such transaction shall, to the satisfaction of the Trustee, be
upon such terms as substantially to preserve and not to impair
in any material respect any of the rights, duties, powers and
authorities of the Trustee or of the Non-Affiliated Holders
hereunder or under the Company's Articles.
11.2 Vesting of Powers in Successor. Whenever the conditions of Section 11.1
hereof have been duly observed and performed, if required by Section
11.1 hereof, the Trustee, the Parent Successor, Holdco and the Company
shall execute and deliver the supplemental trust agreement provided for
in Article 12 hereof and thereupon the Parent Successor shall possess
and from time to time may exercise each and every right and power of
the Parent under this Trust Agreement in the name of the Parent or
otherwise and any act or proceeding by any provision of this Trust
Agreement required to be done or performed by the Parent Board of
Directors or any officers of the Parent may be done and performed with
like force and effect by the directors or officers of such Parent
Successor.
11.3 Wholly-Owned Subsidiaries. Except as provided in Section 5.10, nothing
herein shall be construed as preventing the amalgamation or merger of
any wholly-owned Subsidiary of the Parent with or into the Parent or
the winding up, liquidation or dissolution of any wholly-owned
Subsidiary of the Parent provided that all of the assets of such
Subsidiary are transferred to the Parent or another wholly-owned
Subsidiary of the Parent, and any such transactions are expressly
permitted by this Article 11.
ARTICLE 12
AMENDMENTS AND SUPPLEMENTAL TRUST AGREEMENTS
12.1 Amendments, Modifications, etc. This Trust Agreement may not be amended
or modified except by an agreement in writing executed by the Company,
Holdco, the Parent and the Trustee and approved by the Non-Affiliated
Holders and the holders of the Convertible Shares in accordance with
Article 30.4 of the Share Provisions.
12.2 Ministerial Amendments. Notwithstanding the provisions of Section 12.1
hereof, the parties to this Trust Agreement may in writing, at any time
and from time to time, without the approval of the Non-Affiliated
Holders or the approval of the holders of the Convertible Shares, amend
or modify this Trust Agreement for the purposes of:
(a) adding to the covenants of any or all of the parties hereto
for the protection of the Non-Affiliated Holders and the
holders of the Convertible Shares hereunder and under the
Company's Articles;
(b) making such amendments or modifications not inconsistent with
this Trust Agreement as may be necessary or desirable with
respect to matters or questions which, in the opinion of the
Company Board of Directors and the Parent Board of Directors
and in the opinion of the Trustee, having in mind the
commercially reasonable interests of the Non-Affiliated
Holders and the holders of the Convertible Shares as a whole,
it may be expedient to make, provided that such boards of
directors and the Trustee shall be of the opinion that such
amendments and modifications will not be materially
prejudicial to the
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interests of the Non-Affiliated Holders and the holders of the
Convertible Shares as a whole; or
(c) making such changes or corrections which 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 Trustee and the Company
Board of Directors and the Parent Board of Directors shall be
of the opinion that such changes or corrections will not be
materially prejudicial to the interests of the Non-Affiliated
Holders and the holders of the Convertible Shares as a whole.
12.3 Meeting to Consider Amendments. The Company, at the request of the
Parent, shall call a meeting or meetings of the Non-Affiliated Holders
and the holders of the Convertible Shares for the purpose of
considering any proposed amendment or modification requiring approval
pursuant hereto. Any such meeting or meetings shall be called and held
in accordance with the Company's Articles, the Share Provisions and all
applicable laws.
12.4 Changes in Capital of Parent and the Company. At all times after the
occurrence of any event effected pursuant to Section 6.7 or Section 6.8
of this Trust Agreement, as a result of which either the Parent Common
Shares, the Convertible Shares or the Exchangeable Shares or any of
them are in any way changed, this Trust 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 the Parent Common Shares, the Convertible Shares or the
Exchangeable Shares or any of them are so changed and the parties
hereto shall execute and deliver a supplemental trust agreement giving
effect to and evidencing such necessary amendments and modifications.
12.5 Execution of Supplemental Trust Agreements. No amendment to or
modification or waiver of any of the provisions of this Trust Agreement
otherwise permitted hereunder shall be effective unless made in writing
and signed by all of the parties hereto. From time to time the Company,
Holdco, the Parent and the Trustee may, subject to the provisions of
these presents, and they shall, when so directed by these presents,
execute and deliver by their proper officers, trust agreements or other
instruments supplemental hereto, which thereafter shall form part
hereof, for any one or more of the following purposes:
(a) evidencing the succession of Parent Successors to the Parent
and the covenants of and obligations assumed by each such
Parent Successor in accordance with the provisions of Article
11 and the successor of any successor trustee in accordance
with the provisions of Article 10;
(b) making any additions to, deletions from or alterations of the
provisions of this Trust Agreement or the Voting Rights or the
Exchange Right which, in the opinion of the Trustee, will not
be prejudicial to the interests of the Non-Affiliated Holders
and the holders of the Convertible Shares as a whole or are in
the opinion of the Trustee necessary or advisable in order to
incorporate, reflect or comply with any legislation the
provisions of which apply to the Parent, Holdco, the Company,
the Trustee or this Trust Agreement; and
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(c) for any other purposes not inconsistent with the provisions of
this Trust Agreement, including without limitation to make or
evidence any amendment or modification to this Trust Agreement
as contemplated hereby, provided that, in the opinion of the
Trustee, the rights of the Trustee, the Non-Affiliated Holders
and the holders of the Convertible Shares as a whole will not
be prejudiced thereby.
ARTICLE 13
TERMINATION
13.1 Term. The Trust created by this Trust Agreement shall continue until
the earliest to occur of the following events:
(a) no Convertible Shares are outstanding and no outstanding
Exchangeable Shares are held by any Non-Affiliated Holder;
(b) each of the Company, Holdco and the Parent elects in writing
to terminate the Trust and such termination is approved by the
Non-Affiliated Holders of the Exchangeable Shares and the
holders of the Convertible Shares in accordance with Article
30.4 of the Share Provisions; and
(c) 21 years after the death of the last survivor of the
descendants of His Majesty King Xxxxxx VI of the United
Kingdom of Great Britain and Northern Ireland living on the
date of the creation of the Trust.
13.2 Survival of Agreement. This Trust Agreement shall survive any
termination of the Trust and shall continue until there are no
Convertible Shares outstanding and no Exchangeable Shares outstanding
held by any Non-Affiliated Holder; provided, however, that the
provisions of Articles 8 and 9 hereof and the representation contained
in Section 6.3(b) hereof shall survive any such termination of this
Trust Agreement.
ARTICLE 14
GENERAL
14.1 Severability. If any provision of this Trust Agreement is held to be
invalid, illegal or unenforceable, the validity, legality or
enforceability of the remainder of this Trust Agreement shall not in
any way be affected or impaired thereby and this Trust Agreement shall
be carried out as nearly as possible in accordance with its original
terms and conditions.
14.2 Enurement. This Trust Agreement shall be binding upon and enure to the
benefit of the parties hereto and their respective successors and
permitted assigns and to the benefit of the Non-Affiliated Holders.
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14.3 Notices to Parties. All notices and other communications between the
parties hereunder 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 such party as
shall be specified in like notice):
Raintree Resorts International, Inc.
00000 Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxx
X.X.X. 00000
Attention: Chairman
Telecopy: (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
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.
14.4 Notice of Holders. Any and all notices to be given and any documents to
be sent to any Non-Affiliated Holder or any holder of a Convertible
Share may be given or sent to the address of such holder shown on the
Company's register of security holders in any manner permitted by the
Company Act from time to time in force in respect of notices to
shareholders and shall be deemed to be received (if given or sent in
such manner) at the time specified in such Act, the provisions of which
Act shall apply mutatis mutandis to notices or documents as aforesaid
sent to such holders.
14.5 Risk of Payments by Post. Whenever payments are to be made or documents
are to be sent to any Non-Affiliated Holder or any holder of a
Convertible Share by the Trustee or by the Company, Holdco, the Parent
or by such Non-Affiliated Holder or any holder of a Convertible Share
to the Trustee or to the Parent, Holdco or the Company, the making of
such payment or sending of such document sent through the post shall be
at the risk of the Company, in the case of payments made or documents
sent by the Trustee or the Company or Holdco or the Parent, and shall
be at the risk of the Non-Affiliated Holder or holder of Convertible
Shares, in the case of payments made or documents sent by the
Non-Affiliated Holder or holder of Convertible Shares, as the case may
be.
14.6 Counterparts. This Trust Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
14.7 Jurisdiction. This Trust Agreement shall be construed and enforced in
accordance with the laws of the Province of British Columbia and the
laws of Canada applicable therein.
14.8 Attornment. The Parent agrees that any action or proceeding arising out
of or relating to this Trust Agreement may be instituted in the courts
of British Columbia, 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
agrees not to seek, and hereby waives, any review of the merits
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of any such judgment by the courts of any other jurisdiction and hereby
appoints the Company at its registered office in the Province of
British Columbia as its attorney for service of process.
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be
duly executed as of the date first above written.
RAINTREE RESORTS INTERNATIONAL, INC.
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
RAINTREE RESORTS INTERNATIONAL CANADA LTD.
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
RAINTREE RESORTS HOLDINGS ULC
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
RAINTREE RESORTS HOLDINGS ULC
(in its capacity as the Trustee)
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
- 32 -
