EXCHANGE AND VOTING AGREEMENT
MEMORANDUM OF AGREEMENT made as of the 16 day of February 2000.
AMONG: BIOSYNTECH, INC. (formerly Dream Team Inc.), a corporation
subsisting under the laws of the State of Nevada;
(hereinafter referred to as the "Parent")
AND: 0000-0000 XXXXXX INC., a corporation incorporated under the
laws of the Province of Quebec;
(hereinafter referred to as the "Purchaser"),
AND:
XXXXXX XXXXXXX, attorney, having a business address at De
Grandpre Chaurette Xxxxxxxx, 2000 XxXxxx College Avenue, suite
1600, Xxxxxxxx, Xxxxxx X0X 0X0
(hereinafter referred to as the "Trustee").
AND:
BIO SYNTECH LTEE., a corporation incorporated under the laws
of the Province of Quebec;
(hereinafter referred to as the "Bio Syntech")
W H E R E A S:
A. The Purchaser is the wholly owned subsidiary of the Parent;
B. Pursuant to the Amalgamation Agreement, the Purchaser agreed to
amalgamate with Bio Syntech to form Bio Syntech Canada Inc.("Mergeco.")
in consideration of among other things: (i) the Shareholders of
Biosyntech receiving one Exchangeable Non-Voting Share (as herein
defined) of Mergeco for each share of Bio Syntech held by them
immediately before the Amalgamation 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;
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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 a number of common shares (as herein defined as
the "Parent Common Shares") to the Trustee corresponding to the number
of issued Exchangeable Non-Voting Shares;
D. In accordance with the Amalgamation Agreement and the Exchangeable
Share Provisions, 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; (iii) the Shareholders
exercise their rights of exchange of the Exchangeable Non-Voting
Shares; and (iv) the Parent exercises its Call Right.
E. As consideration for the grant by the Parent of the above rights to the
Shareholders, the Shareholders who have intervened to this Agreement
have granted to the Parent a right to acquire the Exchangeable
Non-Voting Shares tendered by them for Retraction (the "Call Right");
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.
"AMALGAMATION AGREEMENT" means the Amalgamation Agreement dated December 2, 1999
between the Parent, the Purchaser and Bio Syntech, as amended and restated on
the date hereof.
"AUTOMATIC EXCHANGE RIGHTS" means the benefit of the obligation of Parent to
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effect the automatic exchange of Exchangeable Non-Voting Shares for Parent
Common Shares pursuant to Section 4.11 hereof.
"BOARD OF DIRECTORS" means the Board of Directors of Mergeco.
"BUSINESS DAY" means a day other than a Saturday, Sunday or a day when banks are
not open for business in Nova Scotia;
"CALL RIGHT" means the right of the Parent to acquire in certain circumstances
described in the statutes of Mergeco, Exchangeable Non-Voting Shares from the
holders thereof who have intervened to this Agreement, on the basis of one
Parent Common Share for each Exchangeable Non-Voting Share so tendered.
"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 Exchangeable Non-Voting Shares
without par value in the capital stock of Mergeco issuable under the
Amalgamation Agreement.
"EXCHANGEABLE SHARE PROVISIONS" means the rights, privileges, restrictions and
conditions attached to the Exchangeable Non-Voting Shares as set forth in the
Amalgamation Agreement.
"INSOLVENCY EVENT" means the institution by Mergeco of any proceeding to be
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adjudicated bankrupt or insolvent or to be dissolved or wound up, or the consent
of Mergeco 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
Mergeco to contest in good faith any such proceedings commenced in respect of
Mergeco within fifteen (15) days of becoming aware thereof, or the consent by
Mergeco to the filing of any such petition or to the appointment of a receiver,
or the making by Mergeco of a general assignment for the benefit of creditors,
or the admission in writing by Mergeco of its inability to pay its debts
generally as they become due, or Mergeco not being permitted, pursuant to
solvency requirements of applicable law, to redeem any Retracted Shares pursuant
to section 6 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 4.12.
"LIQUIDATION EVENT EFFECTIVE DATE" has the meaning ascribed thereto in Section
4.12(c).
"LIST" has the meaning ascribed thereto in Section 3.8.
"OFFICER'S CERTIFICATE" means, with respect to the Parent or Mergeco, 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 Mergeco, 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 11.1(a).
"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 4.7.
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"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.
"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.
"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 Amalgamation Agreement, Exchangeable Share
Provisions and Support Agreement both to support the Parent's and
Mergeco's obligations thereunder in the event of default and to provide
a mechanism for Shareholders of each Exchangeable Non-Voting Share to
direct the voting of a corresponding Parent
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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 Amalgamation 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 Amalgamation 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
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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. Mergeco 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
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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. Mergeco 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
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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 Mergeco 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 Mergeco 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 Mergeco 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 Mergeco. Mergeco 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
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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.
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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. Mergeco 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; and
(b) the Automatic Exchange Rights.
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 NonVoting 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 NonVoting Shares in accordance with 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.
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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 Mergeco. 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 (Quebec), and
the articles of Mergeco 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 Mergeco 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 Mergeco.
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
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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 Mergeco 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 6 of the
Exchangeable Share Provisions to require Mergeco to redeem any or all
of the Exchangeable Non-Voting Shares held by the Shareholder (the
"Retracted Shares") and is notified by Mergeco pursuant to section 6.6
of the Exchangeable Share Provisions that Mergeco 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 Mergeco pursuant to
section 6.7 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 Mergeco is unable to
redeem. In any such event, Mergeco hereby agrees with the
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Shareholder immediately to notify the Parent of such prohibition
against Mergeco 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 Mergeco of the Exchangeable
Non-Voting Shares (including without limitation a copy of the
retraction request delivered pursuant to section 6.1 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 Mergeco 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 NonVoting
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, Mergeco 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 Mergeco 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, Mergeco 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
15
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 Mergeco 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 5 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
16
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 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
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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 NonVoting 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 NonVoting 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.
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ARTICLE 5
DIVIDENDS
5.1 The holders of Exchangeable Non-Voting Shares will be entitled to
participate in all dividends declared by Mergeco, in accordance with
the provisions of the Exchangeable Share Provisions and the Support
Agreement.
5.2 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 Mergeco has
omitted to pay any dividends otherwise payable or that either the
Parent or Mergeco 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 Mergeco certifying that Mergeco
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 Mergeco to the holders
of Exchangeable Non-Voting Shares.
5.3 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 6
SUPPORT PROVISIONS
6.1 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 Mergeco's obligations under
the Amalgamation Agreement, the Exchangeable Share Provisions and the
Support Agreement. In the event that Mergeco 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
19
Agreement, a Shareholder may provide written notice to the Parent,
Mergeco 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
NonVoting 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 3 of the Exchangeable Share Provisions), the
Parent shall remain obligated to pay such amount to the Shareholder.
6.2 APPLICATION OF TRUST SHARES. At such time as either the Mergeco 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 7
CONCERNING THE TRUSTEE
7.1 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;
20
(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,
Mergeco 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.
7.2 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 9.
7.3 DEALINGS WITH THIRD PARTIES. The Purchaser and the Parent irrevocably
authorize the Trustee, from time to time, to:
21
(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 Mergeco, 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.
7.4 BOOKS AND RECORDS. The Trustee shall keep available for inspection,
during normal business hours, by the Parent and Mergeco, at the
Trustee's principal office, 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.
7.5 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.
7.6 INDEMNIFICATION PRIOR TO CERTAIN ACTIONS BY TRUSTEE. The Trustee shall
exercise any or all of the rights, duties, powers or authorities vested
in it by this 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.
22
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.
7.7 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 Mergeco and the Parent.
7.8 RELIANCE UPON DECLARATIONS. The Trustee shall not be considered to be
in contravention of any of its rights, powers, duties and authorities
hereunder if, when required, it acts and relies in good faith upon
lists, mailing labels, notices, statutory declarations, certificates,
opinions, reports or other papers or documents furnished pursuant to
the provisions hereof or required by the Trustee to be furnished to it
in the exercise of its rights, powers, duties and authorities
hereunder.
7.9 EVIDENCE AND AUTHORITY TO TRUSTEE. Mergeco 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 Mergeco 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 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 Mergeco 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 7.9; or
(b) the Trustee, in the exercise of its rights, powers, duties and
authorities under this Agreement, gives Mergeco 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 Mergeco
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
23
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 Mergeco 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.
7.10 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 Mergeco 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
24
actions hereunder.
7.11 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 State of
Pennsylvania, 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 Mergeco. 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.
7.12 TRUSTEE NOT REQUIRED TO GIVE SECURITY. The Trustee shall not be
required to give any bond or security in respect of the execution of
the trusts, rights, duties, powers and authorities of this Agreement or
otherwise in respect of the premises.
7.13 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 Mergeco
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.
7.14 CONFLICTING CLAIMS. If conflicting claims or demands are made or
asserted with respect to any interest of any Shareholder in any
Exchangeable NonVoting 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
25
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.
7.15 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.
7.16 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 Mergeco, 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.
26
ARTICLE 8
COMPENSATION
8.1 FEES AND EXPENSES OF THE TRUSTEE. The Parent, Purchaser and he
Shareholders jointly and severally agree to pay to the Trustee
reasonable compensation for all of the services rendered by it under
his 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 f 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 Mergeco 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 9
INDEMNIFICATION AND LIMITATION OF LIABILITY
9.1 INDEMNIFICATION OF THE TRUSTEE. The Parent, Purchaser and the
Shareholders 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 Mergeco pursuant hereto.
Subject to (ii), below, the Parent and Mergeco shall be entitled to
participate at their own expense in the defence and, if the Parent and
Mergeco 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 Mergeco 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
27
to re-assume the defence of any suit if the Parent or Mergeco 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 Mergeco; or (ii) the named
parties to any such suit include both the Trustee and the Parent; or
(iii) Mergeco and the Trustee shall have been advised by counsel
acceptable to the Parent or Mergeco 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 Mergeco (in which case
Mergeco 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).
9.2 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 Mergeco 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 10
CHANGE OF TRUSTEE
10.1 RESIGNATION. The Trustee, or any trustee hereafter appointed, may at
any time resign by giving written notice of such resignation to the
Parent and Mergeco 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 Mergeco
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 Mergeco shall
promptly appoint a successor trustee by written instrument in
duplicate, one copy of which shall be delivered to the resigning
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trustee and one copy to the successor trustee.
10.2 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 Mergeco, 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 10.3 of this Agreement.
10.3 SUCCESSOR TRUSTEE. Any successor trustee appointed as provided under
this Agreement shall execute, acknowledge and deliver to the Parent and
Mergeco 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 Mergeco 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 Mergeco and such predecessor trustee shall execute any and
all instruments in writing for more fully and certainly vesting in and
confirming to such successor trustee all such rights and powers.
10.4 NOTICE OF SUCCESSOR TRUSTEE. Upon acceptance of appointment by a
successor trustee as provided herein the Parent and Mergeco 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
Mergeco 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 Mergeco.
ARTICLE 11
THE PARENT SUCCESSORS
11.1 CERTAIN REQUIREMENTS IN RESPECT OF COMBINATION, ETC. The Parent shall
not enter into any transaction (whether by way of reconstruction,
reorganization, consolidation, merger, transfer, sale, lease or
otherwise)
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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.
11.2 VESTING OF POWERS IN SUCCESSOR. Whenever the conditions of Section 11.1
hereof have been duly observed and performed, the Trustee, if required
by Section 11.1 hereof, the Parent Successor and Mergeco shall execute
and deliver the supplemental Agreement provided for in Article 12 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.
11.3 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.
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ARTICLE 12
AMENDMENTS AND SUPPLEMENTAL TRUST AGREEMENTS
12.1 AMENDMENTS, MODIFICATIONS, ETC. This Agreement may not be amended or
modified except by an agreement in writing executed by Mergeco and the
Parent.
12.2 MEETING TO CONSIDER AMENDMENTS. Mergeco, 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 Mergeco, the Exchangeable Share
Provisions and all applicable laws.
12.3 CHANGES IN CAPITAL OF PARENT OR Mergeco. 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.
12.4 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
11 and the successor of any successor trustee in accordance
with the provisions of Article 10;
(b) making any additions to, deletions from or alterations of the
provisions of this Agreement or the Insolvency Exchange Right
or the Automatic Exchange Rights which, in the opinion of the
Parent and its counsel, will
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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 13
TERMINATION
13.1 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 Mergeco 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 10 of the Exchangeable Share Provisions; and
(c) December 31, 2098.
13.2 SURVIVAL OF AGREEMENT. Subject to the provisions of Section 13.1(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 14
GENERAL
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14.1 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.
14.2 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.
14.3 NOTICES TO PARTIES. All notices and other communications between the
parties hereunder shall be in writing and shall be deemed to have been
given if delivered personally or by confirmed 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 Parent or Mergeco:
Bio Syntech, Inc. (formerly Dream Team International Inc.
c/o Xx. Xxxxxxx X. Xxxxxx, Esq.
Xxxxxx & Associates
00 Xxxx Xxxx, Xxxx X
Xxxx Xxxxxx, Xxxxxxxxxx 00000
if to the Trustee at:
Xx. Xxxxxx Xxxxxxx
Xx Xxxxxxxx Chaurette Xxxxxxxx
0000 XxXxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx (Quebec) H3B 3H3
if to the Shareholders:
Mr. Amine Selmani
President
Bio Byntech Ltee
2084 Xxxxxx
Laval (Quebec)
H7S 1X4
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
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deemed to have been given and received on the date of receipt thereof
unless such day is not a Business Day in which case it shall be deemed
to have been given and received upon the immediately following Business
Day.
14.4 NOTICE OF 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 Mergeco 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.
14.5 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 Mergeco, or by
such Shareholder to the Trustee or to the Parent or Mergeco, the making
of such payment or sending of such document sent through the mail shall
be at the risk of Mergeco, in the case of payments made or documents
sent by the Trustee or Mergeco, and the Shareholder, in the case of
payments made or documents sent by the Shareholder.
14.6 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.
14.7 JURISDICTION. This Agreement shall be construed and enforced in
accordance with the laws of the Province of Quebec and the laws of
Canada applicable therein.
14.8 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 Province of Quebec, 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.
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BIOSYNTECH INC. (formerly Dream Team Inc.)
By: /s/ Amine Selmani
-------------------------------------
Name: AMINE SELMANI
Title: President
0000-0000 XXXXXX INC.
By: /s/ Xxxxxx Xxxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxxx
Title: President
/s/ Xxxxxx Xxxxxxx
-----------------------------------------
XXXXXX XXXXXXX
BIOSYNTECH LTEE
By: /s/ Amine Selmani
-------------------------------------
Name: Amine Selmani
Title: President
