VOTING AND EXCHANGE TRUST
AGREEMENT
THIS AGREEMENT
is made the 24th day of July, 2008,
NORTH
AMERICAN NATURAL GAS, INC., a corporation existing under the laws of the
State of Washington,
(hereinafter
referred to as “PureRay U.S.” )
,
PURERAY
HOLDINGS ULC, an
unlimited liability corporation formed under the laws of the
Province of Alberta,
(hereinafter
referred to as “PureRay Holdings” ),
PURERAY
ACQUISITION INC., a
corporation formed under the laws of Canada,
(hereinafter
referred to as the “Corporation” ),
DEREK
BLACKBURN , an individual
resident in the Village of Manotick, in the Province of
Ontario,
(hereinafter
referred to as “Trustee” )
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A.
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the
Corporation is a wholly-owned subsidiary of PureRay Holdings and
PureRay Holdings is a wholly-owned subsidiary of PureRay
U.S.;
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B.
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pursuant to a share purchase
agreement dated July 24, 2008 (the “ Purchase
Agreement ”), between PureRay U.S., PureRay Holdings, the
Corporation and all of the shareholders of PureRay Corporation
(“ PureRay ”), the Corporation has agreed to
acquire all of the outstanding shares in the capital of PureRay
and, in satisfaction of payment of the purchase price therefor, to
issue one Exchangeable Shares (as hereinafter defined) for each
such share of PureRay acquired by the Corporation;
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C.
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PureRay Holdings is to grant to and
in favour of each holder of Exchangeable Shares (as hereinafter
defined) the right to require PureRay Holdings to purchase from
such holder all or any
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part of the Exchangeable Shares (as
hereinafter defined) held by such holder on the terms and
conditions set forth in this Agreement; and
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D.
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the
parties desire to make appropriate provisions and to establish a
procedure whereby the rights to require PureRay to purchase
Exchangeable Shares (as hereinafter defined) from the holders
thereto shall be exercisable by such holders from time to
time;
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NOW THEREFORE,
in consideration of the respective covenants 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
In this
Agreement, the following terms shall have the following
meanings:
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“Affiliate”
of any person means any
other person directly or indirectly controlled by, or under 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.
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“Automatic Exchange
Rights” means the benefit of the obligation
of PureRay Holdings to effect the automatic exchange of PureRay
U.S. Common Shares for Exchangeable Shares pursuant to section
5.11.
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“Beneficiaries”
means the registered
holders from time to time of Exchangeable Shares, other than
PureRay U.S. and its Affiliates.
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“Beneficiary
Votes” has the meaning ascribed thereto in
section 4.2.
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“Board of
Directors” means the board of directors of the
Corporation.
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“Business
Day” means any day on which commercial
banks are open for business in Toronto, Ontario, other than a
Saturday, a Sunday or a day observed as a holiday in Toronto,
Ontario under the laws of the province of Ontario or the federal
laws of Canada.
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“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: (i) the Foreign Currency
Amount by (ii) 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.
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“Current Market
Price” means, in respect of a PureRay U.S.
Common Share on any date, the Canadian Dollar Equivalent of the
average of the closing bid and asked prices of PureRay U.S. Common
Shares during a period of 20 consecutive trading days ending not
more than three
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trading days
before such date on such stock exchange or automated quotation
system on which the PureRay U.S. 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 the PureRay
U.S. Common Shares are not then quoted on any stock exchange or
automated quotation system or if, in the opinion of the Board of
Directors, the public distribution or trading activity of PureRay
U.S. Common Shares during such period does not create a market
which reflects the fair market value of a PureRay U.S. Common
Share, then the Current Market Price of a PureRay U.S. Common Share
shall be determined by the Board of Directors, in good faith and in
its sole discretion, and provided further that any such selection,
opinion or determination by the Board of Directors shall be
conclusive and binding.
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“Exchange
Right” has the meaning ascribed thereto in
section 5.l.
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“Exchangeable
Shares” means the non-voting exchangeable
shares in the capital of the Corporation.
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“Insolvency
Event” means the institution by the
Corporation of any proceeding to be adjudicated a bankrupt or
insolvent or to be wound up, or the consent of the Corporation to
the institution of bankruptcy, insolvency or winding-up proceedings
against it, or the filing of a petition, answer or consent seeking
dissolution or winding-up under any bankruptcy, insolvency or
analogous laws, including without limitation the Companies
Creditors’ Arrangement Act (Canada) and the Bankruptcy
and Insolvency Act (Canada), and the failure by the Corporation
to contest in good faith any such proceedings commenced in respect
of the Corporation within 30 days of becoming aware thereof,
or the consent by the Corporation to the filing of any such
petition or to the appointment of a receiver, or the making by the
Corporation of a general assignment for the benefit of creditors,
or the admission in writing by the Corporation of its inability to
pay its debts generally as they become due, or the Corporation not
being permitted, pursuant to solvency requirements of applicable
law, to redeem any Retracted Shares pursuant to section 5.7 of the
Share Provisions.
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“ITA”
means the Income Tax
Act (Canada), as amended.
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“Liquidation Call
Right” has the meaning ascribed thereto in
the Share Provisions.
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“Liquidation
Event” has the meaning ascribed thereto in
section 5.11(b).
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“Liquidation Event Effective
Date” has the meaning ascribed thereto in
section 5.11(c).
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“List”
has the meaning ascribed
thereto in section 4.6.
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“Officer’s
Certificate” means, with respect to PureRay U.S.
or the Corporation, as the case may be, a certificate signed by any
one officer or director of PureRay U.S. or the Corporation, as the
case may be.
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“Person”
includes an individual,
partnership, corporation, company, unincorporated syndicate or
organization, trust, trustee, executor, administrator and other
legal representative.
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“PureRay U.S.
Affiliates” means Affiliates of PureRay
U.S.
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“PureRay U.S. Common
Share” means an authorized share of common
stock, par value U.S. $0.0001, in the capital of PureRay
U.S.
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“PureRay U.S.
Consent” has the meaning ascribed thereto in
section 4.2.
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“PureRay U.S.
Meeting” has the meaning ascribed thereto in
section 4.2.
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“PureRay U.S. Special Voting
Share” means an authorized share of
Special Voting Stock of PureRay U.S., par value U.S.$0.0001, which
entitles the holder of record to four votes in respect of each such
share and one vote in respect of each one-quarter of a share, all
of which shares are to be issued to, deposited with, and voted by,
the Trustee as described herein.
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“PureRay U.S.
Successor” has the meaning ascribed thereto in
section 11.1 (a).
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“Redemption Call
Right” has the meaning ascribed thereto in
the Share Provisions.
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“Remittance
Date” has the meaning ascribed thereto in
the Share Provisions.
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“Retracted
Shares” has the meaning ascribed thereto in
section 5.7.
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“Retraction Call
Right” has the meaning ascribed thereto in
the Share Provisions.
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“Share
Provisions” means the rights, privileges,
restrictions and conditions attaching to the Exchangeable
Shares.
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“Support
Agreement” means the support agreement made as
of even date herewith between PureRay U.S., PureRay Holdings and
the Corporation.
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“Trust”
means the trust created
by this Agreement.
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“Trust
Estate” means the PureRay U.S. Special
Voting Shares, 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.
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“Voting
Rights” means the voting rights attached to
the PureRay U.S. Special Voting Shares.
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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 the feminine and the
masculine.
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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
PureRay U.S. Special Voting Shares in order to enable the Trustee
to exercise the Voting Rights and will hold the Exchange Rights 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
PURERAY U.S. SPECIAL VOTING SHARES
3.1 Issue
and Ownership of the PureRay U.S. Special Voting
Shares
PureRay U.S.
hereby issues to and deposits with the Trustee, 8,963,750 PureRay
U.S. Special Voting 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 Beneficiaries and in accordance with the provisions
of this Agreement. PureRay U.S. 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 PureRay U.S. Special Voting Shares by PureRay U.S.
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 PureRay U.S. Special
Voting Shares and shall be entitled to exercise all of the rights
and powers of an owner with respect to the PureRay U.S. Special
Voting Shares provided that the Trustee shall:
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(a)
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hold the PureRay U.S. Special Voting
Shares 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
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(b)
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except as specifically authorized by
this Agreement, have no power or authority to sell, transfer, vote
or otherwise deal in or with the PureRay U.S. Special Voting Shares
and the PureRay U.S. Special Voting 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.
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3.2 Legended
Share Certificates
The Corporation
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(s) representing the PureRay U.S. Special Voting Shares
shall at all times be held in safe keeping by the
Trustee.
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ARTICLE 4
EXERCISE OF VOTING RIGHTS
The Trustee, as
the holder of record of the PureRay U.S. Special Voting Shares,
shall be entitled to all of the Voting Rights, including the right
to vote in person or by proxy the PureRay U.S. Special Voting
Shares on any matters, questions, proposals or propositions
whatsoever that may properly come before the shareholders of
PureRay U.S. at a PureRay U.S. Meeting or in connection with a
PureRay U.S. Consent. The Voting Rights shall be and remain vested
in and exercised by the Trustee. Subject to section
7.14:
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(a)
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the
Trustee shall exercise the Voting Rights only on the basis of
instructions received pursuant to this Article 4 from
Beneficiaries entitled to instruct the Trustee as to the voting
thereof at the time at which the PureRay U.S. Meeting is held;
and
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(b)
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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.
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With respect to
all meetings of shareholders of PureRay U.S. at which holders of
PureRay U.S. Common Shares are entitled to vote (each, a
“PureRay U.S. Meeting”) and with respect to all
written consents sought by PureRay U.S. from its shareholders
including the holders of PureRay U.S. Common Shares (each, a
“PureRay U.S. 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 PureRay U.S. or by applicable law for such PureRay U.S. Meeting
or PureRay U.S. Consent, as the case may be (the
“Beneficiary Votes”) , in respect of each
matter, question, proposal or proposition to be voted on at such
PureRay U.S. Meeting or in connection with such PureRay U.S.
Consent.
4.3 Mailings
to Shareholders
With respect to
each PureRay U.S. Meeting and PureRay U.S. Consent, PureRay U.S.
will mail (or otherwise communicate in the same manner as PureRay
U.S. utilizes in communications to holders of PureRay U.S. Common
Shares) to the Trustee and each of the Beneficiaries named in the
List referred to in section 4.6, such mailing or communication to
commence on the same day as the mailing or notice (or other
communication) with respect thereto is commenced by PureRay U.S. to
its shareholders:
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(a)
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a
copy of such notice, together with any related materials to be
provided to shareholders of PureRay U.S.;
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(b)
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a
statement that such Beneficiary is entitled to instruct the Trustee
as to the exercise of the Beneficiary Votes with respect to such
PureRay U.S. Meeting or PureRay U.S. Consent or, pursuant to
section 4.7, to attend such PureRay U.S. Meeting and to exercise
personally the Beneficiary Votes thereat;
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(c)
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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:
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(i)
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a
proxy to such Beneficiary or his designee to exercise personally
the Beneficiary
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Votes; or
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(ii)
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a
proxy to a designated agent or other representative of the
management of PureRay U.S. to exercise such Beneficiary
Votes;
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(d)
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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;
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(e)
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a
form of direction whereby the Beneficiary may so direct and
instruct the Trustee as contemplated herein; and
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(f)
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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 PureRay U.S. Meeting shall not be earlier than the
close of business on the second Business Day before 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 PureRay U.S. Meeting or PureRay U.S.
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 PureRay U.S. or by applicable law for
purposes of determining shareholders entitled to vote at such
PureRay U.S. Meeting.
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PureRay U.S.
will notify the Trustee of any decision of the board of directors
of PureRay U.S. with respect to the calling of any PureRay U.S.
Meeting 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 Shareholder Information
PureRay U.S.
will deliver to the Trustee and each Beneficiary, at the same time
as such materials are first sent to holders of PureRay U.S. Common
Shares, all proxy materials (including notices of PureRay U.S.
Meetings but excluding proxies to vote PureRay U.S. 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 PureRay U.S. Common Shares (and all materials
specifically directed to the Beneficiaries or to the Trustee for
the benefit of the Beneficiaries by PureRay U.S.).
As soon as
reasonably practicable after receipt by PureRay U.S. or
shareholders of PureRay U.S. (if such receipt is known by PureRay
U.S.) of any material sent or given by or on behalf of a third
party to holders of PureRay U.S. 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), PureRay U.S.
shall use its reasonable efforts to obtain and deliver to the
Trustee and each Beneficiary copies thereof (unless the same has
been provided directly to the Trustee and Beneficiaries by such
third party).
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4.6 List of
Persons Entitled to Vote
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(a)
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before each annual, general and
special PureRay U.S. Meeting or the seeking of any PureRay U.S.
Consent; and
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(b)
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forthwith upon each request made at
any time by the Trustee or PureRay U.S. in writing,
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prepare or
cause to be prepared a list (a “List” ) of the
names and addresses of the Beneficiaries arranged in alphabetical
order 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 or PureRay U.S., as applicable,
in such request or, in the case of a List prepared in connection
with a PureRay U.S. Meeting or a PureRay U.S. Consent, at the close
of business on the record date established by PureRay U.S. or
pursuant to applicable law for determining the holders of PureRay
U.S. Common Shares entitled to receive notice of and/or to vote at
such PureRay U.S. Meeting or to give consent in connection with
such PureRay U.S. Consent. Each such List shall be delivered to the
Trustee or PureRay U.S., as applicable, promptly after receipt by
the Corporation of such request or the record date for such meeting
or seeking of consent, as the case may be. PureRay U.S. agrees to
give the Corporation notice (with a copy to the Trustee) of the
calling of any PureRay U.S. Meeting or the seeking of any PureRay
U.S. Consent, together with the record dates therefor, sufficiently
before the date of the calling of such meeting or seeking of such
consent so as to enable the Corporation 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 PureRay U.S.
Meeting or PureRay U.S. Consent will be entitle: (i) 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 (ii) 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
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(a)
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In
connection with each PureRay U.S. Meeting and PureRay U.S. 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 before the time and date fixed by PureRay U.S.
for receipt of such instruction in the notice given by PureRay U.S.
to the Beneficiary pursuant to section 4.3.
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(b)
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The
Trustee shall, or shall cause a representative who is empowered to
sign and deliver on behalf of the Trustee, proxies for Voting
Rights to attend each PureRay U.S. Meeting. Upon submission by a
Beneficiary (or its designee) of identification satisfactory to the
Trustee or the Trustee’s representative, and at the
Beneficiary’s request, the Trustee or 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
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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.
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4.9
Distribution of Written Materials
Any written
materials distributed by PureRay U.S. pursuant to this Agreement
shall be sent by mail (or otherwise communicated in the same manner
as PureRay U.S. utilizes in communications to holders of PureRay
U.S. Common Shares) to each Beneficiary at its address as shown on
the books of the Corporation and to the Trustee at its address set
out in section 14.3 hereof.
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 the Corporation or
PureRay Holdings, as the case may be, 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 PureRay U.S.
Common Shares, as specified in Article 5 (unless, in either
case, PureRay U.S. shall not have delivered the requisite PureRay
U.S. Common Shares issuable in exchange therefor to the Trustee for
delivery to the Beneficiaries), or upon the redemption of
Exchangeable Shares pursuant to section 5 or 6 of the Share
Provisions, or upon the effective date of the liquidation,
dissolution or winding-up of the Corporation pursuant to section 4
of the Share Provisions, or upon the purchase of Exchangeable
Shares from the holder thereof by PureRay Holdings pursuant to the
exercise by PureRay Holdings 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
PureRay
Holdings hereby grants to the Trustee as trustee for and on behalf
of, and for the use and benefit of, the Beneficiaries: (i) the
right (the “Exchange Right” ), upon the
occurrence and during the continuance of an Insolvency Event, to
require PureRay Holdings to purchase from each or any Beneficiary
all or any part of the Exchangeable Shares held by the Beneficiary;
and (ii) the Automatic Exchange Rights, all in accordance with
the provisions of this Agreement. PureRay Holdings 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 PureRay Holdings 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:
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(a)
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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
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(b)
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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.
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5.2 Legended
Share Certificates
The Corporation
will cause each certificate representing Exchangeable Shares to
bear an appropriate legend notifying the Beneficiaries
of:
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(a)
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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
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(b)
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the
Automatic Exchange Rights.
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5.3 General
Exercise of Exchange Right
The Exchange
Right shall be and remain vested in and exercisable by the Trustee.
Subject to section 7.14, 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 PureRay Holdings for each Exchangeable Share to be
purchased by PureRay Holdings under the Exchange Right shall be an
amount per share equal to: (i) the Current Market Price of an
PureRay U.S. Common Share on the last Business Day before the day
of closing of the purchase and sale of such Exchangeable Share
under the Exchange Right, which shall be satisfied in full by
PureRay Holdings causing to be sent to such holder one PureRay U.S.
Common Share, plus (ii) to the extent not paid by the
Corporation, 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
before the closing of the purchase and sale. The purchase price for
each such Exchangeable Share so purchased may be satisfied only by
PureRay Holdings delivering or causing to be delivered to the
relevant Beneficiary one PureRay U.S. 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 5.12).
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 the
Corporation. 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 the Trustee’s office at
Suite 600, 3625 Cumberland Blvd., Atlanta, Georgia, 30339 or
at such other place 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
PureRay Holdings 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
Canada Business Corporations Act and the by-laws
of
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the Corporation
and such additional documents and instruments as the Trustee may
reasonably require, together with:
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(a)
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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 PureRay Holdings 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 PureRay Holdings free and clear of all
liens, claims and encumbrances, (iii) the names in which the
certificates representing PureRay U.S. 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
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(b)
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payment (or evidence of payment
satisfactory to the Trustee, the Corporation, PureRay U.S. and
PureRay Holdings) of the taxes (if any) payable as contemplated by
section 5.8 of this Agreement.
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If only a part
of the Exchangeable Shares represented by any certificate or
certificates delivered to the Trustee are to be purchased by
PureRay Holdings under the Exchange Right, a new certificate for
the balance of such Exchangeable Shares shall be issued to the
holder at the expense of the Corporation.
5.6 Delivery
of PureRay U.S. Common Shares; Effect of Exercise
Promptly after
receipt of the certificates representing the Exchangeable Shares
which the Beneficiary desires PureRay Holdings 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 in
blank, the Trustee shall notify PureRay U.S., PureRay Holdings and
the Corporation of its receipt of the same, which notice to PureRay
U.S., PureRay Holdings and the Corporation shall constitute
exercise of the Exchange Right by the Trustee on behalf of the
holder of such Exchangeable Shares, and PureRay Holdings shall
promptly thereafter deliver or cause to be delivered to the
Beneficiary of such Exchangeable Shares (or to such other persons,
if any, properly designated by such Beneficiary) the number of
PureRay U.S. 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
5.12); provided, however, that no such delivery shall be made
unless and until the Beneficiary requesting the same shall have
paid (or provided evidence of payment satisfactory to the Trustee,
the Corporation, PureRay Holdings and PureRay U.S.) the taxes (if
any) payable as contemplated by section 5.8 of this Agreement.
Immediately upon the giving of noti
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