THIS AGREEMENT made this 14th day of March, 1995.
BETWEEN:
XXXXXXX INVESTMENTS LTD.,
a body corporate with offices in the
City of Calgary, in the Province of Alberta,
OF THE FIRST PART,
- and -
621202 ALBERTA LTD.,
a body corporate with offices in the
City of Edmonton, in the Province of Alberta,
OF THE SECOND PART.
AGREEMENT FOR PURCHASE AND SALE OF SHARES
WHEREAS the Purchaser wishes to acquire all of the Shares of the Corporation in
accordance with the terms hereof;
NOW THEREFORE THIS AGREEMENT WITNESSETH that for and in consideration of the
mutual covenants and agreements herein contained, it is agreed by and between
the Parties hereto as follows:
ARTICLE I - GENERAL
1.1 DEFINITIONS
For the purposes of this Agreement, the recitals hereof and the schedules
annexed hereto, each of the following expressions shall have the meaning
ascribed to it in this section 1.1:
(a) "Affiliate", means an affiliate as defined in the Business
Corporations Act (Alberta);
(b) "Agreement", "hereto", "hereby", "hereunder", "hereof" and similar
expressions when used in this offer to purchase and in the attached
schedules refer to the whole of this offer to purchase and the
E-578
-2-
attached schedules and not to any particular Article or Section or
portion thereof and include any and every instrument supplemental
hereto, and any reference to an Article or Section by number means the
appropriate Article or Section of this Agreement and any reference to
a Schedule by letter means the appropriate Schedule attached to and
forming a part of this Agreement, unless in any of the cases aforesaid
the context is expressly to the contrary;
(c) "Business Day" means any day which is not a Saturday, Sunday or legal
holiday in the Province of Alberta;
(d) "Closing Date" means March 17, 1995, or such earlier or later date as
the parties hereto may jointly determine;
(e) "Corporation" means Classic Portraits & Design Ltd.;
(f) "Obligations to Shareholders" means any and all rights and claims of
the Vendor against the Corporation including in respect of any
advances or loans to the Corporation or any transfers of assets to the
Corporation, and payment of any bonuses and/or dividends which have
been declared but unpaid by the Corporation;
(g) "Permitted Encumbrances" means those interests and encumbrances set
forth in Schedule "C" attached hereto;
(h) "Purchase Price" means the sum of Seven Hundred and Thirty Five
Thousand ($735,000.00) Dollars;
(i) "Purchaser" means 621202 Alberta Ltd.;
(j) "Shares" means all of the issued and outstanding shares in the capital
stock of the Corporation;
(k) "Vendor" means Xxxxxxx Investments Ltd..
1.2 DERIVATIVES
Any derivative of any of the definitions set forth herein shall have the
meaning appropriate to the derivation of such definition.
1.3 NUMBER AND GENDER
Words importing the singular number only shall include the plural and vice
versa and words importing the masculine gender shall include the feminine gender
and words importing persons shall include firms and corporations and vice versa.
E-579
-3-
1.4 HEADINGS AND DIVISIONS
The division of this Agreement into Articles and Sections and the headings
of any Articles and Sections and the table of contents, if any, are for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
1.5 APPLICABLE LAW
This Agreement shall be governed by the laws in force in the Province of
Alberta.
1.6 SCHEDULES
The Schedules mentioned in this Section 1.6 and attached hereto shall form
part hereof:
Schedule "A" - Form - Promissory Note
Schedule "B" - Security Agreement
Schedule "C" - Permitted Encumbrances
1.7 JURIDICAL DAY
In any case where the time limited by this Agreement expires on a Saturday,
Sunday or legal holiday in the Province of Alberta, the time limited shall be
extended to and shall include the next succeeding Business Day.
1.8 NOTICES
Any notice to be given by one party hereto to another pursuant to this
Agreement shall be in writing and delivered by hand addressed to:
the Vendor: x/x Xxxxxx & Xxxxx
Xxxxxxxxxx xxx Xxxxxxxxxx
0000, Xxxxxx Place
00000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx X0X 0X0
Attention: W. Xxxxxx Xxxxxx
the Purchaser: x/x 000, 00000 - 000 Xxxxxx
Xxxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxx Xxxxxxxxxxx
Any notice delivered by hand shall be deemed to be received when left during
normal business hours at the office set forth above. Each party shall be
entitled to change its address for notice to an address elsewhere in Canada, by
notice in writing to the others.
E-580
-4-
1.9 ENUREMENT
The presents shall be binding upon the Vendor and the Purchaser and shall
enure to the benefit of and be binding upon the successors of the Vendor and the
successors and permitted assigns of the Purchaser.
1.10 TIME IS OF THE ESSENCE
Time is of the essence hereof.
1.11 MANNER OF PAYMENT
Any and all reference to money or dollars contained herein shall be a
reference to lawful money of Canada and all payments required to be made
hereunder shall be sufficiently made if made by way of cash, certified cheque,
bank draft or solicitors' trust account cheque and shall be sufficiently paid if
paid to the party for whom the same is intended or to such party's solicitors.
1.12 WHOLE AGREEMENT
This Agreement and any agreement made between the parties in accordance
with the terms hereof constitute the only agreements between the parties
relating to the transaction of purchase and sale contemplated herein.
1.13 REPRESENTATIONS AND WARRANTIES
Except as herein expressly set forth, there are no representations or
warranties by any party with respect to the transaction of purchase and sale
contemplated herein.
1.14 COSTS
Each party hereto is responsible for its own legal fees respecting the
preparation of this Agreement and any collateral or supplementary documentation
hereto.
1.15 NON-MERGER
The representations, warranties, covenants and agreement of the Vendor and
the Purchaser contained in this Agreement shall not merge upon but shall survive
the closing of the transaction of purchase and sale contemplated herein,
notwithstanding any independent examination or investigation conducted by or on
behalf of the Purchaser or the Vendor.
E-581
-5-
ARTICLE II - PURCHASE AND SALE
2.1 OFFER TO PURCHASE
The Purchaser shall purchase the Shares from the Vendor and the Vendor
shall sell the Shares to the Purchaser, for the Purchase Price. The transaction
of purchase and sale shall be completed on the Closing Date in the manner herein
contemplated.
2.2 METHOD OF PAYMENT AND SECURITY
(a) The Purchaser shall, subject to any termination of this Agreement in
accordance with the terms hereof, pay the Purchase Price to the Vendor
on the Closing Date by the delivery of the sum of THREE HUNDRED AND
FORTY THOUSAND ($340,000.00) DOLLARS on the Closing Date and by the
delivery of a Promissory Note in the sum of THREE HUNDRED AND NINETY
FIVE THOUSAND ($395,000.00) DOLLARS in the form attached as Schedule
"A";
(b) As further security for the due payment of the Promissory Note set out
in Article 2.2 (a), the Purchaser agrees to grant to the Vendor a
Security Agreement in the form of a pledge of the Shares of the
Corporation, the Security Agreement to be in the form attached as
Schedule "B" hereto.
ARTICLE III - REPRESENTATIONS AND WARRANTIES
3. REPRESENTATIONS AND WARRANTIES OF THE VENDOR
In order to induce the Purchaser to enter into and consummate this
Agreement, the Vendor represents and warrants to and covenants with the
Purchaser as follows:
3.1 The Corporation is a corporation duly incorporated under the
laws of the Province of Alberta, is not a distributing corporation or
a reporting issuer, is a valid and subsisting corporations, is in good
standing as to the filing of annual returns in the Office of the
Registrar of Corporations for the Province of Alberta and has kept and
maintained such corporate records as are required under the Business
Corporations Act, S.A. 1981 c.B15, and amendments thereto, since its
incorporation, which records are accurate and complete and up to date
in all respects.
3.2 The capital structure of the Corporation is as follows:
(a) the authorized capital of the Corporation is divided
into:
(i) an unlimited number of Class "A" Shares;
(ii) an unlimited number of Class "B" Shares;
E-582
-6-
(iii) an unlimited number of Class "C" Shares; and
(b) the issued and outstanding shares in the capital stock
of the Corporation is owned as follows:
(i) the Vendor - 100 Class "A" Shares.
3.3 The Vendor legally and beneficially own the Shares free of
all liens, claims, charges and encumbrances whatsoever.
3.4 The Vendor own 100% of the issued and outstanding shares of
the Corporation.
3.5 The Vendor has due and sufficient right and authority to
enter into this Agreement on the terms and conditions set forth and to
transfer the legal and beneficial title and ownership of the Shares to
the Purchaser, subject only to the approval of The Alberta Securities
Commission.
3.6 Other than the Articles of Incorporation of the Corporation,
no documents or agreements prohibit the transfer of the Shares or the
transactions contemplated herein.
3.7 No person, firm or corporation has any agreement or option or
right capable of becoming an agreement or option for the purchase of
the Shares, or any shares in the capital of the Corporation owned by
the Vendor or any agreement or option or right capable of becoming an
agreement for the purchase, subscription or issuance of any of the
unissued shares in the capital of the Corporation.
3.8 The Corporation has not agreed to guarantee any debt,
liability or other obligation of any person, firm or corporation.
3.9 There is no basis for and there are no actions, suits,
judgments, investigation or proceedings outstanding or pending, or to
the knowledge of the Vendors or either of them threatened, against or
affecting the Corporation at law or in equity or before or by any
federal, provincial, municipal or other governmental department,
commission, board, bureau or agency.
3.10 The Corporation is not, to the knowledge of the Vendors, in
breach of any laws, ordinances, statutes, regulations, bylaws, orders
or decrees to which it is subject or which apply to it.
Notwithstanding any investigations or inquiries made by the Purchaser or
its representatives, the representations, warranties, covenants and
agreements of the Vendors shall survive the Closing Date and
notwithstanding the closing of the purchase and sale herein provided for
shall continue in full force and effect.
E-583
-7-
ARTICLE IV - COMPLETION-RISK-POSSESSION-ADJUSTMENTS
4.1 DELIVERIES BY VENDOR
On the Closing Date, the Vendor shall deliver to the Purchaser the following
documents, executed where required:
(a) The minute book of the Corporation including the Articles of
Incorporation and Bylaws, and all corporate records, documents and
instruments, the corporate seal of the Corporation and all books of
account of the Corporation;
(b) Share certificates evidencing the Shares, which share certificates
shall be duly endorsed for transfer to the Purchaser or accompanied by
properly executed share transfer form;
(c) Resignations of the directors and officers of the Corporation as
required by the Purchaser;
(d) Certified copy of the Resolution of the directors of the Corporation
approving the transfer of the Shares to the Purchaser;
(e) An executed certificate for the Shares registered in the name of the
Purchaser;
(f) such other evidence as may be reasonably requested by the Purchaser's
Solicitors that the necessary corporate actions and proceedings have
been taken to permit the due and valid transfer at the Closing Date
from the Vendor to the Purchaser of the Shares.
4.2 DELIVERIES BY PURCHASER
On the Closing Date, subject to compliance by the Vendor with all of the
terms and conditions hereof, the Purchaser shall deliver to the Vendor the
following documents:
(a) a duly executed copy of the Promissory Note;
(b) the Security Agreement of the Purchaser;
(c) a Certified Copy of the Resolution of the Directors of the Purchaser
approving the execution of the Promissory Note and Security Agreement;
(d) such other evidence as may be reasonably requested by the Purchaser's
Solicitors that the necessary corporate actions and proceedings have
been taken to permit the due and valid transfer at the Closing Date
from the Vendors to the Purchaser of the Shares.
E-584
-8-
4.3 VENDOR'S APPROVALS
This Agreement, and the closing thereof, shall be subject to the condition
precedent that the Vendor shall obtain all necessary approvals from The Alberta
Securities Commission or any other governmental authority having jurisdiction in
respect of this transaction.
4.4 DOCUMENTS IN ESCROW
All of the matters of payment and delivery of documents by the Vendor and
the Purchaser pursuant to the terms hereof shall be in escrow and shall be
deemed to be concurrent requirements such that, unless otherwise agreed by the
parties hereto, nothing is complete and the escrow shall not be released until
everything has been paid and delivered.
4.5 TIME AND PLACE OF CLOSING
This transaction of purchase and sale shall close on the Closing Date at
the offices of the Vendor's Solicitors at the hour of 10:00 a.m. Edmonton time.
IN WITNESS WHEREOF the parties have hereunto affixed their hands and seals,
or their corporate seal duly attested by its proper officers in that ___ the day
and year first above written.
XXXXXXX INVESTMENTS LTD.
Corporate Seal
XXXXXXX INVESTMENT LTD.
PER: /s/ [illegible]
PRE:
621202 ALBERTA LTD.
PER: /s/ [illegible]
PER:
E-585
SCHEDULE "A"
THIS IS SCHEDULE "A" TO THE AGREEMENT DATED THE 14TH DAY OF MARCH, A.D. 1995,
MADE BETWEEN XXXXXXX INVESTMENTS LTD. AND 621202 ALBERTA LTD.
AMOUNT: $395,000.00 DATE: MARCH 14,1995
PROMISSORY NOTE
FOR VALUE RECEIVED, 621202 ALBERTA LTD. of Edmonton hereby promises to pay to
the order of XXXXXXX INVESTMENTS LTD. c/o 0000 Xxxxxx Xxxxx, Tower 1, 00000
Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx X0X 0X0, the principal sum of THREE HUNDRED AND
NINETY FIVE THOUSAND ($395,000.00) DOLLARS to become due and payable in any
event on the 30th day of April, 1995.
AFTER DEFAULT of payment of the sum of THREE HUNDRED AND NINETY FIVE THOUSAND
($395,000.00) DOLLARS interest will be payable on the outstanding balance
thereon at the rate per annum equal to the Prime Rate of The Royal Bank of
Canada PLUS FIVE (5%) PER CENT calculated monthly not in advance as well after
as before maturity from the 30th day of April, A.D. 1995, until the whole of the
monies hereby secured together with interest as aforesaid is fully paid.
PROVIDED the undersigned are not in default hereunder the undersigned shall have
the privilege of paying at any time, the whole of the outstanding principal and
accrued interest thereon without notice or bonus or penalty.
AND IN DEFAULT of payment the whole amount payable under this Note shall
forthwith become due and payable at the option of XXXXXXX INVESTMENTS LTD..
PRESENTMENT FOR PAYMENT, DEMAND, PROTEST, NOTICE OF DISHONOUR, ARE HEREBY WAIVED
AND THE ENDORSERS AGREE TO REMAIN AS FULLY LIABLE AS IF EVERY PRESENTMENT,
DEMAND, PROTEST AND NOTICE HEREBY WAIVED WERE FULLY MADE AND GIVEN.
621202 ALBERTA LTD.
PER:___________________________
PER__________________________
(corporate seal)
E-586
SCHEDULE "B"
THIS IS SCHEDULE "B" TO THE AGREEMENT DATED THE 14TH DAY OF MARCH, A.D. 1995,
MADE BETWEEN XXXXXXX INVESTMENTS LTD. AND 621202 ALBERTA LTD.
SECURITY AGREEMENT
THIS AGREEMENT is made as of the 14th day of March, 1995.
BY:
621202 ALBERTA LTD.,
a corporation incorporated under
the laws of the Province of Alberta with an
office at Edmonton, in the Province of Alberta
(the "Pledgor"),
IN FAVOUR OF:
XXXXXXX INVESTMENTS LTD.,
a corporation incorporated under the
laws of the Province of Alberta, with
an office at Calgary, in the Province of Alberta,
("Pledgee")
RECITALS:
A. The Pledgee has executed and delivered to Pledgor an agreement in
writing of even date (the "Agreement for Purchase") to sell 100 Class "A"
Shares (the "Shares") of the capital stock of Classic Portraits & Design
Ltd. (the "Corporation") to the Pledgor on the terms and at the price
therein stated;
B. The Pledgor has agreed to execute and deliver this Security
Agreement as additional security for the performance of all of its
covenants under the Agreement for Purchase and the Promissory Note granted
according to the terms of the Agreement for Purchase ("Promissory Note")
and to grant a security interest in the Shares of the capital stock of the
Corporation;
NOW THEREFORE in consideration of the sum of $1.00 and for other good and
valuable consideration (the receipt and sufficiency of which are hereby
acknowledged), the Pledgor agrees with the Pledgee as follows:
E-587
-2-
ARTICLE 1
INTERPRETATION
In this Agreement, in addition to the definitions set out above:
(a) "this Agreement", "hereto", "herein", "hereof", "hereby", "hereunder"
and any similar expressions refer to this Agreement as it may be
amended or supplemented from time to time, and not to any particular
article, section or other portion hereof;
(b) "Agreement for Purchase" means that Agreement for Purchase and Sale of
Shares dated the 14th day of March, 1995, between Xxxxxxx Investments
Ltd. and 621202 Alberta Ltd. providing for the sale of 100 Class "A"
Shares of the capital stock of the Corporation;
(c) "Business Day" means any day, other than Saturday, Sunday or any
statutory holiday in the Province of Alberta;
(d) "Chattel Paper" means one or more than one writing that evidences both
a monetary obligation and a security interest in or a lease of
specific Goods;
(e) "Collateral" means all of the property of the Pledgor subject to, or
intended to be subject to, the Security Interest, and any reference to
"Collateral" shall be deemed to be a reference to "Collateral or any
part thereof" except where otherwise specifically provided;
(f) "Corporation" means Classic Portraits & Design Ltd., a corporation
incorporated under the laws of the Alberta;
(g) "Document of Title" means any writing that purports to be issued by or
addressed to a bailee and purports to cover such Goods in the bailee's
possession as are identified or fungible portions of an identified
mass, and that in the ordinary course of business is treated as
establishing that the Person in possession of it is entitled to
receive, hold and dispose of the documents and the Goods it covers;
(h) "Event of Default" means a default by the Pledgor in the performance
of any of the terms and conditions contained in the Agreement for
Purchase or the Promissory Note or this Agreement.
(i) "Goods" means tangible personal property other than Chattel Paper,
Documents of Title, Instruments, Money and Securities, and includes
fixtures, growing crops, the unborn young of animals, timber to be
cut, and minerals and hydrocarbons to be extracted;
(j) "Instrument" means:
E-588
-3-
(i) a xxxx, note or cheque within the meaning of the BillS of
Exchange Act (Canada) or any other writing that evidences a right
to the payment of Money and is of a type that in the ordinary
course of business is transferred by delivery with any necessary
endorsement or assignment, or
(ii) a letter of credit and an advice of credit if the letter or
advice states that it must be surrendered upon claiming payment
thereunder,
but does not include a writing that constitutes part of Chattel Paper,
a Document of Title or a Security;
(k) "Lien" means any mortgage, pledge, charge, assignment, security
interest, hypothec, lien or other encumbrance, including, without
limitation, any agreement to give any of the foregoing, or any
conditional sale or other title retention agreement;
(1) "Money" means a medium of exchange authorized or adopted by the
Parliament of Canada as part of the currency of Canada or by a foreign
government as part of its currency;
(m) "Obligations" means all of the obligations, liabilities and
indebtedness of the Pledgor to the Pledgee under or in respect of the
Agreement for Purchase and Promissory Note;
(n) "Person" means any individual, partnership, limited partnership, joint
venture, syndicate, sole proprietorship, company or corporation with
or without share capital, unincorporated association, trust, trustee,
executor, administrator or other legal personal representative,
regulatory body or agency, government or governmental agency,
authority or entity however designated or constituted;
(o) "Pledgee" means Xxxxxxx Investments Ltd.;
(p) "Pledgor" means 621202 Alberta Ltd.;
(q) "Pledged Shares" means the shares referred to in recital A;
(r) "PPSA" means the Personal Property Security Act (Alberta) as amended
from time to time and any Act substituted therefor and amendments
thereto;
(s) "Proceeds" means identifiable or traceable personal property in any
form derived directly or indirectly from any dealing with Collateral
or the proceeds therefrom, and includes any payment representing
indemnity or compensation for loss of or damage to the Collateral or
proceeds therefrom;
(t) "Promissory Note" means the Promissory Note issued pursuant to the
terms of the Agreement for Purchase and granted by 621202 Alberta Ltd.
to Xxxxxxx Investments Ltd.. to secure the repayment of the sum of
$395,000.00;
E-589
-4-
(u) "Security" means a document that is:
(i) issued in bearer, order or registered form;
(ii) of a type commonly dealt in upon securities exchanges or markets
or commonly recognized in any area in which it is issued or dealt
in as a medium for investment;
(iii)one of a class or series or by its terms is divisible into a
class or series of documents, and
(iv) evidence of a share, participation or other interest in property
or in an enterprise or is evidence of an obligation of the
issuer,
and, without limiting the generality of the foregoing, includes the
Pledged Shares; and
(v) "Security Interest" has the meaning attributed to such term in
Section 2.1.
1.2 Headings
The inclusion of headings in this Agreement is for convenience of reference only
and shall not affect the construction or interpretation hereof.
1.3 References to Articles and Sections
Whenever in this Agreement a particular article, section or other portion
thereof is referred to, then, unless otherwise indicated, such reference
pertains to the particular article, section or portion thereof contained herein.
1.4 Currency
Except where otherwise expressly provided, all amounts in this Agreement are
stated and shall be paid in Canadian currency.
1.5 Gender and Number
In this Agreements unless the context otherwise requires, words importing the
singular include the plural and vice versa and words importing gender include
all genders.
1.6 Invalidity of Provisions
Each of the provisions contained in this Agreement is distinct and severable and
a declaration of invalidity or unenforceability of any such provision or part
thereof by a court of competent jurisdiction shall not affect the validity or
enforceability of any other provision hereof.
E-590
-5-
1.7 Amendment, Waiver
No amendment or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No waiver of any provision of this
Agreement shall constitute a waiver of any other provision nor shall any waiver
of any provision of this Agreement constitute a continuing waiver unless
otherwise expressly provided.
1.8 Governing Law
This Agreement shall be governed by and construed in accordance with the laws of
the Province of Alberta and the laws of Canada applicable therein.
ARTICLE 2
SECURITY INTEREST
2.1 Creation of Security Interest
The Pledgor hereby pledges, charges, assigns, transfer and hypothecates to the
Pledgee, and grants to the Pledgee a security interest in (collectively, the
"Security Interest"):
(a) the Pledged Shares;
(b) all Securities, Instruments, negotiable Documents of Title and other
personal property of any kind which may hereafter be acquired by the
Pledgor in renewal of, substitution for, as owner of, or as a result
of the exercise of any rights relating to the property described in
this section;
(c) all dividends, income or other distributions, whether paid or
distributed in cash or other property, in respect of any of the
property described in this section; and
(d) all Proceeds of any of the property described in this section.
2.2 Attachment
The attachment of the Security Interest has not been postponed and the Security
Interest shall attach to any particular Collateral as soon as the Pledgor has
rights in such Collateral.
ARTICLE 3
OBLIGATIONS SECURED
3.1 Obligations Secured
The Security Interest granted hereby secures payment, performance and
satisfaction of the Obligations.
E-591
-6-
ARTICLE 4
DEALING WITH COLLATERAL
4.1 The Pledgor shall not, without the prior consent in writing of the
Pledgee:
(a) sell, assign, transfer, exchange, or otherwise dispose of
the Collateral except to the extent permitted by clause
4.3(a)(i) hereof;
(b) create, assume or suffer to exist any Lien upon the
Collateral other than the Security Interest;
(c) cause, allow or permit the Corporation to dispose of any of
its assets in any way other than in the ordinary course of
business.
No provision hereof shall be construed as a subordination or postponement of the
Security Interest to or in favour of any other Lien, whether or not such Lien is
permitted hereunder or otherwise.
4.2 Notices and Other Communications in Respect of Collateral
The Pledgor shall deliver promptly to the Pledgee copies of all notices or other
communications received by the Pledgor in respect of the Collateral. Until the
occurrence of an Event of Default, the Pledgee shall deliver promptly to the
Pledgor all notices or other communications received by the Pledgee or its
nominee in respect of the Collateral. After the occurrence of an Event of
default, the Pledgor waives all rights to receive any notices or communications
received by the Pledgee or its nominee in respect of the Collateral.
4.3 Voting and Other Rights
(a) Until the occurrence of an Event of Default:
(i) The Pledgor may exercise all rights to vote and to exercise all
rights of conversion or retraction or other similar rights with
respect to any Collateral; provided that no such exercise, in the
opinion of the Pledgee, will have an adverse effect on the value
of such Collateral and all expenses of the Pledgee in connection
therewith have been paid in full and provided further that, upon
the exercise of the conversion or retraction right, the
additional Collateral resulting therefrom shall be paid or
delivered to the Pledgee;
(ii) subject to the proviso in clause 4.3(a)(i), the Pledgee shall
grant, or shall cause its nominee to grant, to the Pledgor or its
E-592
-7-
nominee a proxy to vote and to exercise all rights of conversion
or retraction or other similar rights with respect to any
Collateral registered in the name of the Pledgee or its nominee,
upon demand by the Pledgor; and
(iii) the Pledgor shall be entitled to receive all dividends (whether
paid or distributed in cash, securities or other property) and
interest declared and paid or distributed in respect of the
Collateral, and such dividends and interest shall cease to be
subject to the Security Interest if paid or distributed to the
Pledgor prior to the occurrence of an Event of Default but not
otherwise.
(b) Upon the occurrence of an Event of Default:
(i) no proxy granted by the Pledgee or its nominee to the Pledgor or
its nominee pursuant to clause 4.3(a) shall thereafter be
effective;
(ii) the Pledgor shall have no rights to vote or take any other action
with respect to any Collateral;
(iii) the Pledgee may, but shall not be obliged to, vote and take all
other action with respect to any Collateral; and
(iv) The Pledgor shall cease to be entitled to receive any dividends
or interest, whether declared or payable before or after the
occurrence of the Event of Default, in respect of the Collateral.
4.4 Delivery of Collateral to Lender
Subject to clause 4.3(a)(iii), all Collateral received at any time by or on
behalf of the Pledgor, whether before or after the occurrence of an Event of
Default, shall be received and held by or on behalf of the Pledgor in trust for
the Pledgee and shall be delivered to the Pledgee immediately upon such receipt.
4.5 Delivery of Share Certificates to Xxxxxxx
The Pledgee shall return to the Pledgor the certificates representing the
Pledged Shares when the Obligations have been completely discharged.
4.6 Further Assurances
The Pledgor shall at its own expense do, execute, acknowledge and deliver or
cause to be done, executed, acknowledged and delivered all such further acts,
security agreements, pledges, charges, assignments, hypothecs, powers of
attorney and assurance (including instruments supplemental or ancillary hereto)
and such financing statements as the Pledgee may from time to time request to
better assure and perfect the security on the Collateral.
E-593
-8-
ARTICLE 5
REMEDIES
5.1 Remedies Available
Upon the occurrence of an Event of Default, the Pledgee may, either directly or
through its agents or nominees, sell or otherwise dispose of, or concur in
selling or otherwise disposing of, whether by public sale, private sale or
otherwise, Collateral in such manner and on such terms as it considers to be
commercially reasonable. In addition, the Pledgee shall have the following
rights, powers and remedies:
(c) to make payments to Persons having prior rights or Liens on the
Collateral; and
(d) to demand, commence, continue or defend proceedings in the name of the
Pledgee or in the name of the Pledgor for the purpose of protecting,
seizing, collection, realizing or obtaining possession or payment of,
or otherwise enforcing rights, powers or remedies with respect to, the
Collateral and to give effectual receipts and discharges therefor.
In addition to the rights granted in this Agreement and in any other agreement
now or hereafter in effect between the Pledgor and the Pledgee and in addition
to any other rights the Pledgee may have at law or in equity or otherwise, the
Pledgee shall have, both before and after the occurrence of an Event of Default,
all rights and remedies of a secured party under the PPSA.
The Pledgee may incur reasonable expenses in the exercise of its rights, power
and remedies set out in this Agreement.
5.2 Possession of Collateral
The Pledgor acknowledges that the Pledgee may at any time take possession of
Collateral wherever it may be located and by any method permitted by law,
whether before or after the occurrence of an Event of Default.
5.3 Remedies Not Exclusive
All rights, powers and remedies of the Pledgee under this Agreement may be
exercised separately or in combination and shall be in addition to, and not in
substitution for, any other security nor or hereafter held by the Pledgee and
any other rights, powers and remedies of the Pledgee however created or arising.
No single or partial exercise by the Pledgee of any of the rights, powers and
remedies under this Agreement or under any other security now or hereafter held
by the Pledgee shall preclude any other and further exercise of any other right,
power or remedy pursuant to this Agreement or any other security or at law, in
equity or otherwise. The Pledgee shall at all times have the right to proceed
against Collateral or any other security in such order and in such manner as it
shall determine
E-594
-9-
without waiving any rights, powers or remedies which the Pledgee may have with
respect to this Agreement or any other security or at law, in equity or
otherwise. No delay or omission by the Pledgee in exercising any right, power or
remedy hereunder or otherwise shall operate as a waiver thereof or of any other
right, power or remedy.
5.4 Pledgor Liable for Deficiency
The Pledgor shall remain liable to the Pledgee for any deficiency after the
proceeds of any sale or other disposition of Collateral are received by the
Pledgee.
5.5 Exclusion of Liability of Lender
The Pledgee shall not be liable for any exercise or any failure to exercise its
rights, powers or remedies arising hereunder or otherwise, including, without
limitation, taking possession of, collecting, enforcing, realizing, selling or
otherwise disposing of, preserving or protecting the Collateral, or taking any
steps or proceedings for any such purposes of any failure to do any of the
foregoing. The Pledgee shall not have any obligation to examine any notices or
other communications with respect to the Collateral or to advise the Pledgor of
the expiry of any warrants, options or other rights in respect of or comprising
the Collateral or to advise the Pledgor of any other matter relating to any
Persons which are issuers of any Collateral, and the Pledgee shall not have any
obligation to take any steps or proceedings to preserve rights against prior
parties to or in respect of the Collateral, whether or not in the Pledgee's
possession. Subject to the foregoing, the Pledgee shall use reasonable care in
the custody and preservation of the Collateral in its possession.
5.6 Notice of Sale
Unless required by law, the Pledgee shall not be required to give the Pledgor
any notice of any sale or other disposition of the Collateral, the date, time
and place of any public sale of Collateral or the date after which any private
disposition of Collateral is to be made.
5.7 Resignation as Directors and Officers
The Pledgor herewith delivers the signed, undated resignations of its nominees
as employees, officers and directors of the Corporation to be held by the
Pledgee hereunder. Upon an Event of Default, the Pledgee shall be entitled to
date and forward such resignations to the Corporation and the nominees of the
Pledgor shall thereupon cease to act as employees, officers and directors of the
Corporation.
E-595
- 10 -
ARTICLE 6
APPLICATION OF PROCEEDS
6.1 Application of Proceeds
The Proceeds arising from the enforcement of the Security Interest as a result
of the possession to the Pledgee of the Collateral or from any sale or other
disposition of, or realization of security on, the Collateral (except following
acceptance of Collateral in satisfaction of the Obligations) shall be applied by
the Pledgee the following order:
(a) first, in payment of the Pledgee's reasonable costs, charges and
expenses (including legal fees on a solicitor and his own client
basis) incurred in the exercise of all or any of the rights, powers or
remedies granted to it under this Agreement;
(b) second, in payment of amounts paid by the Pledgee pursuant to clause
5.1(a);
(c) third, in payment of the remainder of the Obligations in such order of
application as the Pledgee may determine;
(d) fourth, subject to Sections 6.2 and 6.3, to any Person who has a
security interest in Collateral that is subordinate to that of the
Pledgee and whose interest:
(i) was perfected by possession, the continuance of which was
prevented by the Pledgee taking possession of Collateral, or
(ii) was, immediately before the sale or other disposition by the
Pledgee, perfected by registration;
(e) fifth, subject to Sections 6.2 and 6.3, to any other Person with an
interest in such Proceeds who has delivered a written notice to the
Pledgee of the interest before the distribution of such Proceeds; and
(f) last, subject to Sections 6.2 and 6.3, to the Pledgor or any other
Person who is known by the Pledgee to be an owner of the Collateral.
6.2 Proof of Interest
The Pledgee may require any Person mentioned in clauses 6.1(d), 6.1(e), or
6.1(f) to furnish proof of that Person's interest, and unless the proof is
furnished within ten (10) days after demand by the Pledgee, the Pledgee need not
pay over any portion of the Proceeds referred to therein to such Person.
6.3 Payment Into Court
Where there is a question as to who is entitled to receive payment under clauses
6.1(d), 6.1(e) or 6.1(f), the Pledgee may pay the Proceeds referred to therein
into court.
E-596
-11-
6.4 Monies Actually Received
The Pledgor shall be entitled to be credited only with the actual Proceeds
arising from the possession, sale or other disposition of, or realization of
security on, the Collateral when received by the Pledgee and such actual
Proceeds shall mean all amounts received in cash by the Pledgee upon such
possession, sale or other disposition of, or realization of security on, the
Collateral.
ARTICLE 7
GENERAL
7.1 Power Of Attorney
The Pledgor hereby appoints the Pledgee, as the Pledgor's attorney, with full
power of substitution, in the name and on behalf of the Pledgor, to execute,
deliver and do all such acts, deeds, documents, transfers, demands, conveyances,
assignments, contracts, assurances, consents, financing statements and things as
the Pledgor has herein agreed to execute, deliver and do or as may be required
by the Pledgee to give effect to this Agreement or in the exercise of any
rights, powers or remedies hereby conferred on the Pledgee, and generally to use
powers or remedies the name of the Pledgor, in the exercise of all or any of the
rights, hereby conferred on the Pledgee. This appointment, coupled with an
interest, shall not be revoked by the insolvency, bankruptcy, dissolution,
liquidation or other termination of the existence of the Pledgor or for any
other reason.
7.2 Expenses
The Pledgor shall pay to the Pledgee on demand all of the Pledgee's reasonable
costs, charges and expenses (including, without limitation, legal fees on a
solicitor and his own client basis) in connection with the preparation,
registration or amendment of this Agreement, the perfection or preservation of
the Security Interest, the enforcement by any means of any of the provisions
hereof or the exercise of any rights, powers or remedies hereunder, together
with interest thereon from the date each of such costs, charges and expenses
were incurred to the date of payment at the yearly rate equal to the Prime Rate
of the Royal Bank of Canada plus Five (5%) per cent, calculated monthly..
7.3 Indemnity
The Pledgor shall indemnify the Pledgee and its nominees against all costs,
expenses, liabilities, claims, demands, damages, losses, actions and proceedings
of any kind which the Pledgee or its nominees may suffer or incur by reason of
the Pledgee being now or hereafter a holder, or registered as owner, of the
Collateral.
E-597
-12-
7.4 Set-Off
The Pledgee may at any time and from time to time, without notice to the Pledgor
or to any other Person, set-off, appropriate and apply any and all indebtedness
and liability of either of the Pledgee to the Pledgor, matured or unmatured,
against and on account of the Obligations when due, in such order of application
as the Pledgee may from time to time determine.
7.5 Dealings with Others
The Pledgee may grant extensions of time and other indulgences, take and give up
security, accept compositions, make settlements, grant releases and discharges
and otherwise deal with the Pledgor, debtors of the Pledgor, sureties and other
Persons and with Collateral and other security as the Pledgee sees fit, without
prejudice to the liability of the Pledgor to the Pledgee or the rights, powers
and remedies of the Pledgee under this Agreement.
7.6 No Obligation to Advance
Nothing herein contained shall in any way obligate the Pledgee to advance any
funds, or otherwise make or continue to make any credit available, to the
Pledgor.
7.7 Perfection of Security
The Pledgor authorizes the Pledgee to maintain possession of the certificates
representing the Pledged Shares (endorsed by the Pledgor in blank for transfer)
and to do such acts, matters and things as the Pledgee may consider appropriate
to perfect and continue the Security Interest, to protect and preserve the
interest of the Pledgee in Collateral and to realize upon the Security Interest.
7.8 Communication
Any notice or other communication, including a demand or a direction, required
or permitted to be given hereunder shall be in writing and shall be given by
prepaid first-class mail, by facsimile or other means of electronic
communication or by hand-delivery as hereinafter provided. Any such notice or
other communication, if mailed by ~prepaid first-class mail at any time other
than during or within three (3) Business Days prior to a general discontinuance
of postal service due to strike, lockout or otherwise, shall be deemed to have
been received on the fourth Business Day after the post-marked date thereof, or
if sent by facsimile or other means of electronic communication, shall be deemed
to have been received on the Business Day following the sending, or if delivered
by hand shall be deemed to have been received at the time it is delivered to the
applicable address noted below either to the individual designated below or to a
senior employee of the addressee at such address with responsibility for matters
to which the information relates. Notice of change of address shall also be
governed by this Section. In the event of a general discontinuance of postal
service due to strike, lock-out or otherwise, notices or other communications
shall be delivered by hand or sent by facsimile or other means of electronic
communications and shall be deemed to have been received in accordance with the
foregoing. Notice and other communications shall be addressed as follows:
E-598
-13-
(a) if to the Pledgee:
c/o Duncan & Xxxxx
Barristers and Solicitors
2800, One Scotia Place
00000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx X0X 0X0
Attention: Mr. W. Xxxxxx Xxxxxx
Telecopier: (000)000-0000
(b) if to the Pledgor:
x/x 000, 00000 - 000 Xxxxxx
Xxxxxxxx, Xxxxxxx X0X 0X0
Attention: Xx. Xxxxx Xxxxxxxxxxx
Telecopier:
7.9 Successors and Assigns
This Agreement shall be binding on the Pledgor and its successors and shall
enure to the benefit of the Pledgee and their successors and assigns. This
Agreement shall be assignable by the Pledgee free of any set-off, counter-claim
or equities between the Pledgor and the Pledgee, and the Pledgor shall not
assert against an assignee of the Pledgee any claim defense that the Pledgor has
against the Pledgee.
7.10 Waiver of Financing Statement
The Pledgor hereby acknowledges receipt of a copy of this Agreement and
expressly waives the right to receive a copy of any Financing Statement of any
Financing Change Statement which may be registered by the Pledgee in connection
with this Agreement or any Verification Statement issued with respect thereto
where such waiver is not otherwise prohibited by law.
IN WITNESS WHEREOF the Pledgor has executed this Agreement this 14th day of
March, A.D. 1995.
621202 ALBERTA LTD.
PER:___________________________
PER:___________________________
(corporate seal)
XXXXXXX INVESTMENTS LTD.
PER:__________________________
(corporate seal)
E-599
SCHEDULE "C"
THIS IS SCHEDULE "C" TO THE AGREEMENT DATED THE 14TH DAY OF MARCH, A.D. 1995,
MADE BETWEEN XXXXXXX INVESTMENTS LTD. AND 621202 ALBERTA LTD.
PERMITTED ENCUMBRANCES
NIL
E-600
