THIS SHARE EXCHANGE AND SHARE PURCHASE AGREEMENT is dated for reference the
28th day of June, 2002.
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AMONG:
XXXXXXX XXXXXXX RESOURCES LTD., a corporation incorporated under the laws
of the State of Nevada,
(the "Parent")
AND:
648311 B.C. Ltd. a corporation incorporated under the laws of the Province
of British Columbia,
(the "Purchaser")
AND:
MIND YOUR OWN SKIN PRODUCTS INC., a corporation incorporated under the laws
of the Province of British Columbia,
(the "Corporation");
AND:
ALL OF THE SHAREHOLDERS OF THE CORPORATION as more particularly described
on Schedule "A" attached hereto,
(individually a "Group 1 Shareholder" or "Group 2 Shareholder" and
collectively the "Shareholders").
W H E R E A S:
A. the Group 1 Shareholders own collectively approximately 98.4% of the issued
and outstanding shares of the Corporation (the "Group 1 Corporation
Shares") and the Group 2 Shareholders own the remaining issued and
outstanding shares of the Corporation (the "Group 2 Corporation Shares")
(collectively the "Corporation Shares");
B. the Parent owns all of the issued and outstanding shares in the capital
stock of the Purchaser;
C. the Purchaser desires to purchase all of the Group 1 Corporation's Shares
and the Group 1 Shareholders desire to sell all of the Group 1
Corporation's Shares to the Purchaser on the terms and conditions
hereinafter set forth;
D. the Parent desires to purchase all of the Group 2 Corporation Shares and
the Group 2 Shareholders desires to sell all of the Group 2 Corporation
Shares to the Parent on the terms and conditions hereinafter set forth;
E. the respective boards of directors of the Purchaser, Parent and Corporation
each deem it advisable and in the best interests of their respective
shareholders to combine their respective businesses by the Purchaser and
the Parent acquiring all of the shares in the capital stock of the
Corporation pursuant to the terms of this Agreement; and
F. the respective boards of directors of the Purchaser, Parent and Corporation
have approved and adopted this Agreement with respect to the transfer of
the Canadian Corporation Stock as a plan of reorganization under section
368(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code"),
and as a transfer of shares pursuant to section 85 of the Income Tax Act
(Canada) (the "Tax Act").
NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the foregoing
premises, the mutual representations, warranties, covenants and agreements
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I: DEFINITIONS
1.01 Definitions. The following terms, as used herein, have the following
meanings:
"Affiliate" means, with respect to any Person, any Person directly or indirectly
controlling, controlled by or under direct or indirect common control with such
other Person.
"Agreement" means this Share Exchange and Share Purchase Agreement by and among
the Purchaser, Parent, Corporation and Shareholders.
"Applicable Law" means, with respect to any Person, any United States (whether
federal, territorial, state or local), Canadian (whether federal, territorial,
provincial, municipal or local) or foreign statute, law, ordinance, rule,
administrative interpretation, regulation, order, writ, injunction, directive,
judgment, decree or other requirement, all as in effect as of the Closing, of
any Governmental Authority applicable to such Person or any of its Affiliates or
any of their respective properties, assets, officers, directors, employees,
consultants or agents (in connection with such officer's, director's,
employee's, consultant's or agent's activities on behalf of such Person or any
of its Affiliates).
"Associate" means with respect to any Person (a) any other Person of which such
Person is an officer or partner or is, directly or indirectly, the beneficial
owner of ten percent (10%) or more of any class of equity securities issued by
such other Person, (b) any trust or other estate in which such Person has a ten
percent (10%) or more beneficial interest or as to which such Person serves as
trustee or in a similar fiduciary capacity, and (c) any relative or spouse of
such Person, or any relative of such spouse who has the same home as such Person
or who is a director or officer of such Person or any Affiliate thereof.
"Business Day" means a day other than a Saturday, Sunday or other day on which
commercial banks in Vancouver, British Columbia are authorized or required by
law to close.
"Buying Group" means the Purchaser and the Parent.
"Buying Group Business" means the business as heretofore or currently conducted
by the Buying Group.
"Buying Group Contracts" means all contracts, agreements, options, leases,
licences, sales and purchase orders, commitments and other instruments of any
kind, whether written or oral, to which either the Purchaser or the Parent is a
party on the Closing Date.
"Corporation's Balance Sheet" means the consolidated balance sheet of the
Corporation dated December 31, 2001.
"Corporation Business" means the business as heretofore or currently conducted
by the Corporation .
"Corporation Contracts" means all contracts, agreements, options, leases,
licences, sales and purchase orders, commitments and other instruments of any
kind, whether written or oral, to which the Corporation, or any Shareholder on
behalf of the Corporation is a party on the Closing Date.
"Corporation Permitted Liens" means, with respect to the Corporation, (i) Liens
for Taxes or governmental assessments, charges or claims the payment of which is
not yet due, or for Taxes the validity of which is being contested in good faith
by appropriate proceedings; (ii) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, material men and other similar Persons and
other Liens imposed by Applicable Law incurred in the ordinary course of
business for sums not yet delinquent or being contested in good faith; (iii)
Liens relating to deposits made in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other types of social
security or to secure the performance of leases, trade contracts or other
similar agreements (iv) Liens and Corporation Encumbrances specifically
identified in the Corporation's Balance Sheet included in the Corporation
Financials; (v) Liens securing executory obligations under any lease that
constitute an "operating lease" under American GAAP and (vi) other Liens set
forth on Schedule "E" hereto; provided, however, that, with respect to each of
clauses (i) through (v), to the extent that any such encumbrance or Lien arose
prior to the date of the Corporation's Balance Sheet included in the
Corporation's Financials and relates to, or secures the payment of, a Liability
that is required to be accrued under American GAAP, such encumbrance or Lien
shall not be a Corporation Permitted Lien unless adequate accruals for such
Liability have been established therefor on such Corporation's Balance Sheet in
conformity with American GAAP.
"Corporation Premises" means those premises that have been occupied or used, or
are occupied or used, by the Corporation in connection with the Corporation
Business.
"Exchange and Voting Agreement" means the agreement in substantially the form
set out in Schedule "B" hereto to be entered into by the Parent, Purchaser and
the Trustee.
"Exchangeable Non-Voting Shares" means those 12,112,500 Class "A" exchangeable,
non-voting, participating common shares without par value in the capital stock
of the Purchaser, having those rights and terms set forth in the Exchange and
Voting Agreement and the Exchangeable Share Provisions, which will be issued to
the Shareholders in consideration for the purchase and sale of the
Group 1 Corporation Shares and allocated between the Shareholders as set out in
Schedule "A" hereto.
"Exchangeable Share Provisions" means those rights, restrictions, terms and
provisions pertaining to the Exchangeable Non-Voting Shares, as set forth in
Schedule "G" hereto, and as summarized in section 5.03 hereof.
"Governmental Authority" means any United States (whether federal, territorial,
state, municipal or local), Canadian (whether federal, territorial, provincial,
municipal or local) or foreign government, governmental authority,
quasi-governmental authority, instrumentality, court, government or
self-regulatory organization, commission, tribunal or organization or any
regulatory, administrative or other agency, or any political or other
subdivision, department or branch of any of the foregoing.
"Group 1 Shareholders" means those shareholders of the Corporation described in
Schedule A attached hereto.
"Group 2 Shareholders" means those shareholders of the Corporation described in
Schedule A attached hereto.
"GST" means all goods and services taxes, sales taxes levied by the federal
government of Canada, value added taxes or multi-stage taxes and all provincial
sales taxes integrated with such federal taxes, assessed, rated or charged upon
the Corporation.
"Interim Period" means the period from and including the date of this Agreement
to and including the Closing Date.
"Liability" means, with respect to any Person, any liability or obligation of
such Person of any kind, character or description, whether known or unknown,
absolute or contingent, accrued or unaccrued, liquidated or unliquidated,
secured or unsecured, joint or several, due or to become due, vested or
unvested, determined, determinable or otherwise and whether or not the same is
required to be accrued on the financial statements of such Person.
"Lien" means, with respect to any asset, any mortgage, assignment, trust or
deemed trust (whether contractual, statutory or otherwise arising), title defect
or objection, lien, pledge, charge, security interest, hypothecation,
restriction, encumbrance or charge of any kind in respect of such assets.
"Material Adverse Effect" means a change in, or effect on, the operations,
affairs, prospects, financial condition, results of operations, assets,
Liabilities, reserves or any other aspect of a party to this Agreement or to its
business that results in a material adverse effect on, or a material adverse
change in, any such aspect of the party or to its business.
"Parent's Balance Sheet" means the balance sheet of the Parent dated May 31,
2001.
"Parent Common Shares" means 12,115,500 post rollback common shares in the
capital of the Parent to be issued to the Trustee pursuant to paragraph 2.05
hereof, in consideration of subscription
proceeds from the Trustee of $0.0001 per share, having those rights and terms as
set forth in the Exchange and Voting Agreement.
"Parent Shares" means 225,000 post rollback common shares in the capital of the
Parent to be issued to the Group 2 Shareholders.
"Person" includes an individual, body corporate, partnership, company,
unincorporated syndicate or organization, trust, trustee, executor,
administrator and other legal representative.
"SEC" means the United States Securities and Exchange Commission.
"Shareholders" means collectively the Group 1 Shareholders and the Group 2
Shareholders.
"Subsidiary" means, with respect to any Person, (i) any corporation as to which
more than 10% of the outstanding shares having ordinary voting rights or power
(and excluding shares having voting rights only upon the occurrence of a
contingency unless and until such contingency occurs and such rights may be
exercised) is owned or controlled, directly or indirectly, by such Person and/or
by one or more of such Person's Subsidiaries, and (ii) any partnership, joint
venture or other similar relationship between such Person (or any Subsidiary
thereof) and any other Person (whether pursuant to a written agreement or
otherwise).
"Support Agreement" means that agreement between the Parent and the Purchaser,
in the form attached hereto as Schedule "H" hereto, whereby the Parent agrees to
make certain payments and deliveries to enable the Purchaser to comply with the
Exchangeable Share Provisions.
"Tax" means all taxes imposed of any nature including any United States (whether
federal, territorial, state or local), Canadian (whether federal, territorial,
provincial or local) or foreign income tax, alternative or add-on minimum tax,
profits or excess profits tax, franchise tax, gross income, adjusted gross
income or gross receipts tax, employment related tax (including employee
withholding or employer payroll tax or employer health tax), capital tax, real
or personal property tax or ad valorem tax, sales or use tax, excise tax, stamp
tax or duty, any withholding or back up withholding tax, value added tax, GST,
severance tax, prohibited tax, premiums tax, occupation tax, customs and import
duties, together with any interest or any penalty, addition to tax or additional
amount imposed by any Governmental Authority responsible for the imposition of
any such tax or in respect of or pursuant to any United States (whether federal,
territorial, state or local), Canadian (whether federal, territorial, provincial
or local) or other Applicable Law.
"Tax Return" means all returns, reports, forms or other information required to
be filed with respect to any Tax.
"Trustee" means the trustee or successor trustee designated under the Exchange
and Voting Agreement.
"33 Act" means the United States Securities Act of 1933 and all amendments
thereto.
"34 Act" means the United States Securities Act of 1934 and all amendments
thereto.
1.02 Currency Used. All references herein to dollars or the use of the symbol
"$" shall be deemed to refer to United States dollars unless such reference is
prefaced by "CDN" in which case the reference will be to Canadian dollars.
1.03 Canadian Generally Accepted Accounting Principles. Where the Canadian
Institute of Chartered Accountants or any successor thereto includes a statement
in its handbook or any successor thereto on a method or alternative methods of
accounting or on a standard or standards of auditing, such statement shall be
regarded as the only generally accepted accounting principle or principles or
generally accepted auditing standard or standards ("Canadian GAAP") applicable
to the circumstances that it covers, and references herein to "generally
accepted accounting principles" shall be interpreted accordingly. All accounting
and financial terms used herein with respect to the Corporation, unless
specifically provided to the contrary, shall be interpreted and applied in
accordance with Canadian GAAP.
1.04 American Generally Accepted Accounting Principles. Where the American
Institute of Certified Public Accountants or any successor thereto includes a
statement in its handbook or any successor thereto on a method or alternative
methods of accounting or on a standard or standards of auditing, such statement
shall be regarded as the only generally accepted accounting principle or
principles or generally accepted auditing standard or standards ("American
GAAP") applicable to the circumstances that it covers, and references herein to
"generally accepted accounting principles" shall be interpreted accordingly. All
accounting and financial terms used herein with respect to the Parent, unless
specifically provided to the contrary, shall be interpreted and applied in
accordance with American GAAP.
ARTICLE II: PURCHASE, SALE AND SUBSCRIPTION
2.01 Purchase of Group 1 Corporation Shares. On the terms and subject to the
conditions set forth herein, the Group 1 Shareholders hereby agree to sell,
transfer, convey, assign and deliver to the Purchaser, free and clear of all
Corporation Share Encumbrances (as defined in paragraph 3.01.1), and the
Purchaser hereby agrees to purchase, acquire and accept from the Group 1
Shareholders, all of the Group 1 Corporation Shares held by the Group 1
Shareholders. At Closing, the Group 1 Shareholders will deliver to the Purchaser
certificates evidencing all of the Group 1 Corporation Shares duly endorsed for
transfer and such other instruments as have been reasonably requested by the
Purchaser to transfer full legal and beneficial ownership of the Group 1
Corporation Shares to the Purchaser, free and clear of all Corporation Share
Encumbrances and the Corporation agrees to enter the Purchaser or the
Purchaser's nominee on the books of the Corporation as the holder of the Group 1
Corporation Shares and to issue one or more replacement share certificates
representing the Group 1 Corporation Shares to the Purchaser or the Purchaser's
nominee. The Purchaser shall pay the purchase price for the Group 1 Corporation
Shares in accordance with the terms of Sections 2.05 of this Agreement.
2.02 Purchase of Group 2 Corporation Shares. On the terms and subject to the
conditions set forth herein, the Group 2 Shareholders hereby agree to sell,
transfer, convey, assign and deliver to the Purchaser, free and clear of all
Corporation Share Encumbrances (as defined in paragraph 3.01.1), and the
Purchaser hereby agrees to purchase, acquire and accept from the Group 2
Shareholders, all of the Group 2 Corporation Shares held by the Group 2
Shareholders. At Closing, the Group 2 Shareholders will deliver to the Purchaser
certificates evidencing all of the Group 2 Corporation
Shares duly endorsed for transfer and such other instruments as have been
reasonably requested by the Purchaser to transfer full legal and beneficial
ownership of the Group 2 Corporation Shares to the Purchaser, free and clear of
all Corporation Share Encumbrances and the Corporation agrees to enter the
Purchaser or the Purchaser's nominee on the books of the Corporation as the
holder of the Group 2 Corporation Shares and to issue one or more replacement
share certificates representing the Group 2 Corporation Shares to the Purchaser
or the Purchaser's nominee. The Purchaser shall pay the purchase price for the
Group 2 Corporation Shares in accordance with the terms of Sections 2.05 of this
Agreement.
2.03 Subscription of Parent Common Shares. The Parent agrees to grant to each
Group 1 Shareholder:
1) such number of voting rights in the Parent as is equivalent to the number
of Exchangeable Non-Voting Shares held by each Group 1 Shareholder, as if
each Group 1 Shareholder held an equivalent number of Parent Common Shares,
and, subject to the remaining terms of this Agreement, which voting rights
will be exercisable by the Group 1 Shareholders through their holding
Exchangeable Non-Voting Shares in accordance with the Exchange and Voting
Agreement; and
2) the rights to exchange their Exchangeable Non-Voting Shares for Parent
Common Shares, such rights to be exercised in accordance with the terms of
the Exchange and Voting Agreement.
To ensure that the Purchaser and the Parent has sufficient common shares
available to issue in exchange for Exchangeable Non-Voting Shares, and as
security for its covenant to do so, the Parent agrees to issue the Parent Common
Shares to the Trustee, at or shortly following Closing, at the purchase price of
$0.0001 per share; such Parent Common Shares to be held in accordance with the
Exchange and Voting Agreement.
2.04 Closing. The closing (the "Closing") of the transactions contemplated by
this Agreement shall take place at the offices of Maitland & Company on such
date as the parties hereto may mutually agree in writing (the "Closing Date").
2.05 Payment of Purchase Price. At Closing the Purchaser will deliver to the
Group 1 Shareholders certificates representing the Exchangeable Non-Voting
Shares, all such Exchangeable Non-Voting Shares to be issued as fully paid and
non-assessable, and registered in the names of the Shareholders and in the
denominations set forth in Schedule "A" hereto. At Closing the Parent will issue
the Parent Shares to the Group 2 Shareholders as set forth in Schedule "A"
hereto such Parent Shares to be issued as fully paid and non-assessable, and
registered in the names of the Group 2 Shareholders and in the denominations set
forth in Schedule "A" hereto. On or shortly following the Closing, the Parent
will issue the Parent Common Shares to the Trustee, such Parent Common Shares to
be issued as fully paid and non-assessable, and registered in the name of the
Trustee in such denominations as the Trustee may request.
ARTICLE III: REPRESENTATIONS AND
WARRANTIES OF SHAREHOLDERS
As an inducement to the Buying Group to enter into this Agreement and to
consummate the transactions provided for herein, each Shareholder, as to
himself, herself or itself and as to such of the Corporation Shares owned by
him, her or it (and not as to any other Shareholder or to any of the Corporation
Shares owned by any other Shareholder) represents and warrants to the Buying
Group as follows and confirms that the Purchaser and the Parent are relying upon
the accuracy of each of such representations and warranties in connection with
the purchase of the Corporation Shares and the completion of the transactions
set out herein:
3.01 Representations Regarding the Corporation Shares.
3.01.1 Each Shareholder has good and marketable title to his respective holdings
in the Corporation Shares, free and clear of any and all covenants, conditions,
restrictions, voting trust arrangements, rights of first refusal, options, Liens
and adverse claims and rights whatsoever (collectively, the "Corporation Share
Encumbrances"), and on the Closing Date, the Shareholders will deliver to the
Purchaser or the Parent as the case may be, good and marketable title to the
Corporation Shares free and clear of any and all Corporation Share Encumbrances;
3.01.2 Each Group 2 Shareholder has the full right, power and authority to enter
into this Agreement and each Group 2 Shareholder has the full right, power and
authority to transfer, convey and sell to the Parent at the Closing his
respective holdings of the Corporation Shares sold to the Parent by the Group 2
Shareholders hereunder, and upon consummation of the purchase, the Parent will
acquire from the Group 2 Shareholders good and marketable title to the
Corporation Shares sold to the Parent by the Group 2 Shareholders, free and
clear of all Corporation Share Encumbrances; and
3.01.3 Each Group 1 Shareholder has the full right, power and authority to enter
into this Agreement and each Group 1 Shareholder has the full right, power and
authority to transfer, convey and sell to the Purchaser at the Closing his
respective holdings of the Corporation Shares sold to the Purchaser by the Group
1 Shareholders hereunder, and upon consummation of the purchase, the Purchaser
will acquire from the Group 1 Shareholders good and marketable title to the
Corporation Shares sold to the Purchaser by the Group 1 Shareholders, free and
clear of all Corporation Share Encumbrances; and
3.01.4 No Shareholder is a party to, subject to or bound by any agreement,
judgment, order, writ, prohibition, injunction or decree of any court or other
Governmental Authority that would prevent the execution or delivery to the
Purchaser of this Agreement by any Shareholder, the transfer, conveyance and
sale of the Corporation Shares sold by Shareholder to the Purchaser pursuant to
the terms hereof, or the consummation of the transactions under this Agreement
in accordance with the terms of this Agreement.
3.02 Authorization. The execution, delivery and performance of this Agreement,
and the consummation of the transactions provided for herein, by each
Shareholder are within the respective powers of each Shareholder and have been
duly authorized by all necessary action on the part of each Shareholder,
respectively. This Agreement has been duly and validly executed by each
Shareholder and constitutes a legal, valid and binding agreement of each
Shareholder, respectively, enforceable against each Shareholder in accordance
with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights and subject to general principles of equity.
3.03 Non-Contravention. The execution, delivery and performance of this
Agreement, and the consummation of the transactions provided for herein, by each
Shareholder, do not (a) contravene or conflict with or constitute a material
violation of any provision of any Applicable Law binding upon or applicable to
any Shareholder or the Corporation Shares or (b) result in the creation or
imposition of any Lien.
ARTICLE IV: REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
As an inducement to the Buying Group to enter into this Agreement and to
consummate the transactions provided for herein, the Corporation, represents and
warrants to the Buying Group as follows:
4.01 Existence and Power. The Corporation is a corporation duly incorporated,
organized and validly existing under the laws of the Province of British
Columbia and has all corporate power and all governmental licences,
authorizations, permits, consents and approvals required to carry on the
Corporation Business as now conducted and to own and operate the Corporation
Business as now owned and operated. The Corporation is not required to be
qualified to conduct business in any jurisdiction where the failure to be so
qualified, whether individually or in the aggregate, would have a Material
Adverse Effect. No Corporation proceedings have been taken or authorized by the
Corporation or any Shareholder or, to the knowledge of the Corporation, by any
other Person, with respect to the bankruptcy, insolvency, liquidation,
dissolution or winding-up of the Corporation or with respect to any
amalgamation, merger, consolidation, arrangement or reorganization relating to
the Corporation.
4.02 Authorization. The execution, delivery and performance by the Corporation
of this Agreement and the consummation thereby of the transactions provided for
herein are within the Corporation's powers and have been duly authorized by all
necessary action on its part. This Agreement has been duly and validly executed
by the Corporation and constitutes a legal, valid and binding agreement of the
Corporation enforceable against it in accordance with its terms, except as may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights and subject to general principles of
equity.
4.03 Capital Stock.
4.03.1 At the Closing the authorized capital stock of the Corporation will
consists solely of 75,000,000 voting common shares without par value, of which
12,337,500 common shares will be issued and outstanding at the Closing and are
held by the Shareholders (the "Corporation Shares").
4.03.2 All such issued and outstanding Corporation Shares have been duly and
validly authorized and issued and are validly outstanding, fully paid and
non-assessable. The Corporation Shares represent all of the issued and
outstanding shares of the Corporation. The Corporation does not hold any of the
issued and outstanding Corporation Shares in the treasury of the Corporation,
and there are not outstanding (i) any options, warrants, rights of first refusal
or other rights to purchase any shares of the Corporation except as disclosed in
Schedule "H" hereto, (ii) any securities convertible into or
exchangeable for such shares or (iii) any other commitments of any kind for the
issuance of additional shares of the Corporation or options, warrants or other
securities of the Corporation.
4.04 Subsidiaries. The Corporation has no Subsidiary.
4.05 Governmental Authorization. The execution, delivery and performance by the
Corporation of this Agreement requires no action by, consent or approval of, or
filing with, any Governmental Authority other than as expressly referred to in
this Agreement.
4.06 Non-Contravention. The execution, delivery and performance of this
Agreement by the Corporation, and the consummation by it of the transactions
provided for herein, do not and will not (a) contravene or conflict with the
articles or bylaws of the Corporation; (b) contravene or conflict with or
constitute a material violation of any provision of any Applicable Law binding
upon or applicable to the Corporation, the Corporation Business or the
Corporation Shares and would not, individually or in the aggregate have a
Material Adverse Effect; (c) constitute a default under or give rise to any
right of termination, cancellation or acceleration of, or to a loss of any
benefit to which the Corporation is entitled, under any Corporation Contract to
which the Corporation is a party or any permit or similar authorization relating
to the Corporation, the Corporation Business or the Corporation Shares by which
the Corporation, the Corporation Business or the Corporation Shares may be bound
or affected; or (d) result in the creation or imposition of any Lien.
4.07 Financial Statements: Undisclosed Liabilities.
4.07.1 Attached hereto as Schedule "C" are true and complete copies of the
Corporation's Balance Sheet as of December 31, 2001 and the related consolidated
statements of loss and deficit and cash flows (the "Corporation's Financials").
4.07.2 The Corporation's Financials: (i) have been prepared on a consistent
basis and are based on the books and records of the Corporation in accordance
with American GAAP and present fairly the financial position, results of
operations and statements of changes in the Corporation's financial position as
of the dates indicated or the periods indicated; (ii) contain and reflect all
necessary adjustments and accruals for a fair presentation of its financial
position and the results of its operations for the periods covered by said
financial statements; (iii) contain and reflect adequate provisions for all
reasonably anticipated Liabilities (including Taxes) with respect to the periods
then ended and all prior periods; and (iv) with respect to the Corporation
Contracts and commitments for the sale of goods or the provision of services by
the Corporation, contain and reflect adequate reserves for all reasonably
anticipated material losses and costs and expenses in excess of expected
receipts.
4.07.3 To the best of the knowledge of the Corporation, there are no Liabilities
of the Corporation other than: (i) any Liabilities accrued as Liabilities on the
Corporation's Balance Sheet; (ii) Liabilities incurred since the date of the
Corporation's Balance Sheet that do not, and could not, individually or in the
aggregate have a Material Adverse Effect; and (iii) other Liabilities disclosed
in this Agreement or in any schedules attached hereto.
4.08 Absence of Certain Changes. Since December 31, 2001 the Corporation
Business has been conducted in the ordinary course, and there has not been:
(a) any event, occurrence, state of circumstances, or facts or change in the
Corporation or in the Corporation Business that has had, or which the
Corporation, after reasonable inquiry, expect to have, either individually
or in the aggregate, a Material Adverse Effect;
(b) (i) any change in any Liabilities of the Corporation that has had, or which
the Corporation may, after reasonable inquiry, expect to have, a Material
Adverse Effect or (ii) any incurrence, assumption or guarantee of any
indebtedness for borrowed money by the Corporation in connection with the
Corporation Business or otherwise;
(c) any (i) payments by the Corporation in respect of any indebtedness of the
Corporation for borrowed money or in satisfaction of any Liabilities of the
Corporation related to the Corporation Business, other than in the ordinary
course of business or the guarantee by the Corporation of any of the
indebtedness of any other Person or (ii) creation, assumption or sufferance
of (whether by action or omission) the existence of any Lien on any assets
reflected on the Corporation's Balance Sheet, other than Corporation
Permitted Liens;
(d) any transaction or commitment made, or any Contract entered into, by the
Corporation or any waiver, amendment, termination or cancellation of any of
the Corporation Contracts by the Corporation, or any relinquishment of any
rights thereunder by the Corporation or of any other right or debt owed to
the Corporation, other than, in each such case, actions taken in the
ordinary course of business consistent with past practice;
(e) any (i) grant of any severance, continuation or termination pay to any
director, officer, stockholder or employee of the Corporation or any
Affiliate of the Corporation, (ii) entering into of any employment,
deferred compensation or other similar agreement (or any amendment to any
such existing agreement) with any director, officer, stockholder or
employee of the Corporation or any Affiliate of the Corporation, (iii)
increase in benefits payable or potentially payable under any severance,
continuation or termination pay policies or employment agreements with any
director, officer, stockholder or employee of the Corporation or any
Affiliate of the Corporation, (iv) increase in compensation, bonus or other
benefits payable or potentially payable to directors, officers,
stockholders or employees of the Corporation or any Affiliate of the
Corporation other than in the normal course of business, (v) change in the
terms of any bonus, pension, insurance, health or other benefit plan of the
Corporation or (vi) representation of the Corporation to any employee or
former employee of the Corporation that the Purchaser promised to continue
any Corporation benefit plan after the Closing Date,
(f) any change by the Corporation in its accounting principles, methods or
practices or in the manner it keeps its books and records;
(g) any distribution, dividend, bonus, management fee or other payment by the
Corporation to any officer, director, stockholder or Affiliate of the
Corporation or any of their respective Affiliates or Associates; or
(h) any (i) material single capital expenditure or commitment, or any group of
related capital expenditures or commitments, or (ii) sale, assignment,
transfer, lease or other disposition
of or agreement to sell, assign, transfer, lease or otherwise dispose of
any asset or property other than in the ordinary course of business.
4.09 Properties; Corporation Material Leases; Tangible Assets.
4.09.1 The Corporation does not own any real property.
4.09.2 The Corporation holds title to its properties and assets free and clear
of all Liens, adverse claims, easements, rights of way, servitudes, zoning or
building restrictions or any other rights of others or other adverse interests
of any kind, including leases, chattel mortgages, conditional sales contracts,
collateral security arrangements and other title or interest retention
arrangements (collectively, "Corporation Encumbrances"), except Corporation
Permitted Liens.
4.09.3 All tangible properties and assets reflected on the Corporation's Balance
Sheet are in all material respects fit for the purposes for which they are used
and are in good operating condition and repair and are adequate for the uses to
which they are put, and no material properties or assets necessary for the
conduct of the Corporation Business in substantially the same manner as the
Corporation Business has heretofore been conducted are in need of replacement,
maintenance or repair except for routine replacement, maintenance and repair.
4.10 Affiliates. Other than as disclosed herein and the Company's obligations to
Shield-Tech, there are no Corporation Contracts which have been entered into
within the past two years or are currently in force and effect between the
Corporation and any Shareholder, or any Affiliate or Associate of any
Shareholder. The Corporation is not indebted to any Shareholder.
4.11 Litigation. There are no material proceedings pending or, to the knowledge
of the Corporation, threatened against or affecting the Corporation, or the
Corporation Business or that seeks to prevent, enjoin, alter or delay the
transactions contemplated by this Agreement and (ii) there is no existing order,
judgment or decree of any Governmental Authority naming the Corporation as an
affected party which has not been paid or discharged in full.
4.12 Material Contracts. All Corporation Contracts are legal, valid and binding
obligations of the Corporation and each other Person who is a party thereto,
enforceable against the Corporation and each such Person in accordance with its
terms, and none are subject to any material default thereunder.
4.13 Required Consents. There are no governmental or other registrations,
filings, applications, notices, transfers, consents, approvals, orders,
qualifications or waivers required under Applicable Law or otherwise required to
be obtained or made with any Governmental Authority to be obtained by the
Corporation, or any Shareholder by virtue of the execution and delivery of this
Agreement and the consummation of the transactions provided for herein for any
reason; nor are there any Corporation Contracts with respect to which the
consent of the other party or parties thereto must be obtained by the
Corporation, or any Shareholder by virtue of the execution and delivery of this
Agreement and the consummation of the transactions provided for herein (the
"Required Consents").
4.14 Corporation Intellectual Property.
4.14.1 Schedule "F" sets forth a complete and correct list of each patent,
patent application and invention, trademark, tradename, trademark or tradename
registration or application, copyright or copyright registration or application
for copyright registration, and each licence or licensing agreement, for any of
the foregoing relating to the Corporation Business as conducted by the
Corporation, or held by the Corporation (the "Corporation Intellectual Property
Rights"). Corporation Intellectual Property Rights also include any trade
secrets that are material to the conduct of the Corporation Business in the
manner that the Corporation Business has heretofore been conducted.
4.14.2 The Corporation has not during the three years preceding the date of this
Agreement been a party to any proceeding, nor to the knowledge of the
Corporation, is any proceeding threatened as to which there is a reasonable
possibility of a determination adverse to the Corporation, involving a claim of
infringement by any Person (including any Governmental Authority) of any
Corporation Intellectual Property Right. No Corporation Intellectual Property
Right is subject to any outstanding order, judgment, decree, stipulation or
agreement restricting the use thereof by the Corporation or restricting the
licensing thereof by the Corporation to any Person. The Corporation has no
knowledge that would cause such Person to believe that the use of the
Corporation Intellectual Property Rights or the conduct of the Corporation
Business conflicts with, infringes upon or violates any patent, patent licence,
patent application, trademark, tradename, trademark or tradename registration,
copyright, copyright registration, service xxxx, brand xxxx or brand name or any
pending application relating thereto, or any trade secret, know-how, programs or
processes, or any similar rights, of any Person.
4.14.3 To the knowledge of the Corporation, the Corporation owns the entire
right, title and interest in, to and under, or has acquired an exclusive licence
to use, any and all patents, trademarks, trade names, brand names and copyrights
that are material to the conduct of the Corporation Business in the manner that
the Corporation Business has heretofore, been conducted. The Corporation
Intellectual Property Rights are in full force and effect and have not been used
or enforced or failed to be used or enforced in a manner that would result in
the abandonment, cancellation or unenforceability of any of the Corporation
Intellectual Property Rights. All registrations and filings necessary to
preserve the rights of the Corporation in and to the Corporation Intellectual
Property Rights have been made.
4.15 Tax Matters.
4.15.1 The Corporation has prepared and filed all Tax Returns on time with all
appropriate Governmental Authorities which were required to be filed on or prior
to the Closing Date. Each such Tax Return was correct and complete. True copies
of all Tax Returns prepared and filed by the Corporation during the past three
years and that the Purchaser has requested have been given to the Purchaser on
or before the date of this Agreement.
4.15.2 The Corporation has paid all Taxes due and payable by it and has paid all
assessments and reassessments it has received in respect of Taxes.
4.15.3 The Corporation has withheld from each payment made to any of its present
or former employees, officers and directors, and to all persons who are
non-residents of Canada for the purposes of the Income Tax Act (Canada) all
amounts required by Applicable Law and has remitted
such withheld amounts within the prescribed periods to the appropriate
Governmental Authority. The Corporation has remitted all Canada Pension Plan
contributions, employment insurance premiums, employer health taxes and other
Taxes payable by it in respect of its employees and has remitted such amounts to
the proper Governmental Authority within the time required by Applicable Law.
The Corporation has charged, collected and remitted on a timely basis all Taxes
as required by Applicable Law on any sale, supply or delivery whatsoever, made
by the Corporation.
4.15.4 The Corporation Business is the only business ever conducted by the
Corporation. The non-capital losses (as defined in the Tax Act and any
applicable provincial taxing statute) were incurred by the Corporation only in
carrying on the Corporation Business. The Corporation is not prevented by virtue
of any amalgamation or dissolution from carrying back against income earned by
it prior to the Closing Date, any losses incurred by it after the Closing Date.
4.15.5 The Corporation has paid all Taxes imposed by applicable legislation in
the province of British Columbia on the acquisition of its tangible personal
property as defined in applicable legislation in the province of British
Columbia, and none of its tangible personal property has been transferred at any
time on a tax-exempt basis under applicable legislation of the Province of
British Columbia or any predecessor legislation thereof. The foregoing is
accurate, mutatis mutandis, with respect to all sales or transfer Taxes imposed
under comparable legislation of other provinces.
4.16 Securities Legislation. The Corporation is a private issuer within the
meaning of the Securities Act (British Columbia) and the sale of the Corporation
Shares by the Shareholders to the Purchaser is made in compliance with the
exempt takeover-bid provisions of such Act.
4.17 Full Disclosure. The information contained in the documents, certificates
and written statements (including this Agreement and the schedules and exhibits
hereto) furnished to the Purchaser by or on behalf of the Corporation with
respect to the Corporation (including the Corporation Business and the results
of operations, financial condition and prospects of the Corporation) for use in
connection with this Agreement or the transactions contemplated by this
Agreement is true and complete in all material respects and does not, to the
best of the knowledge of the Corporation after conducting an inquiry which a
reasonably prudent person would make under the circumstances, omit to state any
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. There is no fact known
to the Corporation the Corporation that has not been disclosed to the Purchaser
by the Corporation in writing that has had a Material Adverse Effect on or, so
far as the Corporation can now foresee, could be reasonably likely to have a
Material Adverse Effect on the Corporation (including the Corporation Business
and the results of operations, financial condition or prospects of the
Corporation).
ARTICLE V: REPRESENTATIONS AND WARRANTIES OF THE BUYING GROUP
As an inducement to the Corporation and each Shareholder to enter into this
Agreement and to consummate the transactions provided for herein, the Purchaser
and the Parent, jointly and severally, represent and warrant to the Corporation
and each Shareholder that:
5.01 Existence and Power. Each of the Purchaser and the Parent is a corporation
duly incorporated, organized and validly existing under the laws of the Province
of British Columbia and
the State of Nevada respectively and each has all corporate power and all
governmental licences, authorizations, permits, consents and approvals required
to carry on the Buying Group Business as now conducted and to own and operate
their respective businesses as now owned and operated. The Purchaser and the
Parent are not required to be qualified to conduct business in any jurisdiction
where the failure to be so qualified, whether individually or in the aggregate,
would have a Material Adverse Effect. No proceedings have been taken or
authorized by the Purchaser or the Parent or, to the knowledge of the Purchaser
or the Parent, by any other Person, with respect to the bankruptcy, insolvency,
liquidation, dissolution or winding-up of the Purchaser or the Parent or with
respect to any amalgamation, merger, consolidation, arrangement or
reorganization relating to the Purchaser or the Parent.
5.02 Authorization. The execution, delivery and performance by each of the
Purchaser and the Parent of this Agreement and the consummation thereby of the
transactions provided for herein are within the powers of the Purchaser and the
Parent and have been duly authorized by all necessary action on their part. This
Agreement has been duly and validly executed by each of the Purchaser and the
Parent and constitutes a legal, valid and binding agreement of the Purchaser and
the Parent enforceable against them in accordance with its terms, except as may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights and subject to general principles of
equity.
5.03 Capital Stock of the Purchaser.
5.03.1 The authorized capital stock of the Purchaser consists of 10,000 common
shares no par value of which one common share is issued and outstanding on the
date hereof to and in the name of the Parent and 20,000,000 Exchangeable
Non-Voting Shares with no par value of which no shares are issued and
outstanding. Each Exchangeable Non-Voting Share shall:
(a) be non-voting as to matters concerning the Purchaser (such that all voting
shares of the Purchaser will be and remain held by the Parent); however, as
stated above in paragraph 2.03, the holder of Exchangeable Non-Voting
Shares will be entitled to voting rights in the Parent as is equivalent to
the number of Exchangeable Non-Voting Shares held by each Shareholder as if
each Shareholder held an equivalent number of Parent Common Shares;
(b) entitle the holder thereof (the "Holder") to dividend rights equal, after
conversion into Canadian dollars based on the Canadian/U.S. exchange rate
in effect on the record date thereof, to the per share dividend rights of
Parent Common Shares;
(c) entitle the Holder, on a liquidation of the Purchaser, to receive in
exchange for each Exchangeable Non-Voting Share one Parent Common Shares
for a period ending on the twenty-fifth anniversary of the Closing Date;
and
(d) entitle the Holder, at his election from time to time for a period ending
on the twenty-fifth anniversary of the Closing Date, upon 30 days' written
notice given by such Holder to the Purchaser, to require the Purchaser to
redeem any or all Exchangeable Non-Voting Shares and to exchange therefor,
on a share for share basis, Parent Common Shares (the "Right of
Retraction"),
5.03.2 The Parent and the Purchaser shall be entitled to deduct and withhold
from the consideration otherwise payable to any Holder of Exchangeable
Non-Voting Shares, including any dividend payments in respect of the
Exchangeable Non-Voting Shares, such amount as the Parent or the Purchaser is
required or permitted to deduct and withhold with respect to such payment under
the United States Internal Revenue Code, the Income Tax Act (Canada) or any
provision of state, provincial, local or foreign tax law. The Parent and the
Purchaser shall not initially withhold any United States Tax on dividends paid
on the Exchangeable Non-Voting Shares. However, if any United States taxing
authority determines that the Parent or the Purchaser is liable for United
States withholding Tax on dividends paid to the Holders on the Exchangeable
Non-Voting Shares, the Purchaser shall be entitled to reduce the amount of any
future dividends to be paid to the Holders by such withholding obligation. To
the extent that amounts are so withheld, such withheld amounts shall be treated
for all purposes hereof as having been paid to the Holder of Exchangeable
Non-Voting Shares in respect of which such deduction and withholding was made;
provided, however, that such withheld amounts are actually remitted to the
appropriate taxing authority. To the extent that the amount so required or
permitted to be deducted or withheld from any payment to a Holder exceeds the
cash portion of the consideration otherwise payable to the Holders, the Parent
upon at least ten (10) days' prior written notice to such Holder, is hereby
authorized to sell or otherwise dispose of at fair market value such portion of
such non-cash consideration otherwise payable to the Holder as is necessary to
provide sufficient funds to the Parent in order to enable it to comply with such
deduction or withholding requirement and the Parent shall give an accounting to
the Holder with respect thereof and any balance of such proceeds of sale.
5.03.3 There are not outstanding (i) any options, warrants, rights of first
refusal or other rights to purchase any shares of the Purchaser, (ii) any
securities convertible into or exchangeable for such shares or (iii) any other
commitments of any kind for the issuance of additional shares of the Purchaser
or options, warrants or other securities of the Purchaser.
5.04 Capital Stock of the Parent.
5.04.1 The authorized capital stock of the Parent consists solely of 50,000,000
common shares, $.001 par value per share ("Parent Common Shares") of which
2,708,879 Parent Common Shares will be issued and outstanding on the Closing
Date.
5.04.2 There are not outstanding (i) any options, warrants, rights of first
refusal or other rights to purchase any shares of the Parent, (ii) any
securities convertible into or exchangeable for such shares or (iii) any other
commitments of any kind for the issuance of additional shares of the Parent or
options, warrants or other securities of the Parent.
5.05 General Provisions of the Capital of the Purchaser and the Parent.
5.05.1 All of the issued and outstanding shares in the respective capital stocks
of the Purchaser and the Parent have been duly and validly authorized and issued
and are validly outstanding, fully paid and non-assessable. The Purchaser does
not hold any of the issued and outstanding shares in the treasury of the
Purchaser or the Parent, the Parent does not hold any of the issued and
outstanding shares in the treasury of the Parent and there are not outstanding
(i) any options, warrants, rights of first refusal or other rights to purchase
any shares of the Purchaser or the Parent, (ii) any securities convertible into
or exchangeable for such shares or (iii) any other commitments of any kind for
the
issuance of additional shares of the Purchaser or Parent or options, warrants or
other securities of the Purchaser or Parent other than as disclosed in Article
5.03.1 herein.
5.05.2 All of the Exchangeable Non-Voting Shares, the Parent Common Shares and
the Parent Shares which will be issued hereunder will be fully paid and
non-assessable, subject, if applicable, to such terms and provisions as set
forth in the Exchange and Voting Agreement, and the Purchaser and Parent's
articles of incorporation and the Directors Resolutions relating to the issuance
of the Parent Common Shares and Parent Shares, as applicable, and all such
shares will be issued free and clear of all Liens, charges, encumbrances and
trading restrictions other than as may be imposed by Applicable Law.
5.06 Subsidiaries. The Purchaser has no Subsidiaries and the Parent has no
Subsidiaries other than the Purchaser.
5.07 Governmental Authorization. The execution, delivery and performance by the
Buying Group of this Agreement requires no action by, consent or approval of, or
filing with, any Governmental Authority other than as expressly referred to in
this Agreement.
5.08 Non-Contravention. The execution, delivery and performance of this
Agreement by the Buying Group, and the consummation by it of the transactions
provided for herein, do not and will not (a) contravene or conflict with the
respective articles or bylaws of the Buying Group; (b) contravene or conflict
with or constitute a material violation of any provision of any Applicable Law
binding upon or applicable to the Buying Group, the Buying Group Business or the
outstanding shares in their respective capital stocks and would not,
individually or in the aggregate have a Material Adverse Effect; (c) constitute
a default under or give rise to any right of termination, cancellation or
acceleration of, or to a loss of any benefit to which the Purchaser or the
Parent are entitled, under any Buying Group Contract to which the Purchaser or
the Parent is a party or any Permit or similar authorization relating to the
Purchaser or Parent, the Buying Group Business or the outstanding shares in
their respective capital stocks may be bound or affected; or (d) result in the
creation or imposition of any Lien.
5.09 Financial Statements: Undisclosed Liabilities.
5.09.1 Attached hereto as Schedule "D" are true and complete copies of the
Parent's Balance Sheet, as of May 31, 2001, and the related statements of
operations, stockholders' equity (deficit) and cash flows for the year then
ended (collectively, the "Parent's Financials").
5.09.2 The Parent's Financials: (i) have been prepared on a consistent basis and
are based on the books and records of the Parent in accordance with American
GAAP and present fairly the financial position, results of operations and
statements of changes in the Parent's financial position as of the dates
indicated or the periods indicated; (ii) contain and reflect all necessary
adjustments and accruals for a fair presentation of its financial position and
the results of its operations for the periods covered by said financial
statements; (iii) contain and reflect adequate provisions for all reasonably
anticipated liabilities (including Taxes) with respect to the periods then ended
and all prior periods; and (iv) with respect to Buying Group Contracts and
commitments for the sale of goods or the provision of services by the Parent,
contain and reflect adequate reserves for all reasonably anticipated material
losses and costs and expenses in excess of expected receipts.
5.09.3 To the best of the knowledge of the Buying Group, there are no
Liabilities of the Buying Group other than: (i) any Liabilities accrued as
Liabilities on the Parent's Balance Sheet; (ii) Liabilities incurred since the
date of the Parent's Balance Sheet that do not, and could not, individually or
in the aggregate have a Material Adverse Effect; (iii) other Liabilities
disclosed in this Agreement or in any schedules attached hereto; and (iv) the
Tax on reserves.
5.10 Absence of Certain Changes. Since May 31, 2001, the Buying Group Business
has been conducted in the ordinary course, and there has not been:
(a) any event, occurrence, state of circumstances, or facts or change in the
Purchaser or the Parent or in the Buying Group Business that has had, or
which the Purchaser or the Parent, expect to have, either individually or
in the aggregate, a Material Adverse Effect;
(b) (i) any change in any Liabilities of the Purchaser or the Parent that has
had, or which the Purchaser or the Parent expect to have, a Material
Adverse Effect or (ii) any incurrence, assumption or guarantee of any
indebtedness for borrowed money by the Purchaser or the Parent in
connection with the Buying Group Business or otherwise;
(c) any (i) payments by the Purchaser or Parent in respect of any indebtedness
of the Purchaser or Parent for borrowed money or in satisfaction of any
Liabilities of the Purchaser or Parent related to the Buying Group
Business, other than in the ordinary course of business or the guarantee by
the Purchaser or the Parent of any of the indebtedness of any other Person
or (ii) creation, assumption or sufferance of (whether by action or
omission) the existence of any Lien on any assets reflected on the Parent's
Balance Sheet, other than Buying Group Permitted Liens;
(d) any transaction or commitment made, or any Contract entered into, by the
Buying Group, any waiver, amendment, termination or cancellation of any
Contract by the Buying Group, or any relinquishment of any rights
thereunder by the Buying Group or of any other right or debt owed to the
Buying Group, other than, in each such case, actions taken in the ordinary
course of business consistent with past practice;
(e) any (i) grant of any severance, continuation or termination pay to any
director, officer, stockholder or employee of the Buying Group or any
Affiliate of the Buying Group, (ii) entering into of any employment,
deferred compensation or other similar agreement (or any amendment to any
such existing agreement) with any director, officer, stockholder or
employee of the Buying Group or any Affiliate of the Buying Group, (iii)
increase in benefits payable or potentially payable under any severance,
continuation or termination pay policies or employment agreements with any
director, officer, stockholder or employee of the Buying Group or any
Affiliate of the Buying Group, (iv) increase in compensation, bonus or
other benefits payable or potentially payable to directors, officers,
stockholders or employees of the Buying Group or any Affiliate of the
Buying Group, (v) change in the terms of any bonus, pension, insurance,
health or other benefit plan of the Buying Group or (vi) representation of
the Buying Group to any employee or former employee of the Buying Group
that the Buying Group promised to continue any benefit plan after the
Closing Date,
(f) any change by the Buying Group in its accounting principles, methods or
practices or in the manner it keeps its books and records;
(g) any distribution, dividend, bonus, management fee or other payment by the
Buying Group to any of their respective officers, directors, stockholders
or Affiliates of the Buying Group or any of their respective Affiliates or
Associates; and
(h) any (i) material single capital expenditure or commitment, or any group of
related capital expenditures or commitments by either the Purchaser or the
Parent or (ii) material sale, assignment, transfer, lease or other
disposition of or agreement to sell, assign, transfer, lease or otherwise
dispose of any asset or property by either of the Purchaser or the Parent
other than in the ordinary course of business.
5.11 Properties; Material Leases; Tangible Assets. Neither the Purchaser nor the
Parent own or lease any real property or material assets.
5.12 Affiliates. There are no contracts between either the Parent or Purchaser
and any of its shareholders, or any Affiliate or Associate of any of its
shareholders. There is no indebtedness of either the Parent or the Purchaser to
any of its shareholders, or to any Affiliate or Associate of any of its
shareholders.
5.13 Litigation. There is no proceeding pending or, to the knowledge of the
Buying Group, threatened against or affecting the Buying Group or the Buying
Group Business or that seeks to prevent, enjoin, alter or delay the transactions
contemplated by this Agreement, and there is no existing order, judgment or
decree of any Governmental Authority naming either the Purchaser or the Parent
as an affected party which has not been paid or discharged in full.
5.14 Material Contracts. The Buying Group is not party to any Buying Group
Contract other than as specified herein.
5.15 Compliance with Applicable Laws. The operation of the Buying Group Business
(i) has not violated or infringed, except for violations or infringements that
have been cured and the prior existence of which could not, individually or in
the aggregate, reasonably be expected to have an adverse effect on either the
Purchaser or the Parent and (ii) does not in any material respect violate or
infringe any Applicable Law, the terms of any Permit or any order, writ,
injunction or decree of any Governmental Authority including but not limited to,
the 33 Act, the 34 Act, the Rules and Regulations of the SEC, or the Securities
Laws and Regulations of any state. The Parent is not an investment company as
defined in, or otherwise subject to regulation under, the Investment Company Act
of 1940. The Parent is required to file reports pursuant to Section 12(g) of the
34 Act and is now and as of the Closing Date will be current in its filings.
5.16 Buying Group Employment Agreements; and Employee Benefits.
5.16.1 There are no employment, consulting, severance pay, continuation pay,
termination pay, indemnification agreements, collective agreements, employee
benefit plans or other similar agreements of any nature whatsoever affecting
either the Purchaser or the Parent.
5.16.2 The Buying Group and its Affiliates have complied and are currently
complying, in respect of all employees of the Buying Group and its Affiliates,
with all Applicable Laws respecting employment and employment practices and the
protection of the health and safety of employees, except for such instances
which are not, in the aggregate, material.
5.17 Intellectual Property. The Buying Group has no interest in any patent,
patent application and invention, trademark, trade name, trademark or trade name
registration or application, copyright or copyright registration or application
for copyright registration.
5.18 Tax Matters.
5.18.1 Except as disclosed in the Parent's Financials, the Purchaser and the
Parent have prepared and filed all Tax Returns on time with all appropriate
Governmental Authorities which were required to be filed on or prior to the
Closing Date. Each such Tax Return was correct and complete.
5.18.2 The Purchaser is not a registrant for the purposes of the goods and
services tax provided for under the Tax Act.
5.18.3 The Purchaser is a taxable Canadian Corporation, as that term is defined
in the Tax Act.
5.18.4 The Purchaser has paid all applicable sales and retail taxes in the
Province of British Columbia, and none of its tangible personal property has
been transferred at any time on a tax-exempt basis under applicable legislation
in the Province of British Columbia. The foregoing is accurate, mutatis
mutandis, with respect to all sales or transfer Taxes imposed under comparable
legislation of other provinces.
5.18.5 The Purchaser has never acquired or had the use of any of its assets from
a Person (a "Related Person") with whom the Purchaser was not dealing at arm's
length, within the meaning of the Tax Act. The Purchaser has never disposed of
any asset to a Related Person for proceeds less than the fair market value of
that asset. The Purchaser is not a party to or bound by any agreement with, is
not indebted to, and no amount is owing to the Purchaser by any Related Person,
not dealing at arm's length, within the meaning of the Tax Act, with the
Purchaser.
5.18.6 For the purposes of the Tax Act the Purchaser and the Group 1
Shareholders hereby covenant and agree to elect jointly under Subsection 85(1)
of the Tax Act, by completing and filing with the Department of National Revenue
the prescribed form T2057 within the prescribed time for the purposes of the Tax
Act with respect to the sale by the Group 1 Shareholders to the Purchaser of the
Group 1 Corporation Shares and further agree to transfer the Group 1 Corporation
Shares at an agreed amount equal to the adjusted cost base of the Group 1
Corporation Shares to the Group 1 Shareholders for purposes of the Tax Act or
such greater amount determined by the Group 1 Shareholders (the `Elected
Amount').
5.18.7 If at any time after the Closing Date the Group 1 Shareholders determine
that either:
(a) it is necessary or desirable to change the Elected Amount; or
(b) the Tax Act deems the Elected Amount to be an amount which is different
than the amount agreed upon between the Group 1 Shareholder and the
Purchaser, then the Group 1 Shareholder and the Purchaser shall do all
things reasonably necessary to reflect such change including, for example,
filing an amended election pursuant to subsection 85(1) of the Tax Act.
5.19 Issuance of Shares.
5.19.1 The issuance of the Parent Common Shares and the Parent Shares by the
Parent, and the terms and provisions of the Parent Common Shares and Parent
Shares, will not violate any provisions of the Parent's articles or bylaws or
any Applicable Law, nor will the voting rights attached to the Parent Common
Shares and the Parent Shares derogate from any rights under Applicable Law.
5.19.2 The issuance of the Exchangeable Non-Voting Shares by the Purchaser, and
the terms and provisions of the Exchangeable Non-Voting Shares, will not violate
any provisions of the Purchaser's articles or bylaws or any Applicable Law.
5.20 Full Disclosure. The information contained in the documents, certificates
and written statements (including this Agreement and the schedules and exhibits
hereto) furnished to the Shareholders by or on behalf of the Buying Group with
respect to each of the Purchaser and the Parent (including the Buying Group
Business and the respective results of operations, financial condition and
prospects of the Purchaser and the Parent) for use in connection with this
Agreement or the transactions contemplated by this Agreement is true and
complete in all material respects and does not, to the best of the knowledge of
each Shareholder after conducting an inquiry which a reasonably prudent person
would make under the circumstances, omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. There is no fact known to the Purchaser or the
Parent or any Shareholder that has not been disclosed to the Shareholders by the
Buying Group in writing that has had a Material Adverse Effect on or, so far as
the Buying Group can now foresee, could be reasonably likely to have a Material
Adverse Effect on the Buying Group (including the Buying Group Business and the
respective results of operations, financial condition or prospects of the Buying
Group).
ARTICLE VI: COVENANTS OF THE CORPORATION AND SHAREHOLDERS
6.01 Conduct of the Business. During the Interim Period, other than with the
express written approval of the Purchaser, the Corporation shall conduct the
Corporation Business in the ordinary course consistent with past practice and
shall use its best efforts to preserve intact the organization, relationships
with third parties and goodwill of the Corporation and keep available the
services of the present officers, employees, agents and other personnel of the
Corporation Business.
6.01.1 Without limiting in any way the importance of the foregoing, during the
Interim Period, other than with the express written approval of the Purchaser,
the Corporation shall not, and each Shareholder shall not cause the Corporation
to:
(a) adopt any material change in any method of accounting or accounting
practice used by the Corporation other than by reason of a concurrent
change in generally accepted accounting principles;
(b) amend its articles or bylaws;
(c) sell, mortgage, pledge or otherwise dispose of any substantial assets or
properties of the Corporation;
(d) declare, set aside or pay any management fee or dividend or make any other
distribution with respect to the capital stock of the Corporation or
otherwise make a distribution or payment to any Shareholder;
(e) amalgamate, merge or consolidate with or agree to amalgamate, merge or
consolidate with, or purchase or agree to purchase all or substantially all
of the assets of, or otherwise acquire, any corporation, partnership or
other business organization or division thereof;
(f) authorize for issuance, issue, sell or deliver any additional shares of its
capital stock of any class or any securities or obligations convertible
into shares of its capital stock of any class or commit to doing any of the
foregoing;
(g) split, combine or reclassify any shares of the capital stock of any class
of the Corporation or redeem or otherwise acquire, directly or indirectly,
any shares of such capital stock;
(h) incur or agree to incur any debt or guarantee any debt for borrowed money,
including any debt to any Shareholder, or to any Affiliate or Associate of
any Shareholder, except debt incurred in the ordinary course of business
consistent with past practice;
(i) make any loan, advance or capital contribution to or investment in any
person other than loans, advances and capital contributions to or
investments in joint ventures or other similar arrangements in which the
Corporation has an equity interest in the ordinary course of business and
travel advances made in the ordinary course of business by the Corporation
to its employees to meet business expenses expected to be incurred by such
employees;
(j) enter into any settlement with respect to any Proceeding or consent to any
order, decree or judgment relating to or arising out of any such
Proceeding;
(k) take any action to terminate, dismiss or cause the retirement of any key
employee of the Corporation;
(l) fail in any material respect to comply with any Applicable Laws; or
(m) make, or make any commitments for, capital expenditures exceeding $25,000
for any individual commitment or $100,000 for all such commitments taken in
the aggregate.
6.01.2 During the Interim Period, other than with the express written approval
of the Purchaser, the Corporation shall:
(a) file all Canadian, United States, foreign, federal, state, provincial and
local Tax Returns required to be filed and make timely payment of all
applicable Taxes when due;
(b) promptly notify the Purchaser in writing of any action or circumstance that
results in, or could reasonably be expected to result in, a Material
Adverse Effect or the occurrence of any breach by the Corporation, or any
Shareholder of any representation or warranty, or any covenant or agreement
contained in this Agreement; and
(c) promptly notify the Purchaser in writing of the commencement of any
proceeding or the threat thereof by or against the Corporation, or any
Shareholder.
6.02 Maintenance of Corporation Insurance Policies. On and after the Closing
Date, the Corporation shall not take or fail to take any action if such action
or inaction would adversely affect the applicability of any insurance in effect
on the date hereof that covers all or any material part of the assets of the
Corporation, or the Business.
6.03 Tax Election. The Corporation shall not file an election pursuant to
subsection 256(9) of the Income Tax Act (Canada) or any equivalent provincial
provision.
ARTICLE VII: COVENANTS OF THE BUYING GROUP
7.01 Appointment of Directors and Officers. At Closing, all of the Officers and
Directors of the Parent will resign and will be replace by nominees of the
Corporation.
7.02 Conduct of Business. During the Interim Period, the Buying Group will
conduct the Buying Group Business in the ordinary course consistent with past
practice and shall use its best efforts to preserve intact the organization,
relationships with third parties and goodwill of the Buying Group and keep
available the services of the present officers, directors, employees, agents and
other personnel of the Buying Group Business; and without limiting in any way
the importance of the foregoing, the Buying Group shall not undertake any of
those matters referred to in sections 6.01.1 and 6.01.2, and all such clauses
thereof shall apply mutatis mutandis to the Buying Group.
7.03 Priority. Notwithstanding any term of the Purchaser's bylaws, memorandum
and articles to the contrary, the terms and provisions of this Agreement and the
Exchange and Voting Agreement shall prevail such that the directors of the
Purchaser will only authorize the exchange of the Exchangeable Non-Voting Shares
for shares in the Parent Common Shares in accordance with the terms of the
Exchange and Voting Agreement.
ARTICLE VIII: ACKNOWLEDGMENTS AND COVENANTS OF ALL PARTIES
8.01 Further Assurances. Each party hereto agrees to execute and deliver such
other documents, certificates, agreements and other writings and to take such
other actions as may be reasonably necessary or desirable (including obtaining
all required consents) in order to evidence the consummation or implementation
of the transactions provided for under this Agreement.
8.02 Certain Filings. The parties hereto shall cooperate with one another in
determining whether any action by or in respect of, or filing with, any
Governmental Authority is required or reasonably appropriate, or any action,
consent, approval or waiver from any party to any Contract is required or
reasonably appropriate, in connection with the consummation of the transactions
contemplated by this Agreement. Subject to the terms and conditions of this
Agreement, in taking such actions or making any such filings, the parties hereto
shall furnish information required in connection therewith and seek timely to
obtain any such actions, consents, approvals or waivers.
8.03 Registration. All parties acknowledge and agree that the Parent is a
reporting issuer in the United States under the 34 Act; and all parties further
acknowledge and agree that neither the Parent nor the Purchaser is a reporting
issuer in any province of Canada, and the Exchangeable Non-Voting Shares, Parent
Common Shares and Parent Shares will be subject to such resale restrictions as
imposed by the Applicable Law of the jurisdiction in which a Shareholder is
resident. The Parent further convents to file all required documentation with
the appropriate authorities to obtain reporting issuer status in the United
States as soon as practicable.
ARTICLE IX: CONDITIONS TO CLOSING
9.01 Conditions to Obligation of the Buying Group. The obligations of the Buying
Group to consummate the Closing are subject to the satisfaction of each of the
following conditions:
(a) (i) the Corporation and each Shareholder shall have performed and
satisfied each of their respective obligations hereunder required to
be performed and satisfied by them on or prior to the Closing Date,
(ii) each of the representations and warranties of the Corporation and each
Shareholder contained herein shall have been true and correct and
contained no misstatement or omission that would make any such
representation or warranty misleading when made and shall be true and
correct and contain no misstatement or omission that would make any
such representation or warranty misleading at and as of the Closing
with the same force and effect as if made as of the Closing, and
(iii) the Buying Group shall have received certificates signed by each
Shareholder and a duly authorized executive officer of the Corporation
to the foregoing effect and to the effect that the conditions
specified within this Section 9.01(a) have been satisfied.
(b) All Required Consents for the transactions contemplated by this Agreement
shall have been obtained without the imposition of any conditions that are
or would become applicable to the Corporation, the Business, the
Corporation Shares or the Buying Group (or any of its Affiliates or
Associates) after the Closing that would be materially burdensome upon the
Corporation, the Business, the Corporation Shares or the Buying Group (or
any of its Affiliates or Associates) or their respective businesses
substantially as such businesses have been conducted prior to the Closing
Date or as said businesses, as of the date hereof, would be reasonably
expected to be conducted after the Closing Date. All such approvals shall
be in effect, and no proceedings shall have been instituted or threatened
by any Governmental Authority or other Person with respect thereto as to
which there is a material risk of a determination that would terminate the
effectiveness of, or
otherwise materially and adversely modify the terms of, any such approval;
all applicable waiting periods with respect to such approvals shall have
expired; and all conditions and requirements prescribed by Applicable Law
or by such approvals to be satisfied on or prior to the Closing Date shall
have been satisfied to the extent necessary such that all such approvals
are, and will remain, in full force and effect assuming continued
compliance with the terms thereof after the Closing.
(c) The transactions contemplated by this Agreement and the consummation of the
Closing shall not violate any Applicable Law. The operation of the Business
shall not have violated or infringed, or be in violation or infringement of
any Applicable Law or any order, writ, injunction or decree of any
Governmental Authority, where such violations and infringements,
individually or in aggregate, have resulted in, or could reasonably be
expected to result in a Material Adverse Effect.
(d) Since the date hereof, there shall not have been any event, occurrence,
development or state of circumstances or facts or change in the
Corporation, or the Corporation Business, including any damage, destruction
or other casualty loss affecting the Corporation, or the Corporation
Business that has had or that may be reasonably expected to have, either
alone or together with all such events, occurrences, developments, states
of circumstances or facts or changes, a Material Adverse Effect on the
Corporation.
9.02 Conditions to Obligations of the Shareholders. The obligations of each
Shareholder to consummate the Closing are subject to the satisfaction of each of
the following conditions:
(a) (i) the Buying Group shall have performed and satisfied each of its
obligations hereunder required to be performed and satisfied by it on or
prior to the Closing Date; (ii) each of the representations and warranties
of the Buying Group contained herein shall have been true and correct and
contained no misstatement or omission that would make any such
representation or warranty misleading when made and shall be true and
correct and contain no misstatement or omission that would make any such
representation or warranty misleading at and as of the Closing with the
same force and effect as if made as of the Closing and (iii) each
Shareholder shall have received a certificate signed by a duly authorized
executive officer of the Buying Group to the foregoing effect and to the
effect that the conditions specified within this Section 9.02(a) have been
satisfied.
(b) All Required Consents for the transactions contemplated by this Agreement
shall have been obtained without the imposition of any conditions that are
or would become applicable to any Shareholder (or any of their respective
Affiliates or Associates) after the Closing that would be materially
burdensome upon any such Person. All such approvals shall be in effect, and
no Proceedings shall have been instituted or threatened by any Governmental
Authority with respect thereto as to which there is a material risk of a
determination that would terminate the effectiveness of, or otherwise
materially and adversely modify the terms of, any such approval. All
applicable waiting periods shall have expired, and all conditions and
requirements such approvals to be satisfied on or prior to the Closing
extent necessary such that all such approvals are, and will remain, in full
force and effect assuming continued compliance with the terms thereof after
the Closing.
(c) The transactions contemplated by this Agreement and the consummation of the
Closing shall not violate any Applicable Law. No temporary restraining
order, preliminary or permanent injunction, cease and desist order or other
order issued by any court of competent jurisdiction or any competent
Governmental Authority or any other legal restraint or prohibition
preventing the transfer and exchange contemplated hereby or the
consummation of the Closing, or imposing Damages in respect thereto, shall
be in effect, and there shall be no pending actions or proceedings by any
Governmental Authority (or determinations by any Governmental Authority) or
by any other Person challenging or seeking to materially restrict or
prohibit the transfer and exchange contemplated hereby or the consummation
of the Closing.
(d) Since the date hereof, there shall not have been any event, occurrence,
development or state of circumstances or facts or change in the Buying
Group or the Buying Group Business, including any damage, destruction or
other casualty loss affecting the Buying Group or the Buying Group Business
that has had or that may be reasonably expected to have, either alone or
together with all such events, occurrences, developments, states of
circumstances or facts or changes, a Material Adverse Effect on the Buying
Group.
(e) Since the date hereof, there shall not have been any:
i) change in the capital structure of either the Purchaser or the Parent,
other than as to effect the creation or issuance of the Exchangeable
Non-Voting Shares, the Parent Common Shares or the Parent Shares as
contemplated herein, or to effect the rights, restrictions, privileges
and terms of the Exchangeable Non-Voting Shares, the Parent Common
Shares or the Parent Shares in accordance with the terms hereof; or
ii) any actions, investigations, inquiries or proceedings commenced or
continued against either the Parent or the Purchaser, or their
respective officers, directors, promoters, representatives, agents or
their respective businesses by any securities regulatory authority,
tribunal or body having jurisdiction.
(f) The Parent's Board of Directors, by proper and sufficient vote, shall have
approved this Agreement, the Exchange and Voting Agreement and the Support
Agreement, and the transactions contemplated hereby.
(g) The Parent and the Purchaser will have entered into the Exchange and Voting
Agreement and the Supporting Agreement.
ARTICLE X: INDEMNIFICATION
10.01 Agreement to Indemnify.
10.01.1 Each of the Purchaser and the Parent, and their respective Affiliates,
Associates, officers, directors, shareholders, representatives and agents
(collectively, the "Purchaser Indemnitees") shall each be indemnified and held
harmless to the extent set forth in this Article X by each Shareholder in
respect of any and all damages incurred by any Purchaser Indemnitee as a result
of any inaccuracy or
misrepresentation in or breach of any representation or warranty made in this
Agreement by such Shareholder, provided, however, that each Shareholder shall
have no obligation to indemnify the Purchaser Indemnitees with respect to
damages incurred by any Purchaser Indemnitee as a result of any inaccuracy or
misrepresentation in or breach of any representation or warranty made in this
Agreement by any other Shareholder and further a Shareholder shall have no such
obligation to indemnify a Purchaser Indemnitee hereunder unless, and to the
extent, the aggregate of all damages incurred by the Purchaser Indemnities for
all items covered by this Section 10.01(1) shall exceed $1,000 in the aggregate.
Notwithstanding the foregoing, no Shareholder shall have any obligation to
indemnify the Purchaser Indemnitees in an amount that exceeds the Purchase Price
paid to Shareholder.
10.01.2 Each of the Purchaser Indemnitees shall be indemnified and held harmless
to the extent set forth in this Article X by the Corporation in respect of any
and all damages incurred by any Purchaser Indemnitee as a result of any
inaccuracy or misrepresentation in or breach of any representation, warranty,
covenant or agreement made in this Agreement by the Corporation.
10.01.3 Each Shareholder and their respective Affiliates and Associates and each
officer, director, shareholder, employer, representative and agent of any of the
foregoing (collectively, the "Shareholder Indemnitees") shall each be
indemnified and held harmless to the extent set forth in this Article X by the
Purchaser and Parent in respect of any and all damages incurred by any
Shareholder Indemnitee as a result of any inaccuracy or misrepresentation in or
breach of any representation, warranty, covenant or agreement made by the Parent
or the Purchaser in this Agreement.
10.02 Survival of Representation, Warranties and Covenants. Except as
hereinafter provided in this Section 10.02, all representations, warranties,
covenants, agreements and obligations of each Indemnifying Party contained
herein and all claims of any Purchaser Indemnitee or Shareholder Indemnitee in
respect of any breach of any representation, warranty, covenant, agreement or
obligation of any Indemnifying Party contained in this Agreement, shall survive
the Closing and shall expire one year following the Closing Date.
ARTICLE X1: POWER OF ATTORNEY
11.01 Power of Attorney. All of the parties agree that the execution of the
authorization and power of attorney form, a copy of which is attached hereto as
Schedule "I" by a Shareholder will be sufficient authority for the President of
the Corporation to execute an behalf of that Shareholder this Agreement and the
Exchange and Voting Agreement and legally bind the Shareholder to the terms and
conditions of this Agreement including transferring legal and beneficial
ownership of the Corporation Shares to the Purchaser and the Parent.
ARTICLE XII: MISCELLANEOUS
12.01 Notices. All notices, requests, demands, claims and other communications
hereunder shall be in writing. Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given (i) if personally delivered,
when so delivered, (ii) if mailed, two Business Days after having been sent by
registered or certified mail, return receipt requested, postage prepaid and
addressed to the intended recipient as set forth below, (iii) if given by
facsimile or telecopier, once such notice or other communication is transmitted
to the facsimile or telecopier number specified
below and the appropriate answer back or telephonic confirmation is received,
provided that such notice or other communication is promptly thereafter mailed
in accordance with the provisions of clause (ii) above or (iv) if sent through
an overnight delivery service in circumstances under which such service
guarantees next day delivery, the day following being so sent:
If to the Corporation: XX Xxx 000 0000 Xxxxxxxxx Xx. Xxxxxxxx, X.X. Xxxxxx X0X 0X0
If to the Purchaser: Xxxxx 0000, 000 Xxxxxxx Xxxxxx, Xxxxxxxxx X.X. Xxxxxx X0X 0X0
If to the Parent: Xxxxx 0000, 000 Xxxxxxx Xxxxxx, Xxxxxxxxx X.X. Xxxxxx X0X 0X0
If to a Shareholder: XX Xxx 000 0000 Xxxxxxxxx Xx. Xxxxxxxx, X.X. XxxxxxX0X 0X0
Any party may give any notice, request, demand, claim or other communication
hereunder using any other means (including ordinary mail or electronic mail),
but no such notice, request, demand, claim or other communication shall be
deemed to have been duly given unless and until it actually is received by the
individual for whom it is intended. Any party may change the address to which
notices, requests, demands, claims and other communications hereunder are to be
delivered by giving the other parties notice in the manner herein set forth.
12.02 Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived if, and only if,
such amendment or waiver is in writing and signed, in the case of an
amendment, by all parties hereto, or in the case of a waiver, by the party
against whom the waiver is to be effective.
(b) No waiver by a party of any default, misrepresentation or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent default, misrepresentation or breach
of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent occurrence. No failure or delay by a
party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
12.03 Expenses. All costs and expenses incurred in connection with this
Agreement and enclosing and carrying out the transactions provided for herein
shall be paid by the party incurring such cost or expense. This Section shall
survive the termination of this Agreement.
12.04 Successors and Assigns. This Agreement shall be binding upon and enure to
the benefit, of the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors and permitted assigns. No
party hereto may assign either this Agreement or any of its rights, interests or
obligations hereunder without the prior written approval of each other party,
which approval shall not be unreasonably withheld.
12.05 Governing Law. This Agreement shall be governed by, and interpreted and
enforced in accordance with, the laws in force in the Province of British
Columbia and the laws of Canada
applicable therein (excluding any conflict of laws rule or principle that might
refer such interpretation to the laws of another jurisdiction). Each party
irrevocably submits to the jurisdiction of the courts of British Columbia with
respect to any matter arising hereunder or related hereto.
12.06 Counterparts; Effectiveness. This Agreement and the documents relating to
the transactions contemplated by this Agreement may be signed in any number of
counterparts and the signatures delivered by telecopy, each of which shall be
deemed to be an original, with the same effect as if the signatures thereto were
upon the same instrument and delivered in person. This Agreement and such
documents shall become effective when each party thereto shall have received a
counterpart thereof signed by the other parties thereto. In the case of delivery
by telecopy by any party, that party shall forthwith deliver a manually executed
original to each of the other parties.
12.07 Entire Agreement. This Agreement (including the Schedules referred to
herein, which are hereby incorporated by reference) constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements, understandings and negotiations, both written
and oral, between the parties with respect to the subject matter of this
Agreement. Neither this Agreement nor any provision hereof is intended to confer
upon any Person other than the parties hereto any rights or remedies hereunder.
12.08 Captions. The captions herein are included for convenience of reference
only and shall be ignored in the construction or interpretation hereof. All
references to an Article or Section include all subparts thereof.
12.09 Severability. If any provision of this Agreement, or the application
thereof to any Person, place or circumstance, shall be held by a court of
competent jurisdiction to be invalid, unenforceable or void, the remainder of
this Agreement and such provisions as applied to other Persons, places and
circumstances shall remain in full force and effect only if, after excluding the
portion deemed to be unenforceable, the remaining terms shall provide for the
consummation of the transactions contemplated hereby in substantially the same
manner as originally set forth at the later of the date this Agreement was
executed or last amended.
12.10 Construction. The parties hereto intend that each representation,
warranty, and covenant contained herein shall have independent significance. If
any party has breached any representation, warranty or covenant contained herein
in any respect, the fact that there exists another representation, warranty or
covenant relating to the same subject matter (regardless of the relative levels
of specificity) that the party has not breached shall not detract from or
mitigate the fact that the party is in breach of the first representation,
warranty or covenant.
12.11 Meaning of Include and Including. Whenever in this Agreement the word
"include" or "including" is used, it shall be deemed to mean "include, without
limitation" or "including without limitation", as the case may be, and the
language following "include" or "including" shall not be deemed to set forth an
exhaustive list.
12.12 Cumulative Remedies. The rights, remedies, powers and privileges herein
provided are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law.
12.13 Third Party Beneficiaries. Other than Indemnitees under Article X hereof
who are not parties to this Agreement, no provision of this Agreement shall
create any third party beneficiary rights in any Person, including any employee
or former employee of the Corporation or any Affiliate or Associate thereof
(including any beneficiary or dependent thereof).
12.14 Transmission by Facsimile. The parties hereto agree that this Agreement
may be transmitted by facsimile or such similar device and that the reproduction
of signatures by facsimile or such similar device will be treated as binding as
if originals and each party hereto undertakes to provide each and every other
party hereto with a copy of the Agreement bearing original signatures forthwith
upon demand.
12.15 Fees and Commissions. No broker, finder or other person or entity is
entitled to any fee or commission from the Buying Group or the Corporation for
services rendered on behalf of the Buying Group or the Corporation in connection
with the transactions contemplated by this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
SIERRA GIGANTE RESOURCES, INC.
Per: /s/ Xxx Xxxxx
---------------------------
(Authorized Signatory)
648311 B.C. LTD.
Per: /s/ Xxx Xxxxx
---------------------------
(Authorized Signatory)
MIND YOUR OWN SKIN PRODUCTS INC.
Per: /s/ Xxxx Xxxxxxx Xxxxxx
---------------------------
(Authorized Signatory)
SIGNED, SEALED AND DELIVERED
BY Xxxx Xxxxxxx Xxxxxx in the presence
of:
/s/ X.X. Xxxxxx
---------------------------
Xxxx Xxxxxxx Xxxxxx
-----------------------------------
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY Xxxxx Xxxx Xxxxxxxx-Xxxxxx
in the presence of:
/s/ Xxxxx Xxxxxxxx - Xxxxxx
---------------------------
----------------------------------- Xxxxx Xxxx Xxxxxxxx-Xxxxxx
Signature of Witness
/s/ X.X. Xxxxxx
-----------------------------------
Name of Witness
XXXX XXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxxx Xxxxxx Black in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxx Xxxxxx Black
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxx Xxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY S. Xxxx Xxxxxx and Xxxxxx Xxxxxx
(Jointly) in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
S. Xxxx Xxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx /s/ X.X. Xxxxxx/as attorney for
----------------------------------- -------------------------------
Xxxxxx Xxxxxx
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxxx Xxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxx Xxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxx Xxxxxxxxx Xxxxxx (Xxxxxxxx) in the presence
of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxx Xxxxxxxxx Xxxxxx (Xxxxxxxx)
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxxx Xxxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxx Xxxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY Xxxxxxx X. Xxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxxxx X. Xxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxx Xxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxx Xxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxxx Xxxx Xxxxxxx and Xxxxxxx Xxxx Xxxxxxx
(Jointly) in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxx Xxxx Xxxxxxx
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
Xxxxxxx Xxxx Xxxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxxxxxx Xxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxxxxx Xxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxxxxx Xxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxxxx Xxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxxxxx Xxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxxxx Xxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxxx Xxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxx Xxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY X.X. (Xxx) Xxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- X.X. (Xxx) Xxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxx Xxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxx Xxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxxxx Xxxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxxx Xxxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY Xxxxxxx Xxxxxx Xxxxx in the
presence of:
-------------------------------
----------------------------------- Xxxxxxx Xxxxxx Xxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxx Xxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxx Xxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY Xxxxxxx Xxxxxx Schalkwyk in the
presence of:
-------------------------------
----------------------------------- Xxxxxxx Xxxxxx Schalkwyk
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxxx Xxxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxx Xxxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY Xxxxxxx X. Xxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxxxx X. Xxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY Xxxxxxxxxxx X. Xxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxxxxxxxx X. Xxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY Xxxxxxx X. Xxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxxxx X. Xxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY Xxxxxx X. Xxxxxx in the presence of:
-------------------------------
----------------------------------- Xxxxxx X. Xxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxxxx Xxxxxx in the presence of:
-------------------------------
----------------------------------- Xxxxxx Xxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY Xxxxxx X. Xxxxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxxx X. Xxxxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxxxx Xxxxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxxx Xxxxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xx Xxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xx Xxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY D. Xxxx Xxxxxx Trust in the
presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- D. Xxxx Xxxxxx Trust
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxxxxx Xxxxxxxx in the presence of:
-------------------------------
----------------------------------- Xxxxxxx Xxxxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxx Xxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxx Xxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY Xxxxxxx X. Xxxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxxxx X. Xxxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxxx Xxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxx Xxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY Xxxxxx X. Xxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxxx X. Xxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxxxx Xxxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxxx Xxxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY Xxxxx X. Xxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
Xxxxx X. Xxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY Xx. Xxxx X. Xxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xx. Xxxx X. Xxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
-----------------------------------
Per: LFT Investments Inc.
-----------------------------------
Per: CSC Capital Inc.
SCHEDULE "A"
NAMES OF GROUP 1 SHAREHOLDERS AND SHAREHOLDINGS IN THE CORPORATION AND NUMBER OF
EXCHANGEABLE SHARES TO BE ISSUED IN THE PURCHASER
Shareholders No. of Purchaser Shares
------------ -----------------------
Xxxx Xxxxxxx Xxxxxx 2,475,000 Common shares
Xxxxx Xxxx Xxxxxxxx-Xxxxxx 2,475,000 Common shares
Xxxxx Xxxxxx Black 975,000 Common shares
Xxxx Xxxxxx 975,000 Common shares
S. Xxxx Xxxxxx and
Xxxxxx Xxxxxx (Jointly) 975,000 Common shares
Xxxxx Xxxx 975,000 Common shares
Xxxx Xxxxxxxxx Xxxxxx (Xxxxxxxx) 975,000 Common shares
Xxxxx Xxxxxxx 225,000 Common shares
Xxxxx Xxxx Xxxxxxx and
Xxxxxxx Xxxx Xxxxxxx (Jointly) 75,000 Common shares
Xxxxxxx X. Xxxxxx 225,000 Common shares
LFT Investments Inc. 187,500 Common shares
CSC Capital Inc. 187,500 Common shares
Xxxx Xxxx 187,500 Common shares
Xxxxxxxx Xxxxxx: 187,500 Common shares
Xxxxxxx Xxxxx 112,500 Common shares
Xxxxxxx Xxxxxx 187,500 Common shares
Xxxxx Xxxxxx 75,000 Common shares
X.X. (Xxx) Xxxxxx 75,000 Common shares
Xxxx Xxxxxx 75,000 Common shares
Xxxxxx Xxxxxxx 37,500 Common shares
Xxxxxxx Xxxxxx Xxxxx 18,750 Common shares
Xxxxxxx Xxxxxx Schalkwyk 18,750 Common shares
Xxxx Xxxxxx 18,750 Common shares
Xxxxx Xxxxxxx 37,500 Common shares
Xxxxxxx X. Xxxxxx 18,750 Common shares
Xxxxxxx X. Xxxxxx 18,750 Common shares
Xxxxxx X. Xxxxxx 37,500 Common shares
Xxxxxx Xxxxxx 18,750 Common shares
Xxxxxxxxxxx X. Xxxxxx 18,750 Common shares
Xxxxxx X. Xxxxxxxx 18,750 Common shares
Xxxxxx Xxxxxxxx 18,750 Common shares
Xx Xxxxxx 18,750 Common shares
D. Xxxx Xxxxxx Trust 18,750 Common shares
Xxxxxxx Xxxxxxxx 37,500 Common shares
Xxx Xxxxx 18,750 Common shares
Xxxxxxx X. Xxxxxxx 18,750 Common shares
Xxxxx Xxxxx 18,750 Common shares
Xxxxxx X. Xxxxx 18,750 Common shares
Xxxxxx Xxxxxxx 37,500 Common shares
Xxxxx X. Xxxxxx 18,750 Common shares
NAMES OF GROUP 2 SHAREHOLDERS AND NUMBER OF SHARES TO ISSUED IN THE PARENT
Name No. of Parent Shares
---- ---------------------
Xx. Xxxx X. Xxxxx 225,000 Common shares
SCHEDULE "B"
Exchange and Voting Agreement
MEMORANDUM OF AGREEMENT made as of the th day of June 2002.
---
AMONG:
SIERRA GIGANTE RESOURCES INC., a corporation subsisting under the laws of
the State of Nevada
(hereinafter referred to as the "Parent")
AND:
648311 B.C. LTD., a corporation incorporated under the laws of British
Columbia
(hereinafter referred to as the "Purchaser")
AND:
CANADIAN IMPERIAL BANK OF COMMERCE, having a branch address at 0000 00xx
Xxx. Xxxxxx Xxxxxxx Xxxxxxxx.
(hereinafter referred to as the "Trustee")
AND:
EACH OF THOSE PERSONS holding shares of the Purchaser, as listed in
Appendix "A" hereto
(hereinafter referred to as the "Shareholders")
W H E R E A S:
A. The Purchaser is the wholly owned subsidiary of the Parent;
B. Pursuant to a share exchange and share purchase agreement dated as of June
th, 2002 (the "Purchase Agreement") by and among the Parent, the
---
Purchaser, Mind Your Own Skin Products, Inc. ("MYOSP") and, the
Shareholders, the Purchaser acquired 12,112,500 issued and outstanding
common shares of MYOSP from the Shareholders in consideration of among
other things: (i) the Purchaser issuing to the Shareholders 12,112,500
Exchangeable Non-Voting Shares (as herein defined), and (ii) the Parent,
granting to each Shareholder Voting Rights (as herein defined) in the
Parent on the basis of each Shareholder having an equivalent number of
votes in the Parent as the number of Exchangeable Non-Voting Shares held by
such Shareholder;
C. As security for the Parent's covenant to issue common shares in its capital
stock in exchange for Exchangeable Non-Voting Shares, the Parent agreed to
issue 12,112,500 common shares (as herein defined as the "Parent Common
Shares") to the Trustee; and
D. In accordance with the Purchase Agreement, this Agreement stipulates the
means by which: (i) the Shareholders have voting rights in the Parent; ii)
the Trustee holds the Parent Common Shares for the Shareholders; and (iii)
the Shareholders exercise their rights of conversion of the Exchangeable
Non-Voting Shares,
NOW THEREFORE in consideration of the respective covenants and agreements
provided in this Agreement and for other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties agree as
follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
Definitions. In this Agreement, the following terms shall have the following
meanings:
"Affiliate" of any person means any other person directly or indirectly
controlled by, or under common control of, that person. For the purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control of"), as applied to any person, means
the possession by another person, directly or indirectly, of the power to direct
or cause the direction of the management and policies of that first mentioned
person, whether through the ownership of voting securities, by contract or
otherwise.
"Automatic Exchange Rights" means the benefit of the obligation of Parent to
effect the automatic exchange of Exchangeable Non-Voting Shares for Parent
Common Shares.
"Board of Directors" means the Board of Directors of the Purchaser.
"Business Day" means a day other than a Saturday, Sunday or a day when banks are
not open for business in British Columbia;
"Canadian Dollar Equivalent" means in respect of an amount expressed in a
foreign currency (the "Foreign Currency Amount") at any date the product
obtained by multiplying (a) the Foreign Currency Amount by (b) the exchange rate
on such date for such foreign currency expressed in Canadian dollars as reported
in The Wall Street Journal under "Currency Trading; Exchange Rates" or, in the
event such exchange rate is not available, such exchange rate on such date for
such foreign currency expressed in Canadian dollars as may be deemed by the
Board of Directors to be appropriate for such purpose.
"Current Market Price" means, in respect of a Parent Common Share on any date,
the Canadian Dollar Equivalent of closing price of Parent Common Shares on the
day before such date, on such stock exchange or automated quotation system on
which the Parent Common Shares are listed or
quoted, as the case may be, as may be selected by the Board of Directors for
such purpose; provided, however, that if there is no public distribution or
trading activity of Parent Common Shares during such period, then the Current
Market Price of a Parent Common Share shall be determined by the Board of
Directors based upon the advice of such qualified independent financial advisors
as the Board of Directors may deem to be appropriate, and provided further that
any such selection, opinion or determination by the Board of Directors shall be
conclusive and binding.
"Exchangeable Non-Voting Shares" means the Class "A" exchangeable, non-voting,
participating common shares without par value in the capital stock of the
Purchaser, including the 12,112,500 shares issuable under the Purchase
Agreement.
"Exchangeable Share Provisions" means the rights, privileges, restrictions and
conditions attached to the Exchangeable Non-Voting Shares as set forth in
Schedule "G" to the Purchase Agreement.
"Insolvency Event" means the institution by the Purchaser of any proceeding to
be adjudicated bankrupt or insolvent or to be dissolved or wound up, or the
consent of the Purchaser to the institution of bankruptcy, insolvency,
dissolution or winding up proceedings against it, or the filing 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 Purchaser to contest in good faith any such
proceedings commenced in respect of the Purchaser within fifteen (15) days of
becoming aware thereof, or the consent by the Purchaser to the filing of any
such petition or to the appointment of a receiver, or the making by the
Purchaser of a general assignment for the benefit of creditors, or the admission
in writing by the Purchaser of its inability to pay its debts generally as they
become due, or the Purchaser not being permitted, pursuant to solvency
requirements of applicable law, to redeem any Retracted Shares pursuant to
section 27.6 (e) of the Exchangeable Share Provisions.
"Insolvency Exchange Right" has the meaning ascribed thereto in Section 4.1.
"Liquidation Event" has the meaning ascribed thereto in Section 4.11.
"Liquidation Event Effective Date" has the meaning ascribed thereto in Section
4.11(c).
"List" has the meaning ascribed thereto in Section 3.8.
"Officer's Certificate" means, with respect to the Parent or the Purchaser, as
the case may be, a certificate signed by any one of the Chairman of the Board,
the Vice-Chairman of the Board, the President, any Vice-President or any other
officer of the Parent or the Purchaser, as the case may be.
"Parent Common Shares" means the shares of common stock of the Parent, without
par value, having voting rights of one vote per share, and any other securities
into which such shares may be changed.
"Parent Consent" has the meaning ascribed thereto in Section 3.2.
"Parent Meeting" has the meaning ascribed in Section 3.2.
"Parent Successor" has the meaning ascribed thereto in Section 12.1(a).
"Purchase Agreement" means the Purchase Agreement between the Parent, the
Purchaser, MYOSP, and the Shareholders named therein, dated as of the same date
hereof.
"Person" includes an individual, partnership, corporation, company,
unincorporated syndicate or organization, trust, trustee, executor,
administrator and other legal representative.
"Retracted Shares" has the meaning ascribed thereto in Section 4.6.
"Shareholders" means the registered holders from time to time of Exchangeable
Non-Voting Shares, other than the Parent and its Affiliates, as listed in
Appendix "A" hereto.
"Shareholder Votes" has the meaning ascribed thereto in Section 3.2.
"Support Agreement" means that certain support agreement made as of the same
date hereof between the Purchaser and the Parent, which agreement is attached as
Schedule "H" to the Purchase Agreement.
"Trust" means the trust created by this Agreement.
"Trust Estate" means the Trust Shares and any other securities, money or other
property which may be held by the Trustee from time to time pursuant to this
Agreement.
"Trust Shares" has the meaning ascribed thereto in Section 2.2.
"Trustee" means the Canadian Imperial Bank of Commerce, and subject to the
provisions of Article 11, includes any successor trustee.
"Voting Rights" has the meaning ascribed thereto in Section 3.1.
Interpretation not Affected by Headings, etc. The division of this Agreement
into articles, sections and paragraphs and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
Number, Gender, etc. Words importing the singular number only shall include the
plural and vice versa. Words importing the use of any gender shall include all
genders.
Date for any Action. If any date on which any action is required to be taken
under this Agreement is not a Business Day, such action shall be required to be
taken on the next succeeding Business Day.
ARTICLE 2
TRUST SHARES
2.1 Establishment of Trust. One purpose of this Agreement is to create the Trust
for the benefit of the Shareholders, as herein provided. The Trustee will hold
the Parent Common Shares acquired pursuant to the requirements of the Purchase
Agreement, Exchangeable Share Provisions and Support Agreement both to support
the Parent's and the Purchaser's obligations thereunder in the event of default
and, only if required by applicable law, to provide a mechanism for Shareholders
of each Exchangeable Non-Voting Share to direct the voting of a corresponding
Parent Common Share held by the Trustee.
2.2 Issue and Ownership of the Parent Common Shares. Upon execution of this
Agreement, the Parent shall transfer to the Trustee a number of Parent Common
Shares equal to the number of Exchangeable Non-Voting Shares issued to
Shareholders under the Purchase Agreement, such shares to be hereafter held of
record by the Trustee as trustee for and on behalf of, and for the use and
benefit of, the Shareholders and in accordance with the provisions of this
Agreement. From time to time, the Parent shall transfer additional shares of
Parent Common Shares to the Trustee as required under the Purchase Agreement,
Exchangeable Share Provisions and Support Agreement, also to be held of record
by the Trustee as trustee for and on behalf of, and for the use and benefit of,
the Shareholders and in accordance with the provisions of this Agreement. All
Parent Common Shares so transferred by the Parent to the Trustee pursuant to
this Section 3.1 shall hereafter be referred to as the "Trust Shares". The
Parent hereby acknowledges receipt from the Trustee as trustee for and on behalf
of the Shareholders of good and valuable consideration (and the adequacy
thereof) for the issuance of the Trust Shares by the Parent to the Trustee.
During the term of the Trust and subject to the terms and conditions of this
Agreement, the Trustee shall possess and be vested with full legal ownership of
the Trust Shares and, subject to the terms hereof, shall be entitled to exercise
all of the rights and powers of an owner with respect to the Trust Shares,
provided that the Trustee shall:
(a) hold the Trust Shares and the rights associated therewith as conveyed
by this Agreement as trustee solely for the use and benefit of the
Shareholders in accordance with the provisions of this Agreement; and
(b) except as specifically authorized by this Agreement, have no power or
authority to sell, transfer, vote or otherwise deal in or with the
Trust Shares and the Trust Shares shall not be used or disposed of by
the Trustee for any purpose other than the purposes for which this
Trust is created pursuant to this Agreement.
ARTICLE 3
VOTING
3.1 Voting Rights. The Parent will grant to the Shareholders, by requisite
shareholder or director resolutions, the right for each Shareholder to receive
notice and attend each Parent Meeting and to consent to or to vote in person or
by proxy, on any matter, question or proposition whatsoever that may properly
come before the stockholders of the Parent at a Parent Meeting or in connection
with a Parent Consent (in each case, as hereinafter defined) (the "Voting
Rights") on the basis of one Voting Right for every one Exchangeable Non-Voting
Share held by a Shareholder, as if and to the same extent and effect as if the
Shareholder held an equivalent number of Parent Common Shares. The Voting Rights
shall be and remain vested in and exercised by the Shareholders.
3.2 Number of Votes. With respect to all meetings of stockholders of the Parent
at which holders of shares of Parent Common Shares are entitled to vote (a
"Parent Meeting") and with respect to all written consents sought by the Parent
from its stockholders including the holders of shares of Parent Common Shares (a
"Parent Consent"), each Shareholder shall be entitled to cast and exercise, in
the manner instructed, the Voting Rights ordinarily attributable to one Parent
Common Share for each Exchangeable Non-Voting Share owned of record by such
Shareholder 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 "Shareholder
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.
3.3 Legended Shares Certificates. The Purchaser will cause each certificate
representing Exchangeable Non-Voting Shares to bear an appropriate legend
notifying the Shareholders of their right to a number of votes in the Parent as
is equal to the number of shares represented by the Exchangeable Non-Voting
Share certificates.
3.4 Safekeeping of Certificates. The certificate(s) representing the Trust
Shares shall at all times be held in safe keeping by the Trustee or its agent.
3.5 Mailings to Shareholders of Exchangeable Non-Voting Shares. With respect to
each Parent Meeting and Parent Consent, the Parent will mail or cause to be
mailed (or otherwise communicate in the same manner as the Parent utilizes in
communications to holders of Parent Common Shares, to each of the Shareholders
named in the List (as defined below) 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 Shareholder is entitled to the exercise of the
Shareholder Votes with respect to such Parent Meeting or Parent Consent, as
the case may be, and to attend such Parent Meeting and to exercise
personally the Shareholder Votes thereat;
(c) a statement as to the manner in which to give a proxy to a designated agent
or other representative of the management of the Parent to exercise such
Shareholder Votes; and
(d) a statement of (i) the time and date by which such must be received by the
Parent 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 proxies.
For the purpose of determining Shareholder Votes to which a Shareholder is
entitled in respect of any such Parent Meeting or Parent Consent, the number of
Exchangeable Non-Voting Shares owned of record by the Shareholder 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.
3.6 Copies of Stockholder Information. The Parent will deliver to the
Shareholders copies of all proxy materials (including notices of Parent
Meetings), 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.
3.7 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 its best efforts to obtain and deliver copies thereof to
each Shareholder as soon as possible thereafter.
3.8 List of Persons Entitled to Vote. The Purchaser shall (a) prior to each
annual, general and special Parent Meeting or the seeking of any Parent Consents
and (b) forthwith upon each request made at any time by the Trustee or the
Parent in writing, prepare or cause to be prepared a list (a "List") of the
names and addresses of the Shareholders arranged in alphabetical order and
showing the number of Exchangeable Non-Voting Shares held of record by each such
Shareholder, 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 Parent promptly after receipt by the
Purchaser 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 Parent to perform its obligations under this Agreement. The Parent
agrees to give the Purchaser 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 Purchaser to perform
its obligations under this Section 3.8.
3.9 Distribution of Written Materials. Any written materials to be distributed
by the Parent to the Shareholders pursuant to this 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) to each
Shareholder at its address as shown on the books of the Purchaser. The Purchaser
shall provide or cause to be provided to the Parent for this purpose, on a
timely basis and without charge or other expense current lists of the
Shareholders.
3.10 Termination of Voting Rights. All of the rights of a Shareholder with
respect to the Shareholder Vote exercisable in respect of each Exchangeable
Non-Voting Share held by such Shareholder shall be deemed to be surrendered by
the Shareholder to the Parent and such Shareholder Votes and the Voting Rights
represented thereby shall cease immediately upon the exchange, retraction or
redemption of the Exchangeable Non-Voting Shares by or from the Shareholder.
3.11 Alternative Voting Rights. In the event it is alleged or determined by any
chairman at a shareholders' meeting, the board of directors of the Parent, a
shareholder, or by any corporate or third party action or securities or judicial
authority having jurisdiction that the Shareholders are not
properly entitled to vote the Shareholder Votes or the Voting Rights, for
whatever reason, then at the sole discretion and judgment of a Shareholder, such
Shareholder may elect to suspend such Shareholder's exercise of the Shareholder
Votes or the Voting Rights and direct the Trustee, as the holder of record of
the Trust Shares, to be entitled to all of the Voting Rights attributable to
such Trust Shares. The Trustee shall exercise the Voting Rights only on the
basis of instructions received pursuant to this section 3.11 from Shareholders
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 Shareholder with respect to the Voting
Rights to which such Shareholder is entitled, the Trustee shall not exercise or
permit the exercise of such Shareholder's Voting Rights.
Any Shareholder named in a List prepared in connection with any Parent Meeting
or any Parent Consent will be entitled (a) to instruct the Trustee with respect
to the exercise of the Shareholder Votes to which such Shareholder is entitled
or (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
Shareholder Votes to which such Shareholder is entitled except, in each case, to
the extent that such Shareholder has transferred the ownership of any
Exchangeable Non-Voting Shares in respect of which such Shareholder is entitled
to Shareholder Votes after the close of business on the record date for such
meeting or seeking of consent.
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 Shareholder , the Shareholder Votes as to which such Shareholder
is entitled to direct the Voting Rights (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 Shareholder prior to the time
and date fixed by it for receipt of such instructions in the notice given by the
Trustee to the Shareholder.
The Trustee shall cause such representatives as are empowered by it to sign and
deliver, on behalf of the Trustee, proxies for Voting Rights to attend each
Parent Meeting. Upon submission by a Shareholder (or its designee) of
identification satisfactory to the Trustee's representatives, and at the
Shareholder's request, such representatives shall sign and deliver to such
Shareholder (or its designee) a proxy to exercise personally the Shareholder
Votes as to which such Shareholder is otherwise entitled hereunder to direct the
vote, if such Shareholder either (i) has not previously given the Trustee
instructions in respect of such meeting, or (ii) submits to the Trustee's
representatives written revocation of any such previous instructions. At such
meeting, the Shareholder exercising such Shareholder 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.
ARTICLE 4
EXCHANGE RIGHT AND AUTOMATIC EXCHANGE
4.1 Grant and Ownership of the Exchange Right. The Parent hereby grants to the
Shareholders the right, upon the occurrence and during the continuance of an
Insolvency Event, to require the Parent to purchase from each or any Shareholder
all or any part of the Exchangeable Non-
Voting Shares held by the Shareholder in accordance with the provisions of this
Agreement (the "Insolvency Exchange Right"). The Parent hereby acknowledges
receipt from the Shareholders of good and valuable consideration (and the
adequacy thereof) for the issuance of the Insolvency Exchange Right to them.
4.2 Legended Share Certificates. The Purchaser will cause each certificate
representing Exchangeable Non-Voting Shares to bear an appropriate legend
notifying the Shareholders of:
(a) their right with respect to the exercise of the Insolvency Exchange Right
in respect of the Exchangeable Non-Voting Shares held by a Shareholder;
(b) the Automatic Exchange Rights, and
(c) the restrictions in accordance with the United States Securities Act of
1933 and all amendments thereto.
4.3 Purchase Price. The purchase price payable by the Parent for each
Exchangeable Non-Voting Share to be purchased by the Parent under the Insolvency
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 Non-Voting Share under the
Insolvency Exchange Right plus (b) an additional amount equivalent to the full
amount of all dividends declared and unpaid on each such Exchangeable Non-Voting
Share and all dividends declared on Parent Common Shares which have not been
declared on such Exchangeable Non-Voting Shares in accordance with section 27.3
of the Exchangeable Share Provisions (provided that if the record date for any
such declared and unpaid dividends occurs on or after the day of closing of such
purchase and sale the purchase price shall not include such additional amount
equivalent to such declared and unpaid dividends). In connection with each
exercise of the Insolvency Exchange Right, the Parent will provide to the
Shareholders an Officer's Certificate setting forth the calculation of the
purchase price for each Exchangeable Non-Voting Share. The purchase price for
each such Exchangeable Non-Voting Share so purchased may be satisfied only by
delivering or causing to be delivered to the relevant Shareholder, one Parent
Common Share and a check for the balance, if any, of the purchase price without
interest.
4.4 Exercise Instructions. Subject to the terms and conditions set forth herein,
a Shareholder shall be entitled, upon the occurrence and during the continuance
of an Insolvency Event, to exercise the Insolvency Exchange Right with respect
to all or any part of the Exchangeable Non-Voting Shares registered in the name
of such Shareholder on the books of the Purchaser. To cause the exercise of the
Insolvency Exchange Right, the Shareholder shall deliver to the Parent, in
person or by certified or registered mail the certificates representing the
Exchangeable Non-Voting Shares which such Shareholder 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 Non-Voting
Shares under the Company Act (British Columbia), and the articles of the
Purchaser and such additional documents and instruments as the Parent may
reasonably require together with (a) a duly completed form of notice of exercise
of the Insolvency Exchange Right, contained on the reverse of or attached to the
Exchangeable Non-Voting Share certificates, stating (i) that the Shareholder
elects to exercise the Insolvency Exchange Right so as to require the Parent to
purchase from the Shareholder the number of Exchangeable Non-Voting Shares
specified therein, (ii) that such
Shareholder has good title to and owns all such Exchangeable Non-Voting Shares
to be acquired by Parent free and clear of all liens, claims and encumbrances,
(iii) the name in which the certificates representing Parent Common Shares
deliverable in connection with the exercise of the Insolvency 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 Purchaser and the Parent of payment) of the taxes (if any) payable as
contemplated by Section 4.7 of this Agreement. If only a part of the
Exchangeable Non-Voting Shares represented by any certificate or certificates
delivered to the Trustee are to be purchased by the Parent under the Insolvency
Exchange Right, a new certificate for the balance of such Exchangeable
Non-Voting Shares shall be issued to the Shareholder at the expense of the
Purchaser.
4.5 Delivery of Parent Common Shares; Effect of Exercise. Promptly, and as soon
as reasonably practicable after receipt of the certificates representing the
Exchangeable Non-Voting Shares which the Shareholder desires the Parent to
purchase under the Insolvency Exchange Right, together with such documents and
instruments of transfer and a duly completed form of notice of exercise of the
Insolvency Exchange Right (and payment of taxes, if any, or evidence thereof),
duly endorsed for transfer to the Parent, the Parent shall immediately
thereafter upon receipt of such notice deliver or cause to be delivered to the
Shareholder of such Exchangeable Non-Voting Shares (or to such other persons, if
any, properly designated by such Shareholder), the certificates for the number
of Parent Common Shares deliverable in connection with the exercise of the
Insolvency 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,
and checks for the balance, if any, of the total purchase price therefor. The
Parent may instruct the Trustee to use the Trust Shares it holds for delivery to
the Shareholder under the previous sentence. The Parent shall, immediately upon
receipt of such certificates representing the Exchangeable Non-Voting Shares
from the Shareholder, deliver the certificates to the registered office of the
Purchaser for cancellation. Immediately upon the giving of notice by the
Shareholder to the Parent of the exercise of the Insolvency Exchange Right, as
provided in this Section 4.5, the closing of the transaction of purchase and
sale contemplated by the Insolvency Exchange Right shall be deemed to have
occurred, and the Shareholder of such Exchangeable Non-Voting Shares shall be
deemed to have transferred to the Parent its right, title and interest in and to
such Exchangeable Non-Voting Shares and shall cease to be a Shareholder of such
Exchangeable Non-Voting Shares and shall not be entitled to exercise any of the
rights of a Shareholder in respect thereof, other than the right to receive his
proportionate part of the total purchase price therefor, unless the requisite
number of Parent Common Shares (together with a check for the balance, if any,
of the total purchase price therefor) is not allotted, issued and delivered by
the Parent to such Shareholder (or to such other persons, if any, properly
designated by such Shareholder), within five (5) Business Days of the date of
the giving of such notice by the Shareholder, in which case the rights of the
Shareholder shall remain unaffected until such Parent Common Shares are so
allotted, issued and delivered by the Parent and any such check is so delivered
and paid. Concurrently with such Shareholder ceasing to be a Shareholder of
Exchangeable Non-Voting Shares, the Shareholder shall be considered and deemed
for all purposes to be the holder of Parent Common Shares delivered to it
pursuant to the Insolvency Exchange Right.
4.6 Exercise of Insolvency Exchange Right Subsequent to Retraction. In the event
that a Shareholder has exercised its right under Article 27.6 of the
Exchangeable Share Provisions to require the Purchaser to redeem any or all of
the Exchangeable Non-Voting Shares held by the Shareholder (the "Retracted
Shares") and is notified by the Purchaser pursuant to section 27.6 (a) of
the Exchangeable Share Provisions that the Purchaser will not be permitted as a
result of solvency requirements of applicable law to redeem all such Retracted
Shares, and the Shareholder has not revoked the retraction request delivered by
the Shareholder to the Purchaser pursuant to section 27.6 (a) of the
Exchangeable Share Provisions, the retraction request will constitute and will
be deemed to constitute notice from the Shareholder to the Parent to exercise
the Insolvency Exchange Right with respect to those Retracted Shares which the
Purchaser is unable to redeem. In any such event, the Purchaser hereby agrees
with the Shareholder immediately to notify the Parent of such prohibition
against the Purchaser redeeming all of the Retracted Shares and immediately to
forward or cause to be forwarded to the Parent all relevant materials delivered
by the Shareholder to the Purchaser of the Exchangeable Non-Voting Shares
(including without limitation a copy of the retraction request delivered
pursuant to section 27.6 (a) of the Exchangeable Share Provisions) in connection
with such proposed redemption of the Retracted Shares and the Parent will
thereupon exercise the Insolvency Exchange Right with respect to the Retracted
Shares that the Purchaser is not permitted to redeem and will purchase such
shares in accordance with the provisions of this Article 4.
4.7 Stamp or Other Transfer Taxes. Upon any sale of Exchangeable Non-Voting
Shares to the Parent pursuant to the Insolvency Exchange Right or the Automatic
Exchange Rights, the share certificate or certificates representing 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 Shareholder of the
Exchangeable Non-Voting Shares so sold without charge to the Shareholder of the
Exchangeable Non-Voting Shares so sold; provided, however that such Shareholder
(a) shall pay (and neither the Parent, the Purchaser nor the Trustee shall be
required to pay) any documentary, stamp, transfer, withholding or other 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 Shareholder, or (b) shall
have established to the satisfaction of the Trustee, the Parent and the
Purchaser that such taxes, if any, have been paid.
4.8 Notice of Insolvency Event. Immediately upon the occurrence of an Insolvency
Event or any event which with the giving of notice or the passage of time or
both would be an Insolvency Event, the Purchaser and the Parent shall give
written notice thereof to the Trustee and the Shareholders, which notice shall
contain a brief statement of the right of the Shareholders with respect to the
Insolvency Exchange Right.
4.9 Qualification of Parent Common Shares. The Parent represents and warrants
that it has taken all actions and done all things as are necessary under any
United States or Canadian federal, provincial or state law or regulation or
pursuant to the rules and regulations of any regulatory authority or the
fulfilment of any other legal requirement (collectively, the "Applicable Laws")
as they exist on the date hereof and will in good faith expeditiously take all
such actions and do all such things as are necessary under Applicable Laws as
they may exist in the future to cause the Parent Common Shares to be issued and
delivered pursuant to the Exchangeable Share Provisions, the Insolvency Exchange
Right or the Automatic Exchange Rights; provided that all Parent Common Shares
will be subject to such resale restrictions as imposed by applicable securities
legislation.
4.10 Reservation of Parent Common Shares. The Parent hereby represents, warrants
and covenants that it has irrevocably reserved for issuance and will at all
times keep available, free from preemptive and other rights, out of its
authorized and unissued capital stock such number of Parent Common Shares (a) as
is equal to the sum of (i) the number of Exchangeable Non-Voting Shares issued
and outstanding from time to time and (ii) the number of Exchangeable Non-Voting
Shares
issuable upon the exercise of all rights to acquire Exchangeable Non-Voting
Shares outstanding from time to time and (b) as are now and may hereafter be
required to enable and permit the Purchaser and the Parent to meet their
respective obligations hereunder, under the Support Agreement, under the
Exchangeable Share Provisions and under any other security or commitment
pursuant to which the Parent may now or hereafter be required to issue Parent
Common Shares. To the extent permitted under Article 7 hereof, the Trust Shares
may be used to satisfy the Parent's obligations under this Section 4.10.
4.11 Automatic Exchange on Liquidation of the Parent
(a) The Parent will give the Trustee and the Shareholders notice of each of the
following events (each a "Liquidation Event") at the time set forth below:
(i) in the event of any determination by the board of directors of the
Parent to institute voluntary liquidation, dissolution or winding-up
proceedings with respect to the Parent or to effect any other
distribution of assets of the Parent among its shareholders for the
purpose of winding up its affairs, at least sixty (60) days prior to
the proposed effective date of such liquidation, dissolution,
winding-up or other distribution; or
(ii) immediately, upon the earlier of (A) receipt by the Parent of notice
of or (B) the Parent otherwise becoming aware of any threatened or
instituted claim, suit, petition or other proceedings with respect to
the involuntary liquidation, dissolution or winding-up of the Parent
or to effect any other distribution of assets of the Parent notifying
its shareholders for the purpose of winding up its affairs.
(b) Such notice shall include a brief description of the automatic exchange of
Exchangeable Non-Voting Shares for Parent Common Shares provided for in
Section 4.12(c) and the ability of a Shareholder not to participate in such
automatic exchange.
(c) In order that the Shareholders will be able to participate on a pro rata
basis with the holders of Parent Common Shares in the distribution of
assets of the Parent in connection with a Liquidation Event, on the fifth
Business Day prior to the effective date of a Liquidation Event (the
"Liquidation Event Effective Date") all of the then outstanding
Exchangeable Non-Voting Shares shall be automatically exchanged for Parent
Common Shares in the absence of an affirmative written election from a
Shareholder not to participate in the automatic exchange received by the
Parent before the fifth Business Day before the Liquidation Event Effective
Date. To effect such automatic exchange the Parent shall purchase each
Exchangeable Non-Voting Share outstanding on the fifth Business Day prior
to the Liquidation Event Effective Date and held by Shareholders, and each
Shareholder shall sell the Exchangeable Non-Voting Shares held by it at
such time, for a purchase price per share equal to (a) the Current Market
Price of one (1) Parent Common Share on the fifth Business Day prior to the
Liquidation Event Effective Date, which shall be satisfied in full by the
Parent delivering or causing to be delivered to the Shareholder one Parent
Common Share, plus (b) an additional amount equivalent to the full amount
of all dividends declared and unpaid on each such Exchangeable Non-Voting
Share and all
dividends declared on Parent Common Shares which have not been declared on
such Exchangeable Non-Voting Shares in accordance with section 27.3 of the
Exchangeable Share Provisions (provided that if the record date for any
such declared and unpaid dividends occurs on or after the day of closing of
such purchase and sale the purchase price shall not include such additional
amount equivalent to such declared and unpaid dividends). In connection
with such automatic exchange, the Parent will provide to the Shareholders
an Officer's Certificate setting forth the calculation of the purchase
price for each Exchangeable Non-Voting Share, together with a notice of the
anticipated Liquidation Event Effective Date.
(d) On the fifth Business Day prior to the Liquidation Event Effective Date,
the closing of the transaction of purchase and sale contemplated by the
automatic exchange of Exchangeable Non-Voting Shares for Parent Common
Shares shall be deemed to have occurred, and each Shareholder shall be
deemed to have transferred to the Parent all of the Shareholder's right,
title and interest in and to its Exchangeable Non-Voting Shares and shall
cease to be a Shareholder of such Exchangeable Non-Voting Shares and the
Parent shall deliver or cause to be delivered to the Shareholder Parent
Common Shares deliverable upon the automatic exchange of Exchangeable
Non-Voting Shares for Parent Common Shares and shall deliver to the
Shareholder a check for the balance, if any, of the total purchase price
for such Exchangeable Non-Voting Shares. Concurrently with such Shareholder
ceasing to be a Shareholder, the Shareholder shall be considered and deemed
for all purposes to be the holder of Parent Common Shares issued to it
pursuant to the automatic exchange of Exchangeable Non-Voting Shares for
Parent Common Shares and the certificates held by the Shareholder
previously representing the Exchangeable Non-Voting Shares exchanged by the
Shareholder with the Parent pursuant to such automatic exchange shall
thereafter be deemed to represent Parent Common Shares delivered to the
Shareholder by the Parent pursuant to such automatic exchange prior to the
surrender by the Shareholder of the Exchangeable Non-Voting Share
certificates. Upon the request of a Shareholder and the surrender by the
Shareholder of Exchangeable Non-Voting Share certificates deemed to
represent Parent Common Shares, duly endorsed in blank and accompanied by
such instruments of transfer as the Parent may reasonably require, the
Parent shall deliver or cause to be delivered to the Shareholder
certificates representing Parent Common Shares of which the Shareholder is
the holder.
4.12 Withholding Rights. The Parent will retain tax counsel to advise the Parent
and the Trustee on all income tax and withholding obligations of the Parent, the
Trust and the Trustee. The Parent and the Trustee shall be entitled to deduct
and withhold from the consideration otherwise payable pursuant to this Agreement
to any Shareholder such amounts as the Parent or the Trustee is required or
permitted to deduct and withhold with respect to the making of such payment
under the United States Internal Revenue Code of 1986 as amended (the "Code"),
the Income Tax Act (Canada) or any provision of state, local, provincial or
foreign tax law. To the extent that amounts are so withheld, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the Shareholder of the shares in respect of which such deduction and
withholding was made, provided that such withheld amounts are actually remitted
to the appropriate taxing authority. To the extent that the amount so required
or permitted to be deducted or withheld from any payment to a Shareholder
exceeds the cash portion of the consideration otherwise payable to the
Shareholder, the Parent or the Trustee is hereby authorized to sell or otherwise
dispose of at fair market value such
portion of the consideration as is necessary to provide sufficient funds to the
Parent or the Trustee, as the case may be, in order to enable it to comply with
such deduction or withholding requirement and shall account to the relevant
Shareholder for any balance of such sale proceeds.
ARTICLE 5
PURCHASE RIGHT
5.1 Grant and Ownership of the Purchase Right. In the event that a Shareholder
has exercised its right under Article 27.6 of the Exchangeable Share Provisions
to require the Purchaser to redeem any or all of the Exchangeable Non-Voting
Shares (the "Redemption") held by the Shareholder (the "Retracted Shares") the
Parent shall have the right for a period of 7 days from receipt of a Retraction
Notice by the Purchaser from a Shareholder (the "Retracting Shareholder"), to
require the Retracting Shareholder to sell to the Parent all or any part of the
Retracted Shares (the "Right to Purchase")
5.2 Purchase Price. The purchase price payable by the Parent for each Retracted
Share to be purchased by the Parent under the Right to Purchase 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 Retracted Share plus (b) an additional amount equivalent to the full amount
of all dividends declared and unpaid on each such Retracted Share and all
dividends declared on Parent Common Shares which have not been declared on such
Retracted Shares (provided that if the record date for any such declared and
unpaid dividends occurs on or after the day of closing of such purchase and sale
the purchase price shall not include such additional amount equivalent to such
declared and unpaid dividends). In connection with each exercise of the Right to
Purchase, the Parent will provide to the Shareholders an Officer's Certificate
setting forth the calculation of the purchase price for each Retracted Share.
The purchase price for each such Retracted Share so purchased may be satisfied
only by delivering or causing to be delivered to the relevant Shareholder, one
Parent Common Share and a check for the balance, if any, of the purchase price
without interest.
5.3 Exercise Instructions. Subject to the terms and conditions set forth herein,
the Parent shall be entitled for a period of 7 days from receipt by the
Purchaser of a Retraction Notice, to exercise the Right to Purchase with respect
to all or any part of the Retracted Shares registered in the name of such
Shareholder on the books of the Purchaser. To cause the exercise of the Right to
Purchase, the Parent shall deliver to the Shareholder, in person or by certified
or registered mail a notice in the following form (the "Notice"):
NOTICE OF PURCHASE
To: (the "Holder")
---------------------------
This notice is given pursuant to Paragraph 5.3 of the Exchange and
Voting Agreement.
The Parent hereby notifies the Holder that the Parent hereby elects
to purchase in accordance with paragraph 5.3 of the Exchange and
Voting Agreement Class A Exchangeable Share(s) owned by the
--------
Holder (the "Shares").
The Parent hereby notifies the Holder that the purchase date for the
Shares shall be .
-----------------
Date:
--------------------
-------------------------
Parent
5.4 Delivery of Shares. Upon receipt of the Notice the Shareholder shall
promptly deliver to the Parent the certificates representing the Retracted
Shares which the Parent desires to purchase, duly endorsed in blank, and
accompanied by such other documents and instruments as may be required to effect
a transfer of the Retracted Shares under the Company Act (British Columbia), and
the articles of the Parent and such additional documents and instruments as the
Parent may reasonably require.
5.5 Delivery of Parent Common Shares; Effect of Exercise. Promptly, and as soon
as reasonably practicable after receipt of the certificates representing the
Retracted Shares which the Parent desires to purchase, together with such
documents and instruments of transfer duly endorsed for transfer to the Parent,
the Parent shall immediately thereafter upon receipt of such certificates
deliver or cause to be delivered to the Shareholder the certificates for the
number of Parent Common Shares deliverable in connection with the exercise of
the Right to Purchase, which shares shall be duly issued as fully paid and
non-assessable and shall be free and clear of any lien, claim or encumbrance,
and checks for the balance, if any, of the total purchase price therefor. The
Parent may instruct the Trustee to use the Trust Shares it holds for delivery to
the Shareholder under the previous sentence. The Parent shall, immediately upon
receipt of such certificates representing the Retracted Shares from the
Shareholder, deliver the certificates to the registered office of the Purchaser
for cancellation. Immediately upon the giving of notice by the Parent to the
Shareholder of the exercise of the Right to Purchase, as provided in this
Section 5.5, the closing of the transaction of purchase and sale contemplated by
the Right to Purchase shall be deemed to have occurred, and the Shareholder of
such Retracted Shares shall be deemed to have transferred to the Parent its
right, title and interest in and to such Retracted Shares and shall cease to be
a Shareholder of such Retracted Shares and shall not be entitled to exercise any
of the rights of a Shareholder in respect thereof, other than the right to
receive his proportionate part of the total purchase price therefor, unless the
requisite number of Parent Common Shares (together with a check for the balance,
if any, of the total purchase price therefor) is not allotted, issued and
delivered by the Parent to such Shareholder (or to such other persons, if any,
properly designated by such Shareholder), within five (5) Business Days of the
date of the giving of such notice by the Shareholder, in which case the rights
of the Shareholder shall remain unaffected until such Parent Common Shares are
so allotted, issued and delivered by the Parent and any such check is so
delivered and paid.
5.6 Right to Rescind. In the event that a Shareholder has exercised its right
under Article 27.6 of the Exchangeable Share Provisions to require the Purchaser
to redeem the Retracted Shares and the Parent does not exercised its Right to
Purchase within the 7 day period (the "Term") the Shareholder shall have a right
to rescind its right by so advising the Purchaser in writing within 7 days of
the end of the Term.
ARTICLE 6
DIVIDENDS
6.1 Dividends. The holders of Exchangeable Non-Voting Shares will be entitled to
participate in all dividends declared by the Purchaser, in accordance with the
provisions of the Exchangeable Share Provisions and the Support Agreement.
6.2 Waiver of Dividends by Trustee. The Trustee hereby expressly waives, for and
on its own behalf and on behalf of all Shareholders, all rights to receive
dividends of every nature as may be payable to it as holder of the Trust Shares,
and the parties acknowledge that the Parent need not include the Trust Shares in
its calculations for purposes of determining the payment of dividends, and need
not pay or distribute any dividends (either in cash, shares or otherwise) to the
Trustee as holder of the Trust Shares, provided however that such waiver may be
rescinded by the Trustee upon receipt of notice from a Shareholder that the
Purchaser has omitted to pay any dividends otherwise payable or that either the
Parent or the Purchaser contests the right of the holders of Exchangeable
Non-Voting Shares to receive dividends, or the right to receive dividends on the
Exchangeable Non-Voting Shares that are otherwise in doubt whereupon the Parent
will pay and the Trustee shall collect all dividends paid on the Trust Shares
from time to time until the Trustee receives an Officer's Certificate from the
Purchaser certifying that the Purchaser is in compliance with its obligations to
pay dividends in accordance with the Exchangeable Share Provisions. Any
dividends received by the Trustee on the Trust Shares shall be paid to the
Shareholders in the same manner as dividends would have been paid by the
Purchaser to the holders of Exchangeable Non-Voting Shares.
6.3 Voting Rights. For clarity, the Voting Rights and exchange rights granted by
the Parent to the Shareholders hereunder do not in any manner confer any
additional rights to the Shareholders, including, but subject to the provisions
of the Support Agreement, any rights to receive or participate in dividends
declared or paid by the Parent.
ARTICLE 7
SUPPORT PROVISIONS
7.1 Use of Trust Shares in Connection with Support Agreement. Pursuant to
section 2.11 of the Support Agreement, the Trust Shares provide additional
security for the Parent's and the Purchaser's obligations under the Purchase
Agreement, the Exchangeable Share Provisions and the Support Agreement. In the
event that the Purchaser and the Parent both default on their obligations to
acquire the Exchangeable Non-Voting Shares pursuant to the Exchangeable Share
Provisions, the Support Agreement, or Article 4 of this Agreement, a Shareholder
may provide written notice to the Parent, the Purchaser and the Trustee of such
default. If such default is not cured within ten (10) Business Days, the
Shareholder may provide written notice to the Trustee of such failure to cure.
The Trustee shall then use the Trust Shares to satisfy the Parent's obligation
to acquire the Exchangeable Non-Voting Shares as if the Parent had instructed
the Trustee to use the Trust Shares for such purpose pursuant to section 4.5
hereof. The Exchangeable Non-Voting Shares acquired by
the Trustee in such transaction shall be distributed to the Parent. In the event
that the Trustee uses the Trust Shares to so acquire Exchangeable Non-Voting
Shares, and if the Parent is obligated to pay any declared but unpaid dividends
(or dividends declared on Parent Common Shares which have not been declared on
such Exchangeable Non-Voting Shares in accordance with section 27.3 of the
Exchangeable Share Provisions), the Parent shall remain obligated to pay such
amount to the Shareholder.
7.2 Application of Trust Shares. At such time as either the Purchaser or the
Parent acquires Exchangeable Non-Voting Shares from a Shareholder, it shall
provide the Trustee with an Officer's Certificate specifying (i) the former
Shareholder, (ii) the number of Exchangeable Non-Voting Shares acquired, (iii)
the form of the acquisition, designated by the provision of the applicable
agreement (Exchangeable Share Provisions, Support Agreement or this Agreement)
and (iv) the date of such acquisition. If such certification is made, the
Trustee shall distribute to the Parent a number of Trust Shares equal to the
number of Exchangeable Non-Voting Shares so acquired by the Parent (or, if so
requested by the Parent, distributed such Parent Common Shares to the former
Shareholder on behalf of the Parent).
ARTICLE 8
CONCERNING THE TRUSTEE
8.1 Powers and Duties of the Trustee. The rights, powers and authorities of the
Trustee under this Agreement, in its capacity as trustee of the Trust, shall
include:
(a) receiving and depositing the Trust Shares from the Parent as trustee for
and on behalf of the Shareholders in accordance with the provisions of this
Agreement;
(b) distributing materials to Shareholders as provided in this Agreement;
(c) holding title to the Trust Estate;
(d) investing any moneys forming, from time to time, a part of the Trust Estate
as provided in this Agreement; and
(e) taking such other actions and doing such other things as are specifically
provided in this 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 Agreement as the Trustee, acting
in good faith and in the reasonable exercise of its discretion, may deem
necessary or appropriate 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. Notwithstanding anything to the
contrary herein, the Trustee shall have no obligation to exercise any discretion
in the performance of its obligations hereunder and shall only be required to
act upon the express written instructions of the Parent, the Purchaser or the
Shareholders. For greater certainty, the Trustee shall have only those duties as
are set out specifically in this Agreement.
The Trustee in exercising its rights, powers, duties and authorities hereunder
shall act honestly and in good faith and in accordance with its fiduciary duties
to the Shareholders and shall exercise the care, diligence and skill that a
reasonably prudent trustee would exercise in comparable circumstances. The
Trustee shall not 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 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.
8.2 No Conflict of Interest. The Trustee represents to the Purchaser and the
Parent that at the date of execution and delivery of this 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 ninety (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.
8.3 Dealings with Third Parties. The Purchaser and the Parent irrevocably
authorize the Trustee, from time to time, to:
(a) consult, communicate and otherwise deal with any respective registrars,
transfer agents, payment agents or any other person or entity appointed
from time to time by the Parent in connection with any matter relating to
the Exchangeable Non-Voting Shares and Parent Common Shares; and
(b) requisition, from time to time, (i) from any such registrar, transfer agent
payment agent or other person or entity, appointed from time to time by the
Parent, as applicable, 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 Agreement; and (ii) from the
Purchaser, the holder of Parent Common Shares, and any subsequent holder or
agent of such shares, the share certificates issuable upon the exercise
from time to time of the Insolvency Exchange Right and pursuant to the
Automatic Exchange Rights in the manner specified in Article 4 hereof. The
Purchaser and the Parent irrevocably authorize their respective payment
agent, or any other authorized agent appointed from time to time by the
Parent to comply with all such requests.
8.4 Books and Records. The Trustee shall keep available for inspection, during
normal business hours, by the Parent and the Purchaser, at the Trustee's
principal office in Delaware, correct and complete books and records of account
relating to the Trustee's actions under this Agreement, including without
limitation all information relating to mailings and instructions to and from
Shareholders.
8.5 Income Tax Returns and Reports. The Trustee will allocate and distribute all
income and losses of the Trust to the Shareholders in each year such that the
Trust is not in a position to pay any tax or file any tax returns. Shareholders
will be individually and personally responsible for all
income and losses incurred by the Trust. In this regard, the Parent will retain
tax counsel on behalf of the Trust, and agrees to prepare and distribute to each
Shareholder all necessary tax forms for them to complete their United States and
Canadian tax returns. The Shareholders may obtain the advice and assistance of
such experts as they may consider necessary or advisable.
8.6 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 Agreement at the request, order or direction of any Shareholder upon such
Shareholder furnishing to the Trustee reasonable funding, security and indemnity
against the costs, expenses and liabilities which may be incurred by the Trustee
therein or thereby.
The Trustee shall not be required to expend any of its own funds or otherwise
incur any financial liability in the exercise of any of its rights, powers,
duties or authorities, but instead shall be entitled to be fully funded, given
security and indemnity in advance as aforesaid.
8.7 Actions by Shareholders. Shareholders shall be entitled to take proceedings
in any court of competent jurisdiction to enforce any of their rights hereunder
as against the Purchaser and the Parent.
8.8 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.
8.9 Evidence and Authority to the Trustee. The Purchaser and the Parent shall
furnish to the Trustee evidence of compliance with the conditions provided for
in this Agreement relating to any action or step required or permitted to be
taken by the Purchaser and/or the Parent for the Trustee under this Agreement or
as a result of any obligation imposed under this Agreement including, without
limitation, in respect of the Insolvency Exchange Right, the Right to Purchase
or the Automatic Exchange Rights and the taking of any other action to be taken
by the Trustee at the request of or on the application of the Purchaser and the
Parent forthwith if and when:
(a) such evidence is required by any other section of this Agreement to be
furnished to the Trustee in accordance with the terms of this Section 8.9;
or
(b) the Trustee, in the exercise of its rights, powers, duties and authorities
under this Agreement, gives the Purchaser 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 Purchaser and/or
the Parent, 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 Agreement.
Whenever such evidence relates to a matter other than the Voting Rights, the
Insolvency Exchange Right or the Automatic Exchange Rights 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 him, provided that if such report or opinion is furnished
by a director, officer or employee of the Purchaser and/or the Parent shall be
in the form of an Officer's Certificate or a statutory declaration.
Each statutory declaration, certificate, opinion, report or other paper or
document furnished to the Trustee as evidence of compliance with a condition
provided for in this Agreement shall include a statement by the person giving
the evidence:
(a) declaring that he has read and understands the provisions of this Agreement
relating to the condition in question;
(b) describing the nature and scope of the examination or investigation upon
which he based the statutory declaration, certificate, statement or
opinion; and
(c) declaring that he has made such examination or investigation as he believes
is necessary to enable him to make the statements or give the opinions
contained or expressed therein.
8.10 Experts, Advisors and Agents. The Trustee may:
(a) in relation to these presents, act and rely on the opinion or advice of or
information obtained from any solicitor, auditor, accountant, appraiser,
valuer, engineer or other expert, whether retained by the Trustee or by the
Purchaser and/or the Parent or otherwise, and may employ such assistants as
may be necessary to the proper 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
without taxation for costs and fees; and
(b) employ such agents and other assistants as it may reasonably require for
the proper 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 compensation for all
disbursements, costs and expenses made or incurred by it in the discharge
of its duties hereunder and in the management of the Trust without taxation
for costs and fees, which compensation reimbursement may be requested to be
received in advance prior to undertaking any actions hereunder.
8.11 Investment of Moneys Held by the Trustee. Unless otherwise provided in this
Agreement, any moneys held by or on behalf of the Trustee which under the terms
of this 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 moneys, provided that such securities are stated to
mature within two (2) years after their purchase by the Trustee, and the Trustee
shall so invest such moneys on the written direction of the Purchaser. Pending
the investment of any moneys as hereinbefore provided, such moneys may be
deposited in the name of the Trustee in any bank, loan or trust company
authorized to accept deposits under the laws of the United States, Canada or any
state or province thereof, at the rate of interest then current on similar
deposits.
8.12 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 Agreement or otherwise in respect of the
premises.
8.13 Trustee Not Bound to Act on Corporation's Request. Except as in this
Agreement or otherwise specifically provided, the Trustee shall not be bound to
act in accordance with any direction or request of the Purchaser and/or the
Parent or 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.
8.14 Conflicting Claims. If conflicting claims or demands are made or asserted
with respect to any interest of any Shareholder in any Exchangeable Non-Voting
Shares, including any disagreement between the heirs, representatives,
successors or assigns succeeding to all or any part of the interest of any
Shareholder in any Exchangeable Non-Voting 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 Insolvency Exchange Right or Automatic Exchange 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 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 Insolvency
Exchange Right or Automatic Exchange 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 Insolvency Exchange Right or
Automatic Exchange 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.
8.15 Acceptance of Trust. The Trustee hereby accepts the Trust created and
provided for by and in this Agreement and agrees to perform the same upon the
terms and conditions set forth herein 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 Shareholders, subject to all the terms and conditions set
forth herein.
8.16 Validity of Certificates. If at any time in the performance of its duties
under this Agreement, it shall be necessary for the Trustee to receive, accept,
act or rely upon any certificate, notice, request, waiver, consent, receipt,
direction, affidavit or other paper, writing or document furnished to it and
purporting to have been executed or issued by the Purchaser, the Parent or the
Shareholders or their authorized officers or attorneys, the Trustee shall be
entitled to rely and act upon the genuineness and authenticity of any such
writing submitted to it. It shall not be necessary for the Trustee to ascertain
whether or not the persons who have executed, signed or otherwise issued,
authenticated or receipted such papers, writings or documents have authority to
do so or that they are the same persons named therein or otherwise to pass upon
any requirement of such papers, writing or documents that may be essential for
their validity or effectiveness or upon the truth and acceptability of any
information contained therein which the Trustee in good faith believes to be
genuine
ARTICLE 9
COMPENSATION
9.1 Fees and Expenses of the Trustee. The Parent and Purchaser jointly and
severally agree to pay to the Trustee reasonable compensation for all of the
services rendered by it under this Agreement and will reimburse the Trustee for
all reasonable expenses and disbursements, including, without limitation, legal
fees and expenses and the reasonable compensation and disbursements of all other
advisors, agents and assistants not regularly in its employ and 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 Agreement; provided that the Parent and the
Purchaser 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 fraudulently or in
bad faith or with gross negligence or willful misconduct. The Trustee shall be
obliged to provide only one account or invoice to the Parent from time to time
during this Agreement in connection with any services rendered by it under this
Agreement on behalf of any of the parties.
ARTICLE 10
INDEMNIFICATION AND LIMITATION OF LIABILITY
10.1 Indemnification of the Trustee. The Parent and Purchaser jointly and
severally agree to indemnify and hold harmless the Trustee and each of its
directors, officers, partners, employees and agents appointed and acting in
accordance with this Agreement (collectively, the "Indemnified Parties") against
all claims, losses, damages, costs, penalties, fines and reasonable expenses
(including reasonable expenses of the Trustee's legal counsel) which, without
fraud, gross negligence, willful misconduct or bad faith on the part of such
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 Agreement, or any
written or oral instructions delivered to the Trustee by the Parent or the
Purchaser pursuant hereto. Subject to (ii), below, the Parent and the Purchaser
shall be entitled to participate at their own expense in the defence and, if the
Parent and the Purchaser so elect at any time after receipt of such notice,
either of them may assume the defence of any suit brought to enforce any such
claim. In the event the Parent and/or the Purchaser assume the defence of the
Trustee, no settlement of any claim shall be entered into without the prior
approval of the Trustee; and the Trustee shall have the right to re-assume the
defence of any suit if the Parent or Purchaser fail to actively continue such
defence so assumed. 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: (i) the employment of such
counsel has been authorized by the Parent or the Purchaser; or (ii) the named
parties to any such suit include both the Trustee and the Parent; or (iii) the
Purchaser and the Trustee shall have been advised by counsel acceptable to the
Parent or the Purchaser that there may be one or more legal defences available
to the Trustee which are different from or in addition to those available to the
Parent or the Purchaser (in which case the Purchaser 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).
10.2 Limitation of Liability. The Trustee shall not be liable for any act or
omission by it except where such act or omission occurs as a result of the
Trustee's gross negligence or willful misconduct. The Trustee shall not be
liable for any losses or damages due to the acts or omissions of third parties,
including without limitation, the failure by the Parent and/or the Purchaser to
comply with its obligations under this Agreement, as the case may be. Under no
circumstances shall the Trustee be liable for any special, indirect or
consequential losses or damages (including without limitation loss of profits
and penalties) whether caused by the Trustee's negligence or that of its
employees, agents or otherwise. 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
Agreement except to the extent that such loss is attributable to the fraud,
gross negligence, willful misconduct or bad faith on the part of the Trustee.
ARTICLE 11
CHANGE OF TRUSTEE
11.1 Resignation. The Trustee, or any trustee hereafter appointed, may at any
time resign by giving written notice of such resignation to the Parent and the
Purchaser specifying the date on which it desires to resign, provided that such
notice shall never be given less than thirty (30) days before such desired
resignation date unless the Parent and the Purchaser 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 and
the Purchaser 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.
11.2 Removal. The Trustee, or any trustee hereafter appointed at any time on
thirty (30) days' prior notice by written instrument executed by the Parent and
the Purchaser, in duplicate, one copy of which shall be delivered to the trustee
so removed and one copy to the successor trustee. Any successor trustee to be
appointed upon the removal of the Trustee shall be appointed in accordance with
the provisions as provided under Section 11.3 of this Agreement.
11.3 Successor Trustee. Any successor trustee appointed as provided under this
Agreement shall execute, acknowledge and deliver to the Parent and the Purchaser
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 Agreement with like effect as if
originally named as trustee in this Agreement. However,
on the written request of the Parent and the Purchaser 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 Agreement, execute and deliver an
instrument transferring to such successor trustee all of the rights and powers
of the trustee so ceasing to act. Upon the request of any such successor
trustee, the Parent and the Purchaser 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.
11.4 Notice of Successor Trustee. Upon acceptance of appointment by a successor
trustee as provided herein the Parent and the Purchaser shall cause to be mailed
notice of the succession of such trustee hereunder to each Shareholder at the
address of such Shareholder shown on the register of Shareholders of
Exchangeable Non-Voting Shares. If the Parent or the Purchaser shall fail to
cause such notice to be mailed within ten (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 and the Purchaser.
ARTICLE 12
THE PARENT SUCCESSORS
12.1 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:
(a) such other person or continuing corporation is a corporation (herein
called the "Parent Successor") incorporated under the laws of any
state of the United States or the laws of Canada or any province
thereof; and
(b) the Parent Successor, by operation of law, becomes, without more,
bound by the terms and provisions of this Agreement or, if not so
bound, executes, prior to or contemporaneously with the consummation
of such transaction a Agreement supplemental hereto and such other
instruments (if any) as are satisfactory to the Trustee and in the
opinion of legal counsel to the Trustee are necessary or advisable to
evidence the assumption by the Parent Successor of liability for all
moneys 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 of the covenants
and obligations of the Parent under this Agreement.
12.2 Vesting of Powers in Successor. Whenever the conditions of Section 12.1
hereof have been duly observed and performed, the Trustee, if required by
Section 12.1 hereof, the Parent Successor and the Purchaser shall execute and
deliver the supplemental Agreement provided for in Article 13 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 Agreement in the name of the Parent or
otherwise and any act or proceeding by any provision of this Agreement required
to be done or performed by the board of directors of Parent or any officers of
the Parent may be done and performed with like force and effect by the directors
or officers of such the Parent Successor.
12.3 Wholly-Owned Subsidiaries. Nothing herein shall be construed as preventing
the amalgamation, merger or sale of any wholly-owned subsidiary of the Parent
with or into the Parent, the winding-up 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, and nothing herein
shall prohibit the Parent in any manner whatsoever from selling, transferring or
otherwise disposing of any and all of the assets of the Parent including,
without limitation, any and all of the assets of such subsidiary provided that
all of the assets of such subsidiary are transferred to the Parent or another
wholly-owned subsidiary of the Parent.
ARTICLE 13
AMENDMENTS AND SUPPLEMENTAL TRUST AGREEMENTS
13.1 Amendments, Modifications, etc. This Agreement may not be amended or
modified except by an agreement in writing executed by the Purchaser, the
Trustee, the Parent and the Shareholders in accordance with section 27.10 of the
Exchangeable Share Provisions.
13.2 Meeting to Consider Amendments. The Purchaser, at the request of the Parent
shall call a meeting or meetings of the Shareholders 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 by-laws of the Purchaser, the Exchangeable Share Provisions and all
applicable laws.
13.3 Changes in Capital of Parent or the Purchaser. At all times after the
occurrence of any event effected pursuant to section 2.7 or 2.8 of the Support
Agreement, as a result of which either Parent Common Shares or the Exchangeable
Non-Voting Shares or both are in any way changed, this Agreement shall forthwith
be amended and modified as necessary in order that it shall apply with full
force and effect, mutatis mutandis, to all new securities into which Parent
Common Shares or the Exchangeable Non-Voting Shares or both are so changed and
the parties hereto shall execute and deliver a supplemental Agreement giving
effect to and evidencing such necessary amendments and modifications.
13.4 Execution of Supplemental Agreements. No amendment to or modification or
waiver of any of the provisions of this Agreement otherwise than as permitted
hereunder shall be effective unless made in writing and signed by all of the
parties hereto. From time to time the parties may, subject to the provisions of
these presents, and they shall, when so directed by these presents, execute and
deliver by their proper officers, 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 12 and the successor of any
successor trustee in accordance with the provisions of Article 11;
(b) making any additions to, deletions from or alterations of the
provisions of this Agreement or the Insolvency Exchange Right or the
Automatic Exchange Rights which, in the opinion of the Parent and its
counsel, will not be prejudicial to the interests of the Shareholders
as a whole or are in the opinion of counsel to the Parent necessary
or advisable in order to incorporate, reflect or comply with any
legislation the provisions of which apply to the parties or this
Agreement; and
(c) for any other purposes not inconsistent with the provisions of this
Agreement, including without limitation to make or evidence any
amendment or modification to this Agreement as contemplated hereby,
provided that, in the opinion of the Parent and its counsel, the
rights of the Trustee and the Shareholders as a whole will not be
prejudiced thereby.
ARTICLE 14
TERMINATION
14.1 Term. The Trust created by this Agreement shall continue until the earliest
to occur of the following events:
(a) no outstanding Exchangeable Non-Voting Shares are held by any Shareholder;
(b) each of the Purchaser and the Parent acts in writing to terminate the Trust
and such termination is approved by the Shareholders of the Exchangeable
Non-Voting Shares in accordance with section 27.10 of the Exchangeable
Share Provisions; and
(c) December 31, 2100.
14.2 Survival of Agreement. Subject to the provisions of Section 14.1(b) hereof,
this Agreement shall survive any termination of the Trust and shall continue
until there are no Exchangeable Non-Voting Shares outstanding held by any
Shareholder; and for clarity, that the provisions of Articles 8 and 9 shall
survive any such termination of the Trust or this Agreement.
ARTICLE 15
GENERAL
15.1 Severability. If any provision of this Agreement is held to be invalid,
illegal or unenforceable, the validity, legality or enforceability of the
remainder of this Agreement shall not in any way be affected or impaired thereby
and the agreement shall be carried out as nearly as possible in accordance with
its original terms and conditions.
15.2 Inurement. This Agreement shall be binding upon and endure to the benefit
of the parties hereto and their respective successors and permitted assigns and
to the benefit of the Shareholders.
15.3 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
facsimile to the parties at the following addresses (or at such other address
for such party as shall be specified in like notice):
If to the Corporation: XX Xxx 000 0000 Xxxxxxxxx Xx. Xxxxxxxx, X.X. XxxxxxX0X 0X0
If to the Trustee: 0000 00xx Xxx Xxxxxx X.X. Xxxxxx
If to the Parent: Xxxxx 0000, 000 Xxxxxxx Xxxxxx, Xxxxxxxxx X.X. Xxxxxx X0X 0X0
If to a Shareholder: XX Xxx 000 0000 Xxxxxxxxx Xx. Xxxxxxxx, X.X. XxxxxxX0X 0X0
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.
15.4 Notice of Shareholders. Any and all notices to be given and any documents
to be sent to any Shareholders may be given or sent to the address of such
Shareholder shown on the register of Shareholders in any manner permitted by the
by-laws of the Purchaser 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 by-laws, the provisions of which by-laws
shall apply mutatis mutandis to notices or documents as aforesaid sent to such
Shareholders.
15.5 Risk of Payments by Mail. Whenever payments are to be made or documents are
to be sent to any Shareholder by the Trustee or by the Purchaser, or by such
Shareholder to the Trustee or to the Parent or the Purchaser, the making of such
payment or sending of such document sent through the mail shall be at the risk
of the Purchaser, in the case of payments made or documents sent by the Trustee
or the Purchaser, and the Shareholder, in the case of payments made or documents
sent by the Shareholder.
15.6 Counterparts. This 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.
15.7 Jurisdiction. This Agreement shall be construed and enforced in accordance
with the laws of the State of Delaware and the laws of the United States
applicable therein, except insofar as it relates to internal governance of the
Purchaser, which is to be construed and enforced in accordance with the laws of
the Province of British Columbia and the laws of Canada applicable therein.
15.8 Attornment. The Parent and the Purchaser each agree that any action or
proceeding arising out of or relating to this Agreement may be instituted in the
courts of the State of Nevada, each waives any objection which it may have now
or hereafter to the venue of any such action or proceeding, irrevocably submits
to the non-exclusive jurisdiction of the said courts in any such action or
proceeding, agrees to be bound by any judgment of the said courts and not to
seek, and hereby waives, any review of the merits of any such judgment by the
courts of any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
SIERRA GIGANTE RESOURCES LTD.
Per: /s/ Xxxxxxx Xxxxx
---------------------------
(Authorized Signatory)
648311 B.C. LTD.
Per: /s/ Xxxxxxx Xxxxx
---------------------------
(Authorized Signatory)
CANADIAN IMPERIAL BANK OF COMMERCE
Per:
---------------------------
(Authorized Signatory)
SIGNED, SEALED AND DELIVERED
BY Xxxx Xxxxxxx Xxxxxx in the presence
of:
/s/ X.X. Xxxxxx
---------------------------
Xxxx Xxxxxxx Xxxxxx
-----------------------------------
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY Xxxxx Xxxx Xxxxxxxx-Xxxxxx
in the presence of:
/s/ Xxxxx Xxxxxxxx - Xxxxxx
---------------------------
----------------------------------- Xxxxx Xxxx Xxxxxxxx-Xxxxxx
Signature of Witness
/s/ X.X. Xxxxxx
-----------------------------------
Name of Witness
XXXX XXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxxx Xxxxxx Black in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxx Xxxxxx Black
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxx Xxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY S. Xxxx Xxxxxx and Xxxxxx Xxxxxx
(Jointly) in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
S. Xxxx Xxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx /s/ X.X. Xxxxxx/as attorney for
----------------------------------- -------------------------------
Xxxxxx Xxxxxx
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxxx Xxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxx Xxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxx Xxxxxxxxx Xxxxxx (Xxxxxxxx) in the presence
of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxx Xxxxxxxxx Xxxxxx (Xxxxxxxx)
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxxx Xxxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxx Xxxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY Xxxxxxx X. Xxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxxxx X. Xxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxx Xxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxx Xxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxxx Xxxx Xxxxxxx and Xxxxxxx Xxxx Xxxxxxx
(Jointly) in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxx Xxxx Xxxxxxx
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
Xxxxxxx Xxxx Xxxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxxxxxx Xxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxxxxx Xxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxxxxx Xxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxxxx Xxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxxxxx Xxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxxxx Xxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxxx Xxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxx Xxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY X.X. (Xxx) Xxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- X.X. (Xxx) Xxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxx Xxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxx Xxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxxxx Xxxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxxx Xxxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY Xxxxxxx Xxxxxx Xxxxx in the
presence of:
-------------------------------
----------------------------------- Xxxxxxx Xxxxxx Xxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxx Xxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxx Xxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY Xxxxxxx Xxxxxx Schalkwyk in the
presence of:
-------------------------------
----------------------------------- Xxxxxxx Xxxxxx Schalkwyk
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxxx Xxxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxx Xxxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY Xxxxxxx X. Xxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxxxx X. Xxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY Xxxxxxxxxxx X. Xxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxxxxxxxx X. Xxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY Xxxxxxx X. Xxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxxxx X. Xxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY Xxxxxx X. Xxxxxx in the presence of:
-------------------------------
----------------------------------- Xxxxxx X. Xxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxxxx Xxxxxx in the presence of:
-------------------------------
----------------------------------- Xxxxxx Xxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY Xxxxxx X. Xxxxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxxx X. Xxxxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxxxx Xxxxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxxx Xxxxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xx Xxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xx Xxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY D. Xxxx Xxxxxx Trust in the
presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- D. Xxxx Xxxxxx Trust
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxxxxx Xxxxxxxx in the presence of:
-------------------------------
----------------------------------- Xxxxxxx Xxxxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxx Xxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxx Xxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY Xxxxxxx X. Xxxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxxxx X. Xxxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxxx Xxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxx Xxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY Xxxxxx X. Xxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxxx X. Xxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED BY Xxxxxx Xxxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xxxxxx Xxxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY Xxxxx X. Xxxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
Xxxxx X. Xxxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
SIGNED, SEALED AND DELIVERED
BY Xx. Xxxx X. Xxxxx in the presence of:
/s/ X.X. Xxxxxx/as attorney for
-------------------------------
----------------------------------- Xx. Xxxx X. Xxxxx
Signature of Witness
/s/ Xxxxx Xxxxxxxx Xxxxxx
-----------------------------------
Name of Witness
XXXXX XXXXXXXX XXXXXX
-----------------------------------
Xxxxxxx xx Xxxxxxx
X.X. XXX 000, XXXXXXXX, X.X. X0X 0XX
-----------------------------------
-----------------------------------
Per: LFT Investments Inc.
-----------------------------------
Per: CSC Capital Inc.
APPENDIX "A"
NAMES OF SHAREHOLDERS AND THEIR SHAREHOLDINGS IN THE PURCHASER
Name No. of Exchangeable Shares
Xxxx Xxxxxxx Xxxxxx 2,475,000 Common shares
Xxxxx Xxxx Xxxxxxxx-Xxxxxx 2,475,000 Common shares
Xxxxx Xxxxxx Black 975,000 Common shares
Xxxx Xxxxxx 975,000 Common shares
S. Xxxx Xxxxxx and
Xxxxxx Xxxxxx (Jointly) 975,000 Common shares
Xxxxx Xxxx 975,000 Common shares
Xxxx Xxxxxxxxx Xxxxxx (Xxxxxxxx) 975,000 Common shares
Xxxxx Xxxxxxx 225,000 Common shares
Xxxxx Xxxx Xxxxxxx and
Xxxxxxx Xxxx Xxxxxxx (Jointly) 75,000 Common shares
Xxxxxxx X. Xxxxxx 225,000 Common shares
LFT Investments Inc. 187,500 Common shares
CSC Capital Inc. 187,500 Common shares
Xxxx Xxxx 187,500 Common shares
Xxxxxxxx Xxxxxx: 187,500 Common shares
Xxxxxxx Xxxxx 112,500 Common shares
Xxxxxxx Xxxxxx 187,500 Common shares
Xxxxx Xxxxxx 75,000 Common shares
X.X. (Xxx) Xxxxxx 75,000 Common shares
Xxxx Xxxxxx 75,000 Common shares
Xxxxxx Xxxxxxx 37,500 Common shares
Xxxxxxx Xxxxxx Xxxxx 18,750 Common shares
Xxxxxxx Xxxxxx Schalkwyk 18,750 Common shares
Xxxx Xxxxxx 18,750 Common shares
Xxxxx Xxxxxxx 37,500 Common shares
Xxxxxxx X. Xxxxxx 18,750 Common shares
Xxxxxxx X. Xxxxxx 18,750 Common shares
Xxxxxx X. Xxxxxx 37,500 Common shares
Xxxxxx Xxxxxx 18,750 Common shares
Xxxxxxxxxxx X. Xxxxxx 18,750 Common shares
Xxxxxx X. Xxxxxxxx 18,750 Common shares
Xxxxxx Xxxxxxxx 18,750 Common shares
Xx Xxxxxx 18,750 Common shares
D. Xxxx Xxxxxx Trust 18,750 Common shares
Xxxxxxx Xxxxxxxx 37,500 Common shares
Xxx Xxxxx 18,750 Common shares
Xxxxxxx X. Xxxxxxx 18,750 Common shares
Xxxxx Xxxxx 18,750 Common shares
Xxxxxx X. Xxxxx 18,750 Common shares
Xxxxxx Xxxxxxx 37,500 Common shares
Xxxxx X. Xxxxxx 18,750 Common shares
SCHEDULE "C"
CORPORATION'S FINANCIALS
SCHEDULE "D"
PARENT'S FINANCIALS
SCHEDULE "E"
CORPORATION PERMITTED LIENS
Nil
SCHEDULE "F"
INTELLECTUAL PROPERTY RIGHTS OF THE CORPORATION
SCHEDULE "G"
PROVISIONS ATTACHING TO EXCHANGEABLE NON-VOTING SHARES OF
648311 B.C. LTD. (the "COMPANY")
PART 27
SPECIAL RIGHTS AND RESTRICTIONS ATTACHED
TO CLASS A EXCHANGEABLE SHARES
The Class A Exchangeable Shares in the capital of the Company shall have
attached thereto the following rights, privileges, restrictions and conditions:
27.1 For the purposes of this Article:
"Affiliate" of any person means any other person directly or
indirectly controlled by, or under common control of, that person.
For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common
control of"), as applied to any person, means the possession by
another person, directly or indirectly, of the power to direct or
cause the direction of the management and policies of that first
mentioned person, whether through the ownership of voting securities,
by contract or otherwise.
"Automatic Redemption Date" means the date for the automatic
redemption by the Company of Class A Exchangeable Shares pursuant to
Article 27.7 of these special rights and restrictions, which date
shall be the twenty-fifth anniversary of the Closing Date unless (a)
such date shall be extended at anytime or from time to time to a
specified later date by the board of directors or (b) such date shall
be accelerated at any time to a specified earlier date by the board
of directors if at such time there are less than 200 Class A
Exchangeable Shares outstanding (other than Class A Exchangeable
Shares held by the Parent and its Affiliates and as such number of
shares may be adjusted as deemed appropriate by the board of
directors to give effect to any subdivision or consolidation of or
stock dividend on the Class A Exchangeable Shares, any issue or
distribution of rights to acquire Class A Exchangeable Shares or
securities exchangeable for or convertible into Class A Exchangeable
Shares, any issue or distribution of other securities or rights or
evidences of indebtedness or assets, or any other capital
reorganization or other transaction affecting the Class A
Exchangeable Shares), in each case upon at least sixty (60) days'
prior written notice of any such extension or acceleration, as the
case may be, to the registered holders of
the Class A Exchangeable Shares, in which case the Automatic
Redemption Date shall be such later or earlier date.
"Automatic Redemption" has the meaning ascribed thereto in Article
27.7 of these special rights and restrictions.
"CANS" means the Company Act, British Columbia.
"Board of directors" means the board of directors of the Company.
"Business Day" means any day other than a Saturday, a Sunday or a day
when banks are not open for business in either or both of Xxx Xxxx,
Xxx Xxxx xxx Xxxxxxx, Xxxxxxx Xxxxxxxx.
"Canadian Dollar Equivalent" means in respect of an amount expressed
in a foreign currency (the "Foreign Currency Amount") at any date the
product obtained by multiplying (a) the Foreign Currency Amount by
(b) the exchange rate on such date for such foreign currency
expressed in Canadian dollars as reported in The Wall Street Journal
under "Currency Trading; Exchange Rates", or, in the event such
exchange rate is not available, such exchange rate on such date for
such foreign currency expressed in Canadian dollars as may be deemed
by the board of directors to be appropriate for such purpose.
"Closing Date" means the date of issuance of the Exchangeable
Non-Voting Shares.
"Common Shares" means the voting common shares in the capital of the
Company.
"Company" means 648311 B.C. Ltd., a company formed under the laws of
British Columbia.
"Current Market Price" means, in respect of a Parent Common Share on
any date, the Canadian Dollar Equivalent of the closing price of the
Parent Common Shares on such stock exchange or automated quotation
system on which the Parent Common Shares are listed or quoted, as the
case may be, as may be selected by the board of directors for such
purpose; provided, however, that if there is no public distribution
or trading activity of the Parent Common Shares during such period,
then the Current Market Price of a Parent Common Share shall be
determined by the board of directors based upon the advice of such
qualified independent financial advisors as the board of directors
may deem to be appropriate, and provided further that any such
selection, opinion or determination by the board of directors shall
be conclusive and binding.
"Class A Exchangeable Shares" mean the Class "A" exchangeable,
non-voting, participating common shares without par value in the
capital of the Company having the rights, privileges, restrictions
and conditions set forth herein.
"Exchange and Voting Agreement" means the Exchange and Voting
Agreement among the Company, the Parent and the Trustee.
"Liquidation Amount" has the meaning ascribed thereto in Article
27.5(a) of these special rights and restrictions.
"Liquidation Date" has the meaning ascribed thereto in Article
27.5(a) of these special rights and restrictions.
"Parent", means SIERRA GIGANTE RESOURCES LTD., a Company organized
and existing under the laws of the State of Nevada, and any
successor Company.
"Parent Common Shares" mean the shares of common stock of the Parent
without par value having voting rights of one vote per share, and any
other securities into which such shares may be changed.
"Parent Dividend Declaration Date" means the date on which the board
of directors of the Parent declares any dividend on the Parent Common
Shares.
"Purchase Price" has the meaning ascribed thereto in Article 27.6(c)
of these special rights and restrictions.
"Redemption Price" has the meaning ascribed thereto in Article 27.7
of these special rights and restrictions.
"Retracted Shares" has the meaning ascribed thereto in Article
27.6(a) i) of these special rights and restrictions.
"Retraction Date" has the meaning ascribed thereto in Article 27.6(a)
ii) of these special rights and restrictions.
"Retraction Price" has the meaning ascribed thereto in Article
27.6(a) of these special rights and restrictions.
"Retraction Request" has the meaning ascribed thereto in Article
27.6(a) of these special rights and restrictions.
"Support Agreement" means the Support Agreement between the Parent
and the Company.
"Trustee" means the person appointed as Trustee under the Exchange
and Voting Agreement.
27.2 The Class A Exchangeable Shares shall be entitled to a preference over the
Common Shares and any other shares ranking junior to the Class A Exchangeable
Shares with respect to the payment of dividends and the distribution of assets
in the event of the liquidation, dissolution or winding-up of the Company,
whether voluntary or involuntary, or any other distribution of the assets of the
Company among its shareholders for the purpose of winding up its affairs.
27.3 (a) A holder of a Class A Exchangeable Share shall be entitled to receive
and the board of directors shall, subject to applicable law, on each
Parent Dividend Declaration
Date, declare a dividend on each Class A Exchangeable Share (i) in the
case of a cash dividend declared on the Parent Common Shares, in an
amount in cash for each Class A Exchangeable Share equal to the
Canadian Dollar Equivalent on the Parent Dividend Declaration Date of
the cash dividend declared on each Parent Common Share, (ii) in the
case of a stock dividend declared on the Parent Common Shares to be
paid on the Parent Common Shares, in such number of Class A
Exchangeable Shares for each Class A Exchangeable Share as is equal to
the number of the Parent Common Shares to be paid on each Parent
Common Share or (iii) in the case of a dividend declared on the Parent
Common Shares in property other than cash or the Parent Common Shares,
in such type and amount of property for each Class A Exchangeable
Share as is the same as or economically equivalent to (to be
determined by the board of directors as contemplated by section 2.7 of
the Support Agreement) the type and amount of property declared as a
dividend on each Parent Common Share. Such dividends shall be paid out
of money, assets or property of the Company properly applicable to the
payment of dividends, or out of authorized but unissued shares of the
Company.
(b) Checks of the Company payable at any branch of the bankers of the
Company shall be issued in respect of any cash dividends contemplated
by Article 27.3(a) i) hereof and the sending of such a check to each
holder of a Class A Exchangeable Share shall satisfy the cash dividend
represented thereby unless the check is not paid on presentation.
Certificates registered in the name of the registered holder of Class
A Exchangeable Shares shall be issued or transferred in respect of any
stock dividends contemplated by Article 27.3(a) ii) hereof and the
sending of such a certificate to each holder of a Class A Exchangeable
Share shall satisfy the stock dividend represented thereby. Such other
type and amount of property in respect of any dividends contemplated
by Article 27.3(a) iii) hereof shall be issued, distributed or
transferred by the Company in such manner as it shall determine and
the issuance, distribution or transfer thereof by the Company to each
holder of a Class A Exchangeable Share shall satisfy the dividend
represented thereby. No holder of a Class A Exchangeable Share shall
be entitled to recover by action or other legal process against the
Company any dividend that is represented by a check that has not been
duly presented to the Company's bankers for payment or that otherwise
remains unclaimed for a period of six (6) years from the date on which
such dividend was payable.
(c) The record date for the determination of the holders of Class A
Exchangeable Shares entitled to receive payment of, and the payment
date for, any dividend declared on the Class A Exchangeable Shares
under Article 27.3(a) hereof shall be the same dates as the record
date and payment date, respectively, for the corresponding dividend
declared on the Parent Common Shares.
(d) If on any payment date for any dividends declared on the Class A
Exchangeable Shares under Article 27.3(a) hereof the dividends are not
paid in full on all of the Class A Exchangeable Shares then
outstanding, any such dividends that remain unpaid shall be paid on a
subsequent date or dates determined by the board of
directors on which the Company shall have sufficient moneys, assets or
property properly applicable to the payment of such dividends.
27.4 (a) So long as any of the Class A Exchangeable Shares are outstanding, the
Company shall not at any time without, but may at any time with, the
approval of the holders of the Class A Exchangeable Shares given as
specified in Article 27.10(b) of these special rights and restrictions:
i) pay any dividends on the Common Shares or any other shares ranking
junior to the Class A Exchangeable Shares, other than stock dividends
payable in Common Shares or any such other shares ranking junior to
the Class A Exchangeable Shares, as the case may be;
ii) redeem, or purchase or make any capital distribution in respect of
Common Shares or any other shares ranking junior to the Class A
Exchangeable Shares;
iii) redeem or purchase any other shares of the Company ranking equally
with the Class A Exchangeable Shares with respect to the payment of
dividends or on any liquidation distribution; or
iv) except as provided in Article 27.3(a) of these special rights and
restrictions, issue any Class A Exchangeable Shares or any other
shares of the Company ranking equally with or superior to, the Class A
Exchangeable Shares with respect to the payment of dividends or on any
liquidation distribution, by way of stock dividends to the holders of
such Class A Exchangeable Shares or as contemplated by the Support
Agreement.
The restrictions in Articles 27.4(a) i), 27.4(a) ii) and 27.4(a) iii)
above shall not apply if all dividends on the outstanding Class A
Exchangeable Shares corresponding to dividends declared following the
initial date of issue of Class A Exchangeable Shares on the Parent
Common Shares shall have been declared on the Class A Exchangeable
Shares and paid in full.
27.5 (a) In the event 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, a holder
of Class A Exchangeable Shares shall be entitled, subject to
applicable law, to receive from the assets of the Company in respect
of each Class A Exchangeable Share held by such holder on the
effective date (the "Liquidation Date") of such liquidation,
dissolution or winding-up, before any distribution of any part of the
assets of the Company among the holders of the Common Shares or any
other shares ranking junior to the Class A Exchangeable Shares, an
amount per share (the "Liquidation Amount") equal to the greater of:
i) the sum of (a) the Current Market Price of a Parent Common Share
on the last Business Day prior to the Liquidation Date, which
shall be satisfied in full by the Company causing to be delivered
to such holder one Parent
Common Share, plus (b) an additional amount equivalent to the
full amount of a unpaid dividends on each such Class A
Exchangeable Share and all dividends declared on the Parent
Common Shares which have not been declared on such Class A
Exchangeable Shares in accordance with Article 27.3(a) of these
special rights and restrictions, provided that if the record date
for any such declared and unpaid dividends occurs
on or after the Liquidation Date it shall not include such
additional amount equivalent to such dividends, and
ii) the quotient of (x) the product of (a) ten percent (10%) of the
fair market value of the Company on the last Business Day prior
to the Liquidation Date and (b) the ratio of (A) the number of
Class A Exchangeable Shares outstanding on the Liquidation Date
(exclusive of Class A Exchangeable Shares held by the Parent or
its affiliates) to (B) the sum of (I) the number of Class A
Exchangeable Shares outstanding on the Closing Date and (II) the
number of Class A Exchangeable Shares issued as stock dividends,
divided by (y) the number of Class A Exchangeable Shares
outstanding on the Liquidation Date (exclusive of Class A
Exchangeable Shares held by the Parent or its Affiliates).
(b) On or promptly after the Liquidation Date, the Company shall cause to
be delivered to the holders of the Class A Exchangeable Shares the
Liquidation Amount less any tax required to be deducted and withheld
therefrom by the Company, upon presentation and surrender of the
certificates representing such Class A Exchangeable Shares, together
with such other documents and instruments as may be required to effect
a transfer of Class A Exchangeable Shares under the CANS and the
Articles of the Company and such additional documents and instruments
as the Company may reasonably require, at any office and in any manner
whatsoever as may be specified by the Company by notice to the holders
of the Class A Exchangeable Shares. Payment of the total Liquidation
Amount for such Class A Exchangeable Shares shall be made by the
Company, or on behalf of the Company by an authorized agent, by
delivery to each holder, at the address of the holder recorded in the
securities register of the Company for the Class A Exchangeable Shares
or by holding for pick up by the holder at any office as may be
specified by the Company by notice to the holders of Class A
Exchangeable Shares, and the consideration payable to each holder
therefor shall be the greater of:
i) the product of the Liquidation Amount set forth in Article
27.5(a) i) and the number of Class A Exchangeable Shares then
held by such holder, with the certificates representing the
Parent Common Shares to be duly issued as fully paid and
non-assessable and shall be free and clear of any lien, claim,
encumbrance, security interest or adverse claim and a check of
the Company payable at par at any branch of the bankers of the
Company in respect of the amount equivalent to the full amount of
all declared and unpaid dividends or partial shares comprising
part of the total Liquidation Amount on such shares less any tax
required to be deducted and withheld therefrom by the Company; or
ii) product of the Liquidation Amount set forth in Article 27.5(a)
i), and the number of Class A Exchangeable Shares then held by
such holder, with a check of the Company payable at par at any
branch of the bankers of the Company to be issued less any tax
required to be deducted and withheld therefrom by the Company.
On and after the Liquidation Date, the holders of the Class A
Exchangeable Shares shall cease to be holders of such Class A
Exchangeable Shares and shall not be entitled to exercise any of
the rights of holders in respect thereof, other than the right to
receive their proportionate part of the total Liquidation Amount
unless payment of the total Liquidation Amount for such Class A
Exchangeable Shares shall not be made upon presentation and
surrender of share certificates in accordance with the foregoing
provisions, in which case the rights of the holders shall remain
unaffected until the total Liquidation Amount has been paid in
the manner hereinbefore provided. The Company shall have the
right at any time on or after the Liquidation Date to deposit or
cause to be deposited the total Liquidation Amount in respect of
the Class A Exchangeable Shares represented by certificates that
have not at the Liquidation Date been surrendered by the holders
thereof with an authorized agent of the Company including,
without limitation, any chartered bank or trust company in
Canada. Upon such deposit being made, the rights of the holders
of Class A Exchangeable Shares after such deposit shall be
limited to receiving their proportionate part of the total
Liquidation Amount so deposited (less any tax required to be
deducted and withheld therefrom) without interest for such Class
A Exchangeable Shares against presentation and surrender of the
said certificates held by them, respectively in accordance with
the foregoing provisions. In the event such payment or deposit of
the total Liquidation Amount is made pursuant to the provisions
of this Article 27.5(b), the holders of the Class A Exchangeable
Shares shall thereafter be considered and deemed for all purposes
to be the holders of the Parent Common Shares delivered to them.
To the extent that the amount of tax required to be deducted or
withheld from any payment to a holder of Class A Exchangeable
Shares exceeds the cash portion of such payment, the Company is
hereby authorized to sell or otherwise dispose of at fair market
value such portion of the property then payable to the holder as
is necessary to provide sufficient funds to the Company in order
to enable it to comply with such deduction or withholding
requirement and the Company shall give an accounting to the
holder with respect thereto and any balance of such proceeds of
sale.
(c) After the Company has satisfied its obligations to pay the
holders of the Class A Exchangeable Shares the Liquidation Amount
per Class A Exchangeable Share pursuant to Article 27.5(a) of
these special rights and restrictions, such holders shall not be
entitled to share in any further distribution of the assets of
the Company.
27.6 (a) A holder of Class A Exchangeable Shares shall be entitled at any
time, subject to applicable law and otherwise upon compliance
with the provisions of this Article 27.6, to require the Company
to redeem any or all of the Class A Exchangeable Shares
registered in the name of such holder for an amount per share
equal to (a) the
Current Market Price of a Parent Common Share on the last
Business Day prior to the Retraction Date, which may be satisfied
in full by the Company causing to be delivered to such holder one
Parent Common Share for each Class A Exchangeable Share presented
and surrendered by the holder, plus (b) an additional amount
equivalent to the full amount of all dividends declared and
unpaid thereon and all dividends declared on the Parent Common
Shares which have not been declared on such Class A Exchangeable
Shares in accordance with Article 27.3(a) of these special rights
and restrictions (collectively the "Retraction Price"), provided
that if the record date for any such declared and unpaid
dividends occurs on or after the Retraction Date, the Retraction
Price shall not include such additional amount equivalent to such
dividends. To effect such redemption, the holder shall present
and surrender, at any office and in any manner whatsoever as may
be specified by the Company by notice to the holders of Class A
Exchangeable Shares, the certificate or certificates representing
the Class A Exchangeable Shares which the holder desires to have
the Company redeem, together with such other documents and
instruments as may be required to effect a transfer of Class A
Exchangeable Shares under the BCCA and the Articles of the
Company and such additional documents and instruments as the
Company may reasonably require, and together with a duly executed
statement (the "Retraction Request"):
i) specifying that the holder desires to have all or any number
specified therein of the Class A Exchangeable Shares
represented by such certificate or certificates (the
"Retracted Shares") redeemed by the Company; and
ii) stating the Business Day on which the holder desires to have
the Company redeem the Retracted Shares (the "Retraction
Date"), provided that the Retraction Date shall be not less
than fifteen (15) Business Days nor more than thirty (30)
Business Days after the date on which the Retraction Request
is received by the Company and further provided that, in the
event that no such Business Day is specified by the holder
in the Retraction Request, the Retraction Date shall be
deemed to be the twentieth (20th) Business Day after the
date on which the Retraction Request is received by the
Company in the following form (or in such other form as may
be accepted to the Company:
NOTICE OF RETRACTION
To:
---------------------------
This notice is given pursuant to Article 27.6 of the Articles of the
Company setting forth the Class A Exchangeable Share special rights
and restrictions, (the "Special Rights and Restrictions") attaching
to the share(s) represented by this certificate and all capitalized
words and expression used in this notice which are defined in the
Special Rights and Restrictions have the meanings ascribed to such
words and expressions in such Special Rights and Restrictions:
The undersigned hereby notifies the Company that the undersigned
desires to have the Company redeem in accordance with Article 27.6 of
the Special Rights and Restrictions,
all Class A Exchangeable Share(s) represented by this certificate; or
share(s) only.
--------------------
The undersigned hereby notifies the Company that the Retraction Date
shall be .
--------------------
NOTE: The Retraction Date must be a Business Day and must
not be less than fifteen (15) Business Days nor more
than thirty (30) Business Days after the date upon
which this notice is received by the Company. In the
event that no such Business Day is specified above,
the Retraction Date shall be deemed to be the
twentieth Business Day after the date on which this
notice is received by the Company.
This notice of retraction and offer to sell the Retracted Shares to
the Company may be revoked and withdrawn by the undersigned by notice
in writing given to the Company at any time before the close of
business on the Business Day immediately preceding the Retraction
Date.
The undersigned acknowledges that if as a result of solvency
provisions of applicable law, the Company is unable to redeem all
Retracted Shares, the undersigned will be deemed to have exercised
the Insolvency Exchange Right (as defined in the Exchange and Voting
Agreement) so as to require the Parent to purchase the unredeemed
Retracted Shares.
The undersigned hereby represents and warrants to the Company and the
Parent the undersigned has good title to, and owns, the share(s)
represented by this certificate to be acquired by the Company or the
Parent as the case may be, free and clear of all liens, claims and
encumbrances.
------------------------------
Signature of Shareholder
(Date)
------------------------------
Guarantee of Signature
Please notify if the securities and any check(s) resulting from the
retraction or purchase of the Retracted Shares are to be held for
pick-up by the shareholder, or,
at any office as specified by the Company from time to time, failing
which the securities and any check(s) will be mailed to the last
address of the shareholder as it appears on the register of the
Company.
NOTE: This panel must be completed and this certificate,
together with such additional documents as the
Company may require, must be deposited with the
Company. The securities and any check(s) resulting
from the retraction or purchase of the Retracted
Shares will be issued and registered in, and made
payable to, respectively, the name of the shareholder
as it appears on the register of the Company and the
securities and check(s) resulting from such
retraction or purchase will be delivered to such
shareholder as indicated above, unless the form
appearing immediately below is duly completed.
---------------------------
Name of Person in Whose Name Securities or Check(s)
Are To Be Registered, Issued or Delivered (please
print)
------------------------------- --------------------------
Street Address or P.O. Box Signature of Shareholder
------------------------------- ---------------------------
City - Province Signature Guaranteed by
NOTE: If the notice of retraction is for less than all of
the share(s) represented by this certificate, a
certificate representing the remaining shares of the
Company will be issued and registered in the name of
the shareholder as it appears on the register of the
Company, unless the share transfer power on the share
certificate is duly completed in respect of such
shares.
(b) Upon receipt by the Company in the manner specified in Article 27.6(a)
hereof of a certificate or certificates representing the number of
Class A Exchangeable Shares which the holder desires to have the
Company redeem, together with a Retraction Request, and provided that
the Retraction Request is not revoked by the holder in the manner
specified in Article 27.6 (f), the Company shall redeem the Retracted
Shares effective at the close of business on the Retraction Date and
shall cause to be delivered to such holder the total Retraction Price
with respect to such shares. If only a part of the Class A
Exchangeable Shares represented by any certificate are
redeemed, a new certificate for the balance of such Class A
Exchangeable Shares shall be issued to the holder at the expense of
the Company.
(c) The Company or an authorized agent of the Company, as the case may be,
shall deliver to the relevant holder, at the address of the holder
recorded in the securities register of the Company for the Class A
Exchangeable Shares or at the address specified in the holder's
Retraction Request or by holding for pick up by the holder at any
office as may be specified by the Company by notice to the holder of
Class A Exchangeable Shares, by or on behalf of the Company,
certificates representing the Parent Common Shares (which shares shall
be duly issued as fully paid and non-assessable and shall be free and
clear of any lien, claim, encumbrance security interest or adverse
claim) registered in the name of the holder as the holder may request
in payment of the total Retraction Price and a check of the Company
payable at par at any branch of the bankers of the Company in payment
of the remaining portion, if any, of the total Retraction Price (less
any tax required to be deducted and withheld therefrom by the
Company), and such delivery of such certificates and check by or on
behalf of the Company, shall be deemed to be payment of and shall
satisfy and discharge all liability for the total Retraction Price to
the extent that the same is represented by such share certificates and
check (less any tax required and in fact deducted and withheld
therefrom and remitted to the proper tax authority), unless such check
is not paid on due presentation. To the extent that the amount of tax
required to be deducted or withheld from any payment to a holder of
Class A Exchangeable Shares exceeds the cash portion of such payment,
the Company is hereby authorized to sell or otherwise dispose of at
fair market value such portion of the property then payable to the
holder as is necessary to provide sufficient funds to the Company in
order to enable it to comply with such deduction or withholding
requirement and shall give an accounting to the holder with respect
thereto and any balance of such proceeds of sale.
(d) On and after the close of business on the Retraction Date, the holder
of the Retracted Shares shall cease to be a holder of such Retracted
Shares and shall not be entitled to exercise any of the rights of a
holder in respect thereof, other than the right to receive his
proportionate part of the total Retraction Price unless upon
presentation and surrender of certificates in accordance with the
foregoing provisions, payment of the total Retraction Price shall not
be made, in which case the rights of such holder shall remain
unaffected until the total Retraction Price has been paid in the
manner hereinbefore provided. On and after the close of business on
the Retraction Date, provided that presentation and surrender of
certificates and payment of the total Retraction Price has been made
in accordance with the foregoing provisions, the holder of the
Retracted Shares so redeemed by the Company shall thereafter be
considered and deemed for all purposes to be a holder of the Parent
Common Shares delivered to it.
Notwithstanding any other provision of this Article 27.6, the Company
shall not be obligated to redeem Retracted Shares specified by a
holder in a Retraction Request to the extent that such redemption of
Retracted Shares would be contrary to solvency requirements or other
provisions of applicable law. If the Company believes that on any
Retraction Date it would not be permitted by any of such provisions
to redeem the Retracted Shares tendered for redemption on such date,
the Company shall only be obligated to redeem Retracted Shares
specified by each holder in a Retraction Request to the extent of the
maximum number that may be so redeemed (rounded down to a whole
number of shares) as would not be contrary to such provisions, in
accordance with 27.6(b) of these special rights and restrictions on a
pro rata basis, and the Company shall notify the holder at least two
(2) Business Days prior to the Retraction Date as to the number of
Retracted Shares which will not be redeemed by the Company, and shall
issue to each holder of Retracted Shares a new certificate, at the
expense of the Company, representing the Retracted Shares not
redeemed by the Company pursuant to Article 27.6(b) hereof. Provided
that the Retraction Request is not revoked by the holder in the
manner specified in Article 27.6(f), the holder of any such Retracted
Shares not redeemed by the Company pursuant to Article 27.6(b) of
these special rights and restrictions as a result of solvency
requirements of applicable law shall be deemed by giving the
Retraction Request to require the Parent to purchase such Retracted
Shares from such holder on the Retraction Date or as soon as
practicable thereafter on payment by the Parent to such holder of the
Retraction Price for each such Retracted Share, in accordance with
the Insolvency Exchange Right, as more specifically provided in the
Exchange and Voting Agreement.
A holder of Retracted Shares may, by notice in writing given by the
holder to the Company before the close of business on the Business
Day immediately preceding the Retraction Date, withdraw its
Retraction Request in which event such Retraction Request shall be
null and void, and, for greater certainty, the revocable offer
constituted by the Retraction Request to sell the Retracted Shares to
the Company shall be deemed to have been revoked.
27.7 Subject to applicable law, (a) the Company shall on the Automatic
Redemption Date redeem the whole of the then outstanding Class A Exchangeable
Shares (the "Automatic Redemption") for an amount per share equal to (i) the
Current Market Price of a the Parent Common Share on the last Business Day prior
to the Automatic Redemption Date, which shall be satisfied in full by the
Company causing to be delivered to each holder of Class A Exchangeable Shares
one Parent Common Share for each Class A Exchangeable Share held by such holder,
plus (ii) an additional amount equivalent to the full amount of all declared and
unpaid dividends thereon and all dividends declared on Parent Common Shares
which have not been declared on such Class A Exchangeable Shares in accordance
with Article 27.3(a) of these special rights and restrictions (collectively the
"Redemption Price"), provided that if the record date for any such declared and
unpaid dividends occurs on or after the Redemption Date the Redemption Price
shall not include such additional amount equivalent to such dividends, and (b)
the Company may, at any time when the Company reasonably determines that Class A
Exchangeable Shares are "held of record" (as such term is defined in Rule 12g5-1
promulgated under the United States Securities Exchange Act of 1934, as amended
(the "Exchange Act")) by 500 or more persons ("Record Holders"), redeem (a
"Section 12(g) Redemption") that portion of the then outstanding Class A
Exchangeable Shares held by that number of Record Holders equal to the
difference of (A) the total number of Record Holders and (B) 499, or such
smaller number that the Company reasonably determines is necessary to take the
position that it need not register the Class A Exchangeable Shares pursuant to
Section 12(g) of the Exchange Act, the identity of such Record Holders to be
determined by the Company by lot or other fair method of random determination,
for an amount per share equal to the Redemption Price.
27.8 Subject to applicable law and the Articles of the Company, the Company may
at any time and from time to time purchase for cancellation all or any of the
outstanding Class A Exchangeable Shares at any price by tender to all of the
holders of record of Class A Exchangeable Shares then outstanding at any price
per share together with an amount equal to all declared and unpaid dividends
thereon. If in response to an invitation for tenders under the provisions of
this Article 27.8(a), more Class A Exchangeable Shares are tendered at a price
or prices acceptable to the Company than the Company is prepared to purchase,
the Class A Exchangeable Shares to be purchased by the Company shall be
purchased as nearly as may be pro rata according to the number of shares
tendered by each holder who submits a tender to the Company, provided that when
shares are tendered at different prices the pro rating shall be effected
(disregarding fractions) only with respect to the shares tendered at the price
at which more shares were tendered than the Company is prepared to purchase
after the Company has purchased all the shares tendered at lower prices. If only
part of the Class A Exchangeable Shares rated by any certificate shall be
purchased, a new certificate for the balance of such shares shall be issued at
the expense of the Company.
27.9 Except as required by applicable law and the provisions of Articles
27.10(a), 27.11(a), 27.11(b) and 27.12(b), the holders of the Class A
Exchangeable Shares shall not be entitled as such to receive notice of or to
attend any meeting of the shareholders of the Company or to vote at any such
meeting.
27.10 (a) The rights, privileges, restrictions and conditions attaching to
the Class A Exchangeable Shares may be added to, changed or
removed by the Company, but only with the approval of the holders
of the Class A Exchangeable Shares given as hereinafter
specified.
(b) Any approval given by the holders of the Class A Exchangeable Shares
to add to, change or remove any right, privilege, restriction or
condition attaching to the Class A Exchangeable Shares or any other
matter requiring the approval or consent of the holders of the Class A
Exchangeable Shares shall be deemed to have been sufficiently given if
it shall have been given in accordance with applicable law subject to
a minimum requirement that such approval be evidenced by (i) a
resolution passed by not less than two-thirds of the votes cast on
such resolution by the holders of the Class A Exchangeable Shares, and
(ii) a separate resolution passed by not less than two-thirds of the
votes cast on such separate resolution by the holders of Class A
Exchangeable Shares other than the Parent and its Affiliates, at
separate meetings of holders of Class A Exchangeable Shares and
holders of Class A Exchangeable Shares other than the Parent and its
Affiliates duly called and held in each case at which the holders of
at least 50% of the outstanding Class A Exchangeable Shares (not
including Class A Exchangeable Shares held by the Parent or its
Affiliates) at that time are present or represented by proxy; provided
that if at any such meeting the holders of at least 50% of the
outstanding Class A Exchangeable Shares at that time are not present
or represented by proxy within one-half hour after the time appointed
for such meeting then the meeting shall be adjourned to such date not
less than ten (10) days thereafter and to such time and place as may
be designated by the Chairman of such meeting. At such adjourned
meeting the holders of Class A Exchangeable Shares entitled to vote at
the meeting and present or represented by proxy thereat may transact
the business for which the meeting was originally called and a
resolution passed thereat by the
affirmative vote of not less than two-thirds of the votes entitled to
vote on the resolution cast on such resolution at such meeting shall
constitute the approval or consent of the holders of the Class A
Exchangeable Shares or the holders of Class A Exchangeable Shares
other than the Parent and its Affiliates, as the case may be.
27.11 (a) i) The Company and each holder of a Class A Exchangeable
Share acknowledge that the Support Agreement
provides, in part, that if the Parent:
(aa) issues or distributes 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 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; or
(bb) issues or distributes 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
(cc) issues or distributes to the holders of all or
substantially all of the then outstanding Parent Common
Shares (A) 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), (B) rights,
options or warrants other than those referred to in
Article 27.11(a) i) (aa) above, (C) evidences of
indebtedness of the Parent or (D) assets of the Parent,
the Company, with the cooperation of the Parent, will,
in the absence of the prior approval of the Company and
the prior approval of the holders of the Class A
Exchangeable Shares given in accordance with Article
27.10(b) of these special rights and restrictions,
issue or distribute simultaneously to the holders of
the Class A Exchangeable Shares, the economic
equivalent on a per share basis of such rights,
options, securities, shares, evidences of indebtedness
or other assets.
ii) The Company and each holder of a Class A Exchangeable Share
acknowledge that the Support Agreement further provides, in part,
that if the Parent:
(aa) subdivides, redivides or changes the then outstanding
Parent Common Shares into a greater number of Parent
Common Shares; or
(bb) reduces, combines or consolidates or change the
outstanding Parent Common Shares into a lesser number
of Parent Common Shares; or
(cc) reclassifies or otherwise changes the Parent Common
Shares or effect an amalgamation, merger,
reorganization or other transaction affecting the
Parent Common Shares, the Company, with the
co-operation of the Parent, will, in the absence of
prior approval of the Company and the holders of the
Class A Exchangeable Shares given in accordance with
Article 27.10(b) of these special rights and
restrictions, make the same or an economically
equivalent change simultaneously to, or in the rights
of the holders of, the Class A Exchangeable Shares. The
Support Agreement further provides in part that the
foregoing provisions of the Support Agreement shall not
be changed without the approval of the holders of the
Class A Exchangeable Shares given in accordance with
Article 27.10(b) of these special rights and
restrictions.
iii) Pursuant to the Support Agreement and the Exchange and Voting
Agreement, the number of shares of Parent Common Shares held by
the Trustee will correspond to the number of Class A Exchangeable
Shares held by persons other than the Parent and its Affiliates.
Such Parent Common Shares will be held by the Trustee for the
purposes and on the terms set forth in the Exchange and Voting
Agreement.
27.12 (a) The Company will take all such actions and do all such things as
shall be necessary or advisable to perform and comply with and to
ensure performance and compliance by the Parent with all
provisions of the Support Agreement and the Exchange and Voting
Agreement applicable to the Company and the Parent respectively,
in accordance with the respective terms thereof including,
without limitation, taking all such actions and doing all such
things as shall be necessary or advisable to enforce to the
fullest extent possible for the direct benefit of the Company and
the holders of Class A Exchangeable Shares all rights and
benefits in favour of the Company and such holders under or
pursuant to such agreements.
(b) The Company shall not propose, agree to or otherwise give effect to
any amendment to, or waiver or forgiveness of its rights or
obligations under, the Support Agreement and the Exchange and Voting
Agreement without the approval of holders of the Class A Exchangeable
Shares given in accordance with Article 27.10(b) of these special
rights and restrictions other than such amendments, waivers and/or
forgiveness as may be necessary or advisable for the purposes of:
i) adding to the covenants of the other party or parties to either
such Agreement for the protection of the Company or the holders
of Class A Exchangeable Shares thereunder;
ii) making such provisions or modifications not inconsistent with
either such Agreement as may be necessary with respect to matters
or questions arising thereunder which, in the opinion of the
board of directors, it may be expedient to make, provided that
the board of directors shall be of the opinion, after
consultation with counsel, that such provisions and modifications
will not be prejudicial to the interests of the holders of the
Class A Exchangeable Shares; or
iii) making such changes in or corrections to such agreement which, on
the advice of counsel to the Company, are required for the
purpose of curing or correcting any ambiguity or defect or
inconsistent provision or clerical omission or mistake or
manifest error contained therein, provided that the Board of
directors shall be of the opinion, after consultation with
counsel, that such changes or corrections will not be prejudicial
to the interests of the holders of the Class A Exchangeable
Shares.
(c) In the event that a holder of Class A Exchangeable Shares elects not
to participate in the Automatic Exchange on a Liquidation Event under
section 4.12 of the Exchange and Voting Agreement, such Holder shall
be entitled to receive the consideration set forth in Article 27.5(a)
ii) hereunder rather than the consideration set forth in Article 27.5
(a) i) in the event of a transaction described in Articles 27.5, 27.6,
27.7 or 27.8 of these special rights and restrictions.
27.13 The certificates evidencing the Class A Exchangeable Shares shall contain
or have affixed thereto a legend, in form and on terms approved by the board of
directors relating to the Exchange and Voting Agreement (including the
provisions with respect to the voting rights, exchange rights and automatic
exchange thereunder).
27.14 (a) Any notice, request or other communication to be given to the
Parent and/or the Company by a holder of Class A Exchangeable
Shares shall be in writing and shall be valid and effective if
given by mail (postage prepaid) or by facsimile or by delivery
to:
--------------------------------------------------------------
or such other person and office of the Parent and the Company for
which the holder has received written notice. Any such notice,
request or other communication, if given by mail, facsimile or
delivery, shall only be deemed to have been given and received
upon actual receipt thereof by the Company.
(b) Any presentation and surrender by a holder of Class A Exchangeable
Shares to the Company of certificates representing Class A
Exchangeable Shares in connection with the liquidation, dissolution or
winding up of the Company or the retraction or redemption of Class A
Exchangeable Shares shall be made by registered mail (postage prepaid)
or by delivery to the Company at the above address or to such other
office as may be specified by the Company, in each case addressed to
the attention of the President of the Company unless otherwise
specified by the Company. Any such presentation and surrender of
certificates, if given by mail (postage prepaid) or by delivery, shall
only be deemed to have been made and to be effective upon actual
receipt thereof by the Company. Any such presentation and surrender of
certificates made by registered mail shall be at the sole risk of the
holder mailing the same.
(c) notice, request or other communication to be given to a holder of
Class A Exchangeable Shares by or on behalf of the Company shall be in
writing and shall be valid and effective if given by mail (postage
prepaid) or by delivery to the address of the holder recorded in the
securities register of the Company or, in the event of the address of
any such holder not being so recorded, then at the last known address
of such holder. Any such notice, request or other communication, if
given by mail (postage prepaid) or by delivery, shall only be deemed
to have been made and to be effective upon actual receipt thereof by a
holder of Class A Exchangeable Shares. Accidental failure or omission
to give any notice, request or other communication to one or more
holders of Class A Exchangeable Shares shall not invalidate or
otherwise alter or affect any action or proceeding to be taken by the
Company pursuant thereto.
SCHEDULE "H"
SUPPORT AGREEMENT
MEMORANDUM OF AGREEMENT made as of the th day of June, 2002.
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BETWEEN:
SIERRA GIGANTE RESOURCES LTD., a corporation incorporated under the laws of
the State of Nevada, United States
(the "Parent")
AND:
648311 B.C. LTD., a corporation incorporated under the laws of the Province
of British Columbia, Canada
(the "Corporation")
WHEREAS pursuant to the Share Exchange and Share Purchase Agreement dated as of
June __th , 2002 by and among the Parent, Mind Your Own Skin Products, Inc., the
shareholders of Mind Your Own Skin Products, Inc., and the Corporation (the
"Purchase Agreement"), the parties agreed that on the Closing Date (as such term
is defined in the Purchase Agreement) the Parent and the Corporation would
execute and deliver a Support Agreement substantially in the form hereof;
WHEREAS pursuant to the articles of incorporation of the Corporation, the
capital of the Corporation was authorized to consist of (i) one class of voting
common shares (the "Common Stock") and (ii) Class "A" exchangeable non-voting
common shares without par value (the "Exchangeable Non-Voting Shares");
WHEREAS Schedule "G" to the Purchase Agreement sets forth the rights,
privileges, restrictions and conditions attaching to the Exchangeable Non-Voting
Shares (the "Share Provisions");
WHEREAS the Parent is the registered and beneficial owner of all of the issued
and outstanding Common Stock of the Corporation; and
WHEREAS the parties hereto desire to establish procedures whereby the Parent
will take certain actions and make certain payments and deliveries necessary to
ensure that the Corporation will be able to make certain payments and to deliver
or cause to be delivered certain shares of common stock of the Parent (the
"Parent Common Shares") in satisfaction of the obligations of the Corporation
under the Share Provisions with respect to the payment and satisfaction of
dividends, Liquidation Amounts, Retraction Prices and Redemption Prices, all in
accordance with the Share Provisions;
NOW THEREFORE in consideration of the respective covenants and agreements
provided in this agreement and for other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties agree as
follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 Defined Terms. Each term denoted herein by initial capital letters and not
otherwise defined herein shall have the meaning ascribed thereto in the Share
Provisions, unless the context requires otherwise.
1.2 Interpretation not Affected by Headings, etc. The division of this agreement
into articles, sections and paragraphs and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this agreement.
1.3 Number, Gender, etc. Words importing the singular number only shall include
the plural and vice versa. Words importing the use of any gender shall include
all genders.
1.4 Date for any Action. In the event that any date on or by which any action is
required or permitted to be taken under this agreement is not a Business Day,
such action shall be required or permitted to be taken on or by the next
succeeding Business Day.
ARTICLE 2
COVENANTS OF THE PARENT AND THE CORPORATION
2.1 Funding the Corporation. So long as any Exchangeable Non-Voting Shares which
are registered in the name of holders (other than the Parent or its Affiliates)
are outstanding, the Parent will:
(a) not declare or pay any dividend on the Parent Common Shares unless
(i) the Corporation will have sufficient assets, funds and other
property available to enable the due declaration and the due and
punctual payment in accordance with applicable law, of an equivalent
dividend on the Exchangeable Non-Voting Shares and (ii) the
Corporation shall simultaneously declare or pay, as the case may be,
an equivalent dividend on the Exchangeable Non-Voting Shares, in each
case in accordance with the Share Provisions;
(b) cause the Corporation to declare simultaneously with the declaration
of any dividend on the Parent Common Shares an equivalent dividend on
the Exchangeable Non-Voting Shares and, when such dividend is paid on
the Parent Common Shares, cause the Corporation to pay simultaneously
therewith such equivalent dividend on the Exchangeable Non-Voting
Shares, in each case in accordance with the Share Provisions;
(c) advise the Corporation 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 co-operation with the
Corporation, to ensure that the respective declaration date, record
date and payment date for a dividend on the Exchangeable Non-Voting
Shares shall be the same as the record date, declaration date and
payment date for the corresponding dividend on the Parent Common
Shares;
(d) ensure that the record date for any dividend declared on the Parent
Common Shares is not less than ten (10) Business Days after the
declaration date for such dividend;
(e) take all such actions and do all such things as are necessary to
enable and permit the Corporation, 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 Non-Voting Share upon the liquidation,
dissolution or winding-up of the Corporation, including without
limitation all such actions and all such things as are necessary to
enable and permit the Corporation to cause to be delivered the Parent
Common Shares to the holders of the Exchangeable Non-Voting Shares in
accordance with the provisions of Article 27.5 of the Share
Provisions;
(f) take all such actions and do all such things as are necessary to
enable and permit the Corporation, in accordance with applicable law,
to pay and otherwise perform its obligations with respect to the
satisfaction of the Retraction Price and the Redemption Price,
including without limitation all such actions and all such things as
are necessary to enable and permit the Corporation to cause to be
delivered the Parent Common Shares to the holders of Exchangeable
Non-Voting Shares, upon redemption of the Exchangeable Non-Voting
Shares in accordance with the provisions of Article 27.6 or Article
27.7 of the Share Provisions, as the case may be; and
(g) not exercise its vote as a shareholder to initiate the voluntary
liquidation, dissolution or winding-up of the Corporation nor take
any action or omit to take any action that is designed to result in
the liquidation, dissolution or winding-up of the Corporation.
2.2 Segregation of Funds. The Parent will, from time to time, as is necessary to
carry out the terms and obligations of this agreement, cause the Corporation to
deposit a sufficient amount of funds in a separate account and segregate a
sufficient amount of such assets and other property as is necessary to enable
the Corporation to pay or otherwise satisfy the applicable dividends,
liquidation amount, retraction price or redemption price, in each case for the
benefit of holders from time to time of the Exchangeable Non-Voting Shares, and
will use such funds, and other property so segregated exclusively for the
payment of dividends or the payment or other satisfaction of the liquidation
amount, the retraction price or the redemption price, as applicable.
2.3 Reservation of the Parent Common Shares. The Parent hereby represents,
warrants and covenants that it has irrevocably reserved for issuance and will at
all times keep available, free from preemptive and other rights, out of its
authorized and unissued capital stock such number of Parent Common Shares (or
other shares or securities into which the Parent Common Shares may be
reclassified or changed as contemplated by Section 2.7 hereof) (a) as is equal
to the sum of (i) the number of Exchangeable Non-Voting Shares issued and
outstanding from time to time and (ii) the
number of Exchangeable Non-Voting Shares issuable upon the exercise of all
rights to acquire Exchangeable Non-Voting Shares outstanding from time to time
and (b) as are now and may hereafter be required to enable and permit the
Corporation to meet its obligations hereunder, under the Exchange and Voting
Agreement, under the Share Provisions and under any other security or commitment
pursuant to which the Parent may now or hereafter be required to issue the
Parent Common Shares.
2.4 Notification of Certain Events. In order to assist the Parent to comply with
its obligations hereunder, the Corporation 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 of the
Corporation to institute voluntary liquidation, dissolution or winding-up
proceedings with respect to the Corporation or to effect any other
distribution of the assets of the Corporation among its shareholders for
the purpose of winding up its affairs, at least sixty (60) days prior to
the proposed effective date of such liquidation, dissolution, winding-up or
other distribution;
(b) immediately, upon the earlier of (i) receipt by the Corporation of notice
of, and (ii) the Corporation otherwise becoming aware of, any threatened or
instituted claim, suit, petition or other proceedings with respect to the
involuntary liquidation, dissolution or winding up of the Corporation or to
effect any other distribution of the assets of the Corporation among its
shareholders for the purpose of winding up its affairs;
(c) immediately, upon receipt by the Corporation of a Retraction Request (as
defined in the Share Provisions);
(d) at least one hundred and thirty-five (135) days prior to any accelerated
automatic redemption date determined by the board of directors of the
Corporation in accordance with the Share Provisions; and
(e) as soon as practicable upon the issuance by the Corporation of any
Exchangeable Non-Voting Shares or rights to acquire Exchangeable Non-Voting
Shares.
2.5 Delivery of Parent Common Shares. In furtherance of its obligations under
Sections 2.1(e) and 2.1(f) hereof, upon notice from the Corporation of any event
which requires the Corporation to cause to be delivered the Parent Common Shares
to any holder of Exchangeable Non-Voting Shares, the Parent shall forthwith
deliver the requisite Parent Common Shares to or to the order of the former
holder of the surrendered Exchangeable Non-Voting Shares, as the Corporation
shall direct. All such Parent Common Shares shall be duly issued as fully paid
and non-assessable and shall be free and clear of any lien, claim, encumbrance,
security interest or adverse claim. In consideration of the delivery of each
such Parent Common Share by the Parent, at the Parent's request, the Corporation
shall issue to the Parent or as the Parent shall direct, such number of Common
Stock as is equal to the fair value of such Parent Common Shares.
2.6 Qualifications of Parent Common Shares. The Parent represents and warrants
that it has taken all actions and done all things as are necessary under any
Canadian or United States federal, provincial or state law or regulation or
pursuant to the rules and regulations of any regulatory
authority or the fulfillment of any other legal requirement (collectively, the
"Applicable Laws") as they exist on the date hereof and will in good faith
expeditiously take all such actions and do all things as are necessary under the
Applicable Laws as they may exist in the future to cause the Parent Common
Shares (or other shares or securities in to which the Parent Common Shares may
be reclassified or changed as contemplated by Section 2.7 hereof) to be issued
and delivered pursuant to the Share Provisions, the Insolvency Exchange Right or
the Automatic Exchange Rights (as such terms are defined in the Exchange and
Voting Agreement). The Parent will in good faith expeditiously take all such
actions and do all such things as are necessary to cause all Parent Common
Shares (or other shares or securities in to which the Parent Common Shares may
be reclassified or changed as contemplated by Section 2.7 hereof) to be
delivered pursuant to the Share Provisions, the Insolvency Exchange Right or the
Automatic Exchange Rights (as defined in the Exchange and Voting Agreement) to
be listed, quoted or posted for trading on all stock exchanges and quotation
systems on which outstanding Parent Common Shares are listed, quoted or posted
for trading at such time.
2.7 Economic Equivalence.
(a) The Parent represents and warrants that, in the absence of the prior
approval of the Corporation and the prior approval of the holders of the
Exchangeable Non-Voting Shares given in accordance with section 27.10 of
the Share Provisions, if it:
(i) issues or distributes 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 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; or
(ii) issues or distributes 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) issues or distributes to the holders of all or substantially all of
the outstanding Parent Common Shares (A) shares or securities of the
Parent of any class other than the Parent Common Shares (other than
shares convertible into or exchangeable for or carrying rights to
acquire Parent Common Shares), (B) rights, options or warrants other
than those referred to in Section 2.7(a)(ii) above, (C) evidences of
indebtedness of the Parent or (D) assets of the Parent, it will ensure
that (x) the Corporation is able under the Applicable Laws to issue or
distribute the economic equivalent on a per share basis of such
rights, options, securities, shares, evidences of indebtedness or
other assets simultaneously to holders of the Exchangeable Non-Voting
Shares, and (y) the Corporation shall issue or distribute such rights,
options, securities, shares, evidences of indebtedness or other assets
or economic equivalents simultaneously to holders of the Exchangeable
Non-Voting Shares;
(b) The Parent represents and warrants that, in the absence of the prior
approval of the Corporation and the prior approval of the holders of the
Exchangeable Non-Voting Shares given in accordance with section 10.2 of the
Share Provisions, if it:
(i) subdivides, redivides or changes the then outstanding Parent Common
Shares into a greater number of Parent Common Shares; or
(ii) reduces, combines or consolidates or changes the then outstanding
Parent Common Shares into a lesser number of Parent Common Shares; or
(iii) reclassifies or otherwise changes the Parent Common Shares or effect
an amalgamation, merger, reorganization or other transaction affecting
the Parent Common Shares;
it will ensure that (x) the Corporation is able under applicable law
to simultaneously make the same or an economically equivalent change
to, or in the rights of the holders of, the Exchangeable Non-Voting
Shares, and (y) the Corporation simultaneously does make the same or
an economically equivalent change to, or in the rights of the holders
of, the Exchangeable Non-Voting Shares;
(c) The Parent will ensure that the record date for any event referred to in
Section 2.7(a) or 2.7(b) above, or if no record date is applicable for such
event, the effective date for any such event, is not less than twenty (20)
Business 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 Corporation;
(d) the board of directors of the Corporation shall determine, in good faith
and in its sole discretion (with the assistance of such 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 2.7(a) or 2.7(b) above 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 board of directors of the
Corporation:
(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 of the Corporation 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 2.7(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 board of directors of the Corporation 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 of the Corporation in
the manner above contemplated) of a Parent Common Share;
(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 Parent Common Shares; and
(v) in all such cases, the general taxation consequences of the relevant
event to holders of Exchangeable Non-Voting Shares to the extent that
such consequences may differ from the taxation consequences to holders
Parent Common Shares as a result of differences between taxation laws
of Canada and the United States (except for any differing consequences
arising as a result of differing marginal taxation rates and without
regard to the individual circumstances of holders of Exchangeable
Non-Voting Shares).
For purposes of the foregoing determinations, the current market value of any
security (other than the Parent Common Shares) listed and traded or quoted on a
securities exchange shall be the weighted average of the closing prices of such
security during a period of twenty (20) consecutive trading days ending five (5)
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 board of directors of the Corporation,
the public distribution or trading activity of such securities during such
period does not create a market which reflects the fair value of such
securities, then the current market value thereof shall be determined by the
board of directors of the Corporation, 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). For purposes of the
foregoing determinations, the current market value of the Parent Common Shares
shall be the closing price of the Parent Common Shares on the last Business Day
prior to the date of the applicable exchange, conversion, distribution or other
transaction, provided that if the consideration or adjustment to the rights of
the Exchangeable Non-Voting Shares is based on consideration to be paid to
holders of Parent Common Shares, then the value of the Parent Common Shares
shall be such value. Any such determination by the board shall be conclusive and
binding on the Parent.
2.8 Tender Offers, Etc. In the event that a merger, consolidation, tender offer,
share exchange offer, issuer bid, takeover bid or similar transaction with
respect to the Parent Common Shares (an "Offer") is proposed by the Parent or is
proposed to the Parent or its shareholders and is recommended by the board of
directors of the Parent, or is otherwise effected or to be effected with the
consent or approval of the board of directors of the Parent, the Parent will use
its best efforts expeditiously and in good faith to take all such actions and do
all such things as are necessary to enable and permit holders of Exchangeable
Non-Voting Shares to participate in such Offer to the same extent and on an
economically equivalent basis as the holders of Parent Common Shares, without
discrimination. Without limiting the generality of the foregoing, the Parent
will use commercially reasonable efforts expeditiously and in good faith to
enable holders of Exchangeable Non-Voting Shares to participate in all such
Offers without being required to retract Exchangeable Non-Voting Shares as
against the Corporation (or, if so required, to ensure that any such retraction
shall be effective only upon, and shall be conditional upon, the closing of the
Offer and only to the extent necessary to tender or deposit to the Offer).
2.9 Ownership of Outstanding Shares. Without the prior approval of the
Corporation and the prior approval of the holders of the Exchangeable Non-Voting
Shares given in accordance with section 27.10 of the Share Provisions, the
Parent covenants and agrees in favour of the Corporation that as long as any
outstanding Exchangeable Non-Voting Shares are owned by any person or entity
other than the Parent or any of its Affiliates, the Parent will be and remain
the direct or indirect beneficial owner of all issued and outstanding shares in
the capital of the Corporation and all outstanding securities of the Corporation
carrying or otherwise entitled to voting rights in any circumstances, in each
case other than the Exchangeable Non-Voting Shares.
2.10 Voting of Exchangeable Non-Voting Shares Owned by The Parent. The Parent
covenants and agrees that it will appoint and cause to be appointed proxy
holders with respect to all Exchangeable Non-Voting Shares held by the Parent
and its Affiliates for the sole purpose of attending each meeting of the holders
of Exchangeable Non-Voting 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 Affiliates not to, exercise any voting rights which may be
exercisable by holders of Exchangeable Non-Voting Shares from time to time
pursuant to the Share Provisions, the articles of the Corporation, or pursuant
to the provisions of the CANS (or any successor or other corporate statute by
which the Corporation may in the future be governed) with respect to any
Exchangeable Non-Voting Shares held by it or by its Affiliates in respect of any
matter considered at any meeting of holders of Exchangeable Non-Voting Shares.
2.11 Deposit of Parent Common Shares to Support Obligations. In further support
of its obligations hereunder and under the Share Provisions, the Parent shall
deposit with the Trustee under the Exchange and Voting Agreement a number of
Parent Common Shares equal to the number of shares into which the Exchangeable
Non-Voting Shares held by persons other than the Parent and its Affiliates are
exchangeable, redeemable or otherwise may be acquired by either the Corporation
or the Parent pursuant to the Purchase Agreement or Share Provisions. The
initial number of Parent Common Shares deposited shall be equal to the number of
Exchangeable Non-Voting Shares issued, with additional Parent Common Shares
transferred to the Trustee by the Parent or distributed back to the Parent as
the number of Exchangeable Non-Voting Shares (and the number of Parent Common
Shares required for a later exchange, redemption or other transaction with a
holder of Exchangeable Non-Voting Shares other than the Parent and its
Affiliates) changes over time under such agreements. Such Parent Common Shares
shall be applied by the Trustee as set forth in Articles 4 and 5 of the Exchange
and Voting Agreement in the event that the Corporation and the Parent default on
their obligations specified therein.
2.12 Due Performance. On and after the Closing Date, the Parent shall duly and
timely perform, and shall cause the Corporation to duly and timely perform, all
of its respective obligations provided in the Purchase Agreement, including any
obligation that may arise upon the exercise of the Parent rights under the Share
Provisions.
ARTICLE 3
GENERAL
3.1 Term. This agreement shall come into force and be effective as of the date
hereof and shall terminate and be of no further force and effect at such time as
no Exchangeable Non-Voting Shares (or securities or rights convertible into or
exchangeable for or carrying rights to acquire Exchangeable Non-Voting Shares)
are held by any party other than the Parent and any of its Affiliates.
3.2 Changes in Capital of the Parent and the Corporation. Notwithstanding the
provisions of Section3.4, at all times after the occurrence of any event
effected pursuant to Section 2.7 or 2.8 hereof, as a result of which either
Parent Common Shares or the Exchangeable Non-Voting Shares or both are in any
way changed, this agreement shall forthwith be amended and modified as necessary
in order that it shall apply with full force and effect, mutatis mutandis, to
all new securities into which the Parent Common Shares or the Exchangeable
Non-Voting Shares or both are so changed and the parties hereto shall execute
and deliver an agreement in writing giving effect to and evidencing such
necessary amendments and modifications.
3.3 Severability. If any provision of this agreement is held to be invalid,
illegal or unenforceable, the validity, legality or enforceability of the
remainder of this agreement shall not in any way be affected or impaired thereby
and this agreement shall be carried out as nearly as possible in accordance with
its original terms and conditions.
3.4 Amendments, Modifications, etc. This agreement may not be amended or
modified except by an agreement in writing executed by the Corporation and the
Parent and approved by the holders of the Exchangeable Non-Voting Shares in
accordance with section 27.10 of the Share Provisions.
3.5 Amendments. Notwithstanding the provisions of Section 3.4, the parties to
this agreement may in writing, at any time and from time to time, without the
approval of the holders of the Exchangeable Non-Voting Shares, amend or modify
this agreement for the purposes of:
(a) adding to the covenants of any of the parties for the protection of the
holders of the Exchangeable Non-Voting Shares;
(b) making such amendments or modifications not inconsistent with this
agreement as may be necessary with respect to matters or questions which,
in the determination of the senior management of each of the Corporation
and the Parent it may be expedient to make, provided that each such senior
management shall be of the opinion that such amendments
or modifications will not be prejudicial to the interests of the holders of
the Exchangeable Non-Voting Shares; or
(c) making such changes or corrections which, on the advice of counsel to the
Corporation and the Parent are required for the purpose of curing or
correcting any ambiguity or defect or inconsistent provision or clerical
omission or mistake or manifest error, provided that the boards of
directors of each of the Corporation and the Parent shall be of the opinion
that such changes or corrections will not be prejudicial to the interests
of the holders of the Exchangeable Non-Voting Shares.
3.6 Meeting to Consider Amendments. The Corporation, at the request of the
Parent, shall call a meeting or meetings of the holders of the Exchangeable
Non-Voting Shares for the purpose of considering any proposed amendment or
modification requiring approval pursuant to Section 3.4 hereof. Any such meeting
or meetings shall be called and held in accordance with the by-laws of the
Corporation, the Share Provisions and all applicable laws.
3.7 Amendments only in Writing. No amendments to or modification or waiver of
any of the provisions of this agreement otherwise permitted hereunder shall be
effective unless made in writing and signed by all of the parties hereto.
3.8 Inurement. This agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.
3.9 Notices to Parties. Any notice, request or other communication to be given
the Parent and/or the Corporation by a holder of Exchangeable Non-Voting Shares
shall be made in accordance with the Purchase Agreement.
3.10 Counterparts. This agreement may be executed in counterparts, each of which
shall be deemed an original, and all of which taken together shall constitute
one and the same instrument.
3.11 Jurisdiction. This agreement shall be construed and enforced in accordance
with the laws of the State of Nevada and the laws of the United States
applicable therein, except insofar as it relates to internal governance of the
Corporation, which is to be construed and enforced in accordance with the laws
of the Province of British Columbia and the laws of Canada applicable therein.
3.12 Attornment. The Parent and the Corporation agree that any action or
proceeding arising out of or relating to this agreement may be instituted in the
courts of the Province of British Columbia, and the Corporation waives any
objection which it may have now or hereafter to the venue of any such action or
proceeding, irrevocably submits to the non-exclusive jurisdiction of the said
courts in any such action or proceeding, agrees to be bound by any judgment of
the said courts and not to seek, and hereby waives, any review of the merits of
any such judgment by the courts of any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be duly
executed as of the date first above written.
SIERRA GIGANTE RESOURCES, INC.
Per: /s/ Xxx Xxxxx
---------------------------
(Authorized Signatory)
648311 B.C. LTD.
Per: /s/ Xxx Xxxxx
----------------------------
(Authorized Signatory)
