FORM OF VOTING AND EXCHANGE TRUST
AGREEMENT
AGREEMENT made as of the 2nd day of August, 2007
effective as of the 9th day of August, 2007.
AMONG:
6789722 CANADA INC. , a
corporation existing under the laws of Canada (
“ExchangeCo” )
AND
COUNTERPATH SOLUTIONS, INC.
, a corporation existing under the laws of the State
of Nevada ( “Parent” )
AND
VALIANT TRUST COMPANY ,
a trust company incorporated under the laws of Alberta (
“Trustee” )
WHEREAS:
A.
Pursuant to an arrangement agreement (the
“Arrangement Agreement”
) dated as of June 15, 2007 among Parent, ExchangeCo
and NewHeights Software Corporation (the “Company” ), ExchangeCo
has agreed to issue exchangeable shares (the “Exchangeable Shares” )
to certain holders of common shares of the Company pursuant to the
plan of arrangement (the “Plan of
Arrangement” ) contemplated by the
Arrangement Agreement; and
B.
Pursuant to the Arrangement Agreement, Parent and
ExchangeCo have agreed to execute a voting and exchange trust
agreement substantially in the form of this Agreement;
and
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 hereto covenant and
agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
In this Agreement, the following terms shall have
the following meanings:
“ Affiliate ” of any Person means
any other Person directly or indirectly controlling, controlled by,
or under common control with, that Person. For the purposes of this
definition, “control” (including, with correlative
meanings, the terms “controlled by” and “under
common control with”), 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.
“ Arrangement ” means the
arrangement under section 192 of the CBCA on the terms and subject
to the conditions set forth in the Arrangement Agreement and the
Plan of Arrangement and any
amendments or variations to the Plan of Arrangement
made in accordance with Article 6 of the Plan of Arrangement or
made at the direction of the Court in the Final Order.
“ Arrangement
Agreement ” means the agreement
made as of June 15, 2007 between Parent, ExchangeCo and the
Company, as amended, supplemented and/or restated in accordance
therewith, providing for, among other things, the
Arrangement.
“ Assignee
” has the meaning ascribed to that term in
Section 12.3.
“Authorized Person”
has the meaning ascribed to that term in Section
6.17.
“ Automatic Exchange
Rights ” means the benefit of the
obligation of Parent to effect the automatic exchange of Parent
Common Shares for Exchangeable Shares pursuant to Section
5.13.
“ Beneficiaries ” means the
registered holders from time to time of Exchangeable Shares, other
than Parent and the Parent Affiliates.
“ Beneficiary
Votes ” has the meaning ascribed to
that term in Section 4.2.
“ Board of
Directors ” means the Board of
Directors of ExchangeCo or Parent, as the case may be.
“ Business
Day ” means any day on which
commercial banks are generally open for business in Vancouver,
British Columbia, other than a Saturday, a Sunday or a day observed
as a holiday in Vancouver, British Columbia under the laws of the
Province of British Columbia or the federal laws of
Canada.
“ Canadian Dollar
Equivalent ” means, in respect of
an amount expressed in a currency other than Canadian dollars (the
“ Foreign Currency Amount
”) at any date, the product obtained by
multiplying: (a) the Foreign Currency Amount, by (b) the noon spot
exchange rate on such date for such foreign currency expressed in
Canadian dollars as reported by the Bank of Canada or, in the event
such spot 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.
“ CBCA
” means the Canada
Business Corporations Act as now in
effect and as may be amended from time to time prior to the date
upon which the Plan of Arrangement becomes effective as set forth
in the certificate of arrangement giving effect to the Arrangement
issued by the director pursuant to section 192 of the
Canada Business Corporations Act
, including the regulations made
thereunder.
“ Current Market
Price ” means, in respect of a
Parent Common Share on any date, the Canadian Dollar Equivalent of
the average of the closing prices of Parent Common Shares during a
period of 20 consecutive trading days ending not more than three
trading days before such date on the OTC Bulletin Board, or, if the
Parent Common Shares are not then quoted on the OTC Bulletin Board,
on such other 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 of Parent for such
purpose; provided, however, that if in the opinion of the Board of
Directors of Parent the public distribution or trading activity of
Parent Common Shares during such period does not create a market
which reflects the fair market value of a Parent Common Shares,
then the Current Market Price of a Parent Common Share shall be
determined by the Board of Directors of Parent, in good faith and
in its sole discretion, and provided further that any such
selection, opinion or determination by the Board of Directors of
Parent shall be conclusive and binding.
“ Entity
” means any corporation (including any
non-profit corporation), general partnership, limited partnership,
limited liability partnership, joint venture, estate, trust,
company (including any company limited by shares, limited liability
company or joint stock company), firm, society or other enterprise,
association, organization or entity.
“ Exchange
Right ” has the meaning ascribed to
that term in Section 5.1.
“ Exchangeable
Share ” means a share in the class
of non-voting exchangeable shares in the capital of ExchangeCo
having the rights, privileges, restrictions and conditions set
forth in the Exchangeable Share Provisions.
“ Exchangeable Share
Provisions ” means the rights,
privileges, restrictions and conditions attaching to the
Exchangeable Shares as set forth in Appendix 1 to the Plan of
Arrangement.
“ Exchangeable Share
Support Agreement ” means the
exchangeable share support agreement made as of even date herewith
among ExchangeCo and Parent.
“ Governmental
Body ” means any: (a) nation,
state, commonwealth, province, territory, county, municipality,
district or other jurisdiction of any nature; (b) federal, state,
provincial, local, municipal, foreign or other government; or (c)
governmental or quasi-governmental authority of any nature
(including any governmental division, department, agency,
commission, instrumentality, official, ministry, fund, foundation,
center, organization, unit, body or Entity and any court or other
tribunal).
“ Indemnified
Parties ” has the meaning ascribed
to that term in Section 8.1.
“ Insolvency
Event ” means the institution by
ExchangeCo of any proceeding to be adjudicated a bankrupt or
insolvent or to be wound up, or the consent of ExchangeCo to the
institution of bankruptcy, insolvency or winding-up proceedings
against ExchangeCo, 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 ExchangeCo to contest
in good faith any such proceedings commenced in respect of
ExchangeCo within 30 days of becoming aware thereof, or the consent
by ExchangeCo to the filing of any such petition or to the
appointment of a receiver, or the making by ExchangeCo of a general
assignment for the benefit of creditors, or the admission in
writing by ExchangeCo of its inability to pay its debts generally
as they become due, or ExchangeCo not being permitted, pursuant to
solvency requirements of applicable law, to redeem any Retracted
Shares pursuant to Section 6.6 of the Exchangeable Share
Provisions.
“ Liquidation Call
Right ” has the meaning ascribed to
that term in the Plan of Arrangement.
“Liquidation Event”
has the meaning ascribed to that term in Section
5.13(b).
“Liquidation Event Effective
Date ” has the meaning ascribed to
that term in Section 5.13(c).
“List” has
the meaning ascribed to that term in Section 4.6.
“ Officers
Certificate ” means, with respect
to Parent or ExchangeCo, as the case may be, a certificate signed
by any one of the authorized signatories of Parent or ExchangeCo,
as the case may be.
“ Parent
Affiliates ” means Affiliates of
Parent.
“ Parent Common
Share ” means a share of common
stock, par value U.S. $0.001 per share, in the capital of Parent,
and any other security into which such share may be
changed.
“ Parent
Consent ” has the meaning ascribed
to that term in Section 4.2.
“Parent Meeting”
has the meaning ascribed to that term in Section
4.2.
“ Parent Special
Voting Share ” means the one share
of special voting stock of Parent, par value U.S.$0.001, which
entitles the holder of record of that share to a number of votes at
meetings of holders of Parent Common Shares equal to the number of
Exchangeable Shares outstanding from time to time (other than
Exchangeable Shares held by Parent and Parent
Affiliates).
“ Parent
Successor ” has the meaning
ascribed to that term in Section 10.1.
“ Person
” means any individual, Entity or Governmental
Body.
“ Plan of
Arrangement ” means the plan of
arrangement appended as Schedule D to the Arrangement
Agreement.
“Redemption Call Right”
has the meaning ascribed to that term in the Plan of
Arrangement.
“Retracted Shares”
has the meaning ascribed to that term in Section
5.7.
“ Retraction Call
Right ” has the meaning ascribed to
that term in the Exchangeable Share Provisions.
“Trust” means the trust created by this Agreement.
“ Trust
Estate ” means the Parent Special
Voting Share, any other securities, the Exchange Right, the
Automatic Exchange Rights and any money or other property which may
be held by the Trustee from time to time pursuant to this trust
agreement.
“ Trustee
” means Valiant Trust Company or such other
trust company or other Entity that Parent and the Company choose
and, subject to the provisions of Article 9, includes any
successor trustee.
“ Voting
Rights ” means the voting rights
attached to the Parent Special Voting Share as set forth in
Article 4.
|
1.2
|
Interpretation Not Affected by Headings, etc.
|
The division of this Agreement into Articles,
Sections and other portions and the insertion of headings are for
convenience of reference only and should not affect the
construction or interpretation of this Agreement. Unless otherwise
indicated, all references to an “Article” or
“Section” followed by a number and/or a letter refer to
the specified Article or Section of this Agreement. The terms
“this Agreement”, “hereof”,
“herein” and “hereunder” and similar
expressions refer to this Agreement and not to any particular
Article, Section or other portion hereof and include any agreement
or instrument supplementary or ancillary hereto.
Words importing the singular number only shall
include the plural and vice versa. Words importing any gender shall
include all genders.
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
PURPOSE OF AGREEMENT
|
2.1
|
Establishment of Trust
|
The purpose of this Agreement is to create the Trust
for the benefit of the Beneficiaries, as herein provided. The
Trustee will hold the Parent Special Voting Share in order to
enable the Trustee to execute the Voting Rights and will hold the
Exchange Right and the Automatic Exchange Rights in order to enable
the Trustee to exercise such rights, in each case as trustee for
and on behalf of the Beneficiaries as provided in this
Agreement.
ARTICLE 3
PARENT SPECIAL VOTING SHARE
|
3.1
|
Issue and Ownership of the Parent Special Voting Share
|
Parent hereby issues to and deposits with the
Trustee, the Parent Special Voting Share to be hereafter held of
record by the Trustee as trustee for and on behalf of, and for the
use and benefit of, the Beneficiaries and in accordance with the
provisions of this Agreement. Parent hereby acknowledges receipt
from the Trustee as trustee for and on behalf of the Beneficiaries
of good and valuable consideration (and the adequacy thereof) for
the issuance of the Parent Special Voting Share by 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 Parent Special Voting Share
and shall be entitled to exercise all of the rights and powers of
an owner with respect to the Parent Special Voting Share provided
that the Trustee shall:
|
|
(a)
|
hold the Parent Special Voting Share and the legal title thereto as
trustee solely for the use and benefit of the Beneficiaries 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 Parent Special Voting Share and the Parent Special Voting Share
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.
|
|
3.2
|
Legended Share Certificates
|
ExchangeCo will cause each certificate representing
Exchangeable Shares to bear an appropriate legend notifying the
Beneficiaries of their right to instruct the Trustee with respect
to the exercise of the Voting Rights in respect of the Exchangeable
Shares of the Beneficiaries.
|
3.3
|
Safe Keeping of Certificate
|
The certificate representing the Parent Special
Voting Share shall at all times be held in safe keeping by the
Trustee or its duly authorized agent.
ARTICLE 4
EXERCISE OF VOTING RIGHTS
The Trustee, as the holder of record of the Parent
Special Voting Share, shall be entitled to vote in person or by
proxy the Parent Special Voting Share on any matters, questions,
proposals or propositions whatsoever that may properly come before
the holders of Parent Common Shares at a Parent Meeting or in
connection with a Parent Consent. The Voting Rights shall be and
remain vested in and exercised by the Trustee. Subject to Section
6.15:
|
|
(a)
|
the Trustee shall exercise the Voting Rights only on the basis of
instructions received in accordance with this Article 4 from
Beneficiaries entitled to instruct the Trustee as to the voting
thereof at the time at which the Parent Meeting is held or a Parent
Consent is sought; and
|
|
|
(b)
|
to the extent that no instructions are received from a Beneficiary
with respect to the Voting Rights to which such Beneficiary is
entitled, the Trustee shall not exercise or permit the exercise of
such Voting Rights.
|
With respect to all meetings of stockholders of
Parent at which holders of Parent Common Shares are entitled to
vote (each, a “Parent
Meeting” ) and with respect to all
written consents sought by Parent from its stockholders including
the holders of Parent Common Shares (each, a “Parent Consent” ), each
Beneficiary shall be entitled to instruct the Trustee to cast and
exercise one of the votes comprised in the Voting Rights for each
Exchangeable Share owned of record by such Beneficiary on the
record date established by Parent or by applicable law for such
Parent Meeting or Parent Consent, as the case may be (the
“Beneficiary Votes”
), in respect of each matter, question, proposal or
proposition to be voted on at such Parent Meeting or in connection
with such Parent Consent.
|
4.3
|
Mailings to Stockholders
|
With respect to each Parent Meeting and Parent
Consent, the Trustee will mail or cause to be mailed (or otherwise
communicate in the same manner as Parent utilizes in communications
to holders of Parent Common Shares subject to the Trustee being
advised in writing of that method and its ability to provide that
method of communication) to each of the Beneficiaries named in the
List referred to in Section 4.6, the following materials (such
mailing or communication to commence on the same day as the mailing
(or other communication) is commenced by Parent to its stockholders
or, if later, promptly after receipt by the Trustee of such
materials):
|
|
(a)
|
a copy of the notice of such Parent Meeting or such Parent Consent,
together with any related materials to be provided to stockholders
of Parent;
|
|
|
(b)
|
a statement that such Beneficiary is entitled to instruct the
Trustee as to the exercise of the Beneficiary Votes with respect to
such Parent Meeting or Parent Consent or, pursuant
|
to Section 4.7, to attend such Parent Meeting and to exercise
personally the Beneficiary Votes thereat;
|
|
(c)
|
a statement as to the manner in which such instructions may be
given to the Trustee, including an express indication that
instructions may be given to the Trustee to give:
|
|
|
(i)
|
a proxy to such Beneficiary or his designee to
exercise personally the Beneficiary Votes; or
|
|
|
(ii)
|
a proxy to a designated agent or other
representative of the management of Parent to exercise such
Beneficiary Votes;
|
|
|
(d)
|
a statement that if no such instructions are received from the
Beneficiary, the Beneficiary Votes to which such Beneficiary is
entitled will not be exercised;
|
|
|
(e)
|
a form of direction whereby the Beneficiary may instruct the
Trustee as to voting and otherwise as contemplated herein; and
|
|
|
(f)
|
a statement of the time and date by which such instructions must be
received by the Trustee in order to be binding upon it, which, in
the case of a Parent Meeting, shall be not later than the close of
business on the second Business Day prior to such meeting, and of
the method for revoking or amending such instructions.
|
For the purpose of determining Beneficiary Votes to
which a Beneficiary is entitled in respect of any Parent Meeting or
Parent Consent, the number of Exchangeable Shares owned of record
by the Beneficiary shall be determined at the close of business on
the record date established by Parent or by applicable law for
purposes of determining stockholders entitled to vote at such
Parent Meeting or sign such Parent Consent. Parent will notify the
Trustee of any decision of the Board of Directors of Parent with
respect to the calling of any Parent Meeting or with respect to the
seeking of any Parent Consent and shall provide all necessary
information and materials to the Trustee in each case promptly and
in any event in sufficient time to enable the Trustee to perform
its obligations contemplated by this Section 4.3.
|
4.4
|
Copies of Stockholder Information
|
Parent will deliver to the Trustee copies of all
proxy materials (including notices of Parent Meetings but excluding
proxies to vote Parent Common Shares), information statements,
reports (including without limitation, all interim and annual
financial statements) and other written communications that, in
each case, are to be distributed from time to time to holders of
Parent Common Shares in sufficient quantities and in sufficient
time so as to enable the Trustee to send those materials to each
Beneficiary at the same time as such materials are first sent to
holders of Parent Common Shares. The Trustee will mail or otherwise
send to each Beneficiary, at the expense of Parent, copies of all
such materials (and all materials specifically directed to the
Beneficiaries or to the Trustee for the benefit of the
Beneficiaries by Parent) received by the Trustee from Parent and
will use its best efforts to mail or otherwise send such materials
contemporaneously with the sending by Parent or its designee of
such materials to holders of Parent Common Shares. The Trustee will
also make available for inspection by any Beneficiary at the
Trustee’s principal corporate trust office in the City of
Vancouver during the regular business hours of the Trustee all
proxy materials, information statements, reports and other written
communications that are:
|
|
(a)
|
received by the Trustee as the registered holder of the Parent
Special Voting Share and made available by Parent generally to the
holders of Parent Common Shares; or
|
|
|
(b)
|
specifically directed to the Beneficiaries or to the Trustee for
the benefit of the Beneficiaries by Parent.
|
As soon as reasonably practicable after receipt by
Parent or stockholders of Parent (if such receipt is known by
Parent) of any material sent or given by or on behalf of a third
party to holders of Parent Common Shares generally, including
without limitation, dissident proxy and information circulars (and
related information and material) and tender and exchange offer
circulars (and related information and material), Parent shall use
its reasonable efforts to obtain and deliver to the Trustee copies
thereof in sufficient quantities so as to enable the Trustee to
forward such material (unless the same has been provided directly
to Beneficiaries by such third party) to each Beneficiary as soon
as possible thereafter. As soon as reasonably practicable after
receipt thereof, the Trustee will mail or otherwise send to each
Beneficiary, at the expense of Parent, copies of all such materials
received by the Trustee from Parent. The Trustee will also make
available for inspection by any Beneficiary at the Trustee’s
principal corporate trust office in the City of Vancouver during
the regular business hours of the Trustee copies of all such
materials.
|
4.6
|
List of Persons Entitled to Vote
|
ExchangeCo shall, (a) prior to each annual general
and special Parent Meeting or the seeking of any Parent Consent and
(b) forthwith upon each request made at any time by the Trustee in
writing, prepare or cause to be prepared a list (a
“List” ) of
the names and addresses of the Beneficiaries arranged in
alphabetical order (and, if requested, arranged by jurisdiction of
residence) and showing the number of Exchangeable Shares held of
record by each such Beneficiary, in each case at the close of
business on the date specified by the Trustee in such request or,
in the case of a List prepared in connection with a Parent Meeting
or a Parent Consent, at the close of business on the record date
established by Parent or pursuant to applicable law for determining
the holders of Parent Common Shares entitled to receive notice of
and/or to vote at such Parent Meeting or to give consent in
connection with such Parent Consent. Each such List shall be
delivered to the Trustee promptly after receipt by ExchangeCo 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 to enable the Trustee to perform its obligations under this
Agreement. Parent agrees to give ExchangeCo 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 ExchangeCo to perform its
obligations under this Section 4.6.
|
4.7
|
Entitlement to Direct Votes
|
Any Beneficiary named in a List prepared in
connection with any Parent Meeting or Parent Consent will be
entitled (a) to instruct the Trustee in the manner described in
Section 4.3 with respect to the exercise of the Beneficiary Votes
to which such Beneficiary is entitled or (b) to attend such meeting
and personally exercise thereat, as the proxy of the Trustee, the
Beneficiary Votes to which such Beneficiary is entitled.
|
4.8
|
Voting by Trustee, and Attendance of Trustee Representative at
Meeting
|
|
|
(a)
|
In connection with each Parent Meeting and Parent Consent, the
Trustee shall exercise, either in person or by proxy, in accordance
with the instructions received from a Beneficiary pursuant to
Section 4.3, the Beneficiary Votes as to which such Beneficiary is
entitled to direct the vote (or any lesser number thereof as may be
set forth in the
|
instructions); provided, however, that such written instructions
are received by the Trustee from the Beneficiary prior to the time
and date fixed by the Trustee for receipt of such instruction in
the notice given by the Trustee to the Beneficiary pursuant to
Section 4.3.
|
|
(b)
|
Subject to the timely receipt of instructions as contemplated in
Section 4.3(f), the Trustee shall cause a representative who is
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 Beneficiary (or its designee) of identification
satisfactory to the Trustee’s representative, and at the
Beneficiary’s request, such representative shall sign and
deliver to such Beneficiary (or its designee) a proxy to exercise
personally the Beneficiary Votes as to which such Beneficiary is
otherwise entitled hereunder to direct the vote, if such
Beneficiary either (i) has not previously given the Trustee
instructions pursuant to Section 4.3 in respect of such meeting or
(ii) submits to such representative written revocation of any such
previous instructions. At such meeting, the Beneficiary exercising
such Beneficiary Votes shall have the same rights as the Trustee to
speak at the meeting in favour of any matter, question, proposal or
proposition, to vote by way of ballot at the meeting in respect of
any matter, question, proposal or proposition, and to vote at such
meeting by way of a show of hands in respect of any matter,
question or proposition.
|
|
4.9
|
Distribution of Written Materials
|
Any written materials distributed by the Trustee
pursuant to this Agreement shall be sent by mail (or otherwise
communicated in the same manner as Parent utilizes in
communications to holders of Parent Common Shares subject to the
Trustee being advised in writing of that method of communication
and its ability to provide that method of communication) to each
Beneficiary at its address as shown on the books of ExchangeCo.
ExchangeCo shall provide or cause to be provided to the Trustee for
this purpose, on a timely basis and without charge or other
expense:
|
|
(b)
|
upon the request of the Trustee, mailing labels to enable the
Trustee to carry out its duties under this Agreement.
|
|
4.10
|
Termination of Voting Rights
|
All of the rights of a Beneficiary with respect to
the Beneficiary Votes exercisable in respect of the Exchangeable
Shares held by such Beneficiary, including the right to instruct
the Trustee as to the voting of or to vote personally such
Beneficiary Votes, shall be deemed to be surrendered by the
Beneficiary to Parent, and such Beneficiary Votes and the Voting
Rights represented thereby shall cease immediately upon the
delivery by such holder to the Trustee of the certificates
representing such Exchangeable Shares in connection with the
exercise by the Beneficiary of the Exchange Right or the occurrence
of the automatic exchange of Exchangeable Shares for Parent Common
Shares, as specified in Article 5 (unless, in either case,
Parent shall not have delivered the requisite Parent Common Shares
issuable in exchange for the Exchangeable Shares to the Trustee for
delivery to the Beneficiaries), or upon the redemption of
Exchangeable Shares pursuant to Article 6 or 7 of the Exchangeable
Share Provisions, or upon the effective date of the liquidation,
dissolution or winding-up of ExchangeCo pursuant to Article 5 of
the Exchangeable Share Provisions, or upon the purchase of
Exchangeable Shares from the holder thereof by ExchangeCo pursuant
to the exercise by ExchangeCo of the Retraction Call Right, the
Redemption Call Right or the Liquidation Call Right.
ARTICLE 5
EXCHANGE RIGHT AND AUTOMATIC EXCHANGE
|
5.1
|
Grant and Ownership of the Exchange Right
|
Parent hereby grants to the Trustee as trustee for
and on behalf of, and for the use and benefit of, the Beneficiaries
the right (the “Exchange
Right” ), exercisable upon the
occurrence and during the continuance of an Insolvency Event, to
require Parent to purchase from each or any Beneficiary all or any
part of the Exchangeable Shares held by the Beneficiary and the
Automatic Exchange Rights, all in accordance with the provisions of
this Agreement. Parent hereby acknowledges receipt from the Trustee
as trustee for and on behalf of the Beneficiaries of good and
valuable consideration (and the adequacy thereof) for the grant of
the Exchange Right and the Automatic Exchange Rights by 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 Exchange Right and the
Automatic Exchange Rights and shall be entitled to exercise all of
the rights and powers of an owner with respect to the Exchange
Right and the Automatic Exchange Rights, provided that the Trustee
shall:
|
|
(a)
|
hold the Exchange Right and the Automatic Exchange Rights and the
legal title thereto as trustee solely for the use and benefit of
the Beneficiaries in accordance with the provisions of this
Agreement; and
|
|
|
(b)
|
except as specifically authorized by this Agreement, have no power
or authority to exercise or otherwise deal in or with the Exchange
Right or the Automatic Exchange Rights, and the Trustee shall not
exercise any such rights for any purpose other than the purposes
for which the Trust is created pursuant to this Agreement.
|
|
5.2
|
Legended Share Certificates
|
ExchangeCo will cause each certificate representing
Exchangeable Shares to bear an appropriate legend notifying the
Beneficiaries of:
|
|
(a)
|
their right to instruct the Trustee with respect to the exercise of
the Exchange Right in respect of the Exchangeable Shares held by a
Beneficiary; and
|
|
|
(b)
|
the Automatic Exchange Rights.
|
|
5.3
|
General Exercise of Exchange Right
|
The Exchange Right shall be and remain vested in and
exercisable by the Trustee. Subject to Section 6.15, the Trustee
shall exercise the Exchange Right only on the basis of instructions
received pursuant to this Article 5 from Beneficiaries
entitled to instruct the Trustee as to the exercise thereof. To the
extent that no instructions are received from a Beneficiary with
respect to the Exchange Right, the Trustee shall not exercise or
permit the exercise of the Exchange Right.
The purchase price payable by Parent for each
Exchangeable Share to be purchased by Parent under the Exchange
Right shall be an amount per share equal to (a) the Current Market
Price of a Parent Common Share on the last Business Day prior to
the day of closing of the purchase and sale of such Exchangeable
Share under the Exchange Right, which shall be satisfied in full by
Parent causing to
be sent to such holder one Parent Common Share, plus
(b) to the extent not paid by ExchangeCo, an additional amount
equivalent to the full amount of all declared and unpaid dividends
on each such Exchangeable Share held by such holder on any dividend
record date which occurred prior to the closing of the purchase and
sale. In connection with each exercise of the Exchange Right,
Parent shall provide to the Trustee an Officer’s Certificate
setting forth the calculation of the purchase price for each
Exchangeable Share. The purchase price for each such Exchangeable
Share so purchased may be satisfied only by Parent issuing and
delivering or causing to be delivered to the Trustee, on behalf of
the relevant Beneficiary, one Parent Common Share and on the
applicable payment date a cheque for the balance, if any, of the
purchase price without interest (but less any amounts withheld
pursuant to Section 5.14).
|
5.5
|
Exercise Instructions
|
Subject to the terms and conditions herein set
forth, a Beneficiary shall be entitled, upon the occurrence and
during the continuance of an Insolvency Event, to instruct the
Trustee to exercise the Exchange Right with respect to all or any
part of the Exchangeable Shares registered in the name of such
Beneficiary on the books of ExchangeCo. To cause the exercise of
the Exchange Right by the Trustee, the Beneficiary shall deliver to
the Trustee, in person or by certified or registered mail, at its
principal corporate trust office in Vancouver, British Columbia or
at such other places in Canada as the Trustee may from time to time
designate by written notice to the Beneficiaries, the certificates
representing the Exchangeable Shares which such Beneficiary desires
Parent to purchase, duly endorsed in blank for transfer, and
accompanied by such other documents and instruments as may be
required to effect a transfer of Exchangeable Shares under the CBCA
and the by-laws of ExchangeCo and such additional documents and
instruments as the Trustee, Parent or ExchangeCo may reasonably
require together with (a) a duly completed form of notice of
exercise of the Exchange Right, contained on the reverse of or
attached to the Exchangeable Share certificates, stating (i) that
the Beneficiary thereby instructs the Trustee to exercise the
Exchange Right so as to require Parent to purchase from the
Beneficiary the number of Exchangeable Shares specified therein,
(ii) that such Beneficiary has good title to and owns all such
Exchangeable Shares to be acquired by Parent free and clear of all
liens, claims, security interests, adverse claims and encumbrances,
(iii) the names in which the certificates representing Parent
Common Shares issuable in connection with the exercise of the
Exchange Right are to be issued and (iv) the names and addresses of
the Persons to whom such new certificates should be delivered and
(b) payment (or evidence satisfactory to the Trustee, ExchangeCo
and Parent of payment) of the taxes (if any) payable as
contemplated by Section 5.8 of this Agreement. If only a part of
the Exchangeable Shares represented by any certificate or
certificates delivered to the Trustee are to be purchased by Parent
under the Exchange Right, a new certificate for the balance of such
Exchangeable Shares shall be issued to the holder at the expense of
ExchangeCo.
|
5.6
|
Delivery of Parent Common Shares; Effect of Exercise
|
Promptly after receipt of the certificates
representing the Exchangeable Shares which the Beneficiary desires
Parent to purchase under the Exchange Right, together with such
documents and instruments of transfer and a duly completed form of
notice of exercise of the Exchange Right (and payment of taxes, if
any, payable as contemplated by Section 5.8 or evidence thereof),
duly endorsed for transfer to Parent, the Trustee shall notify
Parent and ExchangeCo of its receipt of the same, which notice to
Parent and ExchangeCo shall constitute exercise of the Exchange
Right by the Trustee on behalf of the holder of such Exchangeable
Shares, and Parent shall promptly thereafter deliver or cause to be
delivered to the Trustee, for delivery to the Beneficiary of such
Exchangeable Shares (or to such other Persons, if any, properly
designated by such Beneficiary) the number of Parent Common Shares
issuable in connection with the exercise of the Exchange Right, and
on the applicable payment date cheques for the balance, if any, of
the total purchase price therefor without interest (but less any
amounts withheld pursuant to Section 5.14; provided, however, that
no such delivery shall be made unless and until the
Beneficiary requesting the same shall have paid (or
provided evidence satisfactory to the Trustee, ExchangeCo and
Parent of the payment of) the taxes (if any) payable as
contemplated by Section 5.8 of this Agreement. Immediately upon the
giving of notice by the Trustee to Parent and ExchangeCo of the
exercise of the Exchange Right as provided in this Section 5.6, the
closing of the transaction of purchase and sale contemplated by the
Exchange Right shall be deemed to have occurred and the holder of
such Exchangeable Shares shall be deemed to have transferred to
Parent all of such holder’s right, title and interest in and
to such Exchangeable Shares shall
