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SHARE EXCHANGE AGREEMENT
This Agreement dated for reference the 13th day of December, 2000.
BETWEEN:
The undersigned SHAREHOLDERS of Hippocampe, more particularly
described on the signature pages hereto
(collectively, the "Shareholders")
AND:
ICHOR CORPORATION, a corporation organized under the laws of
Delaware in the United States, with an address at 00, Xxxx
Xxxxxx, Xxxxxx 0, Xxxxxxx
("ParentCo")
WHEREAS:
A. Each Shareholder owns the Hippocampe Common Shares as set forth
beside his name on the signature pages hereto;
B. ParentCo proposes to establish LuxCo as a wholly-owned subsidiary;
and
C. The Shareholders propose to contribute to LuxCo their Hippocampe
Common Shares in consideration for LuxCo Exchangeable Preferred
Shares, upon the terms and conditions set forth herein.
NOW THEREFORE, the parties hereto agree as follows:
1. DEFINITIONS
For the purposes of this Agreement, including the recitals, and any
amendments hereto, unless the context otherwise requires, the following
words and phrases shall have the following meanings, respectively:
1.1 "Agreement" means this share exchange agreement and any Schedules
hereto, as amended, supplemented or restated from time to time;
1.2 "Bank Agreements" means the underwriting agreement (the
"Underwriting Agreement") between Hippocampe and MFC Merchant Bank S.A.
dated for reference July 24, 2000, as amended, supplemented or restated
from time to time, the credit facility agreement (the "Credit Facility
Agreement") between Hippocampe and MFC Merchant Bank S.A. dated for
reference July 27, 2000, as amended, supplemented or restated from time to
time, the Acte de Nantissement between Hippocampe and MFC Merchant Bank
S.A. dated for reference July 27, 2000, the Contrat xx Xxxx between
Hippocampe and MFC Merchant Bank S.A. dated August 18, 2000 and any other
documents and agreements entered into pursuant to, provided for or
contemplated by either the Underwriting Agreement or the Credit Facility
Agreement;
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1.3 "Hippocampe" means Hippocampe S.A., a societe anonyme organized
under the laws of France, with an address at 00, xxxxxx Xxxxxxxx
Xxxxxxxxxx, X-00000 Xxxxx-Xxxxx-Xxxxx, Xxxxxx;
1.4 "Hippocampe Common Shares" means the common shares in the capital
of Hippocampe;
1.5 "Losses", in respect of any matter, means all claims, demands,
proceedings, losses, damages, liabilities, deficiencies, costs and
expenses (including, without limitation, all legal and other professional
fees and disbursements, interest, penalties and amounts paid in
settlement) arising directly or indirectly as a consequence of such
matter;
1.6 "LuxCo" means a corporation to be organized under the laws of
Luxembourg as a wholly-owned subsidiary of ParentCo;
1.7 "LuxCo Common Shares" means the common shares in the capital of
LuxCo;
1.8 "LuxCo Exchangeable Preferred Shares" means the shares in the
capital of LuxCo which will be exchangeable at the option of the holder
into ParentCo Common Shares on a 1,066.44-for-one basis pursuant to the
Shareholder Agreement, such shares with substantially the rights,
privileges, restrictions and conditions described in Schedule "C" hereto;
1.9 "ParentCo Common Shares" means the common shares in the capital of
ParentCo;
1.10 "ParentCo Share Exchange Agreement" means a share exchange
agreement between ParentCo and certain shareholders of Hippocampe entered
into concurrently with this Agreement, as amended, supplemented or
restated from time to time;
1.11 "ParentCo Special Voting Preferred Share" means the one share of
special voting preferred stock of ParentCo, with substantially the rights,
privileges, restrictions and conditions described in the Voting and
Exchange Trust Agreement;
1.12 "Shareholder Agreement" means a shareholder agreement to be made
among the Shareholders, ParentCo and LuxCo relating to the LuxCo
Exchangeable Preferred Shares, with terms substantially as described in
Schedule "C" hereto;
1.13 "Support Agreement" means the support agreement to be made between
ParentCo and LuxCo relating to the LuxCo Exchangeable Preferred Shares,
with terms substantially as described in Schedule "C" hereto;
1.14 "Trustee" means MFC Merchant Bank S.A., the trustee to be appointed
under the Voting and Exchange Trust Agreement, and any successor thereto;
and
1.15 "Voting and Exchange Trust Agreement" means an agreement to be made
between ParentCo, LuxCo and the Trustee relating to the LuxCo Exchangeable
Preferred Shares and the ParentCo Special Voting Preferred Share, with
terms substantially as described in Schedule "C" hereto.
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2. EXCHANGE OF SHARES
2.1 Subject to the terms and conditions hereof, each of the
Shareholders shall contribute to LuxCo the Hippocampe Common Shares as set
forth beside his name on the signature pages hereto and ParentCo shall
cause LuxCo to issue to each Shareholder four LuxCo Exchangeable Preferred
Shares, with substantially the rights, privileges, restrictions and
conditions described in Schedule "C" hereto, for each Hippocampe Share set
forth beside such Shareholder's name on the signature pages hereto.
2.2 Subject to the terms and conditions hereof, the securities to be
contributed or issued hereunder shall be delivered to the respective
parties as each in writing shall direct.
3. REPRESENTATIONS AND WARRANTIES OF PARENTCO
3.1 ParentCo, by its acceptance hereof, represents and warrants to the
Shareholders that the statements contained in Schedule "A" hereto are
correct and complete as of the date of this Agreement and shall be correct
and complete as of the Closing Date (as though made then) and acknowledges
and confirms that the Shareholders are relying upon such representations
and warranties in connection with the transactions contemplated herein.
3.2 Notwithstanding the representations and warranties of ParentCo
contained in Section 3.1 hereof and the covenants of ParentCo contained in
Section 5.1 hereof, the Shareholders represent, warrant, acknowledge and
agree that ParentCo may prior to the Time of Closing raise up to U.S.$2
million in equity for working capital purposes.
4. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
4.1 The Shareholders severally represent and warrant to ParentCo that
the statements contained in this Section 4.1 are correct and complete as
of the date of this Agreement and shall be correct and complete as of the
Closing Date (as though made then) and hereby acknowledge and confirm that
ParentCo is relying upon such representations and warranties in connection
with the transactions contemplated herein:
(a) each Shareholder has all necessary power and authority to
execute and deliver this Agreement and to perform its
obligations hereunder;
(b) this Agreement has been duly executed and delivered by and
on behalf of each Shareholder and constitutes legal, valid
and binding obligations of each Shareholder enforceable
against such Shareholder in accordance with its terms;
(c) the Hippocampe Common Shares owned by each Shareholder are
owned by such Shareholder as the sole legal and beneficial
owner of record with good, full and marketable title
thereto, free and clear of any mortgages, liens, charges,
restrictions, security interests, adverse claims, pledges,
encumbrances or demands whatsoever, and are issued and
outstanding as fully paid and non-assessable;
(d) no person, firm or corporation has any agreement or option,
or any right or privilege (whether by law, pre-emptive or
contractual) capable of becoming an agreement or option for
the purchase, acquisition, transfer or contribution from any
Shareholder of any of the Hippocampe Common Shares or any
interest therein or right thereto owned by such Shareholder,
other than pursuant hereto; and
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(e) there is no legal or regulatory action or proceeding pending
or threatened by any person to enjoin, restrict or prohibit
the contribution of the Hippocampe Common Shares by each
Shareholder as contemplated herein.
4.2 In addition to the representations and warranties made in Section
4.1 hereof, the Shareholders severally represent and warrant to ParentCo
that the statements contained in Schedule "B" hereto are correct and
complete as of the date of this Agreement and shall be correct and
complete as of the Closing Date (as though made then) and hereby
acknowledge and confirm that ParentCo is relying upon such representations
and warranties in connection with the transactions contemplated herein.
5. COVENANTS OF PARENTCO
5.1 ParentCo covenants as follows:
(a) ParentCo shall use all commercially reasonable efforts to
take all action and do all things necessary, proper or
advisable in order to consummate and make effective the
transactions contemplated by this Agreement;
(b) from the date hereof to the Time of Closing, ParentCo shall
carry on its business, operations and affairs only in the
ordinary and normal course consistent with past practice;
(c) from the date hereof to the Time of Closing, ParentCo shall
not create, incur, assume or suffer to exist: (i) any
material lien on any of its property or assets now owned or
hereafter acquired; or (ii) contingently or otherwise, any
material debt;
(d) from the date hereof to the Time of Closing, ParentCo shall
not make or permit to exist any change, condition, event or
occurrence in or with respect to the nature of its business
which when taken individually with all other changes,
conditions, events or occurrences could reasonably be
expected to have a material adverse effect: (i) on the
property or assets of ParentCo; (ii) on the condition or
prospects, financial or otherwise, of ParentCo; (iii) on the
ability of ParentCo to perform and comply with this
Agreement; and
(e) from the date hereof to the Time of Closing, ParentCo shall
not enter into or agree to enter into any transaction or
series of related transactions (whether by way of
reconstruction, reorganization, consolidation, combination,
amalgamation, merger, transfer, sale, lease, modification or
otherwise), other than in connection with the transactions
contemplated herein, whereby:
(i) all or substantially all of the undertaking, property
or assets of ParentCo will become the property of any
other person or the continuing corporation resulting
therefrom; or
(ii) the corporate structure of ParentCo would be
modified, changed, altered or amended in any manner
which would have a material adverse effect on the
ability of ParentCo to perform and comply with this
Agreement.
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6. COVENANTS OF THE SHAREHOLDERS
6.1 The Shareholders severally covenant as follows:
(a) the Shareholders shall use all commercially reasonable
efforts to take all action and do all things necessary,
proper or advisable in order to consummate and make
effective the transactions contemplated by this Agreement;
(b) from the date hereof to the Time of Closing, the
Shareholders shall cause Hippocampe to carry on its
business, operations and affairs only in the ordinary and
normal course consistent with past practice;
(c) from the date hereof to the Time of Closing, the
Shareholders shall cause Hippocampe not to create, incur,
assume or suffer to exist: (i) any material lien on any of
its property or assets now owned or hereafter acquired; or
(ii) contingently or otherwise, any material debt;
(d) from the date hereof to the Time of Closing, the
Shareholders shall cause Hippocampe not to make or permit to
exist any change, condition, event or occurrence in or with
respect to the nature of its business which when taken
individually with all other changes, conditions, events or
occurrences could reasonably be expected to have a material
adverse effect: (i) on the property or assets of Hippocampe;
(ii) on the condition or prospects, financial or otherwise,
of Hippocampe; or (iii) on the ability of the Shareholders
to perform and comply with this Agreement; and
(e) from the date hereof to the Time of Closing, the
Shareholders shall cause Hippocampe not to enter into or
agree to enter into any transaction or series of related
transactions (whether by way of reconstruction,
reorganization, consolidation, combination, amalgamation,
merger, transfer, sale, lease, modification or otherwise),
other than in connection with the transactions contemplated
herein, whereby:
(i) all or substantially all of Hippocampe's undertaking,
property or assets will become the property of any
other person or the continuing corporation resulting
therefrom;
(ii) all or substantially all of the material patents of
Hippocampe will become the property of any other
person; or
(iii) the corporate structure of Hippocampe would be
modified, changed, altered or amended in any manner
which would have a material adverse effect on the
ability of the Shareholders to perform and comply
with this Agreement.
7. CLOSING PROCEDURE
7.1 The closing of the transactions contemplated herein shall take
place on the date to be determined in the sole discretion of ParentCo,
such date not to be later than March 31, 2001, at the offices of MFC
Merchant Bank S.A. at 6, Cours de Rive, 1211 Xxxxxx 0, Xxxxxxxxxxx, or at
such other time or place as may be mutually agreed upon. The date of the
closing of the transactions contemplated in this Agreement is referred to
herein as the "Closing Date" and the time of closing on such date is
referred to herein as the "Time of Closing".
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7.2 At the Time of Closing on the Closing Date, ParentCo shall:
(a) cause to be delivered to each Shareholder four LuxCo
Exchangeable Preferred Shares issued to such Shareholder for
each Hippocampe Share currently held by such Shareholder;
(b) cause to be executed and delivered to the Shareholders
certified resolutions of the directors of LuxCo authorizing
the issuance to the Shareholders of the LuxCo Exchangeable
Preferred Shares to be issued by LuxCo hereunder; and
(c) deliver or cause to be delivered such other documents as are
required or contemplated to be delivered by ParentCo and
LuxCo, as applicable, pursuant to this Agreement.
7.3 At the Time of Closing on the Closing Date, the Shareholders shall:
(a) deliver or cause to be delivered to LuxCo transfer forms
(i.e., ordres de mouvement) representing the Hippocampe
Common Shares owned by each Shareholder duly executed for
contribution to LuxCo;
(b) cause to be executed and delivered to LuxCo certified
resolutions of the directors of Hippocampe authorizing the
contribution to LuxCo of the issued and outstanding
Hippocampe Common Shares to be contributed by the
Shareholders hereunder; and
(c) deliver or cause to be delivered such other documents as are
required or contemplated to be delivered by the Shareholders
pursuant to this Agreement.
7.4 This Agreement shall take effect concurrently with the ParentCo
Share Exchange Agreement.
8. CONDITIONS OF CLOSING
8.1 The obligation of ParentCo to complete the transactions
contemplated herein shall be subject to the following conditions to be
fulfilled and/or performed at or prior to the Time of Closing on the
Closing Date:
(a) ParentCo shall have received the requisite Shareholder
approval to increase its authorized ParentCo Common Shares
in sufficient amounts to meet its obligations hereunder and
under the ParentCo Share Exchange Agreement;
(b) the Bank Agreements and any share purchase warrants referred
to therein shall have been duly and validly assigned by
Hippocampe to ParentCo in a form satisfactory to ParentCo;
(c) the representations and warranties of the Shareholders
contained in this Agreement shall be true and correct in all
material respects at the Time of Closing, with the same
force and effect as if such representations and warranties
were made at and as of such time;
(d) the Shareholders shall have complied with all covenants and
agreements herein agreed to be performed or caused to be
performed by them; and
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(e) in aggregate, at least 90% of the issued and outstanding
Hippocampe Common Shares shall have been contributed to
ParentCo and/or LuxCo pursuant to this Agreement and the
ParentCo Share Exchange Agreement.
8.2 In the event that the conditions referred to in Section 8.1 hereof
shall not have been fulfilled at or prior to the Time of Closing to the
satisfaction of ParentCo, acting reasonably, or waived by ParentCo, or in
the event that the Closing Date has not occurred on or prior to March 31,
2001, this Agreement shall be rescinded and ParentCo shall be released
from all obligations hereunder.
8.3 The obligation of the Shareholders to complete the transactions
contemplated herein shall be subject to the following conditions to be
fulfilled and/or performed at or prior to the Time of Closing on the
Closing Date:
(a) ParentCo shall have received an indemnity from MFC Bancorp
Ltd. from and against all claims or actions arising out of
the business and undertakings of ParentCo prior to the Time
of Closing;
(b) the representations and warranties of ParentCo contained in
this Agreement shall be true and correct in all material
respects at the Time of Closing, with the same force and
effect as if such representations and warranties were made
at and as of such time;
(c) ParentCo shall have complied with all covenants and
agreements herein agreed to be performed or caused to be
performed by it; and
(d) in aggregate, at least 90% of the issued and outstanding
Hippocampe Common Shares shall have been contributed to
ParentCo and/or LuxCo pursuant to this Agreement and the
ParentCo Share Exchange Agreement.
8.4 In the event that the conditions referred to in Section 8.3 hereof
shall not have been fulfilled at or prior to the Time of Closing to the
satisfaction of the Shareholders, acting reasonably, or waived by the
Shareholders, or in the event that the Closing Date has not occurred on or
prior to March 31, 2001, this Agreement shall be rescinded and the
Shareholders shall be released from all obligations hereunder.
9. COVENANTS RELATING TO THE LUXCO EXCHANGEABLE PREFERRED SHARES
9.1 ParentCo covenants in favour of the Shareholders that, at or prior
to the Time of Closing and subject to the satisfaction or waiver of the
other conditions herein contained in favour of each such party:
(a) ParentCo shall execute and deliver and cause LuxCo to
execute and deliver the Support Agreement, with terms
substantially as described in Schedule "C" hereto;
(b) ParentCo shall execute and deliver, cause LuxCo to execute
and deliver and use all commercially reasonable efforts to
cause the Trustee to execute and deliver the Voting and
Exchange Trust Agreement, with terms substantially as
described in Schedule "C" hereto;
(c) ParentCo shall execute and deliver the Shareholder
Agreement, with terms substantially as described in Schedule
"C" hereto; and
(d) ParentCo shall issue to the Trustee the Special Voting
Share.
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10. INDEMNIFICATION
10.1 ParentCo agrees to indemnify and save harmless the Shareholders
from all Losses suffered or incurred by the Shareholders as a result of or
arising directly or indirectly out of or in connection with: (i) any
breach by ParentCo of or any inaccuracy of any representation or warranty
of ParentCo; or (ii) any breach or non-performance by ParentCo of any
covenant to be performed by it that is contained in this Agreement or in
any agreement, certificate or other document delivered pursuant hereto.
10.2 Each Shareholder severally agrees to indemnify and save harmless
ParentCo from all Losses suffered or incurred by ParentCo as a result of
or arising directly or indirectly out of or in connection with: (i) any
breach by such Shareholder of or any inaccuracy of any representation or
warranty of such Shareholder; or (ii) any breach or non-performance by
such Shareholder of any covenant to be performed by it, that is contained
in this Agreement or in any agreement, instrument, certificate or other
document delivered pursuant hereto.
11. COSTS AND EXPENSES
11.1 All costs and expenses of or incidental to the transactions
contemplated herein are to be assumed and paid by the party incurring such
costs and expenses.
12. NOTICES
12.1 Any notice required or permitted to be given hereunder to ParentCo
shall be given by notice in writing addressed to the President of ParentCo
hand delivered or sent by registered mail to the address mentioned on the
first page of this Agreement, or to any new address previously notified to
the party giving the notice. Any notice required or permitted to be given
hereunder to a Shareholder shall be given by notice in writing addressed
to such Shareholder hand delivered or sent by registered mail to the
respective address mentioned on the signature pages of this Agreement, or
to any new address previously notified to the party giving the notice.
Any such notices shall be deemed to have been given and received at the
time of hand delivery or delivery by the relevant postal service, as the
case may be.
13. SECTIONS AND HEADINGS
13.1 The division of this Agreement into Sections and the insertion of
headings are for convenience of reference only and shall not affect the
interpretation of this Agreement. Unless otherwise indicated, any
reference in this Agreement to a Section or a Schedule refers to the
specified Section of or Schedule to this Agreement.
14. NUMBER, GENDER AND PERSONS
14.1 In this Agreement, words importing the singular number only shall
include the plural and vice versa, words importing gender shall include
all genders and words importing persons shall include individuals,
corporations, partnerships, associations, trusts, unincorporated
organizations, governmental bodies and other legal or business entities.
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15. SUCCESSORS AND ASSIGNS
15.1 All the terms and provisions of this Agreement shall be binding
upon and enure to the benefit of and be enforceable by the parties hereto
and their respective successors and permitted assigns but shall not be
assignable prior to the Time of Closing by a Shareholder without the
written consent of ParentCo or by ParentCo without the written consent of
the Shareholders.
16. SURVIVAL
16.1 It is understood and agreed that all warranties, representations,
covenants, indemnities and agreements of the parties herein contained or
contained in any certificates or documents submitted pursuant to or in
connection with the transactions contemplated herein shall survive the
completion of the transactions contemplated herein and the termination of
this Agreement and shall continue in full force and effect for the benefit
of the other parties for a period of two years following the Closing Date.
17. FURTHER ASSURANCES
17.1 Each party to this Agreement covenants and agrees that, from time
to time subsequent to the Closing Date, it will, at the request and
expense of the requesting party, execute and deliver all such documents
and do all such other acts and things as any other party hereto, acting
reasonably, may from time to time request be executed or done in order to
better evidence or perfect or effectuate any provision of this Agreement
or of any agreement or other document executed pursuant to this Agreement
or any of the respective obligations intended to be created hereby or
thereby.
18. AMENDMENTS
18.1 This Agreement may be amended or modified by an agreement in
writing executed by the parties hereto. Except as aforesaid, no
amendment, waiver or modification of this Agreement shall be effective.
19. SEVERABILITY
19.1 Should a provision of this Agreement be or become invalid, the
validity of the remaining provisions of this Agreement shall not be
affected. The parties hereto undertake to replace any such invalid
provision without delay with a valid provision which as nearly as possible
duplicates the economic intent of the invalid provision.
20. ENGLISH VERSION
20.1 The parties hereby represent, warrant, acknowledge and agree that:
(i) they have agreed that this Agreement be drawn up in the English
language; and (ii) the English version of this Agreement shall govern for
all purposes.
21. GOVERNING LAW
21.1 This Agreement shall be construed and enforced in accordance with,
and the rights and obligations of the parties shall be governed by, the
laws of the State of New York in the United States.
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22. JURISDICTION
22.1 Each of the parties irrevocably attorns to the exclusive
jurisdiction of the courts in the State of New York in the United States.
23. COUNTERPARTS
23.1 This Agreement may be executed in any number of counterparts, each
of which when delivered, either in original or facsimile form, shall be
deemed to be an original and all of which together shall constitute one
and the same document.
IN WITNESS WHEREOF the parties have executed this Agreement in
counterparts, one for each party.
ICHOR CORPORATION
Per:
------------------------------
Authorized Signatory
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THE FOLLOWING SHAREHOLDERS OF HIPPOCAMPE S.A.:
SIGNED, SEALED and DELIVERED by )
PIERRE-XXXXXXXX XXXXXX )
in the presence of: )
)
)
------------------------------- ) -------------------------------
Signature ) PIERRE-XXXXXXXX XXXXXX
------------------------------- )
Name )
------------------------------- ) -------------------------------
Address ) Address
------------------------------- ) -------------------------------
) 2609
------------------------------- ) -------------------------------
Occupation Number of Hippocampe Common
Shares Held
SIGNED, SEALED and DELIVERED by )
XXXXXXXX XXXXXXX )
in the presence of: )
)
)
------------------------------- ) -------------------------------
Signature ) XXXXXXXX XXXXXXX
------------------------------- )
Name )
------------------------------- ) -------------------------------
Address ) Address
------------------------------- ) -------------------------------
) 501
------------------------------- ) -------------------------------
Occupation Number of Hippocampe Common
Shares Held
SIGNED, SEALED and DELIVERED by )
XXXXXXX XXXXXX )
in the presence of: )
)
)
------------------------------- ) -------------------------------
Signature ) XXXXXXX XXXXXX
------------------------------- )
Name )
------------------------------- ) -------------------------------
Address ) Address
------------------------------- ) -------------------------------
) 501
------------------------------- ) -------------------------------
Occupation Number of Hippocampe Common
Shares Held
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SIGNED, SEALED and DELIVERED by )
XXXXX XXXXXXX )
in the presence of: )
)
)
------------------------------- ) -------------------------------
Signature ) XXXXX XXXXXXX
------------------------------- )
Name )
------------------------------- ) -------------------------------
Address ) Address
------------------------------- ) -------------------------------
) 102
------------------------------- ) -------------------------------
Occupation Number of Hippocampe Common
Shares Held
SIGNED, SEALED and DELIVERED by )
XXXX XXXX )
in the presence of: )
)
)
------------------------------- ) -------------------------------
Signature ) XXXX XXXX
------------------------------- )
Name )
------------------------------- ) -------------------------------
Address ) Address
------------------------------- ) -------------------------------
) 100
------------------------------- ) -------------------------------
Occupation Number of Hippocampe Common
Shares Held
SIGNED, SEALED and DELIVERED by )
XXXXXXX XXXXX )
in the presence of: )
)
)
------------------------------- ) -------------------------------
Signature ) XXXXXXX XXXXX
------------------------------- )
Name )
------------------------------- ) -------------------------------
Address ) Address
------------------------------- ) -------------------------------
) 10
------------------------------- ) -------------------------------
Occupation Number of Hippocampe Common
Shares Held
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SIGNED, SEALED and DELIVERED by )
XXXXXXXXXX XXXXXXX )
in the presence of: )
)
)
------------------------------- ) -------------------------------
Signature ) XXXXXXXXXX XXXXXXX
------------------------------- )
Name )
------------------------------- ) -------------------------------
Address ) Address
------------------------------- ) -------------------------------
) 1
------------------------------- ) -------------------------------
Occupation Number of Hippocampe Common
Shares Held
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SIGNED, SEALED and DELIVERED by )
XXXXXXXXXX XXXXX )
in the presence of: )
)
)
------------------------------- ) -------------------------------
Signature ) XXXXXXXXXX XXXXX
------------------------------- )
Name )
------------------------------- ) -------------------------------
Address ) Address
------------------------------- ) -------------------------------
) 30
------------------------------- ) -------------------------------
Occupation Number of Hippocampe Common
Shares Held
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SCHEDULE "A"
REPRESENTATIONS AND WARRANTIES OF PARENTCO
(a) ParentCo has been duly organized and is validly existing and in
good standing under the laws of its jurisdiction of organization.
ParentCo is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction where such
qualification is required. ParentCo has full corporate power and
authority to carry on the businesses in which it is engaged and to
own and use the properties owned and used by it.
(b) ParentCo has all necessary power and authority to execute and
deliver this Agreement and to perform its obligations hereunder.
This Agreement has been duly executed and delivered by and on
behalf of ParentCo and constitutes legal, valid and binding
obligations of ParentCo enforceable against ParentCo in accordance
with its terms.
(c) The authorized capital of ParentCo consists of 30 million ParentCo
Common Shares (approximately 80 million ParentCo Shares at the Time
of Closing) and five million shares of preferred stock, $0.01 par
value per share, of which 4,918,770 ParentCo Common Shares and
564,706 shares of preferred stock, $0.01 par value per share are
issued and outstanding as of the date of this Agreement and
8,165,830 ParentCo Common Shares shall be outstanding as of the
Time of Closing. No person, firm or corporation has any agreement
or option, or any right or privilege (whether by law, pre-emptive
or contractual) capable of becoming an agreement or option that
could require ParentCo to issue, sell, or otherwise cause to become
outstanding any of its capital, other than: (i) pursuant hereto;
(ii) pursuant to the ParentCo Share Exchange Agreement; (iii)
pursuant to the Bank Agreements; and (iv) the holders of options to
acquire ParentCo Common Shares previously granted pursuant to
ParentCo's stock option plans.
(d) The ParentCo Common Shares to be issued upon the exchange from time
to time of the LuxCo Exchangeable Preferred Shares shall be duly
and validly issued and outstanding as fully paid and non-
assessable.
(e) The ParentCo Special Voting Preferred Share to be issued to the
Trustee pursuant to the Voting and Exchange Trust Agreement shall
be duly and validly issued and outstanding as fully paid and non-
assessable.
(f) ParentCo has made all filings with the U.S. Securities and Exchange
Commission that it has been required to make within the past two
years under the U.S. Securities Act of 1933, as amended, and the
U.S. Securities Exchange Act of 1934, as amended (collectively the
"Public Reports"). Each of the Public Reports has complied with
the U.S. Securities Act of 1933, as amended, and the U.S.
Securities Exchange Act of 1934, as amended, in all material
respects. None of the Public Reports, as of their respective
dates, contained any untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements
made therein, in light of the circumstances under which they were
made, not misleading.
(g) ParentCo has filed quarterly reports on Form 10-Q for the fiscal
quarters ended September 30, 2000 (the "Most Recent Fiscal Quarter
End"), June 30, 2000 and March 31, 2000 and an annual report on
Form 10-K for the fiscal year ended December 31, 1999. The
financial statements of ParentCo included in or incorporated by
reference into these Public Reports (including the related notes
and schedules) have been prepared in accordance with U.S. generally
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accepted accounting principles applied on a consistent basis
throughout the periods covered thereby, present fairly the
financial condition of ParentCo as of the indicated dates and the
results of operations of ParentCo for the indicated periods, and
are correct and complete in all respects, and are consistent with
the books and records of ParentCo; provided, however, that the
interim statements are subject to normal year-end adjustments.
(h) Since the Most Recent Fiscal Quarter End, there has not been any
material adverse change in the financial condition of ParentCo.
(i) ParentCo does not have any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due), including any liability for
taxes, except for: (i) liabilities set forth on the face of the
balance sheet dated as of the Most Recent Fiscal Quarter End; and
(ii) liabilities which have arisen after the Most Recent Fiscal
Quarter End in the ordinary course of business or which it assumes
under the Bank Agreements.
(j) At the Time of Closing, LuxCo shall be duly organized and validly
existing and in good standing under the laws of its jurisdiction of
organization. At the Time of Closing, LuxCo shall be duly
authorized to conduct business and be in good standing under the
laws of each jurisdiction where such qualification is required. At
the Time of Closing, LuxCo shall have full corporate power and
authority to carry on the businesses in which it is engaged and to
own and use the properties owned and used by it.
(k) At the Time of Closing, the authorized capital of LuxCo shall
consist of LuxCo Common Shares held by ParentCo and LuxCo
Exchangeable Preferred Shares issued hereunder.
(l) At the Time of Closing, all but not less than all of the issued and
outstanding LuxCo Common Shares shall be owned by ParentCo as the
sole legal and beneficial owner of record with good and marketable
title thereto, free and clear of any mortgages, liens, charges,
restrictions, security interests, adverse claims, pledges,
encumbrances or demands whatsoever. At the Time of Closing, no
person, firm or corporation shall have any agreement or option, or
any right or privilege (whether by law, pre-emptive or contractual)
capable of becoming an agreement or option for the purchase,
acquisition, transfer or contribution from ParentCo of any LuxCo
Common Shares.
(m) At the Time of Closing, there shall not be any issued or
outstanding LuxCo Exchangeable Preferred Shares, and no person,
firm or corporation shall have any agreement or option, or any
right or privilege (whether by law, pre-emptive or contractual)
capable of becoming an agreement or option for the purchase,
acquisition, transfer, contribution or issuance of any LuxCo
Exchangeable Preferred Shares, other than pursuant hereto.
(n) The LuxCo Exchangeable Preferred Shares to be issued at the Time of
Closing shall be duly and validly issued and outstanding as fully
paid and non-assessable.
(o) Other than with respect to the nominal capital contribution made by
ParentCo to LuxCo in conjunction with the organization of LuxCo in
Luxembourg, LuxCo shall not have any assets or liabilities
(absolute, accrued, contingent or otherwise) at the Time of
Closing.
A-2
17
SCHEDULE "B"
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
(a) No person, firm or corporation has any agreement or option, or any
right or privilege (whether by law, pre-emptive or contractual)
capable of becoming an agreement or option for the purchase,
acquisition, contribution or issuance of any Hippocampe Common
Shares or any interest therein or right thereto, other than
pursuant hereto and the ParentCo Share Exchange Agreement or MFC
Merchant Bank S.A. pursuant to the Underwriting Agreement.
(b) The authorized capital of Hippocampe is in the amount of FF 782,000
divided into 7,820 Hippocampe Common Shares of FF 100 each.
(c) Hippocampe has been duly organized and is validly existing and in
good standing under the laws of its jurisdiction of organization
and has all requisite power and authority to carry on its business
as now conducted and as presently proposed to be conducted and to
own, lease and operate its properties and assets.
(d) There is no action, proceeding or investigation pending or, to the
knowledge of the Shareholders, after due inquiry, threatened,
against or affecting Hippocampe, at law or in equity or before or
by any federal, state, local or other governmental department,
commission, board or agency, domestic or foreign, which could in
any way materially adversely affect Hippocampe or the condition
(financial or otherwise) of Hippocampe.
(e) The descriptions of the assets and the liabilities of Hippocampe
set out in the balance sheets of Hippocampe as at December 31, 1998
and December 31, 1999, including the notes thereto, are true and
correct, accurately and fairly present the financial position and
condition of Hippocampe as at the respective dates thereof, reflect
all liabilities (absolute, accrued, contingent or otherwise, as
applicable) of Hippocampe as at the respective dates thereof, and
have been prepared in accordance with French generally accepted
accounting principles applied on a consistent basis.
(f) The statements of earnings, retained earnings and changes in
financial position of Hippocampe, as applicable, for the years
ended December 31, 1997, December 31, 1998 and December 31, 1999,
including the notes thereto, in each case accurately and fairly
present the results of the operations of Hippocampe for the
respective periods covered thereby and have been prepared in
accordance with French generally accepted accounting principles
applied on a consistent basis throughout such period.
(g) There is not, in the constating documents or by-laws of Hippocampe,
any restriction upon or impediment to the payment of dividends by
Hippocampe to the holders of the Hippocampe Common Shares.
(h) There is no person, firm or corporation acting or purporting to act
for Hippocampe entitled to any brokerage or finder's fee in
connection with this Agreement or any of the transactions
contemplated hereunder, other than pursuant to the Bank Agreements.
(i) Hippocampe has conducted, and at the Time of Closing shall be
conducting, its business in compliance in all material respects
with all applicable laws, rules and regulations of its jurisdiction
in which its business is carried on and is duly licensed,
registered or qualified in all jurisdictions in
18
which it owns, leases or operates its property or carries on
business to enable its business to be carried on as now conducted
and its property and assets to be owned, leased and operated, and
all such licenses, registrations and qualifications are valid and
subsisting and in good standing and none of the same contains any
burdensome term, provision, condition or limitation which has an
adverse effect on the operation of its business as now carried on.
(j) Hippocampe has conducted, and at the Time of Closing shall be
conducting, its business in compliance in all material respects
with all applicable licensing and anti-pollution legislation,
regulations or by-laws, environmental protection legislation,
regulations or by-laws or other similar legislation, regulations or
by-laws or other lawful requirements of any governmental or
regulatory bodies which are applicable to Hippocampe.
(k) Hippocampe is not in default or breach of, and the execution and
delivery of this Agreement by the Shareholders and the performance
and compliance with the terms of this Agreement will not result in
any breach of, or be in conflict with or constitute a default
under, or create a state of facts which after notice or lapse of
time, or both, would constitute a default under, any term or
provision of the constating documents or by-laws of Hippocampe, any
resolutions passed or consented to by the directors or shareholders
of Hippocampe or any mortgage, note, indenture, contract, agreement
(written or oral), instrument, lease or other document to which
Hippocampe is a party or any judgement, decree, order, statute,
rule or regulation applicable to Hippocampe, and no terms or
provision thereof materially adversely affects the business,
operations or condition (financial or otherwise) of Hippocampe or
its properties or assets.
(l) Hippocampe has duly and on a timely basis filed all tax returns to
be filed by it, has paid all taxes due and payable by it and has
paid all assessments and re-assessments and all other taxes,
governmental charges, penalties, interest and other fines due and
payable by it and which are claimed by any governmental authority
to be due and owing and adequate provision has been made for taxes
payable for any fiscal period ended for which tax returns are not
yet required to be filed, if required; there are no agreements,
waivers or other arrangements providing for an extension of time
with respect to the filing of any tax return or payment of any tax,
governmental charge or deficiency by Hippocampe; there are no
actions, suits, proceedings, investigations or claims threatened or
pending against Hippocampe in respect of taxes, governmental
charges or assessments or any matters under discussion with any
governmental authority relating to taxes, governmental charges or
assessments asserted by any such authority.
(m) All of the material agreements of Hippocampe have been duly
authorized, executed and delivered by each of the parties thereto
and are legal, valid and binding obligations of the parties thereto
enforceable in accordance with their respective terms against each
of the parties thereto.
(n) All necessary patent applications in respect of its material
patents have been duly filed and Hippocampe has good and valid
title to such patents, and Hippocampe did not disclose to the
public the existence of the subject matter of any of the patents
prior to the date of filing of each of the patents.
(o) Since December 31, 1999, Hippocampe has not made any payment on
account of a redemption or a distribution or return of capital
(including, without limitation, cash dividends or any repayment of
shareholder loans or distributions) to any shareholder or holder of
securities.
(p) Since December 31, 1999, Hippocampe has carried on its business,
operations and affairs only in the ordinary and normal course
consistent with past practice.
B-2
19
(q) Each Shareholder acknowledges that the LuxCo Exchangeable Preferred
Shares issued pursuant hereto and any ParentCo Common Shares to be
issued from time to time upon the exchange of LuxCo Exchangeable
Preferred Shares have not been registered under the U.S. Securities
Act of 1933, as amended, and may be offered, sold or otherwise
transferred only: (i) to ParentCo or LuxCo, as applicable; (ii)
outside the U.S. in accordance with Rule 904 of Regulation S under
the U.S. Securities Act of 1933, as amended; or (iii) inside the
U.S. in accordance with: (A) Rule 144A under the U.S. Securities
Act of 1933, as amended; (B) Rule 144 under the U.S. Securities Act
of 1933, as amended, if applicable; or (C) with the prior written
consent of ParentCo or LuxCo, as applicable, another exemption from
registration under the U.S. Securities Act of 1933.
B-3
20
SCHEDULE "C"
TERMS AND ANCILLARY AGREEMENTS
RELATING TO THE LUXCO EXCHANGEABLE PREFERRED SHARES
LuxCo Exchangeable Preferred Share Provisions
---------------------------------------------
The LuxCo Exchangeable Preferred Shares have the following rights,
privileges, restrictions and conditions:
Ranking
The LuxCo Exchangeable Preferred Shares rank senior to LuxCo Common Shares
with respect to dividends and liquidating distributions.
Voting Rights
The LuxCo Exchangeable Preferred Shares are non-voting in LuxCo. All
votes in respect of LuxCo are exercised by ParentCo as the holder of all
of the voting rights in LuxCo Common Shares. Notwithstanding that the
LuxCo Exchangeable Preferred Shares are non-voting, the holders of LuxCo
Exchangeable Preferred Shares are permitted to vote as a class with
respect to certain matters involving LuxCo.
Shareholder Agreement
---------------------
The Shareholder Agreement provides for the following principal terms:
Dividends
Holders of LuxCo Exchangeable Preferred Shares are entitled to receive
dividends equivalent to dividends paid on the number of ParentCo Common
Shares into which such LuxCo Exchangeable Preferred Shares may be
exchanged.
Exchange by the Holder
A holder of LuxCo Exchangeable Preferred Shares has the right, at any time
at its option, to require LuxCo to exchange its LuxCo Exchangeable
Preferred Shares for ParentCo Common Shares. The exchange ratio is set at
1,066.44-for-one (the "Exchange Ratio"), so that each LuxCo Exchangeable
Preferred Share is exchangeable for 1,066.44 ParentCo Common Shares.
Liquidation Distribution
On the liquidation of LuxCo, holders of the LuxCo Exchangeable Preferred
Shares are entitled to exchange their LuxCo Exchangeable Preferred Shares
for ParentCo Common Shares at the Exchange Ratio.
21
Redemption by LuxCo
LuxCo Exchangeable Preferred Shares are automatically exchanged by LuxCo
for ParentCo Common Shares at the Exchange Ratio, on December 31, 2011,
which automatic redemption date is accelerated in certain circumstances,
including:
(a) if the number of outstanding LuxCo Exchangeable Preferred
Shares falls below 5% of the LuxCo Exchangeable Preferred
Shares outstanding immediately following the completion of
the transactions contemplated in this Agreement (i.e., the
share exchange agreement); or
(b) upon the occurrence of a change of control of ParentCo.
Anti-Dilution Provisions
Since each LuxCo Exchangeable Preferred Share is intended to be
economically equivalent to the number of ParentCo Common Shares into which
it may be exchanged, the exchange ratio is adjusted in the event that
ParentCo undertakes a stock split or consolidation, issues stock dividends
or otherwise changes its share capital.
Support Agreement
-----------------
The Support Agreement includes covenants of ParentCo:
(a) that it will not declare or pay a dividend on ParentCo
Common Shares unless LuxCo can simultaneously pay the same
dividend on the LuxCo Exchangeable Preferred Shares, and
that it will cause LuxCo to declare and pay such equivalent
dividend;
(b) that it will ensure that LuxCo will have a sufficient number
of ParentCo Common Shares in the event of a liquidation of
LuxCo;
(c) that it will satisfy all exchange requests or redemptions of
LuxCo Exchangeable Preferred Shares that will not cause
LuxCo to be liquidated or dissolved;
(d) that it will not undertake a stock split or consolidation,
issue stock dividends or otherwise change its share capital
without adjusting the exchange ratio with respect to the
number of ParentCo Common Shares into which LuxCo
Exchangeable Preferred Shares may be exchanged; and
(e) that, so long as there are any outstanding LuxCo
Exchangeable Preferred Shares owned by a person other than
ParentCo or its affiliates, ParentCo will remain the direct
or indirect beneficial owner of all issued and outstanding
voting shares in the capital of LuxCo.
Voting and Exchange Trust Agreement
-----------------------------------
The Voting and Exchange Trust Agreement provides for the following
principal terms:
C-2
22
ParentCo Special Voting Preferred Share
ParentCo issues to the Trustee a single ParentCo Special Voting Preferred
Share. The terms of the ParentCo Special Voting Preferred Share confer on
the Trustee that number of votes with respect to matters on which holders
of ParentCo Common Shares are entitled to vote, equal to the number of
outstanding LuxCo Exchangeable Preferred Shares (multiplied by the
exchange ratio), other than LuxCo Exchangeable Preferred Shares held by
ParentCo or any affiliates. The Voting and Exchange Trust Agreement
provides a mechanism under which holders of LuxCo Exchangeable Preferred
Shares may instruct the Trustee how to vote the particular votes conferred
by the ParentCo Special Voting Preferred Share relating to the holder's
LuxCo Exchangeable Preferred Shares. By virtue of this voting trust
mechanism, a holder of LuxCo Exchangeable Preferred Shares has a complete
bundle of rights that collectively is equivalent to the rights the holder
would have if the holder owned ParentCo Common Shares directly. As a
beneficiary of the voting trust, the holder of LuxCo Exchangeable
Preferred Shares has the same right to vote in respect of meetings of
holders of ParentCo Common Shares as if the holder owned ParentCo Common
Shares directly, and as a holder of LuxCo Exchangeable Preferred Shares,
the holder has the right to dividends equivalent to those paid in respect
of ParentCo Common Shares, and the indirect right to participate in a
liquidating distribution of ParentCo by virtue of the right at any time to
exchange the LuxCo Exchangeable Preferred Shares into ParentCo Common
Shares.
Insolvency Put Rights
ParentCo grants certain "insolvency put rights" to the holders of LuxCo
Exchangeable Preferred Shares. These put rights include:
(a) an "automatic exchange right" that would be invoked by the
commencement of the voluntary dissolution or liquidation of
ParentCo, in which event the LuxCo Exchangeable Preferred
Shares would automatically be acquired by ParentCo in
exchange for the appropriate number of ParentCo Common
Shares; and
(b) an "optional exchange right" that would permit the holders
of LuxCo Exchangeable Preferred Shares, at their option upon
the occurrence of certain insolvency events with respect to
LuxCo, to require ParentCo to purchase the LuxCo
Exchangeable Preferred Shares directly from the holder, for
a purchase price payable in the appropriate number of
ParentCo Common Shares to the Trustee in respect of the
voting trust, for the benefit of the holders of LuxCo
Exchangeable Preferred Shares in the same manner as the
voting rights.
The insolvency put rights are granted by ParentCo to the Trustee in
respect of the voting trust, for the benefit of the holders of LuxCo
Exchangeable Preferred Shares in the same manner as voting rights.
C-3
