VOTING, EXCHANGE AND SUPPORT AGREEMENT

Voting Agreement

You are currently viewing:

This Voting Agreement involves

ADSERO CORP | NOVA SCOTIA COMPANY

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.

Title: VOTING, EXCHANGE AND SUPPORT AGREEMENT
Governing Law: Delaware Date: 2/4/2005
Law Firm: Gottbetter & Partners LLP

EXHIBIT 10.3

ADSERO CORP.

and

YAC CORP.

and

3091732 NOVA SCOTIA COMPANY

AS "ADSERO CALLCO"

and

3091503 NOVA SCOTIA COMPANY

AS "COMPANY" OR "TAC"

and

THE PERSONS WHO HOLD EXCHANGEABLE SHARES

OF THE COMPANY AND

ARE IDENTIFIED AS "HOLDERS" ON THE SIGNATURE

PAGE HEREOF

AS "HOLDERS"

SERIES II EXCHANGEABLE SHARES

VOTING, EXCHANGE AND SUPPORT AGREEMENT

<PAGE>

ARTICLE 1

DEFINITIONS AND INTERPRETATION

------------------------------

Page #

Section 1.1 Definitions 2

Section 1.2 Interpretation Not Affected by Headings, Etc. 4

Section 1.3 Number, Gender, Etc. 4

Section 1.4 Date for Any Action 4

Section 1.5 Currency 4

ARTICLE 2

SERIES A SPECIAL VOTING SHARES

------------------------------

Section 2.1 Issuance and Ownership of the Series A

Special Voting Shares 5

Section 2.2 Series A Special Voting Shares Non-Transferable 5

Section 2.3 Series A Special Voting Shares Not to be Pledged 5

ARTICLE 3

EXERCISE OF VOTING RIGHTS

-------------------------

Section 3.1 Voting Rights 5

Section 3.2 Number of Votes 5

Section 3.3 Copies of Shareholder Information 6

Section 3.4 Other Materials 6

Section 3.5 Voting by the Holders, and Attendance of

Holders' Representatives, at Meeting 6

Section 3.6 Surrender of Series A Special Voting Shares

for Cancellation 6

Section 3.7 Surrender of Series A Special Voting Share Certificate 7

ARTICLE 4

INSOLVENCY EXCHANGE RIGHT AND AUTOMATIC EXCHANGE

------------------------------------------------

Section 4.1 Grant and Ownership of the Insolvency Exchange Right 7

Section 4.2 Purchase Price 7

Section 4.3 Exercise Instructions 7

Section 4.4 Delivery of Exchangeable Share Consideration;

Effect of Exercise 8

Section 4.5 Exercise of Insolvency Exchange Right Subsequent

to Retraction 9

Section 4.6 Stamp or Other Transfer Taxes 9

Section 4.7 Notice of Insolvency Event 10

Section 4.8 Automatic Exchange on Liquidation of Adsero 10

Section 4.9 Call Rights 11

ARTICLE 5

CERTAIN RIGHTS OF ADSERO CALLCO

TO ACQUIRE EXCHANGEABLE SHARES

------------------------------

Section 5.1 Adsero Callco Liquidation Call Right 11

Section 5.2 Adsero Callco Retraction Call Right 12

Section 5.3 Withholding Rights 14

Section 5.4 Restrictions on Transfer 14

<PAGE>

ARTICLE 6

REPRESENTATIONS, WARRANTIES AND COVENANTS

OF ADSERO, YAC, ADSERO CALLCO AND THE COMPANY

---------------------------------------------

Page #

Section 6.1 Covenants of Adsero Regarding Series II

Exchangeable Shares 15

Section 6.2 Notification of Certain Events 16

Section 6.3 Delivery of Shares by Adsero 16

Section 6.4 Delivery of Shares 17

Section 6.5 Economic Equivalence 17

Section 6.6 Ownership of Outstanding Shares; Voting 18

Section 6.7 Adsero and Affiliates Not to Vote Exchangeable Shares 18

Section 6.8 Tender Offers, Etc. 19

Section 6.9 Representations and Warranties of Adsero, YAC,

Adsero Callco and the Company 19

Section 6.10 Registration and Reservation of Adsero Common

Shares 20

Section 6.11 Registration under the U.S. Securities Act of 1933 20

Section 6.12 Allocation of Expenses 20

ARTICLE 7

AMENDMENTS AND SUPPLEMENTAL AGREEMENTS

--------------------------------------

Section 7.1 Amendments, Modifications, Etc. 20

Section 7.2 Changes in Capital of Adsero and the Company 20

ARTICLE 8

TERMINATION

-----------

Section 8.1 Term 21

ARTICLE 9

GENERAL

-------

Section 9.1 Severability 21

Section 9.2 Enurement 21

Section 9.3 Notices to Parties 21

Section 9.4 Risk of Payments by Post 23

Section 9.5 Counterparts 23

Section 9.6 Jurisdiction 23

Section 9.7 Language 23

ADDENDA

-------

Schedule "A" - Series II Exchangeable Share Provisions.

Schedule "B" - Rights, Privileges, Restrictions and Conditions Attached to the

Series A Special Voting Shares.

<PAGE>

SERIES II EXCHANGEABLE SHARES

VOTING, EXCHANGE AND SUPPORT AGREEMENT

THIS AGREEMENT is entered into as of January 2, 2005, by Adsero Corp.,

a corporation existing under the laws of the State of Delaware and doing

business as Adsero Corp. ("Adsero"), 3091732 Nova Scotia Company, an unlimited

company existing under the laws of the Province of Nova Scotia ("Adsero

Callco"), 3091503 Nova Scotia Company, an unlimited company existing under the

laws of the Province of Nova Scotia (the `Company"), YAC Corp. ("YAC") and the

persons who hold Preferred Shares of the Company and are Identified as the

"Holders' on the signature page hereof (collectively, the "Holders").

WHEREAS, pursuant to a Share Purchase Agreement dated as of January 2,

2005, by and among Adsero, the Company, Adsero Callco, YAC, Teckn-O-Laser

Company, Teckn-O-Laser Global Company, the Holders, and other security holders

of the Company named therein (the "Purchase Agreement"), the parties thereto

agreed that on the closing of the transactions contemplated under the Purchase

Agreement, the parties hereto would execute and deliver a Voting, Exchange and

Support Agreement containing the terms and conditions set forth as an Exhibit to

the Purchase Agreement;

AND WHEREAS pursuant to the Purchase Agreement, the Company has issued

to the Holders certain exchangeable shares of the Company (the "Series II

Exchangeable Shares") having the rights, privileges, restrictions and conditions

set forth in Schedule "A" (collectively, the "Series II Exchangeable Share

Provisions");

AND WHEREAS the parties desire to make appropriate provision and to

establish a procedure whereby voting rights in Adsero shall be exercisable by

the Holders, and in connection therewith, Adsero is to issue to the Holder of

each Series II Exchangeable Share one preference share in the capital of Adsero,

$0.0001 par value having the rights, privileges, restrictions and conditions set

forth in Schedule "B" attached thereto (collectively the "Series A Special

Voting Shares;

AND WHEREAS Adsero Callco is to have the right, exercisable upon the

occurrence of certain events, to require the Holders to sell their Series II

Exchangeable Shares to Adsero Callco;

NOW THEREFORE, in consideration of the respective covenants and

agreements provided in this agreement and for other good and valuable

consideration (including the payment of $1.00 and other valuable consideration

by the Holders to each of Adsero, YAC, Adsero Callco and the Company in

consideration of the right granted to the Holders herein) (the receipt and

sufficiency of which are hereby acknowledged), the parties agree as follows:

<PAGE>

ARTICLE 1

DEFINITIONS AND INTERPRETATION

------------------------------

SECTION 1.1 Definitions.

In this agreement, the following terms shall have the following meanings:

"ACT" means the Companies Act (Nova Scotia), as amended, consolidated

or reenacted from time to time.

"ADSERO COMMON SHARES" means the shares of Common Stock, par value

$0.001 per share, in the capital of Adsero.

"ADSERO CONSENT" has the meaning provided in Section 3.2 hereof.

"ADSERO LIQUIDATION PRICE" has the meaning provided in Section 4.8(b)

hereof.

"ADSERO MEETING" has the meaning provided in Section 3.2 hereof.

"AFFILIATE" shall have the meaning ascribed thereto in the Canada

Business Corporations Act, as amended, consolidated or re-enacted from

time to time.

"AUTOMATIC EXCHANGE RIGHTS" means the benefit of the obligation of

Adsero Callco to effect the automatic exchange of Adsero Common Shares

for Exchangeable Shares pursuant to Section 4.8 hereof.

"BOARD OF DIRECTORS" means the board of directors of the Company;

"BUSINESS DAY" has the meaning provided in the Series II Exchangeable

Share Provisions.

"CALL RIGHTS" means, collectively, the Liquidation Call Right and the

Retraction Call Right; and "Call Right" shall mean any one of such Call

Rights.

"CANADIAN DOLLAR EQUIVALENT" has the meaning provided in the Series II

Exchangeable Share Provisions.

"DATE OF ISSUANCE" has the meaning provided in Section 5.2(4) hereof.

"EFFECTIVE DATE" has the meaning provided in the Series II Exchangeable

Share Provisions.

"HOLDER(S)" means a Holder who exercises any of the rights provided

hereunder, as the context requires.

"HOLDER VOTES" has the meaning provided in Section 3.2 hereto.

"INSIDER" means (i) an officer or director of Adsero or of a subsidiary

thereof, (ii) a person beneficially owing ten percent (10%) or more of

the issued and outstanding

<PAGE>

voting securities of Adsero or (iii) a person that directly or

indirectly through one or more intermediaries, controls or is

controlled by, or is under common control with Adsero.

"INSOLVENCY EVENT" means the institution by the Company of any

proceeding to be adjudicated a bankrupt or insolvent or to be dissolved

or wound-up, or the consent of the Company to the institution of

bankruptcy, insolvency, dissolution or winding-up proceedings against

it, or the filing of a petition, answer or consent seeking dissolution

or winding-up under any bankruptcy, insolvency or analogous laws,

including without limitation the Companies Creditors' Arrangement Act

(Canada) and the Bankruptcy and Insolvency Act (Canada), and the

failure by the Company to contest in good faith any such proceedings

commenced in respect of the Company within 15 days of becoming aware

thereof, or the consent by the Company to the filing of any such

petition or to the appointment of a receiver, or the making by the

Company of a general assignment for the benefit of creditors, or the

admission in writing by the Company of its inability to pay its debts

generally as they become due or the failure by the Company to declare

and pay any dividends as set forth under Article 3 of the Series II

Exchangeable Share Provisions, or the Company not being permitted,

pursuant to liquidity or solvency requirements of applicable law, to

declare any dividend or to redeem any Retracted Shares pursuant to

Section 6.5 of the Series II Exchangeable Share Provisions.

"INSOLVENCY EXCHANGE RIGHT" has the meaning provided in Section 4.1(a)

hereof.

"LIQUIDATION CALL RIGHT" has the meaning provided in Section 5.1(1)

hereof.

"LIQUIDATION EVENT" has the meaning provided in Section 4.8(a) hereof.

"LIQUIDATION EVENT EFFECTIVE TIME" has the meaning provided in Section

4.8(b) hereof.

"OFFICER'S CERTIFICATE" means, with respect to Adsero or the Company, a

certificate signed on behalf of such entity by any one of the Chairman

of the Board, the Vice-Chairman of the Board, the Chief Executive

Officer, the President, the Chief Financial Officer or any Executive

Vice-President, Senior Vice-President or Vice-President (or the

officers with equivalent responsibilities) of Adsero or the Company.

"PERSON" includes an individual, body corporate, partnership, company,

unincorporated syndicate or organization, trust, trustee, executor,

administrator and other legal representative.

"PREFERRED SHARES" means the Preferred Shares of the Company.

"PURCHASE RIGHT" has the meaning provided in Section 5.2(4) hereof.

"PURCHASED SHARES" has the meaning provided in Section 5.2(4) hereof.

"RETRACTED SHARES" has the meaning provided in Section 4.5 and Section

5.2 hereof, as the context requires.

"RETRACTION CALL PURCHASE PRICE" has the meaning provided in Section

5.2(1) hereof.

"RETRACTION CALL RIGHT" has the meaning provided in Section 5.2(1)

hereof.

<PAGE>

"RETRACTION DATE" has the meaning provided in the Series II

Exchangeable Share Provisions.

"RETRACTION REQUEST" has the meaning provided in the Series II

Exchangeable Share Provisions.

"SERIES II EXCHANGEABLE SHARE CONSIDERATION" has the meaning provided

in the Series II Exchangeable Share Provisions.

"SERIES II EXCHANGEABLE SHARE PROVISIONS" are as described in Schedule

"A" hereto.

"SERIES II EXCHANGEABLE SHARES" has the meaning provided in the Series

II Exchangeable Share Provisions.

"SERIES A SPECIAL VOTING SHARES" has the meaning provided in Schedule

"B" hereto.

"SUBSIDIARY" has the meaning provided in the Series II Exchangeable

Share Provisions.

"VOTING RIGHTS" means the voting rights attached to the Series A

Special Voting Shares as set forth in Schedule "B" hereto.

SECTION 1.2 Interpretation Not Affected by Headings, Etc.

The division of this agreement into articles, Sections and paragraphs

and the insertion of headings are for convenience of reference only and shall

not affect the construction or interpretation of this agreement.

SECTION 1.3 Number, Gender, Etc.

Words importing the singular number only shall include the plural and

vice versa. Words importing the use of any gender shall include all genders.

SECTION 1.4 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.

SECTION 1.5 Currency

All amounts in this agreement and its Schedule "A" (but excluding

Schedule "B") are in Canadian currency, while all amounts in Schedule "B" are in

US currency.

<PAGE>

ARTICLE 2

SERIES A SPECIAL VOTING SHARES

------------------------------

SECTION 2.1 Issuance and Ownership of the Series A Special Voting Shares.

Concomitantly with the issuance of each Series II Exchangeable Share by

the Company, Adsero will issue to each Holder one Series A Special Voting Share

to be hereafter held of record by each Holder. Adsero hereby acknowledges

receipt from each Holder of $1.00 and other good and valuable consideration (and

the adequacy thereof) for the issuance of any number of Series A Special Voting

Shares by Adsero to each Holder.

SECTION 2.2 Series A Special Voting Shares Non-Transferable.

The Holders shall not sell, transfer or otherwise dispose of the Series

A Special Voting Shares, provided, however that upon any sale, exchange or other

disposition of Series II Exchangeable Shares by a Holder permitted pursuant to

Section 5.4 hereof, the Holder shall transfer an equivalent number of Series A

Special Voting Shares to Adsero for cancellation.

SECTION 2.3 Series A Special Voting Shares Not to be Pledged.

The Holders shall not pledge, charge, hypothecate, grant a security

interest in, otherwise encumber or create any lien or adverse claim in respect

of the Series A Special Voting Shares.

ARTICLE 3

EXERCISE OF VOTING RIGHTS

-------------------------

SECTION 3.1 Voting Rights.

The Holders, as the holders of record of the Series A Special Voting

Shares, shall be entitled to all of the Voting Rights, including the right to

consent to or to vote, in person or by proxy, the Series A Special Voting

Shares, on any matter, question or proposition whatsoever that may properly come

before the shareholders of Adsero at an Adsero Meeting or in connection with an

Adsero Consent. Except for the Voting Rights, the Holders shall not be entitled

to any other voting rights, entitlements or privileges in their capacity as the

holders of the Series A Special Voting Shares.

SECTION 3.2 Number of Votes.

With respect to all meetings of shareholders of Adsero at which holders

of Adsero Common Shares are entitled to vote (an "Adsero Meeting") and with

respect to all written consents sought by Adsero including the holders of Adsero

Common Shares (an "Adsero Consent"), each Holder shall be entitled to cast and

exercise a number of votes equal to the number of Series A Special Voting Shares

owned of record by such Holder on the record date established by Adsero or by

applicable law for such Adsero Meeting or Adsero Consent, as the case may be,

(the "Holder Votes') in respect of each matter, question or proposition to be

voted on at such Adsero Meeting or to be consented to in connection with such

Adsero Consent.

For the purpose of determining the Holder Votes to which each Holder is

entitled in respect of any such Adsero Meeting or Adsero Consent, the number of

Series A Special Voting

<PAGE>

Shares owned of record by such Holder shall be determined at the close of

business on the record date established by Adsero or by applicable law for

purposes of determining shareholders entitled to vote at such Adsero Meeting or

to give written consent in connection with such Adsero Consent. With respect to

each Adsero Meeting and Adsero Consent, Adsero shall mail or cause to be mailed

(or otherwise communicate in the same manner as Adsero uses in communications to

holders of Adsero Common Shares) to the Holders on the same day as the initial

mailing or notice (or other communication) with respect thereto is given by

Adsero to holders of Adsero Common Shares, a copy of such notice, together with

any proxy or information statement and related materials provided to holders of

Adsero Common Shares.

SECTION 3.3 Copies of Shareholder Information.

Adsero shall mail or cause to be mailed (or otherwise communicate in

the same manner as Adsero uses in communications to holders of Adsero Common

Shares) to the Holders copies of all proxy materials (including notices of

Adsero Meetings), information statements, reports (including without limitation

all interim and annual financial statements) and other written communications

that are distributed from time to time to holders of Adsero Common Shares at the

same time as such materials are first sent to holders of Adsero Common Shares.

SECTION 3.4 Other Materials.

Immediately after receipt by Adsero of any material sent or given

generally to the holders of Adsero 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), Adsero shall obtain and deliver to the

Holders copies thereof as soon as possible thereafter.

SECTION 3.5 Voting by the Holders, and Attendance of Holders'

Representatives at Meeting.

Adsero warrants and represents that provisions substantially similar to the

provisions included in subparagraph (a) and (b) below are included in its

by-laws or other binding internal documents:

(a) In connection with each Adsero Meeting and Adsero Consent, each Holder

may exercise, either in person or by proxy, the Holder Votes as to

which such Holder is entitled to vote.

(b) At any Adsero Meeting, a representative of each Holder shall have the

same rights as any holder of Adsero Common Shares 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.

SECTION 3.6 Surrender of Series A Special Voting Shares for Cancellation

Upon receipt of the Series II Exchangeable Share Consideration by a

Holder of a Series II Exchangeable Share for any reason, such Holder shall

immediately surrender for cancellation, to Adsero, a number of Series A Special

Voting Shares equal to the number of Series II Exchangeable Shares then

transferred or cancelled.

<PAGE>

SECTION 3.7 Surrender of Series A Special Voting Share Certificate.

Contemporaneously with the completion of any transaction pursuant to

which any Series II Exchangeable Share held by a Holder at such time is

retracted, redeemed, purchased or exchanged, such Holder shall surrender to

Adsero, for cancellation, the certificate representing the Series A Special

Voting Shares held by such Holder being surrendered pursuant to Section 3.6

above. If only a part of the Series A Special Voting Shares represented by any

certificate surrendered to Adsero are to be cancelled by Adsero hereunder, a new

certificate for the balance of such Series A Special Voting Shares shall be

issued by Adsero and delivered to the Holder at the expense of Adsero.

ARTICLE 4

INSOLVENCY EXCHANGE RIGHT AND AUTOMATIC EXCHANGE

------------------------------------------------

SECTION 4.1 Grant and Ownership of the Insolvency Exchange Right.

Subject to the last sentence of this Section 4.1, at any point in time

after the issuance of any Series II Exchangeable Share, Adsero Callco hereby

grants to each Holder:

(a) the right (the "Insolvency Exchange Right"), upon the occurrence and during

the continuance of an Insolvency Event, to require Adsero Callco to purchase

from the Holder all or any part of the Series II Exchangeable Shares held by the

Holder. The Insolvency Exchange Right may only be exercised by a Holder if the

Insolvency Event relates to the Company; and

(b) the Automatic Exchange Right,

all in accordance with the provisions of this agreement and the Series II

Exchangeable Share Provisions, as the case may be.

SECTION 4.2 Purchase Price.

The purchase price payable by Adsero Callco for each Series II

Exchangeable Share to be purchased by Adsero Callco under the Insolvency

Exchange Right shall be an amount equal to the applicable Series II Exchangeable

Share Consideration on the last Business Day prior to the day of closing of the

purchase and sale of such Series II Exchangeable Share under the Insolvency

Exchange Right. In connection with each exercise of the Insolvency Exchange

Right, Adsero will provide to the Holder an Officer's Certificate setting forth

the calculation of the applicable Series II Exchangeable Share Consideration.

The applicable Series II Exchangeable Share Consideration for each such Series

II Exchangeable Share so purchased shall be satisfied by the delivery by Adsero

Callco, to the Holder exercising the Insolvency Exchange Right, of the

applicable Series II Exchangeable Share Consideration [less any amounts properly

withheld pursuant to Section 5.3 hereof, if any].

SECTION 4.3 Exercise Instructions.

(1) Subject to the terms and conditions set forth in Section 4.1 and the

other terms and conditions set forth herein, each Holder 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 Series II

Exchangeable Shares registered in the name of the Holder on the

<PAGE>

books of the Company. To cause the exercise of the Insolvency Exchange Right,

the Holder shall deliver to Adsero Callco, in person or by certified or

registered mail, at its head office or at such other places as Adsero Callco may

from time to time designate by written notice to the Holder, with a copy to the

Company, at its principal executive office, the certificates representing the

Series II Exchangeable Shares which the Holder desires Adsero Callco to purchase

duly endorsed for transfer to Adsero Callco, and accompanied by such other

documents and instruments as may be required to effect a transfer of Series II

Exchangeable Shares under the Act and the constating documents of the Company,

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 Series II

Exchangeable Share certificates, stating:

(i) that the Holder is exercising the Insolvency

Exchange Right so as to require Adsero Callco to purchase from

the Holder the number of Series II Exchangeable Shares

specified therein;

(ii) that the Holder has good title to and owns all

such Series II Exchangeable Shares to be acquired by Adsero

Callco free and clear of all liens, hypothecs, pledges,

encumbrances, security interests, options, restrictions,

proxies and. adverse claims except as set forth herein and in

the Series II Exchangeable Share Provisions; and

(iii) the address of the Persons to whom the Series

II Exchangeable Share Consideration should be delivered; and

(b) payment (or evidence satisfactory to the Company

and Adsero Callco if payment) of the taxes (if any) payable as contemplated by

Section 4.6 hereof.

(2) If only a part of the Series II Exchangeable Shares represented by

any certificate delivered to Adsero Callco is to be purchased by Adsero Callco

under the Insolvency Exchange Right, a new certificate for the balance of such

Series II Exchangeable Shares shall be issued to the Holder at the expense of

the Company.

SECTION 4.4 Delivery of Exchangeable Share Consideration;

Effect of Exercise.

Promptly after receipt of the Series II certificates

representing the Series II Exchangeable Shares which the Holder desires Adsero

Callco 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), duly endorsed for transfer to Adsero

Callco, which notice to Adsero Callco and the Company shall constitute exercise

of the Insolvency Exchange Right by the Holder, Adsero Callco shall promptly

thereafter transfer to the Holder the Series II Exchangeable Share Consideration

deliverable in connection with the exercise of the Insolvency Exchange Right

less any amounts properly withheld pursuant to Section 5.3 hereof; provided,

however, that no such delivery shall be made unless and until the Holder shall

have paid (or provided evidence satisfactory to the Company and Adsero Callco of

the payment of) the taxes (if any) payable as contemplated by Section 4.6

hereof. Immediately upon the giving of notice by the Holder to Adsero Callco and

the Company of the exercise of the Insolvency Exchange Right, as provided in

this Section 4.4, the Holder shall be deemed to have transferred to Adsero

Callco all of its right, title and interest in and to such Series II

Exchangeable Shares, shall cease to be a holder of such Series II Exchangeable

<PAGE>

Shares and shall not be entitled to exercise any of the rights of a holder in

respect thereof, other than the right to receive the purchase price therefor

unless the Series II Exchangeable Share Consideration is not delivered by Adsero

Callco to the Holder by the date specified, in which case the rights of the

Holder shall remain unaffected until such Series II Exchangeable Share

Consideration is delivered by Adsero Callco and any cheque included therein is

paid. Notwithstanding the foregoing, until the Series II Exchangeable Share

Consideration is delivered to the Holder, the Holder shall be deemed to be a

holder of the sold Series II Exchangeable Shares for purposes of any right with

respect thereto under this agreement. For greater certainty, Section 3.6 applies

herewith.

SECTION 4.5 Exercise of Insolvency Exchange Right Subsequent to

Retraction.

In the event that a Holder has exercised its right under Article 6 of

the Series II Exchangeable Share Provisions to require the Company to redeem any

or all of the Series II Exchangeable Shares held by the Holder (such number of

Series II Exchangeable Shares so required to be redeemed being hereinafter

collectively referred to as the "Retracted Shares") and is notified by the

Company pursuant to Section 6.5 of the Series II Exchangeable Share Provisions

that the Company will not be permitted as a result of liquidity or solvency

requirements or other provisions of applicable law to redeem all such Retracted

Shares, subject to receipt by such Holder of written notice to that effect from

the Company and provided that the Retraction Call Right with respect to the

Retracted Shares shall not have been exercised, the Retraction Request will

constitute, and will be deemed to constitute, notice from such Holder to Adsero

Callco that such Holder is exercising the Insolvency Exchange Right with respect

to those Retracted Shares which the Company is not permitted by applicable law

to redeem. In any such event, the Company hereby agrees with such Holder

immediately to notify such Holder of such prohibition against the Company

redeeming all of the Retracted Shares and immediately to forward or cause to be

forwarded to Adsero Callco all relevant materials delivered by such Holder to

the Company (including without limitation a copy of the Retraction Request

delivered pursuant to Section 6.1 of the Series II Exchangeable Share

Provisions) in connection with such proposed redemption of the Retracted Shares,

and Adsero Callco will thereupon purchase such shares in accordance with the

provisions of this Article 4.

SECTION 4.6 Stamp or Other Transfer Taxes.

Upon any sale of Series II Exchangeable Shares to Adsero Callco

pursuant to the Insolvency Exchange Right or the Automatic Exchange Rights, the

share certificate representing Adsero Common Shares to be delivered in

connection with the payment of the total purchase price therefor shall be issued

in the name of the Holder without charge to the Holder, provided, however, that

the Holder:

(a) shall pay (and none of Adsero Callco or the Company shall be

required to pay) any documentary, stamp, transfer or other similar

taxes that may be payable in respect of any such transfer; or

(b) shall have established to the satisfaction of the Adsero Callco and

the Company acting reasonably that such taxes, if any, have been paid.

<PAGE>

SECTION 4.7 Notice of Insolvency Event.

Promptly following 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, Adsero and the Company shall give written notice

thereof to the Holders.

SECTION 4.8 Automatic Exchange on Liquidation of Adsero.

(a) Adsero will give the Holders written 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 Adsero to institute voluntary

liquidation, dissolution or winding-up proceedings

with respect to Adsero or to effect any other

distribution of assets of Adsero among its

stockholders for the purpose of winding up its

affairs at least ten days prior to the proposed

effective date of such liquidation, dissolution,

winding-up or other distribution;

(ii) the sale of all or substantially all of the assets of

Adsero; and

(iii) immediately, upon the earlier of:

(A) receipt by Adsero of notice of; and

(B) Adsero otherwise becoming aware of,

any instituted claim, suit, petition or other proceedings with

respect to the involuntary liquidation, dissolution or

winding-up of Adsero or to effect any other distribution of

assets of Adsero among its stockholders for the purpose of

winding up its affairs, provided, however, that such shall

only be a Liquidation Event if Adsero has failed to contest in

good faith any such proceeding commenced in respect of Adsero

within 30 days of becoming aware thereof.

(b) In order that the Holders will be able to participate on a pro rata

basis with the holders of Adsero Common Shares in the distribution of

assets of Adsero in connection with a Liquidation Event, immediately

prior to the effective time (the `Liquidation Event Effective Time") of

a Liquidation Event, all of the then outstanding Series II Exchangeable

Shares shall be automatically exchanged for Adsero Common Shares as

contemplated in the definition of Series II Exchangeable Share

Consideration and shall also be entitled to the remaining Series II

Exchangeable Share Consideration, if any. To effect such automatic

exchange, Adsero Callco shall be deemed to have purchased each Series

II Exchangeable Share outstanding immediately prior to the Liquidation

Event Effective Time held by the Holders, and the Holders shall be

deemed to have sold the Series II Exchangeable Shares held by them at

such time, for a purchase price per share equal to the Series II

Exchangeable Share Consideration applicable at the Liquidation Event

Effective Time (the "Adsero Liquidation Price"). Moreover, the Holder

shall be deemed immediately to be Holder of a number of Adsero Common

Shares to be delivered as part of the Series II Exchangeable Share

Consideration and to be entitled to exercise all rights related

thereto. Adsero further acknowledges that if a certificate representing

the Adsero Common Shares issued to a Holder pursuant to Article 4 is

not

<PAGE>

promptly delivered to such Holder as contemplated herein, then such

Holder shall be entitled to pursue any remedy under this Agreement, the

Adsero Common Shares or the applicable law as if such share certificate

had been duly issued and delivered to such Holder and registered in the

records of Adsero. In connection with such automatic exchange, Adsero

will provide to the Holders an Officer's Certificate setting forth the

calculation of the Adsero Liquidation Price.

Holders shall be deemed to have transferred to Adsero Callco all of

their right, title and interest in and to such Series II Exchangeable

Shares and shall cease to be holders of such Series II Exchangeable

Shares, and Adsero Callco shall transfer and deliver to the Holders the

Series II Exchangeable Share Consideration representing the Holders'

total Adsero Liquidation Price less any amounts properly withheld

pursuant to Section 5.3 hereof. Upon the surrender by a Holder of

certificates representing the transferred Series II Exchangeable

Shares, duly endorsed for transfer to Adsero Callco and accompanied by

such instruments of transfer as Adsero Callco may reasonably require,

Adsero Callco shall deliver or cause to be delivered to the Holder

certificates representing the Adsero Common Shares of which such Holder

is the holder. Notwithstanding the foregoing, until such Holder is

actually entered on the register of holders of Adsero Common Shares,

such Holder shall be deemed to still be a holder of the transferred

Series II Exchangeable Shares for purposes of all rights with respect

thereto under this agreement

SECTION 4.9 Call Rights.

The Holders and the Company hereby acknowledge the Call Rights in

favour of Adsero Callco and further agree that the Call Rights (i) are granted

to Adsero Callco by the Holders in partial consideration of the obligations of

Adsero under the Purchase Agreement; and (ii) may be assigned at any time and

from time to time by Adsero Callco in whole or in part upon written notice to

the Holders provided that:

(x) such assignee acknowledges in writing the Series II

Exchangeable Share Provisions and agrees to be bound

by the terms of this agreement; and

(y) notwithstanding such assignment, Adsero Callco shall

remain solidarily (jointly and severally) liable with

such assignee in respect of the obligations of such

assignee in connection with the exercise of any of

the Call Rights.

ARTICLE 5

CERTAIN RIGHTS OF ADSERO CALLCO TO ACQUIRE EXCHANGEABLE SHARES

--------------------------------------------------------------

SECTION 5.1 Adsero Callco Liquidation Call Right.

(1) At any point in time after the issuance of a Series II Exchangeable

Share, Adsero Callco shall have the overriding right (the "Liquidation Call

Right"), in the event of the proposed liquidation, dissolution or winding-up of

the Company pursuant to Article 5 of the Series II Exchangeable Share

Provisions, to purchase from the Holders who hold the Series II

<PAGE>

Exchangeable Shares in the Company on the Liquidation Date (as defined therein)

all but not less than all of the Series II Exchangeable Shares held by the

Holders on payment by Adsero Callco of an amount per share (the "Liquidation

Call Purchase Price') equal to the Series II Exchangeable Share Consideration

applicable on the last Business Day prior to the Liquidation Date, which shall

be satisfied in full by Adsero Callco delivering or causing to be delivered to

the Holders the Series II Exchangeable Share Consideration representing the

Holders' total Liquidation Call Purchase Price less any amounts withheld

pursuant to Section 5.3 hereof. In the event of the exercise of the Liquidation

Call Right by Adsero Callco as aforesaid, each Holder shall be obligated to sell

all of the Series II Exchangeable Shares held by the Holder to Adsero Callco on

the Liquidation Date on payment by Adsero Callco to the Holder of the

Liquidation Call Purchase Price for each such share, and provided Adsero Callco

completes such purchase, the Company shall have no obligation to redeem such

shares so purchased by Adsero Callco.

(2) To exercise the Liquidation Call Right, Adsero Callco must notify the

Company and the Holders of Adsero Callco's intention to exercise such right at

least 30 days before the Liquidation Date in the case of a voluntary

liquidation, dissolution or winding-up of the Company and at least five Business

Days before the Liquidation Date in the case of an involuntary liquidation,

dissolution or winding-up of the Company. The Company will notify the Holders as

to whether or not Adsero Callco has exercised the Liquidation Call Right

forthwith after the expiry of the period during which the same may be exercised

by Adsero Callco. If Adsero Callco exercises the Liquidation Call Right, then on

the Liquidation Date Adsero Callco will purchase and each Holder will sell all

of the Series II Exchangeable Shares then held by the Holder for a price per

share equal to the Liquidation Call Purchase Price, which price shall be

satisfied in the manner set forth in Section 5.1(1) hereof.

(3) For the purposes of completing the purchase of the Series II

Exchangeable Shares pursuant to the Liquidation Call Right, Adsero Callco shall

deliver to each Holder, on or before the Liquidation Date, the Series II

Exchangeable Share Consideration in payment of the total Liquidation Call

Purchase Price (less any amounts properly withheld pursuant to Section 5.4

hereof) upon presentation and surrender by the Holders of certificates

representing the Series II Exchangeable Shares held by the Holder, together with

such other documents and instruments as may be required to effect a transfer of

Series II Exchangeable Shares under the Act and the constating documents of the

Company and such additional documents and instruments as Adsero Callco may

reasonably require. If Adsero Callco does not exercise the Liquidation Call

Right in the manner described above, then on the Liquidation Date the Holders

will be entitled to receive in exchange therefor the liquidation price otherwise

payable by the Company, in connection with the liquidation, dissolution or

winding-up of the Company pursuant to Article 5 of the Series II Exchangeable

Share Provisions.

SECTION 5.2 Adsero Callco Retraction Call Right.

(1) Adsero Callco shall have the overriding right, notwithstanding the

proposed retraction of any Series II Exchangeable Shares by a Holder pursuant to

Article 6 of the Series II Exchangeable Share Provisions, to purchase from such

Holder on such Retraction Date a number of Series II Exchangeable Shares that

such Holder has requested to be redeemed by the Company (the "Retracted Shares")

held by such Holder on payment by Adsero Callco to such Holder of an amount per

Retracted Share (the "Retraction Call Purchase Price") equal to the Series II

Exchangeable Share Consideration applicable on the last Business Day prior to

the Retraction Date, which shall be satisfied in full by Adsero Callco

delivering or causing to be

<PAGE>

delivered to such Holder, the Series II Exchangeable Share Consideration, less

any amounts properly withheld pursuant to Section 5.3 hereof. In the event of

the exercise of the Retraction Call Right by Adsero Callco, such Holder shall be

obligated to sell all of the Retracted Shares held by such Holder to Adsero

Callco on the Retraction Date on payment by Adsero Callco to such Holder of the

Retraction Call Purchase Price for each such share, less any amounts withheld

pursuant to Section 5.3 hereof, and the Company shall have no obligation to

redeem such shares so purchased by Adsero Callco.

(2) Upon receipt by the Company of a Retraction Request, the Company shall

immediately notify Adsero Callco thereof. To exercise the Retraction Call Right,

Adsero Callco must notify the Company and the Holders of Adsero Callco's

intention to exercise such right within ten days of such notification to Adsero

Callco by the Company of receipt of the Retraction Request. The Company will

notify such Holders as to whether or not Adsero Callco has exercised the

Retraction Call Right forthwith after the expiry of the period during which the

same may be exercised by Adsero Callco. If Adsero Callco exercises the

Retraction Call Right, and provided that the Retraction Request is not revoked

by the Holder in the manner specified in Section 6.6 of the Series II

Exchangeable Share Provisions, the Retraction Request shall thereupon be

considered only to be an offer by the Holder to sell such Retracted Shares to

Adsero Callco in accordance with the Retraction Call Right, and on the

Retraction Date Adsero Callco will purchase and each Holder will sell such

Retracted Shares for a price per share equal to the Retraction Call Purchase

Price which price shall be satisfied in the manner set forth in Section 5.2(1)

hereof.

(3) For the purposes of completing the purchase of the Retracted Shares

pursuant to the Retraction Call Right, Adsero Callco shall deliver to each

Holder, on or before the Retraction Date, the Series II Exchangeable Share

Consideration in payment of the total Retraction Call Purchase Price (less any

amounts withheld pursuant to Section 5.3 hereof) upon presentation and surrender

by the Holders of certificates representing such Retracted Shares, together with

such other documents and instruments as may be required to effect a transfer of

Retracted Shares under the Act and the constating documents of the Company. If

Adsero Callco does not exercise the Retraction Call Right in the manner

described above, then on the Retraction Date such Holder will be entitled to

receive in exchange therefor the Retraction Call Purchase Price otherwise

payable by the Company in connection with the retraction of the Retracted Shares

pursuant to Article 6 of the Series II Exchangeable Share Provisions.

(4) At any point in time during the first ninety (90) days after the

date of issuance (the "Date of Issuance") of any Series II Exchangeable Share

but not later, and in addition to the right granted to Adsero Callco pursuant to

Section 5.2(1) hereof, Adsero Callco shall have the overriding right (the

"Purchase Right") to purchase from such Holder a number of Series II

Exchangeable Shares equal to a maximum of one-half of any such shares issued on

any Date of Issuance (the "Purchased Shares") on payment by Adsero Callco to

such Holder of an amount of $0.50 per Purchased Share (the "Purchase Price"),

which shall be satisfied in full by Adsero Callco by cheque payable forthwith to

the Holder, less any amounts properly withheld pursuant to Section 5.3 hereof,

if any. In the event of the exercise of the Purchase Right by Adsero Callco,

such Holder shall be obligated to sell all the Purchased Shares held by such

Holder to Adsero Callco on payment by Adsero Callco to such Holder of the

Purchase Price for each such Purchased Share, less any amounts withheld pursuant

to Section 5.3 hereof, and the Company shall have no obligation to redeem such

shares so purchased by Adsero Callco.

<PAGE>

SECTION 5.3 Withholding Rights.

The Company, Adsero Callco and Adsero, as the case may be, shall be

entitled to deduct and withhold from any dividend or consideration otherwise

payable to any Holder such amounts as the Company, Adsero Callco or Adsero, as

the case may be, is required to deduct and withhold with respect to such payment

under the Income Tax Act (Canada), the United States Internal Revenue Code or

any provision of provincial, state, local or foreign tax law, in each case, as

amended. To the extent that amounts are so withheld, such withheld amounts shall

be treated for all purposes hereof as having been paid to such Holder of the

Series II Exchangeable 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 such amount so required to be

deducted or withheld from any payment to a Holder exceeds the cash portion of

the consideration otherwise payable to the Holder, the Company, Adsero and

Adsero Callco, as the case may be, shall promptly notify the Holder and unless

such Holder remits the difference in cash to the Company, Adsero or Adsero

Callco, as the case may be, before the tax amount is required to be remitted to

the taxing authority, then the Company, Adsero and Adsero Callco, as the case

may be, may sell or otherwise dispose of such portion of the consideration

(including, without limitation, any of the Adsero Common Shares) as is necessary

to provide sufficient funds to the Company, Adsero and Adsero Callco, as the

case may be, to enable it to comply with such deduction or withholding

requirement and the Company, Adsero and Adsero Callco, as the case may be, shall

notify such Holder and remit any unapplied balance of the net proceeds of such

sale.

In order to assist the Company, Adsero and Adsero Callco, as the case

may be, in complying with any such deduction and withholding requirement, the

Holder shall, to the extent applicable, deliver to the Company, Adsero or Adsero

Callco, as the case may be, (i) if such Holder is an individual, trust or

corporation, a declaration sworn by the individual, a trustee or a director, as

the case may be, before a notary or commissioner for oaths to the effect that

such Holder, is not and will not be, on the date of payment, a non-resident of

Canada for the purposes of the Income Tax Act (Canada) or (ii) if such Holder is

a partnership, a declaration sworn by a general partner before a notary or

commissioner for oaths to the effect that such Holder is a Canadian partnership,

as defined in the Income Tax Act (Canada).

SECTION 5.4 Restrictions on Transfer

No Holder shall Transfer any Series II Exchangeable Shares (or any

other securities of the Company received on account of the Holder's ownership of

Series II Exchangeable Shares) unless such Transfer is (i) a Transfer of Series

II Exchangeable Shares by such Holder for the Series II Exchangeable Share

Consideration pursuant to the terms of this agreement or the Series II

Exchangeable Share Provisions or (ii) is a Transfer approved by the Board of

Directors, which approval may be withheld for any reason. As used above, the

term "Transfer" includes the making of any sale, exchange, assignment,

hypothecation, gift, security interest, pledge or other encumbrance, or any

contract therefor, any voting trust or other agreement or arrangement with

respect to the transfer of voting rights or any other beneficial interest in

such securities, the creation of any other claim thereto or any other transfer

or disposition whatsoever, whether voluntary or involuntary, affecting the

right, title, interest or possession in or to such securities.

<PAGE>

ARTICLE 6

REPRESENTATIONS, WARRANTIES AND COVENANTS

OF ADSERO, YAC, ADSERO CALLCO AND THE COMPANY

---------------------------------------------

SECTION 6.1 Covenants of Adsero Regarding Series II Exchangeable Shares.

So long as any Series II Exchangeable Shares are outstanding and so

long as any Series II Exchangeable Shares can be issued as a result of the

conversion of any issued and outstanding Preferred Share, Adsero will and will,

in the case of Section 6.1(c), (d), (e), (f) and (g) cause its Subsidiaries to:

(a) not declare or pay any dividend on the Adsero Common Shares unless

(i) the Company shall declare or pay, as the case may be, an equivalent

dividend (as provided for in the Series II Exchangeable Share

Provisions) on the Series II Exchangeable Shares and (ii) the Company

shall have sufficient money or other assets or authorized but unissued

securities available to enable the due declaration and the due and

punctual payment, in accordance with applicable law, of any such

dividend on the Series II Exchangeable Shares;

(b) advise each of the Company and the Holders sufficiently in advance

of the declaration by Adsero of any dividend on Adsero Common Shares

and take all such other actions as are reasonably necessary, in

co-operation with the Company to ensure that the respective declaration

date, record date and payment date for a dividend on the Series II

Exchangeable Shares shall, subject to applicable law, be the same as

the declaration date, record date and payment date for the

corresponding dividend on the Adsero Common Shares;

Shares, or any other shares of the Company having an attribute which

permits the holders thereof to exchange or convert into shares of

Adsero or any Affiliate of Adsero;

(d) enable, cause and permit the Company, in accordance with and

subject to applicable law, to pay and otherwise perform its obligations

with respect to the satisfaction of the Series II Exchangeable Share

Consideration representing the Liquidation Amount in respect of each

issued and outstanding Series II Exchangeable Share upon the

liquidation, dissolution or winding-up of the Company or any other

distribution of the assets of the Company for the purpose of winding up

its affairs, including without limitation all such actions and all such

things as are reasonably necessary or, in Adsero's judgment's

desirable, to enable and permit the Company to cause to be delivered

Adsero Common Shares to the Holders in accordance with the provisions

of Article 5 of the Series II Exchangeable Share Provisions;

(e) enable, cause and permit the Company in accordance with and subject

to applicable law, to pay and otherwise perform its obligations with

respect to the satisfaction of the Series II Exchangeable Share

Consideration representing the Retraction Price, as defined in the

Series II Exchangeable Share Provisions including, without limitation

to enable and permit the Company to cause to be delivered Adsero Common

Shares to the Holders upon the retraction of the Series II Exchangeable

Shares in accordance with the provisions of Article 6 of the Series II

Exchangeable Share Provisions;

<PAGE>

(f) enable and permit Adsero Callco and any assignee of Adsero Callco,

in accordance with applicable law, to perform its obligations arising

upon the exercise by it of any Call Right, including without limitation

to enable and permit Adsero Callco to cause to be delivered Adsero

Common Shares to the Holders in accordance with the provisions of any

Call Right as the case may be; and

(g) not consent to nor exercise its vote as a member of the Company to

initiate or permit the voluntary liquidation, dissolution or winding-up

of the Company nor take any action or omit to take any action that is

designed to result in the liquidation, dissolution or winding-up of the

Company.

SECTION 6.2 Notification of Certain Events.

In order to assist Adsero and Adsero Callco to comply with their

respective rights and obligations hereunder, the Company will give each of

Adsero, Adsero Callco and, as the case may be, the Holders notice of each of the

following events at the time set forth below:

(a) any determination by the Board of Directors to institute voluntary

liquidation, dissolution or winding-up proceedings with respect to the

Company or to effect any other distribution of the assets of the

Company among its members for the purpose of winding-up its affairs, at

least 30 days prior to the proposed effective date of such liquidation,

dissolution, winding-up or other distribution; it being understood that

any merger, amalgamation, consolidation, or similar transaction, and

any sale of all or any or substantially all of the assets of the

Company shall not, in and of itself, constitute a liquidation,

dissolution or winding-up;

(b) promptly, upon the earlier of (i) receipt by the Company of notice

of, and (ii) the C

SITE SEARCH

AGREEMENTS / CONTRACTS

CLAUSES

Search Contract Clauses >>

Browse Contract Clause Library>>

Get Email Updates