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EXHIBIT 10(a)
INSURANCE POLICY AGREEMENT
THIS AGREEMENT made this 1st day of February, 0000
X X X X X X X:
SEL-DRUM INTERNATIONAL, INC.
(Hereinafter called "Sel-Drum")
OF THE FIRST PART;
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XXXXX X. XXXXXXXX
(Hereinafter called "Xxxxxxxx")
OF THE SECOND PART.
WHEREAS over a period of years The Manufacturers Life Insurance Company
("Manulife") has issued and maintained a policy of life insurance on the life of
Xxxxxxxx, being policy number 7592717-8 in the face amount of $2,000,000.00 in
Canadian Dollars (the "Policy");
AND WHEREAS Sel-Drum has been paying the annual premiums due to
Manulife to maintain the Policy;
AND WHEREAS the designated beneficiary or beneficiaries of the Policy
have been 547118 Ontario Limited and/or 547117 Ontario Limited, two corporations
solely owned and controlled by Xxxxxxxx;
AND WHEREAS the parties hereto wish to enter into this Agreement to
establish the steps to be taken in the event that the Policy proceeds are paid
out by Manulife;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration for being
named by Xxxxxxxx as the beneficiary within the Policy, and the sum of Two
Dollars ($2.00), the receipt and sufficiency of such consideration being
acknowledged by Sel-Drum, Sel-Drum does hereby covenant and agree as follows:
1. Upon receipt of any proceeds of insurance paid by Manulife or any
successor or assign pursuant to the provisions of the Policy, or any
subsequent policy in lieu thereof that names Sel-Drum as the beneficiary
therein, such proceeds shall be disbursed by Sel-Drum as follows:
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(a) The total sum of all premiums paid by Sel-Drum throughout the
years that the Policy is in place shall be deducted from the
proceeds received and shall be retained by Sel-Drum as its own
funds as reimbursement for such premiums paid; and
(b) The Remaining Proceeds of the Policy, after the deduction in
paragraph (a) above, shall be paid by Sel-Drum for the benefit
of Xxxxxxxx, in the following order:
(i) To the extent that Xxxxxxxx or any personal
corporation controlled by him, such as 547117
Ontario Limited or 547118 Ontario Limited, holds
any preference or special shares in the capital
stock of Sel-Drum or any subsidiary thereof
("Xxxxxxxx Special Shares"), such portion of the
Remaining Proceeds as shall be required to redeem
the Xxxxxxxx Special Shares shall be paid to the
holder thereof as a redemption payment; and
(ii) In the event that any Remaining Proceeds are still
held by Sel-Drum after all of the Xxxxxxxx Special
Shares are fully redeemed, then such balance of
the Remaining Proceeds shall be paid by Sel-Drum
to purchase common shares of the capital stock of
Sel-Drum or any subsidiary thereof held by
Xxxxxxxx or any personal corporation controlled by
him, to the extent that such balance of the
Remaining Proceeds permits. The price to be paid
for such common shares shall be as established by
the auditors of Sel-Drum, acting reasonably, and
calculated as at the date of death of Xxxxxxxx.
Sel-Drum shall not be compelled to purchase any
fractional shares, but may retain any nominal
balance of the Remaining Proceeds, as its own
funds, after purchasing the maximum number of
whole common shares that can be fully paid for.
(c) Sel-Drum is only obligated to redeem Xxxxxxxx Special Shares
or to purchase common shares pursuant to this Agreement to the
extent that funds are available as Remaining Proceeds, and
this Agreement shall not be construed as to require Sel-Drum
to purchase any or all of the Xxxxxxxx Special Shares or any
common shares in the event that Remaining Proceeds are not
available to Sel-Drum to complete such transactions.
2. (a) By executing this Agreement, Xxxxxxxx represents and
warrants that, as of the date of execution of this Agreement,
none of the Xxxxxxxx Special Shares or any common shares of
Sel-Drum held or controlled by him have been pledged,
hypothecated or otherwise charged or encumbered to any third
party, nor does any third party hold any option or other right
to acquire such shares.
(b) In the event that, subsequent to the execution of this
Agreement, Xxxxxxxx pledges, hypothecates, otherwise charges
or encumbers any of the shares that are the subject of this
Agreement, or in the event that Xxxxxxxx grants any third
party any option or other right to acquire such shares,
Xxxxxxxx shall give notice of
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such event to Sel-Drum and Sel-Drum is hereby authorized,
after such notice and the subsequent receipt of Policy
proceeds, to pay directly to such third party part or all of
the Remaining Proceeds to be applied to any indebtedness that
the said shares may be subject to, but only on the express
condition that Xxxxxxxx Special Shares shall be delivered to
Sel-Drum by the security holder thereof, duly endorsed in
blank for redemption purposes, and that similarly, any common
shares being acquired pursuant to this Agreement are also duly
endorsed in blank for transfer purposes and are delivered to
Sel-Drum at the time of payment.
3. Sel-Drum's obligations and covenants herein shall only be in effect as
at such time as Manulife accepts the change in beneficiary designation,
naming Sel-Drum as the beneficiary of the Policy proceeds, and shall
only continue in force for such time as such beneficiary designation
continues.
4. At all times this Agreement shall be subject to the policies and
provisions of the United States securities laws or the corporate laws of
the state in which Sel-Drum is incorporated or maintained. Further, this
Agreement shall be governed by and be construed in accordance with the
laws of the Province of Ontario and such Canadian federal statutes as
are applicable therein.
5. Each party shall co-operate with the other, take such further action and
execute and deliver such further documents as may be reasonably
requested by the other party to carry out the terms and purposes of this
Agreement.
6. This Agreement may be amended only by a writing executed by both parties
hereto.
7. No party shall assign or attempt to assign any of its or his rights or
obligations under this Agreement without the prior written consent of
the other party hereto.
8. This Agreement shall enure to the benefit of and be binding upon the
successors, assigns and legal representations of both parties hereto.
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IN WITNESS WHEREOF the parties have duly executed this Agreement on the
date first written above.
SEL-DRUM INTERNATIONAL, INC.
Per:/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx - President
/s/ Xxxxx Xxxxxxxx
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Xxxxx Xxxxxxxx
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