EXHIBIT 99.1
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SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT is made as of the 10th day of April, 2006.
BETWEEN:
XXXXX XXXXX, XXXXXX XXXXX AND XXXX XXXXX,
(each a "Vendor" and collectively, the "Vendors")
-and-
6544631 CANADA INC.,
a company incorporated pursuant to the federal laws of Canada
with its principal office at 00 Xxxxxxxxxx Xxxxxx West, Suite 1704,
Xxxxxxx, Xxxxxxx X0X 0X0, ("Exchangeco")
-and-
BIG FLASH CORP.,
a corporation incorporated under the laws of the State of Delaware,
having its principal office at
56 West 400 South, Suite 200, Salt Lake City, Utah, 84101,
United States of America
("Big Flash")
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INTELGENX CORP.,
a corporation incorporated pursuant to the federal laws of Canada
with its principal office at
0000 Xxxxxx Xxxxxx, Xxxxx-Xxxxxxx, Xxxxxx X0X 0X0
(the "Company")
WHEREAS the Vendors are the registered holders and beneficial owners of an
aggregate of 10,991,000 common shares in the capital of the Company as set out
in Schedule "B" hereto (the "Purchased Shares");
WHEREAS Exchangeco is a wholly-owned subsidiary of Big Flash;
AND WHEREAS the Vendors have agreed to sell and Exchangeco has agreed to
purchase all of the Purchased Shares on the terms and conditions set out in this
Agreement;
NOW THEREFORE THIS AGREEMENT WITNESSES THAT, in consideration of the premises,
covenants, terms, conditions representations and warranties hereinafter set
forth, the Parties agree each with the other as follows:
ARTICLE 1 - PURCHASE AND SALE OF SHARES
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1.1 Purchase and Sale. Subject to the conditions and upon the terms
hereinafter set forth, Exchangeco agrees to purchase and the Vendors agree to
sell to Exchangeco all of their right, title and interest in and to the
Purchased Shares.
1.2 Purchase Price. The purchase price for the Purchased Shares shall
consist of an aggregate of 10,991,000 Exchangeable Shares to be issued to the
Vendors as
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set out in Schedule "B" hereto. At Closing, Exchangeco will deliver to the
Vendors certificates representing the Exchangeable Shares, all such Exchangeable
Shares to be issued as fully paid and non-assessable, and registered in the
names of the Vendors and in the denominations set forth in Schedule "B" hereto.
At the Closing, Big Flash will issue the Big Flash Shares to the Trustee as
security for Big Flash's covenants under the provisions of the Exchangeable
Shares, including without limitation section 8 thereof, in accordance with the
terms of the Exchange and Voting Trust Agreement.
1.3 Support Agreement, Exchange and Voting Trust Agreement and Escrow
Agreement. On or before Closing: (a) Big Flash, Exchangeco and the Trustee shall
enter into the Support Agreement in the form attached hereto as Schedule "E" and
the Exchange and Voting Trust Agreement, in the form attached hereto as Schedule
"G"; and (b) Big Flash, Exchangeco, the Vendors and the Escrow Agent shall enter
into the Escrow Agreement, in the form attached hereto as Schedule "F". Such
Support Agreement and Exchange and Voting Trust Agreement are incorporated
herein by reference thereto and the Vendors, jointly and severally, shall each
have all rights and remedies of enforcement of the Support Agreement and the
Exchange and Voting Trust Agreement as contemplated in each such agreement.
1.4 Accounting Consequences. It is intended by the parties hereto that the
purchase and sale of the Purchased Shares under this Agreement shall qualify for
accounting treatment as a recapitalization under U.S. generally-accepted
accounting principles.
1.5 Tax Treatment.
(a) It is intended that the transactions contemplated in this
Agreement shall generally constitute (i) a taxable exchange for
United States federal income tax purposes (not qualifying under
Sections 368 or 351 of the United States Internal Revenue Code of
1986, as amended) to persons who are otherwise subject to taxation
in the United States on the sale or exchange of Purchased Shares,
and (ii) a tax deferred reorganization for Canadian federal income
tax purposes for the Vendors. At the option of each Vendor,
Exchangeco covenants and agrees to elect, jointly with each such
Vendor if applicable (referred to in this section as an "Electing
Vendor"), in accordance with the provisions of subsection 85(1) of
the Tax Act (and the corresponding provisions of any applicable
provincial tax legislation) in the prescribed form and within the
prescribed time for the purposes of the Tax Act, and shall therein
agree to elect in respect of the Purchased Shares of the Electing
Vendor such amount as the Electing Vendor's proceeds of
disposition thereof as the Electing Vendor may determine, subject
to the provisions of subsection 85(1) of the Tax Act (and the
corresponding provisions of any applicable provincial tax
legislation). Each of the Electing Vendors and Exchangeco agree to
execute all such documents and forms to make the election
contemplated in this section.
(b) Xxxxx Xxxxx and Xxxxxx Xxxxx, with their professional advisors,
have made a bona fide determination that the Purchased Shares are
"qualified small business corporation shares" as defined in
subsection 110.6(1) of the Tax Act as of the date hereof. Based on
such determination, it is the desire and intention of Xxxxx Xxxxx
and Xxxxxx Xxxxx and Exchangeco that the "agreed amount" for the
transfer of their respective Purchased Shares (the "Vendor's
Shares") be the lesser of the fair market value of the Vendor's
Shares and the aggregate of the Vendor's adjusted cost base
thereof plus an amount equal to the Vendor's unused capital gain
deduction as provided in subsection 110.6(2.1) of the Tax Act.
However, it is agreed between each of Xxxxx Xxxxx and Xxxxxx Xxxxx
and Exchangeco that should any competent taxing authority at any
time issue or propose to issue any assessment or assessments that
would impose any liability for tax (other than the alternative
minimum tax provided for in section 127.5 of the Tax Act) on the
basis that a Vendor's Shares are not "qualified small business
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corporation shares", or that the capital gain of a Vendor
resulting from the within transaction is not otherwise eligible
for the exemption pursuant to subsection 110.6(2.1) of the Tax Act
(or the corresponding provision of any applicable provincial tax
legislation) and if all appeals requested by a Vendor have been
exhausted, then the "agreed amount" shall be adjusted nunc pro
tunc pursuant to the provisions of this paragraph to be such
amount as will eliminate such liability for tax (except for the
alternative minimum tax as provided for section 127.5 of the Tax
Act) and the Vendors and Exchangeco shall do all things necessary
to reflect such change, including filing amended elections,
provided that such adjustment shall not result in any additional
Exchangeable Shares being issued to the Vendors.
1.6 Securities Law Exemptions and Resale Restrictions. The sale of the
Purchased Shares and the issuance of the Exchangeable Shares to the Vendors
shall be made in reliance on an exemption from the registration and prospectus
filing requirements contained in section 2.16 of National Instrument 45-106
Prospectus and Registration Exemptions ("NI 45-106"). The issuance or transfer
of the Big Flash Shares to the Vendors on the exchange of their Exchangeable
Shares shall be made in reliance on section 2.16 of NI 45-106 and the exemption
from the registration requirement of U.S. Securities Law contained in Regulation
S promulgated under the U.S. Securities Act of 1933, as amended. The Vendors
hereby acknowledge that as a result:
(a) any Exchangeable Shares that they receive pursuant to this
Agreement will be subject to resale restrictions in accordance
with applicable Canadian Securities Law and U.S. Securities Law
and that as a result the certificates representing such
Exchangeable Shares will be affixed with the following legends
describing such restrictions:
(i) the certificates representing such Exchangeable Shares or Big
Flash Shares will be affixed with the following legend
describing such restrictions:
THE SECURITY OR SECURITIES EVIDENCED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS,
AND MAY NOT BE OFFERED OR SOLD TO ANY PERSON EXCEPT AS SET
FORTH IN THE FOLLOWING SENTENCE. THE HOLDER HEREOF AGREES
THAT: (1) IT WILL NOT RESELL OR OTHERWISE TRANSFER THE SHARES
EVIDENCED HEREBY EXCEPT (A) IN AN OFFSHORE TRANSACTION
COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S OR (B)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR ANOTHER THEN
AVAILABLE EXEMPTION UNDER THE SECURITIES ACT AND STATE
SECURITIES LAWS OR, (C) IN A TRANSACTION THAT DOES NOT
REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR ANY
APPLICABLE STATE LAWS, OR (D) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE
TIME OF SUCH TRANSFER); (2) PRIOR TO ANY SUCH TRANSFER, IT
WILL FURNISH TO THE COMPANY OR ITS AGENTS SUCH
CERTIFICATIONS, LEGAL OPINIONS, OR OTHER INFORMATION AS THE
COMPANY OR SUCH AGENTS MAY REASONABLY REQUIRE TO CONFIRM THAT
SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
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REQUIREMENTS OF THE SECURITIES ACT OR STATE SECURITIES LAWS;
AND (3) IT WILL DELIVER TO EACH PERSON TO WHOM THE COMMON
STOCK EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND.
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE
HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY
BEFORE THE DATE THAT IS 4 MONTHS AND A DAY AFTER
THE LATER OF (i) [insert the distribution date],
AND (ii) THE DATE THE ISSUER BECAME A
REPORTING ISSUER IN ANY PROVINCE OR TERRITORY.
and
(ii) the certificates representing the Exchangeable Shares will be
affixed with a legend describing such restrictions,
including, without limitation, the following:
THE CLASS A SPECIAL SHARES REPRESENTED HEREBY ARE
SUBJECT TO THE RIGHTS, PRIVILEGES, TERMS, CONDITIONS AND
RESTRICTIONS AS SET FORTH IN THE SHARE EXCHANGE
AGREEMENT, THE SUPPORT AGREEMENT AND THE EXCHANGE AND VOTING
TRUST AGREEMENT, RESPECTIVELY, COPIES OF EACH OF
WHICH ARE ON FILE AT THE REGISTERED OFFICE OF THE COMPANY.
PURSUANT TO THE EXCHANGE AND VOTING TRUST AGREEMENT,
THE HOLDER OF THIS SECURITY IS ENTITLED TO INSTRUCT THE
TRUSTEE UNDER THE EXCHANGE AND VOTING TRUST AGREEMENT
AS TO THE EXERCISE OF THE VOTING RIGHTS ATTACHED TO A
NUMBER OF BIG FLASH SHARES EQUAL TO THE NUMBER OF
SHARES REPRESENTED BY THIS CERTIFICATE WITH RESPECT TO
EACH MEETING OF THE SHAREHOLDERS OF BIG FLASH AND EACH
CONSENT SOUGHT TO BE OBTAINED FROM THE SHAREHOLDERS OF
BIG FLASH, OR TO ATTEND SUCH MEETING OF THE SHAREHOLDERS
OF BIG FLASH AND TO EXERCISE PERSONALLY SUCH VOTING
RIGHTS. THE HOLDER OF SHARES REPRESENTED BY THIS
CERTIFICATE SHOULD REFER TO THE EXCHANGE AND VOTING
TRUST AGREEMENT FOR A DESCRIPTION OF SUCH VOTING RIGHTS
AND THE MANNER IN WHICH THEY MAY BE EXERCISED."
(b) the resale exemptions provided under Canadian Securities Law and
U.S. Securities Law may not be generally available because of the
conditions and limitations of such exemptions, and that Exchangeco
and Big Flash are under no obligation to take any action other
than the actions specified in section 1.8 of this Agreement and
commercially reasonable actions to make any of said exemptions
available to the Vendors; and
(c) only Big Flash can register the Big Flash Shares or file a
prospectus or registration statement to qualify the Big Flash
Shares for immediate resale and Big Flash has made representations
to the Vendors that it will do so only in accordance with section
1.8 of this Agreement.
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1.7 Securities Law Compliance. The Vendors hereby agree that they shall not
sell, transfer or otherwise deal with the Exchangeable Shares or the Big Flash
Shares without obtaining a favourable opinion of counsel or such other evidence
as may be required by Exchangeco or Big Flash, that the proposed dealing will
not be in violation of U.S. Securities Law.
1.8 Prospectus Filing. No later than 90 days after the Closing, Big Flash
shall use its commercially reasonable efforts to file with, and obtain receipts
from, the Ontario Securities Commission for a non-offering preliminary
prospectus and (final) prospectus for the purpose of having Big Flash deemed to
be a reporting issuer under the securities laws of the province of Ontario and
permitting the Vendors to rely upon the prospectus exemption set out in sections
2.6 and 2.7(2) or section 2.8 of National Instrument 45-102 Resale of Securities
for the first trade by the Vendors in the Big Flash Shares to be issued or
transferred to the Vendors upon exchange of the Exchangeable Shares.
ARTICLE 2 - CLOSING MATTERS
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2.1 Date, Time and Place of Closing. The Closing shall take place at the
Closing Time on the Closing Date at the offices of Xxxxxx Xxxxxx LLP, located at
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx X0X 0X0 or such place as the
Parties may agree on.
2.2 Mutual Conditions of Closing. The Parties shall be obliged to complete
the purchase and sale of the Purchased Shares only if each of the conditions
precedent set out in Part 1 of Schedule "C" hereto have been satisfied in full
at or before the Closing Time. Each of such conditions precedent is for the
benefit of each of the Parties, and the Parties may by mutual consent waive any
of them in whole or in part in writing.
2.3 Conditions for Big Flash's and Exchangeco's Benefit. Big Flash and
Exchangeco shall not be obliged to complete the purchase of the Purchased Shares
or the issuance and/or transfer of the Big Flash Shares and Exchangeable Shares
unless each of the conditions set out in Part 2 of Schedule "C" shall have been
satisfied on or before the Closing Date. Each of such conditions precedent is
for the exclusive benefit of Big Flash and Exchangeco and they may waive any of
such conditions in whole or in part in writing.
2.4 Conditions for the Vendors' Benefit. The Vendors shall not be obliged
to complete the sale of the Purchased Shares unless each of the conditions set
out in Part 3 of Schedule "C" shall have been satisfied on or before the Closing
Date. Each of such conditions precedent is for the exclusive benefit of the
Vendors and the Vendors may waive any of them in whole or in part in writing.
2.5 Failure to Satisfy Condition. If any condition set forth in Schedule
"C" is not satisfied at the Closing Time, or if it becomes apparent that any
such condition cannot be satisfied at the Closing Time, any Party entitled to
the benefit of such condition (the "First Party") may terminate this Agreement
by notice in writing to the other Parties and in such event:
(a) unless the other Parties can show that the condition or conditions
which have not been satisfied and for which the First Party has
terminated this Agreement are reasonably capable of being
performed or caused to be performed by the First Party or have not
been satisfied by reason of a default by the First Party
hereunder, the First Party shall be released from all obligations
hereunder; and
(b) unless the First Party can show that the condition or conditions
which have not been satisfied and for which the First Party has
terminated this Agreement are reasonably capable of being
performed or caused to be performed by the other Party or have not
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been satisfied by reason of a default by the other Party
hereunder, then the other Party shall also be released from all
obligations hereunder.
2.6 Deliveries on Closing. On the Closing Date:
(a) Exchangeco will deliver to or to the direction of the Vendors
certificates representing the Exchangeable Shares in accordance
with Section 1.2 above;
(b) the Vendors will deliver to or to the direction of Exchangeco
certificates representing their Purchased Shares duly signed off
for transfer, together with all other documentation required to
transfer title to their Purchased Shares to or to the direction of
Exchangeco, provided that if there are no certificates
representing the Purchased Shares, the Vendors shall each deliver
to Exchangeco, or as directed by Exchangeco, an executed stock
power of attorney or other document evidencing the transfer of the
Purchased Shares from the Vendors to or to the direction of
Exchangeco; and
(c) Big Flash, Exchangeco and the Trustee shall execute and deliver
the Support Agreement; Big Flash, Exchangeco, the Vendors and the
Trustee shall execute and deliver the Exchange and Voting Trust
Agreement; and Big Flash, Exchangeco, the Vendors and the Escrow
Agent shall execute and deliver the Escrow Agreement.
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
------------------------------------------
3.1 Representations and Warranties of the Vendors. The Vendors hereby
jointly and severally represent and warrant to Exchangeco and Big Flash as set
out in Part 1 of Schedule "D", provided that each Vendor shall be deemed to have
severally made those representations set forth in paragraphs (a) to (i) of
Schedule "D" (collectively, the "Individual Representations"), and acknowledge
that Exchangeco and Big Flash are relying on these representations and
warranties in entering into this Agreement and performing their obligations
under the same.
3.2 Representations and Warranties of Big Flash. Big Flash represents and
warrants to the Vendors as set out in Part 2 of Schedule "D" and acknowledges
that the Vendors are relying on these representations and warranties in entering
into this Agreement and performing their obligations under the same.
3.3 Representations and Warranties of Exchangeco. Exchangeco represents and
warrants to the Vendors as set out in Part 3 of Schedule "D" and acknowledges
that the Vendors are relying on these representations and warranties in entering
into this Agreement and performing their obligations under the same.
3.4 Representations and Warranties of the Company given by Vendors and the
Company. The Vendors and the Company hereby jointly and severally represent and
warrant to Exchangeco and Big Flash as set out in Part 4 of Schedule "D" and
acknowledge that Exchangeco and Big Flash are relying on these representations
and warranties in their entirety in entering into this Agreement and performing
their obligations under same.
3.5 Survival of Representations and Warranties. All representations and
warranties contained in this Agreement shall survive the Closing for a period of
one year from the Closing Date, after which time, if no claim shall have been
made against a Party with respect to any incorrectness in or breach of any
representation or warranty, that Party shall have no further liability under
this Agreement with respect to that representation or warranty.
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3.6 Certificates and Instruments Included. All statements contained in any
certificate or any instrument delivered by or on behalf of a Party pursuant to
or in connection with the transactions contemplated by this Agreement shall be
deemed to be made by such Party under this Agreement.
ARTICLE 4 - INDEMNIFICATION
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4.1 Mutual Indemnification for Breaches of Covenant or Warranty. Subject to
the limitation period set out in section 3.5, above, each of Big Flash and
Exchangeco hereby covenant and agree with the Vendors and the Vendors and the
Company hereby jointly and severally covenant and agree with Big Flash and
Exchangeco, provided that with respect to Individual Representations, the
Vendors severally covenant and agree with Big Flash and Exchangeco (the parties
covenanting and agreeing to indemnify another party under this Article 4 are
hereinafter individually referred to as "Indemnifying Party" and the parties
that are being indemnified by another Party under this Article 4 are hereinafter
individually referred to as the "Indemnified Party") to indemnify and save
harmless the Indemnified Party, effective as and from the Closing Time, from and
against any Claims which maybe made or brought against the Indemnified Party
and/or which it may suffer or incur as a result of, or arising out of any
non-fulfillment of any covenant, obligation or agreement on the part of the
Indemnifying Party under this Agreement or any incorrectness in or breach of any
representation or warranty of the Indemnifying Party contained in this
Agreement.
ARTICLE 5 - INTERIM OPERATIONS
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5.1 Company Carrying on Business to Closing
(a) Up to the Closing Time, the Vendors shall cause the Company to (1)
carry on its business in the normal and ordinary course; (2)
preserve the ongoing goodwill of the Company; and (3) ensure that
key employees, if any, and key independent contractors continue
their association with the Company and undertake to notify Big
Flash of any event or occurrence during such period which might
reasonably be considered to have a materially adverse effect on
the assets or the business of the Company.
(b) Unless otherwise contemplated herein or approved by Big Flash in
writing, during the period from the date hereof until the earlier
of the Closing Date or termination of this Agreement, neither the
Company shall not:
(i) except in the ordinary course of business, sell, transfer or
dispose of or create any mortgage, pledge, waiver or other
encumbrance or a security interest on or in respect of the
whole or any part of its assets;
(ii) enter into any transaction or material contract not in the
normal and ordinary course of business;
(iii) borrow money or incur any indebtedness for money borrowed
except as disclosed to and agreed by Big Flash, acting
reasonably;
(iv) make loans, advances or other payments, excluding routine
reimbursements to employees of the Company for expenses
incurred in the ordinary course and such amounts as
contemplated in this Agreement;
(v) make any capital expenditures except as disclosed to and
agreed to by Big Flash, acting reasonably;
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(vi) issue, sell or agree to issue or sell any shares, rights,
options, warrants or other securities of the Company save and
except for (i) the issuance of a combination of 3,200,000
common shares and 100,000 warrants to purchase common shares
to private placement investors acceptable to Big Flash,
acting reasonably, where such shares are issued for $0.47 per
share and each warrant entitles each holder to purchase one
common share of the Company for (Cdn.) $0.47; (ii) 325,000
common shares issuable to Xxxx Xxxxxx, at (Cdn.) $0.0001 per
share, pursuant to a loan agreement between the Company and
Xxxx Xxxxxx, dated March 15, 2006, as amended;
(vii) declare any dividends or distribution;
(viii) purchase, cancel, retire, redeem or otherwise acquire any
of the Company's outstanding securities, rights, options,
warrants or other securities other than as contemplated
herein;
(ix) change, amend or modify the charter documents or by-laws of
the Company, other than as disclosed to and approved by Big
Flash;
(x) merge or amalgamate with or agree to merge or amalgamate
with, or purchase substantially all of the assets of, or
otherwise acquire any business; or sell or lease or agree to
sell or lease, any material properties or assets or approve
or undertake any other material transaction or furnish or
cause to be furnished any information concerning the
business, properties or assets of any Persons (other than to
Big Flash) which is interested in any such transactions; or
(xi) except as required by law, not to initiate, propose, assist
or participate in any activities in opposition to or in
competition with this Agreement, and without limiting the
generality of the foregoing, to undertake any transaction or
negotiate any transaction which would be or potentially could
be in conflict with this Agreement and not to take actions of
any kind which may reduce the likelihood of success of the
completion of this Agreement.
5.2 Big Flash Carrying on Business to Closing
(a) Up to the Closing Time, Big Flash shall (1) carry on its business
in the normal and ordinary course; (2) preserve the ongoing
goodwill of Big Flash; and (3) ensure that key employees and key
independent contractors continue their association with Big Flash
and undertake to notify the Vendor of any event or occurrence
during such period which might reasonably be considered to have a
materially adverse effect on the assets or the business of Big
Flash.
(b) Unless otherwise contemplated herein or approved by the Vendors in
writing, during the period from the date hereof until the earlier
of the Closing Date or termination of this Agreement, Big Flash
shall not:
(i) sell, transfer or dispose of or create any mortgage, pledge,
waiver or other encumbrance or a security interest on or in
respect of the whole or any part of the assets of Big Flash;
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(ii) enter into any transaction or material contract not in the
normal and ordinary course of business;
(iii) borrow money or incur any indebtedness for money borrowed
except as disclosed to and agreed by the Vendors, acting
reasonably;
(iv) make loans, advances or other payments, excluding routine
reimbursements to employees of Big Flashfor expenses incurred
in the ordinary course and such amounts as contemplated in
this Agreement;
(v) make any capital expenditures except as disclosed to and
agreed to by the Vendor's, acting reasonably;
(vi) issue, sell or agree to issue or sell any shares, rights,
options, warrants or other securities of Big Flash, other as
approved by the Vendors;
(vii) declare any dividends or distribution;
(viii) purchase, cancel, retire, redeem or otherwise acquire any
of Big Flash's outstanding securities, rights, options,
warrants or other securities other than as contemplated
herein;
(ix) change, amend or modify the charter documents or by-laws of
Big Flash;
(x) merge or amalgamate with or agree to merge or amalgamate
with, or purchase substantially all of the assets of, or
otherwise acquire any business; or sell or lease or agree to
sell or lease, any material properties or assets or approve
or undertake any other material transaction or furnish or
cause to be furnished any information concerning the
business, properties or assets of any Persons (other than to
the Vendors) which is interested in any such transactions; or
(xi) except as required by law, not to initiate, propose, assist
or participate in any activities in opposition to or in
competition with this Agreement, and without limiting the
generality of the foregoing, to undertake any transaction or
negotiate any transaction which would be or potentially could
be in conflict with the completion of this Agreement and not
to take actions of any kind which may reduce the likelihood
of success of the completion of this Agreement.
ARTICLE 6 - INTERPRETATION AND GENERAL
--------------------------------------
6.1 Definitions. Where used in this Agreement and the recitals and any
schedules hereto, each of the following words will have the meanings ascribed to
them in Schedule "A" hereto.
6.2 Interpretation. In this Agreement, except as otherwise expressly
provided:
(a) all references in this Agreement to a designated "paragraph" or
other subdivision or to a Schedule is to the designated paragraph
or other subdivision of, or Schedule, to this Agreement;
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(b) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular paragraph or other subdivision or Schedule;
(c) the headings are for convenience only and do not form a part of
this Agreement and are not intended to interpret, define, or limit
the scope, extent or intent of this Agreement or any provision
hereof;
(d) the singular of any term includes the plural, and vice versa, the
use of any term is equally applicable to any gender and, where
applicable, a body corporate, the word "or" is not exclusive and
the word "including" is not limited (whether or not non-limited
language, such as "without limitation" or "but not limited" or
words of similar import, are used with reference thereto);
(e) any accounting term not otherwise defined has the meanings
assigned to it in accordance with generally accepted accounting
principles applicable to the United States of America or Canada
depending on whether it relates to a person whose financial
statements are prepared in accordance with generally accepted
accounting principles in the United States of America or Canada,
respectively;
(f) any reference to a statute includes and is a reference to that
statute and to the regulations made pursuant thereto, with all
amendments made thereto and in force from time to time, and to any
statute or regulations that may be passed which has the effect of
supplementing or superseding that statute or regulations; and
(g) any other term defined within the text of this Agreement has the
meaning so ascribed.
6.3 Schedules. The following are the Schedules to this Agreement and are
incorporated herein and form part of this Agreement:
Schedule Description
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A Definitions
B Shareholdings
C Conditions of Closing
D Representations, Warranties and Covenants
E Support Agreement
F Escrow Agreement
G Exchange and Voting Trust Agreement
H Material Contracts
I Intellectual Property
6.4 Entire Agreement. This Agreement, together with the Schedules and other
documents to be delivered pursuant to this Agreement, constitutes the entire
agreement between the Parties pertaining to the matters contemplated herein and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, and there are no warranties, representations and other
agreements between the Parties in connection with the subject matter hereof
except as specifically set forth in this Agreement or any other agreement or
document to be delivered pursuant to this Agreement.
6.5 Notices. All notices, requests, demands and other communications
hereunder must be made in writing and will be deemed to have been duly given if
delivered personally or by courier to the addressee at the address appearing on
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the first page hereof or to such other address as may be given in writing by the
Party. Any notice given by personal delivery shall be deemed to be received on
the date of delivery. Any notice sent by courier shall be deemed to be received
on the next Business Day following the deposit of the communication with the
courier service.
6.6 Time of Essence. Time shall be of the essence in all respects of this
Agreement.
6.7 Further Assurances. The Parties shall with reasonable diligence do all
things and provide all reasonable assurances as may be required to complete the
transactions contemplated by this Agreement, and each Party shall provide such
further documents or instruments required by any other Party as may be
reasonably necessary or desirable to give effect to this Agreement and carry out
its provisions.
6.8 Transaction Expenses. Each Party to this Agreement will bear all costs
and expenses incurred by it in negotiating this Agreement and in closing and
carrying out the transactions contemplated by this Agreement. All costs and
expenses related to satisfying any condition or fulfilling any covenant
contained in this Agreement will be borne by the party whose responsibility it
is to satisfy the condition or fulfil the covenant in question.
6.9 Amendment. No supplement, modification, waiver or termination of this
Agreement shall be binding unless executed in writing by both Parties.
6.10 Waiver. No waiver of any of the provisions of this Agreement shall
constitute a waiver of any other provision (whether or not similar) nor shall
such waiver constitute a continuing waiver unless otherwise expressly provided.
6.11 Assignment. This Agreement and the rights or obligations hereunder or
thereunder may not be assigned by either Party without the prior written consent
of the other Parties.
6.12 Enurement. This Agreement shall be binding on and enure to the benefit
of both Parties and their respective successors and permitted assigns. In
addition all obligations of the Parties under this Agreement shall also be
binding upon any and all directors, officers, employees, consultants, advisors
and agents of each Party as well as all parent corporations, subsidiaries,
related and affiliated companies thereof.
6.13 Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the Province of Ontario without giving effect to
provisions of conflicts of law thereto. Each Party irrevocably submits to the
non-exclusive jurisdiction of the courts of the Province of Ontario with respect
to any matter arising hereunder or related hereto.
6.14 Severability. If any provision of this Agreement is determined to be
prohibited, void or unenforceable in whole or in part, such void or
unenforceable provision shall not affect or impair the validity of any other
provision of this Agreement and shall be severable from this Agreement. Any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
6.15 Independent Legal Advice. Each of the Vendors acknowledges that he or
she has been advised to seek independent legal counsel in respect of this
Agreement and the other agreements and documents referred to herein and the
matters contemplated herein. To the extent that any vendor declines to receive
independent legal counsel in respect of this Agreement, such Vendor hereby
waives the right, should a dispute later develop, to rely on its lack of
-11-
independent legal counsel to avoid its obligations, to seek indulgences from the
other Parties hereto, or to otherwise attack, in whole or in part, the integrity
of this Agreement and the documents related thereto.
6.16 Counterparts. This Agreement may be executed by the Parties in one or more
counterparts by original or by facsimile, each of which when so executed and
delivered shall be an original and such counterparts shall together constitute
one and the same instrument.
[Signature Page Follows]
-12-
IN WITNESS WHEREOF the parties have duly executed this Agreement on the day and
year first above written.
BIG FLASH CORP.
Name: /s/ Xxxxxx X. Xxxxx
--------------------------------
Title: President
Name: /s/ Xxxxx Xxxxxxxx
--------------------------------
Title: Secretary
6544631 CANADA INC.
Name:
Title:
Name:
Title:
INTELGENX CORP.
Name: /s/ Xxxxx Xxxxx
--------------------------------
Title: CEO, Director
Name: /s/ Xxxxxx Xxxxx
--------------------------------
Title: Director
)
)
)
Witness ) /s/ Xxxxx Xxxxx
) ----------------------------------------
) Xxxxx Xxxxx
)
)
Witness ) /s/ Xxxxxx Xxxxx
) ----------------------------------------
) Xxxxxx Xxxxx
)
)
Witness ) /s/ Xxxx Xxxxx
) ----------------------------------------
) Xxxx Xxxxx
-13-
SCHEDULE "A"
DEFINITIONS
Where used in this Agreement and the recitals and any schedules hereto, each of
the following words will have the following meanings:
(a) "Agreement" means this agreement, including the preamble and the
schedules hereto, as it may from time to time be supplemented or
amended in effect.
(b) "Big Flash" means Big Flash Corp.
(c) "Big Flash Financial Statements" means the audited financial
statements of Big Flash for the 2005 and 2004 fiscal years.
(d) "Big Flash SEC Documents" shall mean all forms, reports,
statements, schedules, registration statements and other documents
required to be filed by Big Flash with the United States
Securities and Exchange Commission (including any such forms,
reports, statements, schedules and other documents filed
subsequent to the date hereof).
(e) "Big Flash Shares" means the shares in the common stock of Big
Flash exchangeable for the Exchangeable Shares.
(f) "Bulletin Board" means the Over-the-Counter Bulletin Board, an
over-the-counter securities market operated by the National
Association of Securities Dealers.
(g) "Business Day" means a day other than a Saturday or Sunday, on
which Canadian chartered banks are open for the transaction of
domestic business in Xxxxxxx, Xxxxxxx.
(h) "Canadian Securities Law" means the securities laws of any
province or territory of Canada in which recipients of any shares
issued or transferred under this Agreement may reside, and the
regulations, rules and policies promulgated thereunder, in each
case as amended from time to time.
(i) "Canadian Securities Regulators" means the securities commissions
or other Governmental Authorities authorized to administer and
enforce securities laws in any province or territory of Canada.
(j) "Claim" means any claims, demands, actions, causes of action,
damages, losses, costs, fines, penalties, interest, liabilities
and expenses, including, without limitation, reasonable legal fees
and other expenses reasonably incurred in connection with any of
the foregoing.
(k) "Closing" means the completion of the purchase of the Purchased
Shares by Exchangeco in accordance with the terms and conditions
of this Agreement.
(l) "Closing Date" means the date hereof, or such earlier or later
date as the Parties may agree on.
(m) "Closing Time" means 2:00 p.m. (Toronto time) on the Closing
Date, or such earlier or later time on the Closing Date as the
Parties may agree to.
-14-
(n) "Company" means IntelGenx Corp., a corporation incorporated under
the Canada Business Corporations Act.
(o) "Company Financial Statements" means the audited financial
statements of the Company for the 2005 and 2004 fiscal years.
(p) "Constating Documents" means (i) the articles or certificate of
incorporation and the bylaws of a corporation; (ii) any charter or
similar document adopted or filed in connection with the creation,
formation, or organization of a Person and (iii) any amendment to
any of the foregoing.
(q) "Court Order" shall mean any judgement, decision, consent decree,
injunction, ruling or order of any federal, provincial, state or
local court or governmental agency, department or authority that
is binding on a specified person, persons, entity or entities or
its or their property under applicable law.
(r) "Encumbrance" means any mortgage, charge, pledge, hypothecation,
debenture, lien, security interest, encumbrance, claim, option,
right of first refusal, community of property or restriction of
any kind, including any restriction on the use, voting, transfer,
receipt of income, or exercise of any other attribute of
ownership, regardless of form and whether consensual or arising by
operation of law, other than a Permitted Encumbrance.
(s) "Escrow Agent" means Equity Transfer Services Inc.
(t) "Escrow Agreement" means the escrow agreement relating to the
Exchangeable Shares and Big Flash Shares to be entered into by Big
Flash, Exchangeco, the Vendors and the Escrow Agent on or before
Closing.
(u) "Exchangeable Shares" means Class A Special Shares of Exchangeco
bearing the rights, privileges and restrictions described in
Schedule "A" to the Support Agreement.
(v) "Exchange and Voting Trust Agreement" means the exchange and
voting trust agreement to be entered into by Big Flash, Exchangeco
and the Trustee on or before Closing.
(w) "Exchangeco" means 6544631 Canada Inc.
(x) "Governmental Authority" means any applicable Canadian or U.S.
federal, provincial, state or municipal government, agency,
ministry, commission, crown corporation, department, inspector,
official or body of any kind exercising or entitled to exercise
any administrative, executive, judicial, legislative, police,
regulatory or taxing authority or power of any nature.
(y) "Governmental Charges" means all fees, levies and charges imposed
by a Governmental Authority.
(z) "Intellectual Property" means domestic and foreign: (i) patents,
applications for patents and reissues, divisions, continuations,
renewals, extensions and continuations-in-part of patents or
patent applications; (ii) proprietary and non-public business
information, including inventions (whether patentable or not),
invention disclosures, improvements, discoveries, trade secrets,
confidential information, know-how, methods, processes, designs,
-15-
technology, technical data, schematics, formulae and customer
lists, and documentation relating to any of the foregoing; (iii)
copyrights, copyright registrations and applications for copyright
registration; (iv) mask works, mask work registrations and
applications for mask work registrations; (v) designs, design
registrations, design registration applications and integrated
circuit topographies; (vi) trade names, business names, corporate
names, domain names, website names and world wide web addresses,
common law trade-marks, trade-xxxx registrations, trade xxxx
applications, trade dress and logos, and the goodwill associated
with any of the foregoing; (vii) software; and (viii) any other
intellectual property and industrial property;
(aa) "material" means, when used with respect to an obligation,
contract, liability or any other matter, that the obligation,
contract, liability or such other matter is of such a nature as to
be substantially likely to be considered important to a reasonable
investor in making an investment decision, including a decision to
purchase, hold or sell securities of the Person in question.
(bb) "Material Adverse Change" means a material adverse change in or a
material adverse effect on the businesses, assets, operations,
results of operations or financial condition of a Person and its
subsidiaries (if any) taken as a whole, provided that any adverse
effects arising from or relating to the following matters
(individually and in the aggregate) shall be excluded in
determining whether such a material adverse effect has occurred:
(i) general economic conditions or conditions (including
conditions in financial markets) generally prevailing in the
industry or market segment in which the corporate entity and its
subsidiaries conduct their respective businesses, (ii) the
announcement or pendency of the transactions contemplated in this
Agreement or the closing or pendency of any transaction of the
Parties which was publicly announced as of the date of this
Agreement; and (iii) the taking by any Party of any action (or
omission by any Party to take any action) at the request of or
with the permission of the other Parties; provided, further, that
a decline in the public trading price of the common shares of Big
Flash shall not by itself constitute a Material Adverse Change.
(cc) "Material Contracts" means those contracts and agreements of the
Company which are listed in Schedule "H" hereto;
(dd) "Ordinary Course of Business", with respect to an action taken by
a Person, means:
(i) an action consistent with the past practices of such Person
and taken in the ordinary course of the normal operations of
such Person;
(ii) an action not required to be authorized by the board of
directors of such Person (or by any Person or group of
Persons exercising similar authority) and not required to be
specifically authorized by the parent company (if any) of
such Person; and
(iii) an action similar in nature and magnitude to actions
customarily taken, without any authorization by the board of
directors (or by any Person or group of Persons exercising
similar authority), in the ordinary course of the normal
day-to-day operations of other Persons that are in the same
line of business as such Person.
(ee) "Parties" means the parties to this Agreement and "Party" means
any one of them.
-16-
(ff) "Permitted Encumbrance" shall mean: (i) materialmen's, mechanics',
carriers', workmen's, repairmen's or other like liens arising in
the ordinary course of business for amounts not yet due or which
have been disclosed to Big Flash as being contested in good faith
by appropriate proceedings, (ii) liens for taxes, assessments and
governmental charges not yet due or due but for which notice of
assessment has not been given or any taxes, assessments and
governmental charges which have been disclosed to Big Flash as
being contested in good faith by appropriate proceedings, (iii)
liens to secure performance of statutory obligations, (iv) any
lien securing any purchase money indebtedness incurred in the
ordinary course of business and reflected in the referenced
party's financial statements, (v) liens of lessors under leases,
(vi) undetermined or inchoate liens, charges and privileges
incidental to current operations and statutory liens, charges,
adverse claims, security interests or encumbrances of any nature
whatsoever claimed or held by any Governmental Authority which
have not at the time been filed or registered against the title to
the asset or served upon the referenced party pursuant to law or
which relate to obligations not due or delinquent, and (vii)
security given in the ordinary course of business to any public
utility, municipality or government or to any statutory or public
authority in connection with the operations of the business of the
referenced party, other than security for borrowed money.
(gg) "Person" means any individual, corporation (including any
non-profit corporation), body corporate, partnership, limited
partnership, limited liability company, joint venture, society,
association, trust, unincorporated organization, Governmental
Authority or other entity, or any trustee, executor,
administrator, or other legal representative.
(hh) "Purchased Shares" means common shares of the Company held by the
Vendors as set out in Schedule "B" hereto.
(ii) "Regulations" shall mean any applicable laws, statutes,
ordinances, regulations, rules, court decisions, principles of law
and orders of any foreign, federal, provincial, state or local
government and any other governmental department or agency.
(jj) "SEC" means the U.S. Securities and Exchange Commission.
(kk) "Support Agreement" means the exchangeable share support agreement
to be entered into by Big Flash, Exchangeco and the Trustee on or
before Closing.
(ll) "Tax Act" means the Income Tax Act (Canada), as amended from time
to time.
(mm) "Transaction" means the transaction contemplated by this
Agreement.
(nn) "Trustee" means Equity Transfer Services Inc.
(oo) "U.S. Securities Law" means the United States Securities Act of
1933 and the United States Securities Exchange Act of 1934, the
securities laws of any State of the United States of America, and
the regulations, rules and policies promulgated thereunder, all as
amended from time to time.
-17-
SCHEDULE "B"
COMPLETE LIST OF SHAREHOLDERS OF INTELGENX CORP.
---------------------------------------- -------------------------------------- --------------------------------------
Name and Address of Shareholder Number of Purchased Shares Held Number of Exchangeable Shares to be
Received
---------------------------------------- -------------------------------------- --------------------------------------
Xxxxx Xxxxx 4,709,643.5 4,709,643.5
000 Xxxx Xxxx
Xxxxxx, Xxxxxx X0X 0X0
---------------------------------------- -------------------------------------- --------------------------------------
Xxxxxx Xxxxx 4,709,643.5 4,709,643.5
000 Xxxx Xxxx
Xxxxxx, Xxxxxx X0X 0X0
---------------------------------------- -------------------------------------- --------------------------------------
Xxxx Xxxxx 1,571,713 1,571,713
0000 Xxxx Xxxxx
Xxxxxxxx, Xxxxxx X0X 0X0
---------------------------------------- -------------------------------------- --------------------------------------
-18-
SCHEDULE "C"
CONDITIONS OF CLOSING
1. Mutual Conditions of Closing. The Parties shall be obliged to complete
the purchase and sale of the Purchased Shares only if each of the following
conditions precedent have been satisfied in full at or before the Closing Time
(a) Consents, Authorizations and Registrations - All consents,
approvals, orders and authorizations of, from or notifications to
any Persons or Governmental Authorities required (if any) in
connection with the completion of any of the transactions
contemplated by this Agreement, the Support Agreement, the
Exchange and Voting Trust Agreement and the Escrow Agreement, the
execution of this Agreement, the Support Agreement, the Exchange
and Voting Trust Agreement and the Escrow Agreement, the Closing
or the performance of any of the terms and conditions of this
Agreement, the Support Agreement, the Exchange and Voting Trust
Agreement and the Escrow Agreement shall have been obtained on or
before the Closing Date.
(b) No Claims - There shall be no injunction or order issued
preventing, and no pending or threatened claim, action, litigation
or proceeding, judicial or administrative, or investigation
against any Party by any Governmental Authority or Person for the
purpose of enjoining or preventing the consummation of this
Agreement, the Support Agreement, the Exchange and Voting Trust
Agreement or the Escrow Agreement, or otherwise claiming that this
Agreement, the Support Agreement, the Exchange and Voting Trust
Agreement or the Escrow Agreement or the consummation thereof is
improper or would give rise to proceedings under any statute or
rule of law.
2. Conditions for Big Flash's and Exchangeco's Benefit. Big Flash and
Exchangeco shall not be obliged to complete the purchase of the Purchased Shares
or the issuance of the Big Flash Shares and Exchangeable Shares unless each of
the following conditions shall have been satisfied or waived on or before the
Closing Time:
(a) Accuracy of Representations - The representations and warranties
of the Vendors set forth in section 3.1 of this Agreement and Part
1 of Schedule "D" thereto and the representations and warranties
of the Vendors and the Company set forth in Part 4 of Schedule "D"
of this Agreement shall be true and correct as of the date of this
Agreement and as of the Closing Time as if made as of the Closing
Time.
(b) Performance of Obligations - The Vendors and the Company shall
have performed all of the obligations hereunder to be performed by
them at or prior to the Closing, and shall not be in breach of any
provision of this Agreement.
(c) Execution of Agreements - The Vendors shall have executed and
delivered on or prior to the Closing the Escrow Agreement,
substantially in the form of Schedule "F" to this Agreement
(d) No Material Changes - There shall have been no Material Adverse
Change in respect of the Company, and the Company shall not have
sold or pledged any assets, issued any shares or entered into any
transaction outside the Ordinary Course of Business.
-19-
(e) No Claims - No action by any Governmental Authority or other
person shall have been instituted or threatened that could
reasonably be expected to materially (a) damage the business or
financial condition of the Company if the transactions
contemplated hereunder are consummated. There shall have been no
determination by Big Flash that the consummation of the
transactions contemplated by this Agreement has become inadvisable
or impracticable solely by reason of the institution by any person
or any federal, provincial or other Governmental Authority of
litigation. There shall not be any Regulation or Court Order that
makes the transaction contemplated by this Agreement, the issuance
of the Big Flash Shares or the Exchangeable Shares contemplated
hereby illegal or otherwise prohibited.
(f) Approval - The transactions contemplated hereunder shall have been
duly approved by the board of directors of Big Flash and
Exchangeco.
(g) Legal Opinion - The Company shall have delivered to Big Flash and
Exchangeco an opinion of Xxxxxx Xxxxxxx LLP, counsel to the
Vendors and the Company, dated as of the Closing Date, in a form
satisfactory to Big Flash and Exchangeco.
(h) Board Resolutions - Big Flash and Exchangeco shall have received
from the Company resolutions adopted by the boards of directors of
the Company approving this Agreement and the agreements and
transactions contemplated hereby and thereby, certified by an
officer of the Company.
(i) Completion of Due Diligence - Big Flash, its counsel, agents or
representatives, acting reasonably, shall have completed a legal
due diligence process on the Company, and all matters relating
thereto, including but without limitation, a review of the Company
Financial Statements.
3. Conditions for the Vendors' Benefit. The Vendors shall not be obliged
to complete the sale of the Purchased Shares unless each of the following
conditions shall have been satisfied or waived on or before the Closing Time:
(a) Accuracy of Representations - The representations and warranties
of Big Flash and Exchangeco set forth in sections 3.2 and 3.3 of
this Agreement and Parts 2 and 3 of Schedule "D" thereto shall be
true and correct as of the date of this Agreement and as of
Closing Time as if made as of the Closing Time.
(b) Performance of Obligations - Big Flash and Exchangeco shall have
performed all of the obligations hereunder to be performed by them
at or prior to the Closing, and shall not be in breach of any
provision of this Agreement.
(c) Release of Guarantees - the bankers of the Company shall have
delivered written releases of the guarantees given by certain of
the Vendors pertaining to the Company's line of credit, such
releases to be satisfactory in form and content to the Vendors.
(d) Directors and Officers of Big Flash - Each of Xxxxx Xxxxx and Xxxx
Xxxxx shall have been duly appointed as directors and senior
officers of Big Flash.
(e) Execution of Agreements - Big Flash and Exchangeco shall have
executed and delivered on or prior to the Closing the Support
Agreement, the Exchange and Voting Trust Agreement and the Escrow
Agreement, substantially in the form of Schedules E, G and F
respectively, to this Agreement
-20-
(f) No Claims - No action by any Governmental Authority or other
person shall have been instituted or threatened that could
reasonably be expected to materially (a) damage the business or
financial condition of Big Flash or Exchangeco if the transactions
contemplated hereunder are consummated. There shall have been no
determination by the Vendors that the consummation of the
transactions contemplated by this Agreement has become inadvisable
or impracticable solely by reason of the institution by any person
or any federal, provincial or other Governmental Authority of
litigation. There shall not be any Regulation or Court Order that
makes the transactions contemplated by this Agreement, the
issuance and/or transfer of the Big Flash Shares or the
Exchangeable Shares contemplated hereby illegal or otherwise
prohibited or that would prohibit the Vendors from selling the Big
Flash Shares back into the United States in compliance with Rule
144 or other registration exemption under U.S. Securities Law.
(g) No Material Change - Since December 31, 2005, there shall not have
been any Material Adverse Change with respect to the financial or
business condition of Big Flash except as disclosed in the Big
Flash SEC Documents.
(h) Legal Opinion - Big Flash and Exchangeco shall have delivered to
the Vendors an opinion of Xxxxxx Xxxxxx LLP and Xxxxxxx X.
Xxxxxxx, P.C., counsel to Big Flash and Exchangeco, dated as of
the Closing Date, in a form satisfactory to the Vendors.
(i) Board Resolutions - The Vendors shall have received from Big Flash
and Exchangeco resolutions adopted by the boards of directors of
Big Flash and Exchangeco approving this Agreement and the
agreements and transactions contemplated hereby and thereby,
certified by an officer of Big Flash and Exchangeco, as
applicable, respectively.
(j) No Suspension - From the date hereof to the Closing Date, trading
in the common shares of Big Flash shall not have been suspended by
the United States Securities and Exchange Commission, and at any
time prior to the Closing Date, trading in securities generally as
reported by Bloomberg Financial markets shall not have been
suspended or limited, or minimum prices shall not have been
established on securities whose trades are reported by such
service, or on any market or exchange on which the common shares
of Big Flash are listed or quoted for trading on the date in
questions, nor shall a banking moratorium have been declared in
respect of Big Flash by either the United States or Delaware State
authorities.
(k) Completion of Due Diligence - The Vendors, their counsel, agents
or representatives, acting reasonably, shall have completed a
legal due diligence process on Big Flash, and all matters relating
thereto, including but without limitation, a review of the Big
Flash Financial Statements.
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SCHEDULE "D"
REPRESENTATIONS, WARRANTIES AND COVENANTS
Part 1 - Representations, Warranties and Covenants of the Vendors. The Vendors
hereby severally represent, warrant and covenant to Exchangeco and Big Flash as
follows, and acknowledge that Exchangeco and Big Flash are relying on these
representations, warranties and covenants in entering into this Agreement and
performing their obligations under the same:
(a) Capacity and Authority - If the Vendor is a corporation, the
Vendor (i) has been duly formed and is a valid and subsisting
corporation, (ii) has the necessary corporate capacity and
authority to own the Purchased Shares, to execute and deliver this
Agreement and the Escrow Agreement and to observe and perform its
covenants and obligations hereunder, (iii) has taken all necessary
corporate action in respect and (iv) the individual signing this
Agreement and the Escrow Agreement on behalf of the Vendor has the
authority to do so and to bind such Vendor by his signature. If
the Vendor is a natural person, he or she has the capacity to (i)
own the Purchased Shares and (ii) execute this Agreement and the
Escrow Agreement and to take all actions required pursuant
thereto.
(b) Title to Purchased Shares - Each particular Vendor is the sole
legal and beneficial owner of the Purchased Shares set out
opposite its name in Schedule "B" hereto with good and marketable
title thereto, free and clear of any Encumbrances.
(c) No Option - No Person has any agreement, warrant, option or right,
or a right capable of becoming an agreement for, the purchase of
the Purchased Shares, or the purchase of any other securities of
the Company.
(d) Absence of Conflict - No Vendor is a party to, bound or affected
by any agreement, which is material to the Vendor and, which would
be violated, breached or terminated by, or which would result in
creation or imposition of any Encumbrance upon any of the
Purchased Shares as a consequence of the execution and delivery of
this Agreement or the Escrow Agreement or the consummation of the
transactions contemplated in this Agreement or the Escrow
Agreement. The execution of this Agreement and Escrow Agreement
and the consummation of transactions contemplated therein do not
and will not conflict with, or result in a breach of, or
constitute a default under the terms or conditions of any
Constating Documents of a Vendor (if not an individual), any
Regulations, any court or administrative order or process, any
material agreement or instrument to which a Vendor is party or by
which it is bound or require the Vendor to obtain any approval,
consent or waiver of, or make any filing with any person or entity
(governmental or otherwise) which has not been obtained or made
prior to the Closing Date except for such breaches, defaults,
approvals, consents, waivers or filings as would not individually
or in the aggregate constitute a Material Adverse Change in
respect of the Vendor.
(e) Residence - Each Vendor is a resident, within the meaning of the
Tax Act, of the jurisdiction set out under their name in Schedule
"B" hereto.
(f) Binding Agreement - This Agreement has been and the Escrow
Agreement will be when executed duly and validly executed and
delivered by each Vendor and constitute legal, valid and binding
-22-
obligations of each Vendor enforceable against the Vendor in
accordance with their terms except as may be limited by laws of
general application affecting the rights of creditors, bankruptcy,
reorganization, insolvency or moratorium, and subject to the
effect of general principles of equity, including the possible
unavailability of specific performance or injunctive relief.
(g) Bankruptcy/Liquidation - No proceedings have been taken, are
pending or have been authorized, and no receiver or trustee has
been appointed for a Vendor by the Vendor or (to the knowledge of
the Vendor) by any other person in respect to the bankruptcy,
insolvency, liquidation, dissolution or winding up of a Vendor.
(h) Litigation - There are no judgments, decrees, injunctions, rulings
or orders of any court, arbitrator, federal, provincial, state,
municipal or other governmental authority, department, commission,
board, bureau or agency, or any actions, suits, grievances or
proceedings (whether or not on behalf of a Vendor) commenced, (or
to the knowledge of the Vendor) pending or threatened against or
relating to a Vendor which may result in the imposition of a
Encumbrance on the Purchased Shares or which may prevent, delay,
make illegal or otherwise interfere with the consummation of the
transactions contemplated in this Agreement.
(i) EACH VENDOR: (I) ACKNOWLEDGES THAT INVESTMENT IN THE SECURITIES OF
BIG FLASH IS HIGHLY SPECULATIVE AND INVOLVES A VERY HIGH DEGREE OF
RISK AND SHOULD NOT BE MADE UNLESS THE VENDOR IS PREPARED TO, AND
CAN AFFORD TO, LOSE THE ENTIRE INVESTMENT; (II) HAS SUFFICIENT
KNOWLEDGE, SOPHISTICATION AND EXPERIENCE IN BUSINESS AND FINANCE
TO CAPABLY EVALUATE INFORMATION CONCERNING BIG FLASH, (III) HAS
HAD AN OPPORTUNITY TO REVIEW BIG FLASH'S PUBLICLY FILED REPORTS,
AND TO ASK DETAILED QUESTIONS AND RECEIVE SATISFACTORY ANSWERS
FROM REPRESENTATIVES OF BIG FLASH, (IV) HAS HAD ADEQUATE
OPPORTUNITY TO REQUEST AND REVIEW ANY AND ALL OTHER DOCUMENTS AND
INFORMATION RELEVANT TO VENDOR'S CONSIDERATION OF INVESTMENT IN
THE BIG FLASH SECURITIES AND HAS OTHERWISE OBTAINED SUFFICIENT
INFORMATION FROM BIG FLASH TO EVALUATE THE MERITS AND RISKS OF AN
INVESTMENT IN BIG FLASH; (V) HAS INDEPENDENTLY CONSIDERED AND
DISCUSSED SUCH PROSPECTIVE INVESTMENT WITH THE VENDOR'S BUSINESS,
LEGAL, TAX AND FINANCIAL ADVISERS AS TO THE SUITABILITY OF SUCH
INVESTMENT WITH RESPECT TO THE VENDOR'S PARTICULAR FINANCIAL
SITUATION, AND (VI) ON THE BASIS OF THE FOREGOING, EACH VENDOR HAS
DETERMINED THAT INVESTMENT IN THE SECURITIES OFFERED HEREBY IS A
SUITABLE INVESTMENT.
Part 2 - Representations, Warranties and Covenants of Big Flash. Big Flash
represents, warrants and covenants to the Vendors as follows and acknowledges
that the Vendors are relying on these representations, warranties and covenants
in entering into this Agreement and performing their obligations under the same:
(a) Due Incorporation - Big Flash is a corporation duly incorporated
and organized, validly existing and in good standing under the
laws of the State of Delaware with full corporate power and
authority to own or lease its properties and to conduct its
business in the manner and in the places where such properties are
owned or leased or such business is conducted or proposed to be
conducted by it. Big Flash is not in violation of any terms of its
-23-
Constating Documents. Big Flash is not required to be licensed or
qualified to conduct its business in any other jurisdiction where
it is not so licensed or qualified.
(b) Capacity and Authority - Big Flash has the power and capacity and
good and sufficient right and authority to enter into this
Agreement, the Support Agreement, the Escrow Agreement and the
Exchange and Voting Trust Agreement on the terms and conditions
set forth in each such agreement, to perform its obligations under
this Agreement, the Support Agreement, the Escrow Agreement and
the Exchange and Voting Trust Agreement. The execution and
delivery of this Agreement, the Support Agreement, the Escrow
Agreement and the Exchange and Voting Trust Agreement and the
completion of the transactions contemplated herein and therein has
been duly and validly authorized by all necessary corporate action
on the part of Big Flash, and no other action on the part of the
board of directors or shareholders of Big Flash is required in
connection therewith.
(c) Binding Agreement - This Agreement has been and the Support
Agreement, the Escrow Agreement and the Exchange and Voting Trust
Agreement will be when executed duly and validly executed and
delivered by Big Flash and constitute legal, valid and binding
obligations of Big Flash enforceable against Big Flash in
accordance with their terms except as may be limited by laws of
general application affecting the rights of creditors, bankruptcy,
reorganization, insolvency or moratorium, and subject to the
effect of general principles of equity, including the possible
unavailability of specific performance or injunctive relief.
(d) Absence of Conflict - Big Flash is not a party to, bound or
affected by any agreement which would be violated, breached or
terminated by, or which would result in creation or imposition of
any Encumbrance upon any of the assets of Big Flash, Exchangeable
Shares, Purchased Shares or Big Flash Shares as a consequence of
the execution and delivery of this Agreement, the Support
Agreement, the Escrow Agreement or the Exchange and Voting Trust
Agreement or give rise to a right of termination of any indenture,
loan or credit agreement, or other agreement, contract,
instrument, mortgage, lien, lease, permit, authorization, order,
writ, judgment, injunction, decree, determination or arbitration
award to which Big Flash is a party or by which the property of
Big Flash is bound or affected. The execution of this Agreement,
Support Agreement, Escrow Agreement and the Exchange and Voting
Trust Agreement and the consummation of transactions contemplated
therein do not and will not conflict with, or result in a breach
of, or constitute a default under the terms or conditions of any
Constating Documents of Big Flash, any Regulations, any court or
administrative order or process, any agreement or instrument to
which Big Flash is party or by which it is bound or require Big
Flash to obtain any approval, consent or waiver of, or make any
filing with, any person or entity (governmental or otherwise)
which has not been obtained or made prior to the Closing Date
except for such breach or defaults as would not individually or in
the aggregate constitutea Material AdverseChange in respect of Big
Flash.
(e) Bankruptcy / Liquidation - No proceedings have been taken, are
pending or have been authorized, and no receiver or trustee has
been appointed for Big Flash by Big Flash or (to the knowledge of
Big Flash) by any other person in respect to the bankruptcy,
insolvency, liquidation, dissolution or winding up of Big Flash.
(f) Litigation - There are no judgments, decrees, injunctions, rulings
or orders of any court, arbitrator, federal, provincial, state,
municipal or other governmental authority, department, commission,
board, bureau or agency, or any actions, suits, grievances or
-24-
proceedings (whether or not on behalf of Big Flash) commenced, or,
to the knowledge of Big Flash, pending or threatened against or
relating to Big Flash which may result in the imposition of an
Encumbrance on the Exchangeable Shares or the Big Flash Shares or
which may prevent, delay, make illegal or otherwise interfere with
the consummation of the transactions contemplated in this
Agreement. To the knowledge of Big Flash, no director or officer
of Big Flash, is or has been the subject of any action involving a
claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty. There has
not been, and to the knowledge of Big Flash, there is not pending
or contemplated, any investigation by the SEC involving Big Flash
or any current or former director or officer of Big Flash. Neither
Big Flash nor any property or asset of Big Flash is subject to any
continuing order of, consent decree, settlement agreement or other
similar written agreement with, or to the knowledge of Big Flash,
continuing investigation by, any Governmental Authority, or any
order, writ, judgment, injunction, decree, determination or award
of any Governmental Authority.
(g) Capitalization - The authorized and outstanding capitalization of
Big Flash consists of 20,000,000 common shares, par value $0.00001
per share, of which 1,500,000 common shares are issued and
outstanding. All of the outstanding shares of capital stock of Big
Flash have been validly issued and are outstanding as fully paid
and non-assessable, shares of Big Flash. No Person has any right
of first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated by
this Agreement and its Schedules. Except as a result of the
purchase and sale of the Purchased Shares, there are no
outstanding options, warrants, script rights to subscribe to,
calls or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exchangeable
for, or giving any Person any right to subscribe for any common
shares of Big Flash or contracts, commitments, understandings or
arrangements by which Big Flash is or may become bound to issue
additional common shares of Big Flash or rights convertible or
exchangeable into shares of common stock of Big Flash, save as
disclosed in Big Flash's SEC Reports. Filings with the SEC will
not obligate Big Flash to issue common shares of Big Flash or
other securities to any Person (other than each Vendor) and will
not result in a right of any holder of Big Flash securities to
adjust the exercise, conversion, exchange or reset price under
such securities. Big Flash has reserved no common shares of Big
Flash for issuance upon exercise of outstanding options or
warrants to purchase common shares of Big Flash.
(h) SEC Reports and Financial Statements - Big Flash has filed all
reports, forms, statements, schedules, registration statements and
other documents required to be filed by it under U.S. Securities
Law for the two years preceding the date hereof (or such shorter
period as Big Flash was required by law to file such material)
(the foregoing materials, including the exhibits thereto and any
forms, reports, statements, schedules, registration statements and
other documents filed subsequent to the date hereof, being
collectively referred to herein as the "SEC Reports") on a timely
basis or has received a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such
extension. Big Flash has made available to the Vendors a true and
complete copy of each SEC Report, and prior to the Closing Date,
Big Flash will have furnished the Vendors with true and complete
copies of any additional SEC Reports filed with the SEC by Big
Flash prior to the Closing Date. All documents required to be
filed as exhibits to the SEC Reports have been so filed, and all
material contracts so filed as exhibits are in full force and
effect, except as disclosed in the SEC Reports and those which
have expired in accordance with their terms, and neither Big Flash
-25-
nor any of its subsidiaries is in default thereunder. The SEC
Reports (i) at the time they were filed or, if amended, as of the
date of such amendment, complied in all material respects, and
each report subsequently filed by Big Flash with the SEC will
comply in all material respects, with all applicable requirements
of U.S. Securities Law, as in effect on the date so filed, and
(ii) did not or will not, at the time they were or will be filed,
or, if amended, as of the date of such amendment, contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which
they were made, not misleading. No subsidiary of Big Flash is
required to file any form, report or other document with the SEC.
Big Flash has not received any non-routine inquires or
interrogatories, whether in writing or otherwise, from the SEC or
any other Governmental Authority or been the subject of any
investigation, audit, review or hearing by or in front of such
persons, in each case with respect to any of the SEC Reports or
any of the information contained therein. True and complete copies
of any such written inquiries or interrogatories have been
furnished to the Vendors and the Vendors have otherwise been made
aware of any such oral inquiries or interrogatories,
investigations, audits, reviews or hearings. The financial
statements of Big Flash, including the notes thereto, included in
the SEC Reports (the "Big Flash Financial Statements") are
complete and correct in all material respects as of their
respective dates, comply as to form in all material respects with
applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto as of their
respective dates, and have been prepared in accordance with U.S.
GAAP applied on a basis consistent throughout the periods
indicated and consistent with each other. The Big Flash Financial
Statements fairly present in all material respects the
consolidated financial condition, operating results and cash flows
of Big Flash and its subsidiaries at the dates and during the
periods indicated therein. There has been no change in Big Flash's
accounting policies except as described in the notes to the Big
Flash Financial Statements. Except as and to the extent set forth
in the SEC Reports, none of Big Flash nor any of its subsidiaries
has any liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise), in each case that is required
by US GAAP to be set forth on a consolidated balance sheet of Big
Flash or in the notes thereto. Except as set forth in SEC Reports
from December 31, 2005 through the date hereof (i) there has not
been any Material Adverse Change in the business, operations,
properties, assets, liabilities, condition (financial or other),
results of operations or prospects of Big Flash and its
subsidiaries, taken as a whole, and (ii) Big Flash and its
subsidiaries have conducted their businesses only in the ordinary
course and in a manner consistent with past practice and Big Flash
and its subsidiaries have not taken any action that, if taken
after the date of this Agreement, would constitute a breach of the
covenants set forth in Section 5.2 of this Agreement. Big Flash
has designed such internal control over financial reporting to
provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements
for external purposes in accordance with U.S. GAAP (as such term
is defined in National Instrument 52-107 Acceptable Accounting
Principles, Auditing Standards and Reporting Currency) and Big
Flash has disclosed in its most recent SEC Reports any changes in
its internal control over financial reporting that has affected or
is reasonably likely to affect its internal control over financial
reporting.
(i) Listing and Maintenance Requirements - Big Flash has not, in the
12 months preceding the date hereof, received notice from any
trading market on which the common shares of Big Flash is or has
been listed or quoted to the effect that Big Flash is not in
-26-
compliance with the listing or maintenance requirements of such
trading market and Big Flash is, and has no reason to believe that
it will not in the foreseeable future continue to be, in
compliance with all such requirements.
(j) Issuance and Securities Law - The Big Flash Shares issuable upon
exercise of the Exchangeable Shares will: (i) be validly issued,
fully paid and non-assessable and not subject to pre-emptive
rights or other similar rights of shareholders; (ii) be free from
all liens and charges with respect to the issuance thereof; (iii)
be issued or transferred to the Vendors pursuant to a valid
exemption under U.S. Securities Law; (iv) be issued or transferred
to the Vendors pursuant to the prospectus and registration
exemption contained in section 2.16 of NI 45-106 and section 4.5
of the Companion Policy to NI 45-106; (v) be subject to the hold
period prescribed in section 2.6 of NI 45-102; (vi) be subject to
the hold period prescribed by Rule 144 of U.S. Securities Act; and
(xi) be registered or exempt from registration under applicable
"blue sky laws".
(k) Business Operations - Since its incorporation, Big Flash has not
carried on any active business operations.
(l) No Vote Required - No vote of the stockholders of Big Flash is
required by Regulation, Big Flash's Constating Documents or
otherwise in order for Big Flash and Exchangeco to consummate the
transactions contemplated in this Agreement.
(m) Securities and Blue Sky Laws - Big Flash shall take such steps as
may be necessary to comply with the securities and blue sky laws
of all jurisdictions which are applicable to the issuance of the
Exchangeable Shares and the issuance and transfer of the Big Flash
Shares in connection with the transactions contemplated hereby.
(n) Commitments for Capital Expenditures - Big Flash is not committed
to make any material capital expenditures, nor have any capital
expenditures been authorized by Big Flash other than such
expenditures as disclosed in the Big Flash Financial Statements.
(o) Dividends and Distributions - Since the date of the Big Flash
Financial Statements, Big Flash has not declared or paid any
dividend or made any other distribution on any of its shares of
any class, or redeemed or purchased or otherwise acquired any of
its shares of any class, or reduced its authorized capital or
issued capital, or agreed to any of the foregoing.
(p) Tax Matters
(i) Big Flash has duly and on a timely basis prepared and filed
all tax returns and other documents required to be filed by
them in respect of all Governmental Charges and such returns
and documents are complete and correct and clearly and fairly
represent the information and tax status of Big Flash for the
relevant period;
(ii) Big Flash has paid all Governmental Charges which are due
and. payable on or before the date hereof. Adequate provision
was made in the Big Flash Financial Statements for all
Governmental Charges for the periods covered by the Big Flash
Financial Statements. To the best of the knowledge of Big
Flash, Big Flash has no liability for Governmental Charges
other than those provided for in the Big Flash Financial
Statements and those arising in the Ordinary Course of
Business of Big Flash since the date of the Big Flash
Financial Statements and for which adequate provisions have
been made on the books of Big Flash;
-27-
(iii) there are no actions, suits, proceedings, investigations,
enquiries or claims now pending or made or, to the knowledge
of Big Flash, threatened against Big Flash in respect of
Governmental Charges;
(iv) there are no Governmental Charges, assessments,
re-assessments, or levies of any whatsoever nature which Big
Flash is required or will or could be required by law to
withhold, collect or pay and for which Big Flash could become
liable, including, but without limiting the generality of the
foregoing, unemployment insurance, pension plan payments,
non-resident withholding tax or similar assessments, except
as disclosed in the Big Flash Financial Statements;
(v) all Governmental Charges, assessments, levies and source
deductions which Big Flash is required by law to withhold or
to collect, including, without limitation, unemployment
insurance, employment benefits, pension plan payments and
non-resident withholding tax, have been, to the best of its
knowledge, duly withheld or collected, and paid over to the
proper governmental authorities, or held by Big Flash or on
behalf of it as required, and such withholdings and
collections and all other payments due in connection
therewith are duly reflected in the Big Flash Financial
Statements to the date as of which they were prepared and
since that date will be duly entered in the accounts of Big
Flash;
(vi) there are no agreements, waivers or other arrangements
providing for any extension of time with respect to the
filing of any tax return or other document or the payment of
any Governmental Charges by Big Flash; and
(vii) on or before the Closing Date, all returns of Big Flash for
capital, excise, sales or use tax required to be filed by Big
Flash before the Closing Date shall be fully prepared and
filed before the Closing Date and all such Governmental
Charges of every kind and description due or payable against
or payable by Big Flash prior to the Closing Date in respect
of Big Flash shall have been paid by Big Flash.
(q) Inspection of Financial Books and Records - Until and including
the Closing Time,Big Flash shall make available during normal
business hours, to the representatives of the Company all material
books, accounts, records and other financial and accounting data
of Big Flash (including all available unaudited financial
statements) in order to enable such representatives to make an
examination of the same.
(r) Inspection of Non-Financial Books and Records - Until and
including the Closing Time, Big Flash shall make available during
normal business hours, to Counsel for the Company all Material
Contracts, minute books and other material corporate records and
all documents of title and related records and other material data
of Big Flash in order to enable such counsel to make an
examination of the same.
(s) Investment Canada Act - Following the Closing, Big Flash will file
all required notices pursuant to the Investment Canada Act or the
Competition Act (Canada).
Part 3 - Representations, Warranties and Covenants of Exchangeco. Exchangeco and
Big Flash jointly and severally represent, warrant and covenant to the Vendors
as follows and acknowledge that the Vendors are relying on these
-28-
representations, warranties and covenants in entering into this Agreement and
performing their obligations under the same:
(a) Due Incorporation - Exchangeco is a corporation duly
incorporated and organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation
with full corporate power and authority to own or lease its
properties and to conduct its business in the manner and in
the places where such properties are owned or leased or such
business is conducted or proposed to be conducted by it.
Exchangeco is not in violation of any terms of its Constating
Documents. Exchangeco is not required to be licensed or
qualified to conduct its business in any other jurisdiction
where it is not so licensed or qualified.
(b) Capacity and Authority - Exchangeco has the power and capacity and
good and sufficient right and authority to enter into this
Agreement, Support Agreement, the Escrow Agreement and the
Exchange and Voting Trust Agreement on the terms and conditions
set forth in each such agreement and to perform its obligations
under this Agreement, Support Agreement, Escrow Agreement and the
Exchange and Voting Trust Agreement. The execution and delivery of
this Agreement, Support Agreement, Escrow Agreement and the
Exchange and Voting Trust Agreement and the completion of the
transaction contemplated herein has been duly and validly
authorized by all necessary corporate action on the part of
Exchangeco, and no other action on the part of the board of
directors or shareholders of Exchangeco is required in connection
therewith.
(c) Binding Obligation - This Agreement has been and the Support
Agreement, Escrow Agreement and the Exchange and Voting Trust
Agreement will be when executed duly and validly executed and
delivered by Exchangeco and constitute legal, valid and binding
obligations on its part enforceable against Exchangeco in
accordance with their terms except as may be limited by laws of
general application affecting the rights of creditors, bankruptcy,
reorganization, insolvency or moratorium, and subject to the
effect of general principles of equity, including the possible
unavailability of specific performance or injunctive relief.
(d) Absence of Conflict - Exchangeco is not a party to, bound or
affected by any agreement which would be violated, breached or
terminated by, or which would result in creation or imposition of
any Encumbrance upon any of the Exchangeable Shares or Big Flash
Shares as a consequence of the execution and delivery of this
Agreement, Support Agreement, Escrow Agreement or the Exchange and
Voting Trust Agreement or the consummation of the transactions
contemplated in this Agreement, Support Agreement, Escrow
Agreement or the Exchange and Voting Trust Agreement or give rise
to a right of termination of any indenture, loan or credit
agreement, or other agreement, contract, instrument, mortgage,
lien, lease, permit, authorization, order, writ, judgment,
injunction, decree, determination or arbitration award to which
Exchangeco is a party or by which the property of Exchangeco is
bound or affected. Exchangeco's execution of this Agreement,
Support Agreement, Escrow Agreement and the Exchange and Voting
Trust Agreement and the consummation of transactions contemplated
therein do not and will not conflict with, or result in a breach
of, or constitute a default under the terms or conditions of any
Constating Documents of Exchangeco, any Regulations, court or
administrative order or process, any agreement or instrument to
which Exchangeco is party or by which it is bound or require
Exchangeco to obtain any approval, consent or waiver of, or make
any filing with, any person or entity (governmental or otherwise)
which has not been obtained or made prior to the Closing Date
-29-
except for such breach or defaults as would not individually or in
the aggregate constitute a Material Adverse Change in respect of
Exchangeco.
(e) Capitalization - The authorized and outstanding capitalization of
Exchangeco consists of an unlimited number of Common Shares and
Class A Special Shares. All of the outstanding shares in the
capital of Exchangeco have been validly issued and are outstanding
as fully paid and non-assessable shares of Exchangeco. No Person
has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the
transactions contemplated by this Agreement and its Schedules.
Except as a result of the purchase and sale of the Purchased
Shares, there are no outstanding options, warrants, script rights
to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into
or exchangeable for, or giving any Person any right to subscribe
for any shares of Exchangeco or contracts, commitments,
understandings or arrangements by which Exchangeco is or may
become bound to issue additional shares of Exchangeco or rights
convertible or exchangeable into shares of Exchangeco.
(f) Bankruptcy/Liquidation - No proceedings have been taken, are
pending or have been authorized, and no receiver or trustee has
been appointed for Exchangeco by Exchangeco or (to the knowledge
of Exchangeco) by any other person in respect to the bankruptcy,
insolvency, liquidation, dissolution or winding up of Exchangeco.
(g) Litigation - There are no judgements, decrees, injunctions,
rulings or orders of any court, arbitrator, federal, provincial,
state, municipal or other governmental authority, department,
commission, board, bureau or agency, or any actions, suits,
grievances or proceedings (whether or not on behalf of Exchangeco)
commenced, pending or threatened against or relating to Exchangeco
which may result in the imposition of a Encumbrance on the
Exchangeable Shares or which may prevent, delay, make illegal or
otherwise interfere with the consummation of the transactions
contemplated in this Agreement. Neither Exchangeco nor any
property or asset of Exchangeco is subject to any continuing order
of, consent decree, settlement agreement or other similar written
agreement with, or to the knowledge of Exchangeco, continuing
investigation by, any Governmental Authority, or any order, writ,
judgment, injunction, decree, determination or award of any
Governmental Authority.
(h) Issuance and Securities Law - The Exchangeable Shares issuable to
the Vendors will: (i) be validly issued, fully paid and
non-assessable and not subject to pre-emptive rights or other
similar rights of shareholders; (ii) be free from all liens and
charges with respect to the issuance thereof; (iii) be issued to
the Vendors pursuant to a valid exemption under U.S. Securities
Law; (iv) be issued to the Vendors pursuant to the prospectus and
registration exemption contained in section 2.16 of NI 45-106; (v)
the exchange, redemption or retraction of the Exchangeable Shares
for Big Flash Shares in accordance with the provisions of the
Exchangeable Shares and the Exchange and Voting Trust Agreement
shall be exempt from the prospectus and registration requirements
of Canadian Securities Laws pursuant to the exemption contained in
section 2.16 of NI 45-106 and section 4.5 of the Companion Policy
to NI 45-106; (vi) be subject to the hold period prescribed in
Section 2.4 of NI 45-102; (vii) be subject to the hold period
prescribed by Rule 144 of U.S. Securities Act; and (viii) be
registered or exempt from registration under applicable "blue sky
laws".
-30-
(i) Business Operations - Since its incorporation, Exchangeco has not
carried on any active business operations.
(j) No Vote Required - No vote of the stockholders of Exchangeco is
required by Regulation, Excahngeco's Constating Documents or
otherwise in order for Exchangeco to consummate the transactions
contemplated in this Agreement.
(k) Priority - Notwithstanding any term of Exchangeco's Constating
Documents to the contrary, the terms and provisions of this
Agreement and the Exchange and Voting Trust Agreement shall
prevail such that the directors of Exchangeco will only authorize
the exchange of the Exchangeable Shares for Big Flash Shares in
accordance with the terms of the Exchange and Voting Trust
Agreement.
(l) Inspection of Financial Books and Records - Until and including
the Closing Time, Exchangeco shall make available to the
representatives of the Vendors all material books, accounts,
records and other financial and accounting data of Exchangeco
(including all available unaudited financial statements) in order
to enable such representatives to make an examination of the same
and shall cause the accountants of Exchangeco to give all such
material information concerning the affairs of same to such
representatives as such representatives may reasonably request.
(m) Inspection of Non-Financial Books and Records - Until and
including the Closing Time, Exchangeco shall make available to
counsel for the Vendors all material contracts of Exchangeco,
minute books and other corporate records and all documents of
title and related records and other material data of Exchangeco in
order to enable such counsel to make an examination of the same
and without limiting the generality of the foregoing, including
such technical and market information as the Vendors consider
appropriate and all environmental permits, licenses and approvals.
Part 4 - Representations, Warrants and Covenants of the Vendors and the Company.
The Vendors and the Company hereby jointly and severally represent, warrant and
covenant to Exchangeco and Big Flash as follows, and acknowledge that Exchangeco
and Big Flash are relying on these representations, warranties and covenants in
entering into this Agreement and performing their obligations under the same:
(a) Due Incorporation - The Company is a corporation duly incorporated
and organized, validly existing and in good standing under the
federal laws of Canada with full corporate power and authority to
own or lease its properties and to conduct its business in the
manner and in the places where such properties are owned or leased
or such business is conducted or proposed to be conducted by it.
The Company is not in violation of any terms of its Constating
Documents. The Company is not required to be licensed or qualified
to conduct its business in any other jurisdiction where it is not
so licensed or qualified.
(b) Authorized Capital. The authorized share capital of the Company
consists of an unlimited number of Common Shares of which a total
of 10,991,000 Shares are validly issued and outstanding as fully
paid and non-assessable;
(c) Shareholders of the Company - Schedule "B" hereto contains a
complete and accurate list of each registered holder of issued and
outstanding Purchased Shares and sets out the residence or
principal place of business of each holder;
-31-
(d) No Option to Purchase. Other than pursuant to the loan agreement
to be entered into by the Company and Xxxxxxx X. Xxxxxx, no person
has any agreement, right or option (whether direct, indirect or
contingent or whether pre-emptive, contractual or by law) to
purchase, or otherwise acquire any of the unissued shares in the
capital of the Company, or for the issue of any other securities
of any nature or kind of the Company;
(e) Exempt Take-Over Bid. The Company is not a "reporting issuer" as
such term is defined in the Securities Act (Quebec), the Purchased
Shares are not traded on an organized market and there are less
than 50 security holders of the Company, excluding holders who are
or have been employees of the Company or of an affiliate of the
Company;
(f) No Share Restrictions. Except as provided for in this Agreement,
none of the outstanding Common Shares are subject to escrow
restrictions, pooling arrangements, voting trusts or any form of
shareholders agreements, whether voluntary or otherwise;
(g) Material Contracts. Each Material Contract is in good standing and
in full force and effect with no amendments except as set forth in
Schedule "H" and the Company is entitled to all rights and
benefits thereunder. The Material Contracts, including any
amendments thereto or extensions thereof are, to the Vendors'
knowledge, valid and binding obligations of the parties thereto
enforceable in accordance with their respective terms. The Company
has complied with all material terms of the Material Contracts,
has paid all material amounts due thereunder, has not waived any
material rights thereunder and no material default or breach
exists in respect thereof on the part of the Company, or to the
Vendors' knowledge, on the part of any of the other parties
thereto and no event has occurred which, after the giving of
notice or the lapse of time or both, would constitute such a
material default or breach. All amounts payable to the Company
under the Material Contracts, which have not yet been paid to the
Company, are still due and owing to the Company without any right
of set-off;
(h) Intellectual Property.
(i) Attached as Schedule "I" is a list of all Intellectual
Property described in clauses (i) and (iii) to (vi) of the
definition of Intellectual Property, as well as all
inventions (whether patentable or not), invention
disclosures, improvements, discoveries, trade secrets and
customer lists, owned by or licensed to the Company or used
by the Company in carrying on its business.
(ii) Schedule "I" includes complete and accurate particulars of
all registrations and applications for registration of the
Intellectual Property owned by the Company. All of the
Company's owned Intellectual Property which has been
registered or applied for has been properly maintained and
renewed by the Company in accordance with all applicable
laws. (iii) Except as set forth in Schedule "I", the Company
owns all right, title and interest in and to the Intellectual
Property owned by the Company, free and clear of all liens
and the Company has the right to use all the Intellectual
Property used by it in carrying on its business. To the
knowledge of the Company, it has taken all reasonable steps
to protect its rights in and to its owned Intellectual
Property, in each case in accordance with industry practice.
-32-
(iv) Except as set forth in Schedule "I", to the knowledge of the
Company, no person is currently infringing any of the
Intellectual Property owned by, licensed to or used by the
Company.
(v) Except as set forth in Schedule "I", all current and former
employees and consultants of the Company have entered into
confidentiality, intellectual property assignment and
proprietary information agreements with and in favour of the
Company. Each such person has waived its non-assignable
rights (including moral rights) to any Intellectual Property
created by it on behalf of the Company
(i) No Claims. To the knowledge of the Vendors, there are no claims,
actions, suits, judgments, litigation or proceedings pending
against or affecting the Company which will constitute or may
constitute a Material Adverse Change for the Company after giving
effect to the Transaction or which may prevent the completion of
the Transaction, and the Company is not aware of any existing
ground on which any such claim, action, suit, judgment, litigation
or proceeding might be commenced with any reasonable likelihood of
success;
(j) Financial Statements. The audited financial statements of the
Company and the notes thereto for the financial years ended
December 31, 2005 and December 31, 2004 fairly present, in all
material respects, the consolidated financial position, results of
operations, earnings and cash flow of the Company as at the
respective dates and for the periods indicated therein and such
financial statements have been prepared in accordance with
Canadian generally accepted accounting principles that were
applicable as of the date thereof applied on a consistent basis;
(k) No Material Adverse Change. There has been no Material Adverse
Change in relation to the Company since December 31, 2005;
(l) Not a Reporting Issuer. The Company is not a reporting issuer
under the securities legislation of any province or territory of
Canada.
(m) Binding Agreement - This Agreement, has been duly and validly
executed and delivered by the Company and constitutes legal, valid
and binding obligations of the Company enforceable against the
Company in accordance with its terms except as may be limited by
laws of general application affecting the rights of creditors.
(n) Absence of Conflict - The Company is not a party to, bound or
affected by any agreement which would be violated, breached or
terminated by, or which would result in creation or imposition of
any Encumbrance upon any of the assets of the Company or the
Purchased Shares as a consequence of the execution and delivery of
this Agreement or give rise to a right of termination of any
indenture, loan or credit agreement, or other agreement, contract,
instrument, mortgage, lien, lease, permit, authorization, order,
writ, judgment, injunction, decree, determination or arbitration
award to which the Company is a party or by which the property of
the Company is bound or affected. The consummation of transactions
contemplated herein do not and will not conflict with, or result
in a breach of, or constitute a default under the terms or
conditions of any Constating Documents of the Company, any
Regulations, any court or administrative order or process, any
agreement or instrument to which the Company is party or by which
it is bound or require the Company to obtain any approval, consent
or waiver of, or make any filing with, any person or entity
-33-
(governmental or otherwise) which has not been obtained or made
prior to the Closing Date except for such breaches, defaults,
approvals. consents, waivers or filings as would not individually
or in the aggregate have a Material Adverse Affect on the Company.
(o) Bankruptcy / Liquidation - No proceedings have been taken, are
pending or have been authorized, and no receiver or trustee has
been appointed for the Company by the Company or (to the knowledge
of the Company) by any other person in respect to the bankruptcy,
insolvency, liquidation, dissolution or winding up of the Company.
(p) No Guarantees - Except as disclosed in the Company Financial
Statements, the Company is not a party to or bound by any
agreement of guarantee, indemnification, assumption or endorsement
or any other like commitment of the obligations, liabilities
(contingent or otherwise) or indebtedness of any Persons except in
the Ordinary Course of Business.
(q) Litigation - There are no judgments, decrees, injunctions, rulings
or orders of any court, arbitrator, federal, provincial, state,
municipal or other governmental authority, department, commission,
board, bureau or agency, or any actions, suits, grievances or
proceedings (whether or not on behalf of the Company) commenced,
or, to the knowledge of the Company, pending or threatened against
or relating to the Company which may result in the imposition of
an Encumbrance on the Purchased Shares or which may prevent,
delay, make illegal or otherwise interfere with the consummation
of the transactions contemplated in this Agreement. To the
knowledge of the Company, no director or officer of the Company,
is or has been the subject of any action involving a claim of
violation of or liability under federal or state securities laws
or a claim of breach of fiduciary duty. There has not been, and to
the knowledge of the Company, there is not pending or
contemplated, any investigation by the SEC involving the Company
or any current or former director or officer of the Company The
Company is not subject to any continuing order of, consent decree,
settlement agreement or other similar written agreement with, or
to the knowledge of the Company, continuing investigation by, any
Governmental Authority, or any order, writ, judgment, injunction,
decree, determination or award of any Governmental Authority.
(r) Partnerships or Joint Ventures - Except as disclosed in the
Material Contracts, the Company is not a partner or participant in
any partnership, joint venture, profit-sharing arrangement or
other association of any kind and is not a party to any agreement
under which the Company agrees to carry on any part of its
business or any other activity in such manner or by which the
Company agrees to share any revenue or profit with any other
Persons.
(s) Officers and Directors of the Company - The only officers and
directors of the Company are as hereinafter set forth:
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Name Office
---- ------
Xxxxx Xxxxx President, Chief Executive Officer
and Director
Xxxxxx Xxxxx Secretary, Director
Xxxx Xxxxx Executive Vice-President,
Chief Financial Officer and Director
(t) Management Contracts - Except as provided in the Material
Contracts, the Company is not a party to any written management
contract or employment agreement, including without limitation,
any contract which provides for the payment of severance in lieu
of notice upon termination thereof or for a right of payment in
the event of a change in control of the Company.
(u) Corporate Records - As of the date hereof, the corporate records
and minute books of the Company are materially complete and
accurate. The share certificate books, register of transfers and
register of directors and any similar corporate records of the
Company are complete and accurate in all material respects.
(v) Liabilities of the Company - There are no material liabilities,
contingent or otherwise, of the Company of any kind whatsoever,
including, without limitation, any bonds, debentures, mortgages,
promissory notes, loan agreements, inter-company debt, or
liabilities of any kind, other than the loan agreement between the
Company and Xxxxxxx X. Xxxxxx and:
(i) liabilities disclosed or reflected in or provided for in the
Company Financial Statements or this Agreement; and
(ii) liabilities incurred since the date of the Company Financial
Statements which were incurred in the Ordinary Course of
Business.
(w) Prepaid Expenses - All prepaid expenses reflected in the Company
Financial Statements, and all expenses prepaid by the Company
subsequent to the Company Financial Statements were prepaid in
accordance with the regular business practices of the Company,
consist of expenses that were incurred in the ordinary course of
business of the Company, consistent with past practice, and are
valued at reasonable amounts based on the Ordinary Course of
Business of the Company within the past six months. There has not
been any material write-down or write-off of, or other adjustments
to, such prepaid expenses by the Company since the date of the
Company Financial Statements.
-35-
SCHEDULE "E"
SUPPORT AGREEMENT
Please see attached.
-36-
SCHEDULE "F"
ESCROW AGREEMENT
Please see attached.
-37-
SCHEDULE "D" PART II DISCLOSURE ANNEX G
CAPITALIZATION OF BIG FLASH
Big Flash's authorized capital stock consists of 20,000,000 shares, all of which
are common shares, par value $0.00001 per share. There are 1,500,000 common
shares issued and outstanding as of the date hereof. There are no preferred
shares authorized, issued or outstanding.
-38-
SCHEDULE "G"
EXCHANGE AND VOTING TRUST AGREEMENT
Please see attached.
-39-
SCHEDULE "H"
MATERIAL CONTRACTS
1. Development Agreement dated November 17, 2005 between IntelGenx
Corp. and Xxxx Pharmaceutical Inc.
2. Development Agreement dated October 28, 2005 between IntelGenx
Corp. and Novavax Inc.
3. Memorandum of Understanding dated October 26, 2005 between Keata
Pharma Inc. and IntelGenx Corp.
4. Employment Agreement dated December 1, 2005 between IntelGenx
Corp. and Xxxxx Xxxxx
5. Memorandum of Agreement dated December 1, 2005 between IntelGenx
Corp. and Xxxxx Xxxxx
6. Employment Letter dated December 1, 2005 from IntelGenx Corp. to
Xxxxxx Xxxxx
7. Confidentiality Agreement dated December 1, 2005 between IntelGenx
Corp. and Xxxxxx Xxxxx
8. Employment Agreement dated November 28, 2005 between IntelGenx
Corp. and Xxxxxxxx Xxxxx-Xxxxx, as amended on January 9, 2006
9. Employment Agreement dated June 27, 2005 between IntelGenx Corp.
and Xxxxxx Xxxxxxxx
10. Consulting Agreement dated December 1, 2005 between IntelGenx
Corp. and Xxxx Xxxxx.
-40-
SCHEDULE "I"
INTELLECTUAL PROPERTY
----------- -------------------------------- ------------------------------------------ -------------------------
No. Patent/Application No. Title Date submitted/issued
----------- -------------------------------- ------------------------------------------ -------------------------
1 US 6,231,957 Rapidly Disintegrating Flavor Wafer for 05/2001
Flavor Enrichment
----------- -------------------------------- ------------------------------------------ -------------------------
2 US 6,660,292 Rapidly Disintegrating Film for 12/2003
Precokked Foods
----------- -------------------------------- ------------------------------------------ -------------------------
3 US Appl. 10/123,142 Flavored Film 04/2002
----------- -------------------------------- ------------------------------------------ -------------------------
4 US Provisional Appl. Multilayer Tablet 12/2005
60,755,280
----------- -------------------------------- ------------------------------------------ -------------------------
5 US Provisional Appl. Multi-Vitamin And Mineral Supplement 12/2005
60/748,298
----------- -------------------------------- ------------------------------------------ -------------------------
6 US Provisional Appl. Delayed Release Pharmaceutical Oral 12/2005
60,772,547
----------- -------------------------------- ------------------------------------------ -------------------------
Notes:
(1) Ownership of all intellectual property is subject to a Movable Hypothec
granted in favour of each of Xxxx Xxxxxx and the Business Development
Bank of Canada pursuant to the laws of the Province of Quebec.
-41-
================================================================================
EXCHANGE AND VOTING TRUST AGREEMENT
THIS EXCHANGE AND VOTING TRUST AGREEMENT made as of the 28th day April, 2006.
AMONG: BIG FLASH CORP, a corporation subsisting under the laws of
the State of Delaware;
(the "Parent");
AND: 6544631 CANADA INC., a corporation incorporated under the
laws of Canada;
(the "Purchaser");
AND: EQUITY TRANSFER SERVICES INC., a corporation incorporated
under the federal laws of Canada;
(the "Trustee");
AND: EACH OF THOSE PERSONS holding shares of the Purchaser, as
listed in Appendix A hereto;
(individually a "Shareholder" and collectively the
"Shareholders");
WHEREAS the Purchaser is the wholly-owned subsidiary of the Parent;
WHEREAS pursuant to a share exchange agreement dated as of o, 2006 (the
"Purchase Agreement") by and among the Parent, the Purchaser, the Shareholders
and IntelGenx Corp. ("IntelGenx"), the Purchaser acquired all of the issued and
outstanding common shares of IntelGenx from the Shareholders in consideration
of: (i) the Purchaser issuing to the Shareholders a total of 10,991,000
Exchangeable Shares (as herein defined); and (ii) the Parent issuing the Parent
Common Shares (as herein defined) to the Trustee to be held and dealt with by
the Trustee in accordance with the terms of this Agreement;
WHEREAS as security for the Parent's covenant to issue common shares in its
capital stock in exchange for Exchangeable Shares, the Parent agreed to issue
10,991,000 common shares (as herein defined as the "Parent Common Shares") to
the Trustee;
AND WHEREAS in accordance with the Purchase Agreement, this Agreement stipulates
the means by which: (i) the Shareholders have voting rights in the Parent; (ii)
the Trustee holds the Parent Common Shares as security for the Parent's covenant
to issue common shares in exchange for the Exchangeable Shares; and (iii) the
Shareholders exercise their rights of conversion of the Exchangeable Shares;
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NOW THEREFORE in consideration of the respective covenants and agreements
provided in this Agreement and for other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties agree as
follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Agreement, the following terms shall have the following meanings:
"Affiliate" of any person means any other person directly or indirectly
controlled by, or under common control of, that person. For the purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control of"), as applied to any person, means
the possession by another person, directly or indirectly, of the power to direct
or cause the direction of the management and policies of that first mentioned
person, whether through the ownership of voting securities, by contract or
otherwise, provided that for the purpose of this Agreement, a Shareholder shall
not be deemed to be an Affiliate of the Parent solely as a result of the
ownership of Exchangeable Shares by such Shareholder, the rights of Shareholders
under the Exchangeable Share Provisions, the Support Agreement and the Purchase
Agreement, and the Shareholder being a beneficiary of the rights granted to the
Trustee under this Agreement.
"Automatic Exchange Rights" means the benefit of the obligation of Parent to
effect the automatic exchange of Exchangeable Shares for Parent Common Shares
pursuant to section 4.11 hereof.
"Board of Directors" means the Board of Directors of the Purchaser.
"Business Day" means a day other than a Saturday, Sunday or a day when banks are
not open for business in Montreal, Quebec.
"Current Market Price" shall have the meaning attributed to such term in the
Exchangeable Share Provisions.
"Exchangeable Shares" means the Class A Special shares in the capital of the
Purchaser, including the Exchangeable Shares issuable under the Purchase
Agreement.
"Exchangeable Share Provisions" means the rights, privileges, restrictions and
conditions attached to the Exchangeable Shares, substantially in the form set
out in Schedule "A" to the Support Agreement.
"Insolvency Event" means the institution by the Purchaser of any proceeding to
be adjudicated bankrupt or insolvent or to be dissolved or wound up, or the
consent of the Purchaser 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 Purchaser to contest in good faith any such
-2-
proceedings commenced in respect of the Purchaser within fifteen (15) days of
becoming aware thereof, or the consent by the Purchaser to the filing of any
such petition or to the appointment of a receiver, or the making by the
Purchaser of a general assignment for the benefit of creditors, or the admission
in writing by the Purchaser of its inability to pay its debts generally as they
become due, or the Purchaser not being permitted, pursuant to solvency
requirements of applicable law, to redeem any Retracted Shares pursuant to
section 6.6 of the Exchangeable Share Provisions.
"Insolvency Exchange Right" has the meaning ascribed thereto in section 4.1.
"Liquidation Call Right" has the meaning ascribed thereto in the Exchangeable
Share Provisions.
"Liquidation Event" has the meaning ascribed thereto in section 4.11(a).
"Liquidation Event Effective Date" has the meaning ascribed thereto in section
4.11(c).
"List" has the meaning ascribed thereto in section 3.8.
"Officer's Certificate" means, with respect to the Parent or the Purchaser, as
the case may be, a certificate signed by any one of the Chairman of the Board,
the Chief Executive Officer, the President or the Chief Financial Officer of the
Parent or the Purchaser, as the case may be.
"Parent Common Shares" means the shares of common stock of the Parent, par value
of U.S.$0.00001, having voting rights of one vote per share, and any other
securities into which such shares may be changed.
"Parent Consent" has the meaning ascribed thereto in section 3.2. "Parent
Meeting" has the meaning ascribed in section 3.2. "Parent Successor" has the
meaning ascribed thereto in section 11.1(a).
"Purchase Agreement" means the Purchase Agreement between the Parent, the
Purchaser, IntelGenx and the Shareholders named therein, dated as of the same
date hereof.
"Person" shall have the meaning attributed to such term in the Exchangeable
Share Provisions.
"Redemption Call Right" has the meaning ascribed thereto in the Exchangeable
Share Provisions.
"Retracted Shares" has the meaning ascribed thereto in section 4.6.
"Retraction Call Right" has the meaning ascribed thereto in the Exchangeable
Share Provisions.
"Shareholders" means the registered holders from time to time of Exchangeable
Shares, other than the Parent and its Affiliates, as listed in Appendix A
hereto.
"Shareholder Votes" has the meaning ascribed thereto in section 3.2.
-3-
"Support Agreement" means that certain support agreement made as of the same
date hereof between the Purchaser, the Parent and the Trustee.
"Trust" means the trust created by this Agreement.
"Trust Estate" means the Trust Shares, the Insolvency Exchange Right, the
Automatic Exchange Rights and any other securities, money or other property
which may be held by the Trustee from time to time pursuant to this Agreement.
"Trust Shares" has the meaning ascribed thereto in section 2.2.
"Trustee" means Equity Transfer Services Inc., and subject to the provisions of
Article 10, includes any successor trustee.
"Voting Rights" has the meaning ascribed thereto in section 3.1.
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.
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.
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.
ARTICLE 2
TRUST SHARES
2.1 ESTABLISHMENT OF TRUST
The purpose of this Agreement is to create the Trust for the benefit of the
Shareholders, as herein provided. The Trustee will hold the Parent Common Shares
issued pursuant to the requirements of the Purchase Agreement, Exchangeable
Share Provisions and Support Agreement both to support the Parent's and the
Purchaser's obligations thereunder in the event of default and to enable the
Trustee to exercise the Voting Rights and will hold the Insolvency Exchange
Right and Automatic Exchange Rights to enable the Trustee to exercise such
rights, in each case as trustee for and on behalf of the Shareholders as
provided in this Agreement.
2.2 ISSUE AND OWNERSHIP OF THE PARENT COMMON SHARES
Upon execution of this Agreement, the Parent shall issue to and deposit with the
Trustee a number of Parent Common Shares equal to the number of Exchangeable
Shares issued to Shareholders under the Purchase Agreement, such shares to be
-4-
hereafter held of record by the Trustee as trustee for and on behalf of, and for
the use and benefit of, the Shareholders and in accordance with the provisions
of this Agreement. From time to time, the Parent shall issue to and deposit with
the Trustee additional Parent Common Shares as required under the Purchase
Agreement, Exchangeable Share Provisions and Support Agreement, also to be held
of record by the Trustee as trustee for and on behalf of, and for the use and
benefit of, the Shareholders and in accordance with the provisions of this
Agreement. All Parent Common Shares so issued and deposited by the Parent with
the Trustee pursuant to this section 2.2 shall hereafter be referred to as the
"Trust Shares". The Parent hereby acknowledges receipt from the Trustee as
trustee for and on behalf of the Shareholders of good and valuable consideration
(and the adequacy thereof) for the issuance of the Trust Shares by the Parent to
the Trustee. During the term of the Trust and subject to the terms and
conditions of this Agreement, the Trustee shall possess and be vested with full
legal ownership of the Trust Shares and, subject to the terms hereof, shall be
entitled to exercise all of the rights and powers of an owner with respect to
the Trust Shares, provided that the Trustee shall:
(a) hold the Trust Shares and the legal title thereto as trustee
solely for the use and benefit of the Shareholders in accordance
with the provisions of this Agreement; and
(b) except as specifically authorized by this Agreement, have no power
or authority to sell, transfer, vote or otherwise deal in or with
the Trust Shares and the Trust Shares shall not be used or
disposed of by the Trustee for any purpose other than the purposes
for which this Trust is created pursuant to this Agreement.
ARTICLE 3
VOTING
3.1 VOTING RIGHTS
The Trustee, as the holder of record of the Parent Common Shares, shall be
entitled to all of the voting rights, including the right to vote in person or
by proxy the Parent Common Shares on any matters, questions, proposals or
propositions whatsoever that may properly come before the stockholders of the
Parent at a Parent Meeting or in connection with a Parent Consent (in each case
as hereinafter defined) (the "Voting Rights"). The Voting Rights shall be and
remain vested in and exercised by the Trustee. Subject to section 7.14:
(a) the Trustee shall exercise the Voting Rights only on the basis of
instructions received pursuant to this Article 3 from Shareholders
entitled to instruct the Trustee as to the voting thereof at the
time at which the Parent Meeting is held or a Parent Consent is
sought; and
(b) to the extent that no instructions are received from a Shareholder
with respect to the Voting Rights to which such Shareholder is
entitled, the Trustee shall not exercise or permit the exercise of
such Voting Rights.
-5-
3.2 NUMBER OF VOTES
With respect to all meetings of stockholders of the Parent at which holders of
shares of Parent Common Shares are entitled to vote (a "Parent Meeting") and
with respect to all written consents sought by the Parent from its stockholders
including the holders of shares of Parent Common Shares (a "Parent Consent"),
each Shareholder shall be entitled to instruct the Trustee to cast and exercise
one of the votes comprised in the Voting Rights for each Exchangeable Share
owned of record by such Shareholder on the record date established by the Parent
or by applicable law for such Parent Meeting or Parent Consent, as the case may
be (the "Shareholder Votes") in respect of each matter, question, proposal or
proposition to be voted on at such Parent Meeting or to be consented to in
connection with such Parent Consent.
3.3 LEGENDED SHARES CERTIFICATES
The Purchaser will cause each certificate representing Exchangeable Shares to
bear an appropriate legend notifying the Shareholders of their right to instruct
the Trustee with respect to the exercise of the Voting Rights in respect of the
Exchangeable Shares of the Shareholders.
3.4 SAFEKEEPING OF CERTIFICATES
The certificate(s) representing the Trust Shares shall at all times be held in
safe keeping by the Trustee or its agent.
3.5 MAILINGS TO SHAREHOLDERS OF EXCHANGEABLE SHARES
With respect to each Parent Meeting and Parent Consent, the Parent will mail or
cause to be mailed (or otherwise communicate in the same manner as the Parent
utilizes in communications to holders of Parent Common Shares) to each of the
Shareholders named in the List (as defined below) on the same day as the initial
mailing or notice (or other communication) with respect thereto is commenced by
the Parent to its stockholders: (a) a copy of such notice, together with any
proxy or information statement and related materials to be provided to
stockholders of the Parent;
(b) a statement that such Shareholder is entitled to instruct the
Trustee as to the exercise of the Shareholder Votes with respect
to such Parent Meeting or Parent Consent, as the case may be, or
pursuant to section 3.9, to attend such Parent Meeting and to
exercise personally the Shareholder Votes thereat as the proxy of
the Trustee;
(c) a statement as to the manner in which such instructions may be
given to the Trustee, including an express indication that
instructions may be given to the Trustee to give:
(i) a proxy to such Shareholder or his designee to exercise
personally the Shareholder Votes; or
(ii) a proxy to a designated agent or other representative of
the management of the Parent to exercise such Shareholder
Votes;
-6-
(d) a statement that if no such instructions are received from the
Shareholder, the Shareholder Votes to which such Shareholder is
entitled will not be exercised;
(e) a form of direction whereby the Shareholder may so direct and
instruct the Trustee as contemplated herein; and;
(f) a statement of: (i) the time and date by which such instructions
must be received by the Trustee in order to be binding upon it,
which in the case of a Parent Meeting shall not be earlier than
the close of business on the second Business Day prior to such
meeting; and (ii) the method for revoking or amending such
instructions.
For the purpose of determining Shareholder Votes to which a Shareholder is
entitled in respect of any Parent Meeting or Parent Consent, the number of
Exchangeable Shares owned of record by the Shareholder shall be determined at
the close of business on the record date established by the Parent or by
applicable law for purposes of determining stockholders entitled to vote at such
Parent Meeting or to give written consent in connection with such Parent
Consent.
3.6 COPIES OF STOCKHOLDER INFORMATION
The Parent will deliver to the Shareholders copies of all proxy materials
(including notices of Parent Meetings), information statements, reports
(including without limitation all interim and annual financial statements) and
other written communications that are to be distributed from time to time to
holders of Parent Common Shares.
3.7 OTHER MATERIALS
Immediately after receipt by the Parent or any stockholder of the Parent of any
material sent or given generally to the holders of Parent 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), the Parent
shall use its best efforts to obtain and deliver copies thereof to each
Shareholder as soon as possible thereafter.
3.8 LIST OF PERSONS ENTITLED TO VOTE
The Purchaser shall (a) prior to each annual, general and special Parent Meeting
or the seeking of any Parent Consent and (b) forthwith upon each request made at
any time by the Trustee or the Parent in writing, prepare or cause to be
prepared a list (a "List") of the names and addresses of the Shareholders
arranged in alphabetical order and showing the number of Exchangeable Shares
held of record by each such Shareholder, in each case at the close of business
on the date specified by the Trustee or the Parent in such request or, in the
case of a List prepared in connection with a Parent Meeting or a Parent Consent,
at the close of business on the record date established by the Parent or
pursuant to applicable law for determining the holders of Parent Common Shares
entitled to receive notice of and/or to vote at such Parent Meeting or to give
consent in connection with such Parent Consent. Each such List shall be
delivered to the Trustee or the Parent promptly after receipt by the Purchaser
of such request or the record date for such meeting or seeking of consent, as
the case may be, and in any event within sufficient time as to enable the Parent
-7-
to perform its obligations under this Agreement. The Parent agrees to give the
Purchaser written notice (with a copy to the Trustee) of the calling of any
Parent Meeting or the seeking of any Parent Consent, together with the record
dates therefor, sufficiently prior to the date of the calling of such meeting or
seeking of such consent so as to enable the Purchaser to perform its obligations
under this section 3.8.
3.9 ENTITLEMENT TO DIRECT VOTES
Any Shareholder named in a List prepared in connection with any Parent Meeting
or Parent Consent will be entitled (a) to instruct the Trustee in the manner
described in section 3.5 with respect to the exercise of the Shareholder Votes
to which such Shareholder is entitled or (b) to attend such meeting and
personally exercise thereat, as the proxy of the Trustee, the Shareholder Votes
to which such Shareholder is entitled.
3.10 VOTING BY TRUSTEE, AND ATTENDANCE OF TRUSTEE REPRESENTATIVE AT MEETING
(a) In connection with each Parent Meeting and Parent Consent, the
Trustee shall exercise, either in person or by proxy, in
accordance with the instructions received from a Shareholder
pursuant to section 3.5, the Shareholder Votes as to which such
Shareholder is entitled to direct the vote (or any lesser number
thereof as may be set forth in the instructions); provided,
however, that such written instructions are received by the
Trustee from the Shareholder prior to the time and date fixed by
the Trustee for receipt of such instructions in the notice given
by the Parent to the Shareholder pursuant to section 3.5.
(b) The Trustee shall cause a representative who is empowered by it to
sign and deliver, on behalf of the Trustee, proxies for Voting
Rights to attend each Parent Meeting. Upon submission by a
Shareholder (or its designee) of identification satisfactory to
the Trustee's representative, and at the Shareholder's request,
such representative shall sign and deliver to such Shareholder (or
its designee) a proxy to exercise personally the Shareholder Votes
as to which such Shareholder is otherwise entitled hereunder to
direct the vote, if such Shareholder either (i) has not previously
given the Trustee instructions pursuant to section 3.5 in respect
of such meeting or (ii) submits to such representative written
revocation of any such previous instructions. At such meeting, the
Shareholder exercising such Shareholder Votes shall have the same
rights as the Trustee to speak at the meeting in favour of any
matter, question, proposal or proposition, to vote by way of
ballot at the meeting in respect of any matter, question, proposal
or proposition, and to vote at such meeting by way of a show of
hands in respect of any matter, question or proposition.
3.11 DISTRIBUTION OF WRITTEN MATERIALS
Any written materials to be distributed by the Parent to the Shareholders
pursuant to this Agreement shall be delivered or sent by mail (or otherwise
communicated in the same manner as the Parent utilizes in communications to
-8-
holders of Parent Common Shares) to each Shareholder at its address as shown on
the books of the Purchaser. The Purchaser shall provide or cause to be provided
to the Parent for this purpose, on a timely basis and without charge or other
expense a current List of the Shareholders.
3.12 TERMINATION OF VOTING RIGHTS
All of the rights of a Shareholder with respect to the Shareholder Votes
exercisable in respect of each Exchangeable Share held by such Shareholder shall
be deemed to be surrendered by the Shareholder to the Parent and such
Shareholder Votes and the Voting Rights represented thereby shall cease
immediately upon the delivery by such holder to the Trustee of the certificates
representing such Exchangeable Shares in connection with the exercise by the
Shareholder of the Insolvency Exchange Right or the occurrence of the automatic
exchange of Exchangeable Shares for Parent Common Shares, as specified in
Article 4 (unless and until, in either case, the Trustee shall not have
transferred and delivered to the Shareholder the requisite Parent Common Shares
required to be transferred and delivered by the Trustee to the Shareholder), or
upon the retraction or redemption of Exchangeable Shares pursuant to Article 6
or 7 of the Exchangeable Share Provisions, or upon the effective date of the
liquidation, dissolution or winding-up of the Purchaser pursuant to Article 5 of
the Exchangeable Share Provisions, or upon the purchase of Exchangeable Shares
from the holder thereof by Parent pursuant to the exercise by Parent of the
Retraction Call Right, the Redemption Call Right or the Liquidation Call Right.
ARTICLE 4
EXCHANGE RIGHT AND AUTOMATIC EXCHANGE
4.1 GRANT AND OWNERSHIP OF THE EXCHANGE RIGHT
The Parent hereby grants to the Trustee as trustee for and on behalf of, and for
the use and benefit of, the Shareholders the right (the "Insolvency Exchange
Right"), upon the occurrence and during the continuance of an Insolvency Event,
to require the Parent to purchase from each or any Shareholder all or any part
of the Exchangeable Shares held by the Shareholder and the Automatic Exchange
Rights all in accordance with the provisions of this Agreement. The Parent
hereby acknowledges receipt from the Trustee, as trustee for and on behalf of
the Shareholders, of good and valuable consideration (and the adequacy thereof)
for the grant of the Insolvency Exchange Right, and the Automatic Exchange
Rights, by the Parent to the Trustee. During the term of the Trust and subject
to the terms and conditions of this Agreement, the Trustee shall possess and be
vested with full legal ownership of the Insolvency Exchange Right and the
Automatic Exchange Rights and shall be entitled to exercise all of the rights
and powers of an owner with respect to the Insolvency Exchange Right and the
Automatic Exchange Rights, provided that the Trustee shall:
(a) hold the Insolvency Exchange Right and the Automatic Exchange
Rights and the legal title thereto as trustee solely for the use
and benefit of the Shareholders in accordance with the provisions
of this Agreement; and
(b) except as specifically authorized by this Agreement, have no power
or authority to exercise or otherwise deal in or with the
Insolvency Exchange Right or the Automatic Exchange Rights, and
the Trustee shall not exercise any such rights for any purpose
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other than the purposes for which the Trust is created pursuant to
this Agreement, and shall not assign or transfer such rights
except to a successor trustee hereunder.
The Insolvency Exchange Right and the Automatic Exchange Rights shall be and
remain vested in and exercisable by the Trustee. Subject to section 7.14, the
Trustee shall exercise the Insolvency Exchange Right only on the basis of
instructions received pursuant to this Article 4 from Shareholders entitled to
instruct the Trustee as to the exercise thereof. To the extent that no
instructions are received from a Shareholder with respect to the Insolvency
Exchange Right, the Trustee shall not exercise or permit the exercise of the
Insolvency Exchange Right.
4.2 LEGENDED SHARE CERTIFICATES
The Purchaser will cause each certificate representing Exchangeable Shares to
bear an appropriate legend notifying the Shareholders of:
(a) their right to instruct the Trustee with respect to the exercise
of the Insolvency Exchange Right in respect of the Exchangeable
Shares held by a Shareholder; and
(b) the Automatic Exchange Rights.
4.3 PURCHASE PRICE
The purchase price payable by the Parent for each Exchangeable Share to be
purchased by the Parent under the Insolvency Exchange Right shall be an amount
per share equal to: (i) the Current Market Price of a Parent Common Share on the
last Business Day prior to the day of closing of the purchase and sale of such
Exchangeable Share under the Insolvency Exchange Right plus; (ii) an additional
amount equivalent to the full amount of all dividends declared and unpaid on
each such Exchangeable Share and all dividends declared on Parent Common Shares
which have not been declared on such Exchangeable Shares in accordance with
Article 3 of the Exchangeable Share Provisions (provided that if the record date
for any such declared and unpaid dividends occurs on or after the day of closing
of such purchase and sale the purchase price shall not include such additional
amount equivalent to such declared and unpaid dividends). In connection with
each exercise of the Insolvency Exchange Right, the Parent will provide to the
Trustee, as trustee for and on behalf of the Shareholders, an Officer's
Certificate setting forth the calculation of the purchase price for each
Exchangeable Share. The purchase price for each such Exchangeable Share so
purchased may be satisfied by (i) the Parent issuing and delivering to the
Trustee for delivery by the Trustee to the Shareholders, one Parent Common and a
cheque for the balance, if any, of the purchase price without interest; or (ii)
the Parent instructing and directing the Trustee to transfer and deliver from
the Trust Shares to the relevant Shareholder, one Parent Common Share and a
cheque for the balance, if any, of the purchase price without interest.
4.4 EXERCISE INSTRUCTIONS
Subject to the terms and conditions set forth herein, a Shareholder shall be
entitled, upon the occurrence and during the continuance of an Insolvency Event,
to instruct the Trustee to exercise the Insolvency Exchange Right with respect
to all or any part of the Exchangeable Shares registered in the name of such
Shareholder on the books of the Purchaser. To cause the exercise of the
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Insolvency Exchange Right by the Trustee, the Shareholder shall deliver to the
Trustee, in person or by certified or registered mail the certificates
representing the Exchangeable Shares which such Shareholder desires the Parent
to purchase, duly endorsed in blank for transfer, and accompanied by such other
documents and instruments as may be required to effect a transfer of
Exchangeable Shares under the laws applicable to the Purchaser and the articles
and by-laws of the Purchaser and such additional documents and instruments as
the Trustee may reasonably require 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 Exchangeable Share certificates, stating: (i) that the
Shareholder thereby instructs the Trustee to exercise the Insolvency Exchange
Right so as to require the Parent to purchase from the Shareholder the number of
Exchangeable Shares specified therein; (ii) that such Shareholder has good title
to and owns all such Exchangeable Shares to be acquired by Parent free and clear
of all liens, claims and encumbrances; (iii) the name in which the certificates
representing Parent Common Shares to be issued or transferred in connection with
the exercise of the Insolvency Exchange Right are to be issued; and (iv) the
names and addresses of the persons to whom such new certificates should be
delivered, and (b) payment (or evidence satisfactory to the Trustee, the
Purchaser and the Parent of payment) of the taxes (if any) payable as
contemplated by section 4.7 of this Agreement. If only a part of the
Exchangeable Shares represented by any certificate or certificates delivered to
the Trustee are to be purchased by the Parent under the Insolvency Exchange
Right, a new certificate for the balance of such Exchangeable Shares shall be
issued to the Shareholder at the expense of the Purchaser.
4.5 DELIVERY OF PARENT COMMON SHARES; EFFECT OF EXERCISE
Promptly, and as soon as reasonably practicable after receipt of the
certificates representing the Exchangeable Shares which the Shareholder desires
the Parent 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 (and payment of taxes as contemplated
by section 4.7 of this Agreement, if any, or evidence thereof), duly endorsed
for transfer to the Parent, Trustee shall notify Parent and Purchaser of its
receipt of the same, which notice to Parent and Purchaser shall constitute
exercise of the Insolvency Exchange Right by the Trustee on behalf of the holder
of such Exchangeable Shares, and the Parent shall immediately thereafter upon
receipt of such notice deliver or cause to be delivered to the Shareholder of
such Exchangeable Shares (or to such other persons, if any, properly designated
by such Shareholder), certificates representing the number of Parent Common
Shares deliverable in connection with the exercise of the Insolvency Exchange
Right, which shares shall be, or shall have been, duly issued as fully paid and
non-assessable and shall be free and clear of any lien, claim or encumbrance,
and cheques for the balance, if any, of the total purchase price therefor. The
Parent may fulfill its obligation under the previous sentence by instructing the
Trustee to transfer and deliver to the Shareholder a number of Trust Shares
equal to the number of Exchangeable Shares which the Shareholder desires the
Parent to purchase under the Insolvency Exchange Right. The Parent shall,
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immediately upon receipt of such certificates representing the Exchangeable
Shares from the Shareholder, deliver the certificates to the registered office
of the Purchaser for cancellation. Immediately upon the giving of notice by the
Trustee to the Parent and the Purchaser of the exercise of the Insolvency
Exchange Right, as provided in this section 4.5, the closing of the transaction
of purchase and sale contemplated by the Insolvency Exchange Right shall be
deemed to have occurred, and the holder of such Exchangeable Shares shall be
deemed to have transferred to the Parent its right, title and interest in and to
such Exchangeable Shares and the related interest in the Trust Estate and shall
cease to be a holder of such Exchangeable Shares and shall not be entitled to
exercise any of the rights of a Shareholder in respect thereof, other than the
right to receive the purchase price therefor, unless the requisite number of
Parent Common Shares (together with a cheque for the balance, if any, of the
total purchase price therefor) is not issued and delivered by the Parent to the
Trustee and delivered by the Trustee to such Shareholder (or to such other
persons, if any, properly designated by such Shareholder), or unless the Parent
fails to deliver a written instruction to the Trustee to transfer a requisite
number of Trust Shares to such Shareholder (or to such other persons, if any,
properly designated by such Shareholder) or if the Parent delivered such written
instruction to the Trustee, but the Trustee failed to transfer such requisite
number of Trust Shares to such Shareholder, (or to such other persons, if any,
properly designated by such Shareholder) within five (5) Business Days of the
date of the giving of such notice by the Trustee, in which case the rights of
the Shareholder shall remain unaffected until such Parent Common Shares are so
issued and delivered by the Parent, or transferred and delivered by the Trustee,
as the case may be, and any such cheque is so delivered and honoured.
Concurrently with such Shareholder ceasing to be a Shareholder of Exchangeable
Shares, the Shareholder shall be considered and deemed for all purposes to be
the holder of Parent Common Shares delivered to it pursuant to the Insolvency
Exchange Right.
4.6 EXERCISE OF INSOLVENCY EXCHANGE RIGHT SUBSEQUENT TO RETRACTION
In the event that a Shareholder has exercised its right under Article 6 of the
Exchangeable Share Provisions to require the Purchaser to redeem any or all of
the Exchangeable Shares held by the Shareholder (the "Retracted Shares") and is
notified by the Purchaser pursuant to section 6.6 of the Exchangeable Share
Provisions that the Purchaser will not be permitted as a result of solvency
requirements of applicable law to redeem all such Retracted Shares, and provided
that Parent shall not have exercised the Retraction Call Right with respect to
the Retracted Shares and that the Shareholder has not revoked the retraction
request delivered by the Shareholder to the Purchaser pursuant to section 6.1 of
the Exchangeable Share Provisions, the retraction request will constitute and
will be deemed to constitute notice from the Shareholder to the Trustee
instructing the Trustee to exercise the Insolvency Exchange Right with respect
to those Retracted Shares which the Purchaser is unable to redeem. In any such
event, the Purchaser hereby agrees with the Trustee and in favour of the
Shareholder promptly to forward or cause to be forwarded to the Trustee all
relevant materials delivered by the Shareholder to the Purchaser (including
without limitation a copy of the retraction request delivered pursuant to
section 6.1 of the Exchangeable Share Provisions) in connection with such
proposed redemption of the Retracted Shares and the Trustee will thereupon
exercise the Insolvency Exchange Right with respect to the Retracted Shares that
the Purchaser is not permitted to redeem and will require Parent to purchase
such shares in accordance with the provisions of this Article 4.
4.7 STAMP OR OTHER TRANSFER TAXES
Upon any sale of Exchangeable Shares to the Parent pursuant to the Insolvency
Exchange Right or the Automatic Exchange Rights, the share certificate or
certificates representing Parent Common Shares to be delivered in connection
with the payment of the total purchase price therefor shall be issued in the
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name of, or transferred to, the Shareholder of the Exchangeable Shares so sold
without charge to the Shareholder of the Exchangeable Shares so sold; provided,
however that such Shareholder: (i) shall pay (and none of the Parent, the
Purchaser nor the Trustee shall be required to pay) any documentary, stamp,
transfer or other similar taxes that may be payable in respect of any transfer
involved in the issuance or delivery of such shares to a person other than such
Shareholder; or (ii) shall have established to the satisfaction of the Trustee,
the Parent and the Purchaser that such taxes, if any, have been paid.
4.8 NOTICE OF INSOLVENCY EVENT
Immediately upon 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, the Purchaser and the Parent shall give written notice thereof to the
Trustee and the Shareholders, which notice shall contain a brief statement of
the right of the Shareholders with respect to the Insolvency Exchange Right.
4.9 QUALIFICATION OF PARENT COMMON SHARES
(a) The Parent represents and warrants that it has taken all actions and
done all things as are necessary under any United States or Canadian federal,
provincial or state law or regulation or pursuant to the rules and regulations
of any regulatory authority or the fulfilment of any other legal requirement
(collectively, the "Applicable Laws") as they exist on the date hereof and will
in good faith expeditiously take all such actions and do all such things as are
necessary under Applicable Laws as they may exist in the future to cause the
Parent Common Shares to be issued and delivered, or transferred and delivered,
as the case may be, pursuant to the Exchangeable Share Provisions, the
Insolvency Exchange Right or the Automatic Exchange Rights. If any Parent Common
Shares (or other shares or securities into which Parent Common Shares may be
reclassified or changed as contemplated by section 2.7 of the Support Agreement)
to be issued and delivered, or transferred and delivered, as the case may be,
hereunder require registration or qualification with or approval of or the
filing of any document, including any prospectus or similar document or the
taking of any proceeding with or the obtaining of any order, ruling or consent
from any governmental or regulatory authority under any Applicable Laws or
pursuant to the rules and regulations of any securities or other regulatory
authority or the fulfillment of any other United States or Canadian legal
requirement before such shares (or such other shares or securities) may be
issued by Parent and delivered by Parent, or may be transferred and delivered by
the Trustee at the direction of Parent, as the case may be, to the holder of
surrendered Exchangeable Shares, Parent will in good faith expeditiously take
all such actions and do all such things as are necessary or desirable to cause
such Parent Common Shares (or such other shares or securities) to be and remain
duly registered, qualified or approved under Applicable Laws. Parent will in
good faith expeditiously take all such actions and do all such things as are
reasonably necessary or desirable to cause all Parent Common Shares (or such
other shares or securities) to be delivered hereunder to be listed, quoted or
posted for trading on all stock exchanges and quotation systems on which
outstanding Parent Common Shares (or such other shares or securities) have been
listed by Parent and remain listed and are quoted or posted for trading at such
time.
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(b) The Parent represents and warrants to the Shareholders that the Parent
has delivered to IntelGenx's legal counsel copies of all correspondence received
by the Parent from the United States Securities and Exchange Commission from the
date of incorporation of the Parent to the date of this agreement. The Parent
acknowledges that this representation and warranty is also made for the benefit
of IntelGenx, as a third party, that the shareholders shall hold in trust for
IntelGenx the benefit of this representation and that IntelGenx shall have a
direct cause of action against the Parent in respect of a breach of this
representation.
4.10 RESERVATION OF PARENT COMMON SHARES
The Parent hereby represents, warrants and covenants that it has irrevocably
reserved for issuance and will at all times keep available, free from
pre-emptive and other rights, out of its authorized and unissued capital stock
such number of Parent Common Shares: (a) as is equal to the sum of: (i) the
number of Exchangeable Shares issued and outstanding from time to time; and (ii)
the number of Exchangeable Shares issuable upon the exercise of all rights to
acquire Exchangeable Shares outstanding from time to time; and (b) as are now
and may hereafter be required to enable and permit the Purchaser and the Parent
to meet their respective obligations hereunder, under the Support Agreement,
under the Exchangeable Share Provisions and under any other security or
commitment pursuant to which the Parent may now or hereafter be required to
issue Parent Common Shares. To the extent permitted under Article 5 hereof, the
Trust Shares may be used to satisfy the Parent's obligations under this section
4.10.
4.11 AUTOMATIC EXCHANGE ON LIQUIDATION OF THE PARENT
(a) The Parent will give the Trustee and the Shareholders 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 the Parent to institute voluntary liquidation, dissolution
or winding-up proceedings with respect to the Parent or to
effect any other distribution of assets of the Parent among
its shareholders for the purpose of winding up its affairs,
at least sixty (60) days prior to the proposed effective date
of such liquidation, dissolution, winding-up or other
distribution; and
(ii) immediately, upon the earlier of: (i) receipt by the Parent
of notice of; and (ii) the Parent otherwise becoming aware of
any threatened or instituted claim, suit, petition or other
proceedings with respect to the involuntary liquidation,
dissolution or winding-up of the Parent or to effect any
other distribution of assets of the Parent among its
shareholders for the purpose of winding up its affairs.
(b) Such notice shall include a brief description of the automatic
exchange of Exchangeable Shares for Parent Common Shares provided
for in section 4.11(c).
(c) In order that the Shareholders will be able to participate on a
pro rata basis with the holders of Parent Common Shares in the
distribution of assets of the Parent in connection with a
Liquidation Event, on the fifth Business Day prior to the
effective date of a Liquidation Event (the "Liquidation Event
Effective Date") all of the then outstanding Exchangeable Shares
shall be automatically exchanged for Parent Common Shares. To
effect such automatic exchange, the Parent shall purchase each
Exchangeable Share outstanding on the fifth Business Day prior to
the Liquidation Event Effective Date and held by Shareholders, and
each Shareholder shall sell the Exchangeable Shares held by it at
such time, for a purchase price per share equal to: (a) the
Current Market Price of one (1) Parent Common Share on the fifth
Business Day prior to the Liquidation Event Effective Date, which
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shall be satisfied in full by the Parent delivering or causing to
be delivered to the Shareholder one Parent Common Share; plus (b)
an additional amount equivalent to the full amount of all
dividends declared and unpaid on each such Exchangeable Share and
all dividends declared on Parent Common Shares which have not been
declared on such Exchangeable Shares in accordance with Article 3
of the Exchangeable Share Provisions (provided that if the record
date for any such declared and unpaid dividends occurs on or after
the day of closing of such purchase and sale the purchase price
shall not include such additional amount equivalent to such
declared and unpaid dividends). In connection with such automatic
exchange, the Parent will provide to the Trustee and the
Shareholders an Officer's Certificate setting forth the
calculation of the purchase price for each Exchangeable Share,
together with a notice of the anticipated Liquidation Event
Effective Date.
(d) On the fifth Business Day prior to the Liquidation Event
Effective Date, the closing of the transaction of purchase
and sale contemplated by the automatic exchange of
Exchangeable Shares for Parent Common Shares shall be deemed
to have occurred, and each Shareholder shall be deemed to
have transferred to the Parent all of the Shareholder's
right, title and interest in and to its Exchangeable Shares
and the related interest in the Trust Estate and shall cease
to be a Shareholder of such Exchangeable Shares and the
Parent shall deliver or cause to be delivered to the
Shareholder Parent Common Shares deliverable upon the
automatic exchange of Exchangeable Shares for Parent Common
Shares and shall deliver to the Shareholder a cheque for the
balance, if any, of the total purchase price for such
Exchangeable Shares. Concurrently with such Shareholder
ceasing to be a Shareholder, the Shareholder shall be
considered and deemed for all purposes to be the holder of
Parent Common Shares issued or transferred to it pursuant to
the automatic exchange of Exchangeable Shares for Parent
Common Shares and the certificates held by the Shareholder
previously representing the Exchangeable Shares exchanged by
the Shareholder with the Parent pursuant to such automatic
exchange shall thereafter be deemed to represent Parent
Common Shares issued, or caused to be transferred, by the
Parent to the Shareholder pursuant to such automatic
exchange. Upon the request of a Shareholder and the surrender
by the Shareholder of Exchangeable Share certificates deemed
to represent Parent Common Shares, duly endorsed in blank and
accompanied by such instruments of transfer as the Parent may
reasonably require, the Parent shall deliver or cause to be
delivered to the Shareholder certificates representing Parent
Common Shares of which the Shareholder is the holder.
4.12 WITHHOLDING RIGHTS
The Parent and the Trustee shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any Shareholder
such amounts as the Parent or the Trustee is required or permitted to deduct and
withhold with respect to the making of such payment under the United States
Internal Revenue Code of 1986 as amended (the "Code"), the Income Tax Act
(Canada) or any provision of state, local, provincial or foreign tax law. To the
extent that amounts are so withheld, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the Shareholder of the
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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 the amount so required or permitted to be deducted
or withheld from any payment to a Shareholder exceeds the cash portion of the
consideration otherwise payable to the Shareholder, the Parent or the Trustee is
hereby authorized to sell or otherwise dispose of at fair market value such
portion of the consideration as is necessary to provide sufficient funds to the
Parent or the Trustee, as the case may be, in order to enable it to comply with
such deduction or withholding requirement and shall account to the relevant
Shareholder for any balance of such sale proceeds.
ARTICLE 5
DIVIDENDS
5.1 The holders of Exchangeable Shares will be entitled to participate in
all dividends declared by the Purchaser, in accordance with the
provisions of the Exchangeable Share Provisions and the Support
Agreement.
5.2 The Trustee hereby expressly waives, for and on its own behalf and on
behalf of all Shareholders, all rights to receive dividends of every
nature as may be payable to it as holder of the Trust Shares, and the
parties acknowledge that the Parent need not include the Trust Shares
in its calculations for purposes of determining the payment of
dividends, and need not pay or distribute any dividends (either in
cash, shares or otherwise) to the Trustee as holder of the Trust
Shares, provided however that such waiver may be rescinded by the
Trustee upon receipt of notice from a Shareholder that the Purchaser
has omitted to pay any dividends otherwise payable or that either the
Parent or the Purchaser contests the right of the holders of
Exchangeable Shares to receive dividends, or the right to receive
dividends on the Exchangeable Shares that are otherwise in doubt
whereupon the Parent will pay and the Trustee shall collect all
dividends paid on the Trust Shares from time to time until the Trustee
receives an Officer's Certificate from the Purchaser certifying that
the Purchaser is in compliance with its obligations to pay dividends in
accordance with the Exchangeable Share Provisions. Any dividends
received by the Trustee on the Trust Shares shall be paid to the
Shareholders in the same manner as dividends would have been paid by
the Purchaser to the holders of Exchangeable Shares.
5.3 For clarity, the Voting Rights and exchange rights granted by the
Parent hereunder to the Trustee, as trustee for and on behalf of, and
for the use and benefit of, the Shareholders do not in any manner
confer any additional rights to the Trustee or the Shareholders,
including, but subject to the provisions of the Support Agreement, any
rights to receive or participate in dividends declared or paid by the
Parent.
ARTICLE 6
SUPPORT PROVISIONS
6.1 USE OF TRUST SHARES IN CONNECTION WITH SUPPORT AGREEMENT
Pursuant to section 2.3 of the Support Agreement, the Trust Shares provide
additional security for the Parent's and the Purchaser's obligations under the
Purchase Agreement, the Exchangeable Share Provisions and the Support Agreement.
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In the event that the Purchaser and the Parent both default on their obligations
to acquire the Exchangeable Shares pursuant to the Exchangeable Share
Provisions, the Support Agreement, or Article 4 of this Agreement, a Shareholder
may provide written notice to the Parent, the Purchaser and the Trustee of such
default. If such default is not cured within ten (10) Business Days, the
Shareholder may provide written notice to the Trustee of such failure to cure.
The Trustee shall then use the Trust Shares to satisfy the Parent's obligation
to acquire the Exchangeable Shares as if the Parent had instructed the Trustee
to use the Trust Shares for such purpose pursuant to section 4.5 hereof. The
Exchangeable Shares acquired by the Trustee in such transaction shall be
delivered to the Parent. In the event that the Trustee uses the Trust Shares to
so acquire Exchangeable Shares, and if the Parent is obligated to pay any
declared but unpaid dividends (or dividends declared on Parent Common Shares
which have not been declared on such Exchangeable Shares in accordance with
Article 3 of the Exchangeable Share Provisions), the Parent shall remain
obligated to pay such amount to the Shareholder.
6.2 APPLICATION OF TRUST SHARES
At such time as either the Purchaser or the Parent acquires Exchangeable Shares
from a Shareholder, it shall provide the Trustee with an Officer's Certificate
specifying: (i) the former Shareholder; (ii) the number of Exchangeable Shares
acquired; (iii) the form of the acquisition, designated by the provision of the
applicable agreement (Exchangeable Share Provisions, Support Agreement or this
Agreement); and (iv) the date of such acquisition. If such certification is
made, the Trustee shall deliver to the Parent a number of Trust Shares equal to
the number of Exchangeable Shares so acquired by the Parent (or, if so requested
by the Parent, deliver such Parent Common Shares to the former Shareholder on
behalf of the Parent).
ARTICLE 7
CONCERNING THE TRUSTEE
7.1 POWERS AND DUTIES OF THE TRUSTEE
The rights, powers and authorities of the Trustee under this Agreement, in its
capacity as trustee of the Trust, shall include:
(a) receipt and deposit of the Trust Shares from the Parent as trustee
for and on behalf of the Shareholders in accordance with the
provisions of this Agreement;
(b) granting proxies and distributing materials to Shareholders as
provided in this Agreement;
(c) voting the Shareholder Votes in accordance with the provisions of
this Agreement;
(d) receiving the grant of the Insolvency Exchange Right and the
Automatic Exchange Rights from the Parent as Trustee for and on
behalf of the Shareholders in accordance with the provisions of
this Agreement;
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(e) exercising the Insolvency Exchange Right and enforcing the benefit
of the Automatic Exchange Rights, in each case in accordance with
the provisions of this Agreement, and in connection therewith
receiving from the Shareholders Exchangeable Shares and other
requisite documents and delivering to such Shareholders Parent
Common Shares and cheques, if any, to which such Shareholders are
entitled upon the exercise of the Insolvency Exchange Right or
pursuant to the Automatic Exchange Rights, as the case may be;
(f) holding title to the Trust Estate;
(g) investing any moneys forming, from time to time, a part of the
Trust Estate as provided in this Agreement;
(h) taking action on its own initiative or at the direction of a
Shareholder or Shareholders to enforce the obligations of the
Parent and the Purchaser under this Agreement; and
(i) taking such other actions and doing such other things as are
specifically provided in this Agreement.
In the exercise of such rights, powers and authorities the Trustee shall have
(and is granted) such incidental and additional rights, powers and authority not
in conflict with any of the provisions of this Agreement as the Trustee, acting
in good faith and in the reasonable exercise of its discretion, may deem
necessary or appropriate to effect the purpose of the Trust. Any exercise of
such discretionary rights, powers and authorities by the Trustee shall be final,
conclusive and binding upon all persons. Notwithstanding anything to the
contrary herein, the Trustee shall have no obligation to exercise any discretion
in the performance of its obligations hereunder and shall only be required to
act upon the express written instructions of the Parent, the Purchaser or the
Shareholders. For greater certainty, the Trustee shall have only those duties as
are set out specifically in this Agreement.
The Trustee in exercising its rights, powers, duties and authorities hereunder
shall act honestly and in good faith and with a view to the best interests of
the Shareholders and shall exercise the care, diligence and skill that a
reasonably prudent trustee would exercise in comparable circumstances. The
Trustee shall not be required to take any notice of, or to do or to take any
act, action or proceeding as a result of any default or breach of any provision
hereunder, unless and until notified in writing of such default or breach, which
notice shall distinctly specify the default or breach desired to be brought to
the attention of the Trustee and, in the absence of such notice, the Trustee may
for all purposes of this Agreement conclusively assume that no default or breach
has been made in the observance or performance of any of the representations,
warranties, covenants, agreements or conditions contained herein.
7.2 NO CONFLICT OF INTEREST
The Trustee represents to the Purchaser and the Parent that at the date of
execution and delivery of this Agreement there exists no material conflict of
interest in the role of the Trustee as a fiduciary hereunder and the role of the
Trustee in any other capacity. The Trustee shall, within ninety (90) days after
it becomes aware that such a material conflict of interest exists, either
eliminate such material conflict of interest or resign in the manner and with
the effect specified in Article 9.
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7.3 DEALINGS WITH THIRD PARTIES
The Purchaser and the Parent irrevocably authorize the Trustee, from
time to time, to: (a) consult, communicate and otherwise deal with
any respective registrars, transfer agents, payment agents or any
other person or entity appointed from time to time by the Parent
or the Purchaser in connection with any matter relating to the
Exchangeable Shares and Parent Common Shares; and
(b) requisition, from time to time: (i) from any such registrar,
transfer agent, payment agent or other person or entity, appointed
from time to time by the Parent or the Purchaser, as applicable,
any information readily available from the records maintained by
it which the Trustee may reasonably require for the discharge of
its duties and responsibilities under this Agreement; and (ii)
from the Parent or the transfer agent of Parent Common Shares, and
any subsequent transfer agent of such shares, the share
certificates issuable upon the exercise from time to time of the
Insolvency Exchange Right and pursuant to the Automatic Exchange
Rights in the manner specified in Article 4 hereof. The Purchaser
and the Parent irrevocably authorize their respective registrars,
transfer agents and payment agents, or any other authorized agent
appointed from time to time by the Parent or the Purchaser to
comply with all such requests.
7.4 BOOKS AND RECORDS
The Trustee shall keep available for inspection, during normal business hours,
by the Parent and the Purchaser, at the Trustee's principal office in Toronto,
correct and complete books and records of account relating to the Trustee's
actions under this Agreement, including without limitation all information
relating to mailings and instructions to and from Shareholders and all
transactions pursuant to the Insolvency Exchange Right and the Automatic
Exchange Rights.
7.5 INCOME TAX RETURNS AND REPORTS
The Trustee will allocate and distribute all income and losses of the Trust to
the Shareholders in each year such that the Trust is not in a position to pay
any tax. Shareholders will be individually and personally responsible for all
income and losses incurred by the Trust. In this regard, the Parent will retain
tax counsel on behalf of the Trust, and agrees to prepare and distribute to each
Shareholder all necessary tax forms for them to complete their United States and
Canadian tax returns. The Shareholders may obtain the advice and assistance of
such experts as they may consider necessary or advisable.
7.6 INDEMNIFICATION PRIOR TO CERTAIN ACTIONS BY TRUSTEE
The Trustee shall exercise any or all of the rights, duties, powers or
authorities vested in it by this Agreement at the request, order or direction of
any Shareholder upon such Shareholder furnishing to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
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incurred by the Trustee therein or thereby, provided that no Shareholder shall
be obligated to furnish to the Trustee any such security or indemnity in
connection with the exercise by the Trustee of any of its rights, duties, powers
and authorities with respect to the voting of the Trust Shares pursuant to
Article 3 and with respect to the Insolvency Exchange Right and Automatic
Exchange Rights pursuant to Article 4.
The Trustee shall not be required to expend any of its own funds or otherwise
incur any financial liability in the exercise of any of its rights, powers,
duties or authorities, but instead shall be entitled to be fully funded, given
security and indemnity in advance as aforesaid.
7.7 ACTIONS BY SHAREHOLDERS
Shareholders shall be entitled to take proceedings in any court of competent
jurisdiction to enforce any of their rights hereunder as against the Purchaser
and the Parent.
7.8 RELIANCE UPON DECLARATIONS
The Trustee shall not be considered to be in contravention of any of its rights,
powers, duties and authorities hereunder if, when required, it acts and relies
in good faith upon statutory declarations, certificates, opinions, reports or
other papers or documents furnished pursuant to the provisions hereof or
required by the Trustee to be furnished to it in the exercise of its rights,
powers, duties and authorities hereunder if such statutory declarations,
certificates, opinions or reports comply with the provisions of section 7.9, if
applicable, and with any other applicable provisions of this Agreement.
7.9 EVIDENCE AND AUTHORITY TO TRUSTEE
The Purchaser and/or the Parent shall furnish to the Trustee evidence of
compliance with the conditions provided for in this Agreement relating to any
action or step required or permitted to be taken by the Purchaser and/or the
Parent or the Trustee under this Agreement or as a result of any obligation
imposed under this Agreement including, without limitation, in respect of the
Voting Rights, Insolvency Exchange Right or the Automatic Exchange Rights and
the taking of any other action to be taken by the Trustee at the request of or
on the application of the Purchaser and/or the Parent forthwith if and when:
(a) such evidence is required by any other section of this Agreement
to be furnished to the Trustee in accordance with the terms of
this section 7.9; or
(b) the Trustee, in the exercise of its rights, powers, duties and
authorities under this Agreement, gives the Purchaser and/or the
Parent written notice requiring it to furnish such evidence in
relation to any particular action or obligation specified in such
notice.
Such evidence shall consist of an Officer's Certificate of the Purchaser and/or
the Parent, a statutory declaration or a certificate made by persons entitled to
sign an Officer's Certificate stating that any such condition has been complied
with in accordance with the terms of this Agreement.
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Whenever such evidence relates to a matter other than the Voting Rights, the
Insolvency Exchange Right or the Automatic Exchange Rights or the taking of any
other action to be taken by the Trustee at the request or on the application of
the Parent and/or the Purchaser, and except as otherwise specifically provided
herein, such evidence may consist of a report or opinion of any solicitor,
auditor, accountant, appraiser, valuer, engineer or other expert or any other
person whose qualifications give authority to a statement made by him, provided
that if such report or opinion is furnished by a director, officer or employee
of the Purchaser and/or the Parent shall be in the form of an Officer's
Certificate or a statutory declaration.
Each statutory declaration, Officer's Certificate, opinion, report or other
paper or document furnished to the Trustee as evidence of compliance with a
condition provided for in this Agreement shall include a statement by the person
giving the evidence:
(c) declaring that he has read and understands the provisions of this
Agreement relating to the condition in question;
(d) describing the nature and scope of the examination or
investigation upon which he based the statutory declaration,
certificate, statement or opinion; and
(e) declaring that he has made such examination or investigation as he
believes is necessary to enable him to make the statements or give
the opinions contained or expressed therein.
7.10 EXPERTS, ADVISORS AND AGENTS
The Trustee may:
(a) in relation to these presents, act and rely on the opinion or
advice of or information obtained from any solicitor, auditor,
accountant, appraiser, valuer, engineer or other expert, whether
retained by the Trustee or by the Purchaser and/or the Parent or
otherwise, and may employ such assistants as may be necessary to
the proper discharge of its powers and duties and determination of
its rights hereunder and may pay proper and reasonable
compensation for all such legal and other advice or assistance as
aforesaid without taxation for costs and fees; and
(b) employ such agents and other assistants as it may reasonably
require for the proper discharge of its powers and duties
hereunder, and may pay reasonable remuneration for all services
performed for it,
(and shall be entitled to receive reasonable remuneration for all services
performed by it) in the discharge of the trusts hereof and compensation for all
disbursements, costs and expenses made or incurred by it in the discharge of its
duties hereunder and in the management of the Trust without taxation for costs
and fees, which compensation reimbursement may be requested to be received in
advance prior to undertaking any actions hereunder.
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7.11 INVESTMENT OF MONEYS HELD BY THE TRUSTEE
Unless otherwise provided in this Agreement, any moneys held by or on behalf of
the Trustee which under the terms of this Agreement may or ought to be invested
or which may be on deposit with the Trustee or which may be in the hands of the
Trustee may be invested and reinvested in the name or under the control of the
Trustee in securities in which, under the laws of the Province of Ontario,
trustees are authorized to invest trust moneys, provided that such securities
are stated to mature within two (2) years after their purchase by the Trustee,
and the Trustee shall so invest such moneys on the written direction of the
Purchaser. Pending the investment of any moneys as hereinbefore provided, such
moneys may be deposited in the name of the Trustee in any bank, loan or trust
company authorized to accept deposits under the laws of the United States,
Canada or any state or province thereof, at the rate of interest then current on
similar deposits.
7.12 TRUSTEE NOT REQUIRED TO GIVE SECURITY
The Trustee shall not be required to give any bond or security in respect of the
execution of the trusts, rights, duties, powers and authorities of this
Agreement or otherwise in respect of the premises.
7.13 TRUSTEE NOT BOUND TO ACT ON CORPORATION'S REQUEST
Except as in this Agreement or otherwise specifically provided, the Trustee
shall not be bound to act in accordance with any direction or request of the
Purchaser and/or the Parent or the directors thereof until a duly authenticated
copy of the instrument or resolution containing such direction or request shall
have been delivered to the Trustee and the Trustee shall be empowered to act and
rely upon any such copy purporting to be authenticated and believed by the
Trustee to be genuine.
7.14 CONFLICTING CLAIMS
If conflicting claims or demands are made or asserted with respect to any
interest of any Shareholder in any Exchangeable Shares, including any
disagreement between the heirs, representatives, successors or assigns
succeeding to all or any part of the interest of any Shareholder in any
Exchangeable Shares resulting in conflicting claims or demands being made in
connection with such interest, then the Trustee shall be entitled, at its sole
discretion, to refuse to recognize or to comply with any such claim or demand.
In so refusing, the Trustee may elect not to exercise any Voting Rights,
Insolvency Exchange Right or Automatic Exchange Rights subject to such
conflicting claims or demands and in so doing, the Trustee shall not be or
become liable to any person on account of such election or its failure or
refusal to comply with any such conflicting claims or demands. The Trustee shall
be entitled to continue to refrain from acting and to refuse to act until:
(a) the rights of all adverse claimants with respect to the Voting
Rights, Insolvency Exchange Right or Automatic Exchange Rights
subject to such conflicting claims or demands have been
adjudicated by a final judgment of a court of competent
jurisdiction; or
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(b) all differences with respect to the Voting Rights, Insolvency
Exchange Right or Automatic Exchange Rights subject to such
conflicting claims or demands have been conclusively settled by a
valid written agreement binding on all such adverse claimants, and
the Trustee shall have been furnished with an executed copy of
such agreement.
If the Trustee elects to recognize any claim or comply with any demand made by
any such adverse claimant, it may in its discretion require such claimant to
furnish such surety bond or other security satisfactory to the Trustee as it
shall deem appropriate to fully indemnify it as between all conflicting claims
or demands.
7.15 ACCEPTANCE OF TRUST
The Trustee hereby accepts the Trust created and provided for by and in this
Agreement and agrees to perform the same upon the terms and conditions set forth
herein and to hold all rights, privileges and benefits conferred hereby and by
law in trust for the various persons who shall from time to time be
Shareholders, subject to all the terms and conditions set forth herein.
7.16 VALIDITY OF CERTIFICATES
If at any time in the performance of its duties under this Agreement, it shall
be necessary for the Trustee to receive, accept, act or rely upon any
certificate, notice, request, waiver, consent, receipt, direction, affidavit or
other paper, writing or document furnished to it and purporting to have been
executed or issued by the Purchaser, the Parent or the Shareholders or their
authorized officers or attorneys, the Trustee shall be entitled to rely and act
upon the genuineness and authenticity of any such writing submitted to it. It
shall not be necessary for the Trustee to ascertain whether or not the persons
who have executed, signed or otherwise issued, authenticated or receipted such
papers, writings or documents have authority to do so or that they are the same
persons named therein or otherwise to pass upon any requirement of such papers,
writing or documents that may be essential for their validity or effectiveness
or upon the truth and acceptability of any information contained therein which
the Trustee in good faith believes to be genuine.
ARTICLE 8
COMPENSATION
8.1 FEES AND EXPENSES OF THE TRUSTEE
The Parent and Purchaser jointly and severally agree to pay to the Trustee
reasonable compensation for all of the services rendered by it under this
Agreement and will reimburse the Trustee for all reasonable expenses and
disbursements, including, without limitation, legal fees and expenses and the
reasonable compensation and disbursements of all other advisors, agents and
assistants not regularly in its employ and the cost and expense of any suit or
litigation of any character and any proceedings before any governmental agency
reasonably incurred by the Trustee in connection with its rights and duties
under this Agreement; provided that the Parent and the Purchaser shall have no
obligation to reimburse the Trustee for any expenses or disbursements paid,
incurred or suffered by the Trustee in any suit or litigation in which the
Trustee is determined to have acted fraudulently or in bad faith or with
negligence or wilful misconduct. The Trustee shall be obliged to provide only
-23-
one account or invoice to the Parent from time to time during this Agreement in
connection with any services rendered by it under this Agreement on behalf of
any of the parties.
ARTICLE 9
INDEMNIFICATION AND LIMITATION OF LIABILITY
9.1 INDEMNIFICATION OF THE TRUSTEE
The Parent and Purchaser jointly and severally agree to indemnify and hold
harmless the Trustee and each of its directors, officers, partners, employees
and agents appointed and acting in accordance with this Agreement (collectively,
the "Indemnified Parties") against all claims, losses, damages, reasonable
costs, penalties, fines and reasonable expenses (including reasonable expenses
of the Trustee's legal counsel) which, without fraud, negligence, recklessness,
wilful misconduct or bad faith on the part of such Indemnified Party, may be
paid, incurred or suffered by the Indemnified Party by reason of or as a result
of the Trustee's acceptance or administration of the Trust, its compliance with
its duties set forth in this Agreement, or any written or oral instructions
delivered to the Trustee by the Parent or the Purchaser pursuant hereto. Subject
to (ii), below, the Parent and the Purchaser shall be entitled to participate at
their own expense in the defence and, if the Parent and the Purchaser so elect
at any time after receipt of such notice, either of them may assume the defence
of any suit brought to enforce any such claim. In the event the Parent and/or
the Purchaser assume the defence of the Trustee, no settlement of any claim
shall be entered into without the prior approval of the Trustee; and the Trustee
shall have the right to re-assume the defence of any suit if the Parent or
Purchaser fail to actively continue such defence so assumed. The Trustee shall
have the right to employ separate counsel in any such suit and participate in
the defence thereof but the fees and expenses of such counsel shall be at the
expense of the Trustee unless: (i) the employment of such counsel has been
authorized by the Parent or the Purchaser; or (ii) the named parties to any such
suit include both the Trustee and the Parent or the Purchaser, and the Trustee
shall have been advised by counsel acceptable to the Parent or the Purchaser
that there may be one or more legal defences available to the Trustee which are
different from or in addition to those available to the Parent or the Purchaser
and that in the judgment of such counsel, would present a conflict of interest
were a joint representation to be undertaken (in which case the Purchaser and
the Parent shall not have the right to assume the defence of such suit on behalf
of the Trustee but shall be liable to pay the reasonable fees and expenses of
counsel for the Trustee). Neither the Parent nor the Purchaser shall be liable
for any settlement of a matter in respect of which an Indemnified Party may seek
indemnification under this section 9.1, unless the Parent and the Purchaser have
consented in writing to such settlement.
9.2 LIMITATION OF LIABILITY
The Trustee shall not be liable for any act or omission by it except where such
act or omission occurs as a result of the Trustee's fraud, negligence,
recklessness, bad faith or wilful misconduct. The Trustee shall not be liable
for any losses or damages due to the acts or omissions of third parties,
including without limitation, the failure by the Parent and/or the Purchaser to
comply with its obligations under this Agreement, as the case may be. The
Trustee shall not be held liable for any loss which may occur by reason of
depreciation of the value of any part of the Trust Estate or any loss incurred
on any investment of funds pursuant to this Agreement except to the extent that
such loss is attributable to the fraud, negligence, recklessness, wilful
misconduct or bad faith on the part of the Trustee.
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ARTICLE 10
CHANGE OF TRUSTEE
10.1 RESIGNATION
The Trustee, or any trustee hereafter appointed, may at any time resign by
giving written notice of such resignation to the Parent and the Purchaser
specifying the date on which it desires to resign, provided that such notice
shall never be given less than thirty (30) days before such desired resignation
date unless the Trustee, the Parent and the Purchaser otherwise agree, and
provided further that such resignation shall not take effect until the date of
the appointment of a successor trustee and the acceptance of such appointment by
the successor trustee. Upon receiving such notice of resignation, the Parent and
the Purchaser shall promptly appoint a successor trustee by written instrument
in duplicate, one copy of which shall be delivered to the resigning trustee and
one copy to the successor trustee. Failing the appointment by the Parent and the
Purchaser of a successor trustee as aforesaid and the acceptance of such
appointment by a successor trustee, a successor trustee may be appointed by
order of a court of competent jurisdiction in the Province of Ontario upon
application of one or more of the parties to this Agreement.
10.2 REMOVAL
The Trustee, or any trustee hereafter appointed, may at any time on thirty (30)
days' prior notice by written instrument executed by the Parent and the
Purchaser, in duplicate, one copy of which shall be delivered to the Trustee, be
removed and one copy to the successor trustee. Any successor trustee to be
appointed upon the removal of the Trustee shall be appointed in accordance with
the provisions as provided under section 10.3 of this Agreement.
10.3 SUCCESSOR TRUSTEE
Any successor trustee appointed as provided under this Agreement shall execute,
acknowledge and deliver to the Parent and the Purchaser and to its predecessor
trustee an instrument accepting such appointment. Thereupon the resignation or
removal of the predecessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, duties and obligations of its predecessor under this
Agreement with like effect as if originally named as trustee in this Agreement.
However, on the written request of the Parent and the Purchaser or of the
successor trustee, the trustee ceasing to act shall, upon payment of any amounts
then due it pursuant to the provisions of this Agreement, execute and deliver an
instrument transferring to such successor trustee all of the rights and powers
of the trustee so ceasing to act. Upon the request of any such successor
trustee, the Parent and the Purchaser and such predecessor trustee shall execute
any and all instruments in writing for more fully and certainly vesting in and
confirming to such successor trustee all such rights and powers.
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10.4 NOTICE OF SUCCESSOR TRUSTEE
Upon acceptance of appointment by a successor trustee as provided herein the
Parent and the Purchaser shall cause to be mailed notice of the succession of
such trustee hereunder to each Shareholder at the address of such Shareholder
shown on the register of Shareholders of Exchangeable Shares. If the Parent or
the Purchaser shall fail to cause such notice to be mailed within ten (10) days
after acceptance of appointment by the successor trustee, the successor trustee
shall cause such notice to be mailed at the expense of the Parent and the
Purchaser.
ARTICLE 11
THE PARENT SUCCESSORS
11.1 CERTAIN REQUIREMENTS IN RESPECT OF COMBINATION, ETC.
The Parent shall not enter into any transaction (whether by way of
reconstruction, reorganization, consolidation, merger, transfer, sale, lease or
otherwise) whereby all or substantially all of its undertaking, property and
assets would become the property of any other person or, in the case of a
merger, of the continuing corporation resulting therefrom unless:
(a) such other person or continuing corporation is a corporation
(herein called the "Parent Successor") incorporated under the laws
of any state of the United States or the laws of Canada or any
province thereof; and
(b) the Parent Successor, by operation of law, becomes, without more,
bound by the terms and provisions of this Agreement or, if not so
bound, executes, prior to or contemporaneously with the
consummation of such transaction an agreement supplemental hereto
and such other instruments (if any) as are satisfactory to the
Trustee, acting reasonably, and in the opinion of legal counsel to
the Trustee are necessary or advisable to evidence the assumption
by the Parent Successor of liability for all moneys payable and
property deliverable hereunder and the covenant of such Parent
Successor to pay and deliver or cause to be delivered the same and
its agreement to observe and perform all of the covenants and
obligations of the Parent under this Agreement.
11.2 VESTING OF POWERS IN SUCCESSOR
Whenever the conditions of section 11.1 hereof have been duly observed and
performed, the Trustee, if required by section 11.1 hereof, the Parent Successor
and the Purchaser shall execute and deliver the supplemental Agreement provided
for in Article 12 and thereupon the Parent Successor shall possess and from time
to time and may exercise each and every right and power of the Parent under this
Agreement in the name of the Parent or otherwise and any act or proceeding by
any provision of this Agreement required to be done or performed by the board of
directors of Parent or any officers of the Parent may be done and performed with
like force and effect by the directors or officers of such the Parent Successor.
-26-
11.3 WHOLLY-OWNED SUBSIDIARIES
Nothing herein shall be construed as preventing (i) the amalgamation or merger
or sale of any wholly-owned direct or indirect subsidiary of the Parent with or
into the Parent, or (ii) the winding-up, liquidation or dissolution of any
wholly-owned subsidiary of the Parent, provided that all of the assets of such
subsidiary are transferred to the Parent or another wholly-owned subsidiary of
the Parent.
ARTICLE 12
AMENDMENTS AND SUPPLEMENTAL TRUST AGREEMENTS
12.1 AMENDMENTS, MODIFICATIONS, ETC.
This Agreement may not be amended or modified except by an agreement in writing
executed by the Purchaser, the Parent and the Trustee and approved by the
Shareholders in accordance with section 11.2 of the Exchangeable Share
Provisions.
12.2 MEETING TO CONSIDER AMENDMENTS
The Purchaser, at the request of the Parent shall call a meeting or meetings of
the Shareholders for the purpose of considering any proposed amendment or
modification requiring approval pursuant hereto. Any such meeting or meetings
shall be called and held in accordance with the by-laws of the Purchaser, the
Exchangeable Share Provisions and all applicable laws.
12.3 CHANGES IN CAPITAL OF PARENT OR THE PURCHASER.
At all times after the occurrence of any event effected pursuant to section 2.7
or 2.8 of the Support Agreement, as a result of which either Parent Common
Shares or the Exchangeable Shares or both are in any way changed, this Agreement
shall forthwith be amended and modified as necessary in order that it shall
apply with full force and effect, mutatis mutandis, to all new securities into
which Parent Common Shares or the Exchangeable Shares or both are so changed and
the parties hereto shall execute and deliver a supplemental Agreement giving
effect to and evidencing such necessary amendments and modifications.
12.4 EXECUTION OF SUPPLEMENTAL AGREEMENTS
No amendment to or modification or waiver of any of the provisions of this
Agreement otherwise permitted hereunder shall be effective unless made in
writing and signed by all of the parties hereto. From time to time the parties
may, subject to the provisions of these presents, and they shall, when so
directed by these presents, execute and deliver by their proper officers, trust
agreements or other instruments supplemental hereto, which thereafter shall form
part hereof, for any one or more of the following purposes:
(a) evidencing the succession of Parent Successors to the Parent and
the covenants of and obligations assumed by each such Parent
Successor in accordance with the provisions of Article 11 and the
successor of any successor trustee in accordance with the
provisions of Article 10;
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(b) making any additions to, deletions from or alterations of the
provisions of this Agreement or the Voting Rights, the Insolvency
Exchange Right or the Automatic Exchange Rights which, in the
opinion of the Trustee, will not be prejudicial to the interests
of the Shareholders as a whole or are in the opinion of counsel to
the Trustee necessary or advisable in order to incorporate,
reflect or comply with any legislation the provisions of which
apply to the parties or this Agreement; and
(c) for any other purposes not inconsistent with the provisions of
this Agreement, including without limitation to make or evidence
any amendment or modification to this Agreement as contemplated
hereby, provided that, in the opinion of the Trustee, the rights
of the Trustee and the Shareholders as a whole will not be
prejudiced thereby.
ARTICLE 13
TERMINATION
13.1 TERM
The Trust created by this Agreement shall continue until the earliest to occur
of the following events:
(a) no outstanding Exchangeable Shares are held by any Shareholder;
(b) each of the Purchaser and the Parent elects in writing to
terminate the Trust and such termination is approved by the then
holders of the Exchangeable Shares in accordance with section 11.2
of the Exchangeable Share Provisions; and
(c) 21 years after the death of the last survivor of the issue of Her
Majesty Queen Xxxxxxxxx XX of Canada living on the date of the
creation of the Trust.
13.2 SURVIVAL OF AGREEMENT
This Agreement shall survive any termination of the Trust and shall continue
until there are no Exchangeable Shares outstanding held by any Shareholder;
provided however that the provisions of Article 9 and Article 10 shall survive
any such termination of the Trust or this Agreement.
ARTICLE 14
GENERAL
14.1 SEVERABILITY
If any provision of this Agreement is held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the remainder of this
Agreement shall not in any way be affected or impaired thereby and the agreement
shall be carried out as nearly as possible in accordance with its original terms
and conditions.
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14.2 INUREMENT
This Agreement shall be binding upon and endure to the benefit of the parties
hereto and their respective successors and permitted assigns and to the benefit
of the Shareholders.
14.3 NOTICES TO PARTIES
All notices and other communications between the parties hereunder shall be in
writing and shall be deemed to have been given if delivered personally or by
confirmed facsimile to the parties at the following addresses (or at such other
address for such party as shall be specified in like notice):
(a) if to the Parent or the Purchaser:
Big Flash Corp.
00 Xxxx 000 Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: o
Fax: (000) 000-0000
(b) if to the Trustee at:
Equity Transfer Services Inc.
000 Xxxxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: President
Fax: (000) 000-0000
Any notice or other communication given personally shall be deemed to have been
given and received upon delivery thereof and if given by telecopy shall be
deemed to have been given and received on the date of receipt thereof unless
such day is not a Business Day in which case it shall be deemed to have been
given and received upon the immediately following Business Day.
14.4 NOTICE OF SHAREHOLDERS
Any and all notices to be given and any documents to be sent to any Shareholders
may be given or sent to the address of such Shareholder shown on the register of
Shareholders in any manner permitted by the by-laws of the Purchaser from time
to time in force in respect of notices to shareholders and shall be deemed to be
received (if given or sent in such manner) at the time specified in such
by-laws, the provisions of which by-laws shall apply mutatis mutandis to notices
or documents as aforesaid sent to such Shareholders.
14.5 RISK OF PAYMENTS BY MAIL
Whenever payments are to be made or documents are to be sent to any Shareholder
by the Trustee, the Parent or by the Purchaser, or by such Shareholder to the
Trustee or to the Parent or the Purchaser, the making of such payment or sending
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of such document through the mail shall be at the risk of the Purchaser and the
Parent, in the case of payments made or documents sent by the Trustee, the
Parent or the Purchaser, and the Shareholder, in the case of payments made or
documents sent by the Shareholder.
14.6 COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
14.7 JURISDICTION
This Agreement shall be construed and enforced in accordance with the laws of
the Province of Ontario and the laws of Canada applicable therein.
14.8 ATTORNMENT
The Parent and the Purchaser each agree that any action or proceeding arising
out of or relating to this Agreement may be instituted in the courts of the
Province of Ontario, each waives any objection which it may have now or
hereafter to the venue of any such action or proceeding, irrevocably submits to
the non-exclusive jurisdiction of the said courts in any such action or
proceeding, agrees to be bound by any judgment of the said courts and not to
seek, and hereby waives, any review of the merits of any such judgment by the
courts of any other jurisdiction.
14.9 INDEPENDENT LEGAL ADVICE
All other parties have been advised to seek independent advice with respect to
this Agreement and the tax or other consequences arising from it.
14.10 LANGUAGE
The parties acknowledge that they have required that this Agreement and all
notices related hereto are and shall be drawn up in the English language. Les
parties reconnaissent avoir exige que la convention ainsi que tous les documents
y afferents soient et devront etre rediges en langue anglaise.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
BIG FLASH CORP.
Per:
-----------------------------------
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6544631 CANADA INC.
Per:
-----------------------------------
o
EQUITY TRANSFER SERVICES INC.
Per:
---------------------------------
THE SHAREHOLDERS OF THE CORPORATION:
------------------------------ ----------------------------------
Witness Xxxxx Xxxxx
----------------------------- -----------------------------------
Witness Xxxxxx Xxxxx
----------------------------- -----------------------------------
Witness Xxxx Xxxxx
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APPENDIX A
LIST OF EXCHANGEABLE SHARE HOLDERS
SHAREHOLDER NAME NUMBER OF INTEGENX SHARES HELD NUMBER OF EXCHANGEABLE SHARES
---------------- ------------------------------ -----------------------------
Xxxxx Xxxxx 4,709,643.5 4,709,643.5
Xxxxxx Xxxxx 4,709,643.5 4,709,643.5
Xxxx Xxxxx 1,571,713 1,571,713
TOTAL: 10,991,000 10,991,000
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================================================================================
SUPPORT AGREEMENT
THIS AGREEMENT is made effective the 28th day of April, 2006,
BETWEEN:
BIG FLASH CORP.,
a corporation incorporated under the laws of Delaware and having its
corporate office at 00 Xxxx 000 Xxxxx, Xxx 000, Xxxx Xxxx Xxxx, XX, 00000
("Big Flash")
- and -
6544631 CANADA INC.,
a corporation incorporated under the Canada Business Corporations Act
and having its principal office at 00 Xxxxxxxxxx Xxxxxx Xxxx,
Xxxxx 0000, X.X. Xxx 00, Xxxxxxx, Xxxxxxx X0X 0X0
("Exchangeco")
- and -
EQUITY TRANSFER SERVICES INC.,
a corporation incorporated under the laws of the Province of Ontario
and having its offices at 000 Xxxxxxxx Xxxxxx Xxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxx X0X 0X0
(the "Trustee")
WHEREAS pursuant to a share exchange agreement dated as of March <>,
2006 (the "Share Exchange Agreement"), Exchangeco has agreed to acquire all of
the Common Shares (the "Common Shares") of IntelGenx Corp. (the "Company") held
by Xxxxx Xxxxx, Xxxxxx Xxxxx and Xxxx Xxxxx (collectively, the "Vendors") in
exchange for the issuance to the Vendors of Class A Special Shares in the
capital of Exchangeco (the "Exchangeable Shares");
AND WHEREAS in accordance with the Share Exchange Agreement, Big Flash
and Exchangeco have agreed to enter into this support agreement (the
"Agreement");
AND WHEREAS in accordance with the Share Exchange Agreement, Big Flash
and Exchangeco have agreed to enter into an exchange and voting trust agreement
(the "Exchange and Voting Trust Agreement") with the Trustee;
NOW THEREFORE in consideration of the respective covenants and
agreements provided in this Agreement and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the Parties hereto covenant and agree as follows:
-1-
ARTICLE 1 - DEFINITIONS AND INTERPRETATION
------------------------------------------
1.1 Defined Terms
-------------
Each term denoted herein by initial capital letters and not otherwise defined
herein shall have the meaning ascribed thereto in the share provisions of the
Exchangeable Shares (the "Share Provisions"), a copy of which are attached
hereto as Schedule "A".
1.2 Interpretation Not Affected by Headings
---------------------------------------
The division of this Agreement into Articles, sections and other portions and
the insertion of headings are for convenience of reference only and shall not
affect the construction or interpretation of this Agreement. Unless otherwise
indicated, all references to an "Article" or "section" followed by a number
and/or a letter refer to the specified Article or section of this Agreement. The
terms "this Agreement", "hereof", "herein" and "hereunder" and similar
expressions refer to this agreement and not to any particular Article, section
or other portion hereof and include any agreement or instrument supplementary or
ancillary hereto.
1.3 Number, Gender
--------------
Words in the singular number only shall include the plural and vice versa. Words
in one gender shall include all genders.
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.
ARTICLE 2 - COVENANTS OF BIG FLASH AND EXCHANGECO
-------------------------------------------------
2.1 Covenants Regarding Exchangeable Shares
---------------------------------------
So long as any Exchangeable Shares not owned by Big Flash or its Affiliates are
outstanding, Big Flash shall:
(a) not declare or pay any dividend on Big Flash Common Shares unless
(i) Exchangeco shall simultaneously declare or pay, as the case
may be, an equivalent dividend (as provided for in the Share
Provisions) on the Exchangeable Shares, and (ii) Exchangeco 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 the applicable law, of any
such dividend on the Echangeable Shares:
(b) advise Exchangeco sufficiently in advance of the declaration by
Big Flash of any dividend on Big Flash Common Shares and take all
such other actions, including payment or transfer of monies, as
are necessary, in co-operation with Exchangeco, to ensure that the
respective declaration date, record date and payment date for a
dividend on the Exchangeable Shares shall be the same as the
declaration date, record date and payment date for the
corresponding dividend on Big Flash Common Shares;
(c) ensure that the record date for any dividend declared on Big Flash
Common Shares is not less than ten (10) Business Days after the
declaration date of such dividend;
-2-
(d) take all such actions, including payment or transfer of monies,
and do all such things as are reasonably necessary or desirable to
enable and permit Exchangeco, in accordance with applicable law,
to pay and otherwise perform its obligations with respect to the
satisfaction of the Liquidation Amount, the Retraction Price or
the Redemption Price in respect of each issued and outstanding
Exchangeable Share upon a Liquidation Distribution, the delivery
of a Retraction Request by a holder of Exchangeable Shares or a
redemption of Exchangeable Shares by Exchangeco, as the case may
be, including, without limitation, all such actions and all such
things as are necessary or desirable to enable and permit
Exchangeco to instruct the Trustee to cause the Big Flash Common
Shares to be delivered directly to the holders of Exchangeable
Shares by the Trustee in accordance with the provisions of Section
5, 6 or 7, as the case may be, of the Share Provisions;
(e) take all such actions and do all such things as are necessary or
desirable to enable and permit it, in accordance with applicable
law, to perform its obligations arising upon the exercise by it of
the Liquidation Call Right, the Retraction Call Right or the
Redemption Call Right including, without limitation, all such
actions and all such things as are necessary or desirable to
enable, permit and instruct Exchangeco to cause the Big Flash
Common Shares to be delivered to the holders of Exchangeable
Shares in accordance with the provisions of Section 8 of the Share
Provisions; and
(f) not exercise its vote as a direct or indirect shareholder to
initiate the voluntary liquidation, dissolution or winding-up of
Exchangeco nor take any action or omit to take any action that is
designed to result in the liquidation, dissolution or winding-up
of Exchangeco.
2.2 Segregation of Funds
--------------------
Big Flash will cause Exchangeco (and shall fund Exchangeco to the extent
necessary) to deposit a sufficient amount of funds in a separate account of
Exchangeco and segregate a sufficient amount of such other assets and property
as is necessary to enable Exchangeco to pay dividends when due and to pay or
otherwise satisfy its respective obligations under Sections 5, 6 or 7 of the
Share Provisions, as applicable, and Exchangeco will use such funds or other
assets exclusively to pay such dividends or satisfy its obligations under
Sections 3, 5, 6 or 7 of the Share Provisions.
2.3 Issuance and Custody of Big Flash Common Shares
-----------------------------------------------
Big Flash hereby represents, warrants and covenants in favour of Exchangeco that
pursuant to the terms of the Exchange and Voting Trust Agreement, dated as of
even date herewith, by and among Big Flash, Exchangeco, the Vendors and the
Trustee that Big Flash has issued an aggregate of 10,991,000 shares of Big Flash
Common Shares (the "Trust Shares") to be held in trust by the Trustee for the
benefit of the Vendors, the Trust Shares have been duly authorized and validly
issued as fully paid and non-assessable shares and are free and clear of any
lien, claim or encumbrance, and Big Flash undertakes that it shall furthermore,
at all times while any Exchangeable Shares are outstanding, issue to the Trustee
such number of additional Big Flash Common Shares out of its authorized and
unissued capital stock as necessary so that the Trustee at all times holds such
number of Big Flash Common Shares (1) as is equal to the sum of (i) the number
of Exchangeable Shares issued and outstanding from time to time (including any
Exchangeable Shares issued pursuant to section 3.1(b) of the Share Provisions),
and (ii) the number of Exchangeable Shares issuable upon the exercise of all
rights to acquire Exchangeable Shares outstanding from time to time (if any) and
(2) as are now and may hereafter be required to enable and permit Big Flash to
meet its obligations hereunder, under the Liquidation Call Right, the Retraction
-3-
Call Right and the Redemption Call Right, and under any other security or
commitment pursuant to which Big Flash may now or hereafter be required to issue
Big Flash Common Shares, to enable and permit Big Flash and Exchangeco to meet
their respective obligations hereunder and under the Share Provisions.
2.4 Notification of Certain Events
------------------------------
In order to assist and permit Big Flash to exercise the Liquidation Call Right,
Retraction Call Right and Redemption Call Right, Exchangeco will notify Big
Flash of each of the following events at the time set forth below:
(a) in the event of any determination by the Board of Directors of
Exchangeco to institute voluntary liquidation, dissolution or
winding-up proceedings with respect to Exchangeco or to effect any
other distribution of the assets of Exchangeco among its
shareholders for the purpose of winding up its affairs, at least
sixty (60) days prior to the proposed effective date of such
liquidation, dissolution, winding-up or other distribution;
(b) promptly, upon the earlier of receipt by Exchangeco of notice of
and Exchangeco otherwise becoming aware of any threatened or
instituted claim, suit, petition or other proceedings with respect
to the involuntary liquidation, dissolution or winding-up of
Exchangeco or to effect any other distribution of the assets of
Exchangeco among its shareholders for the purpose of winding up
its affairs;
(c) immediately, upon receipt by Exchangeco of a Retraction Request;
(d) on the same date on which notice of redemption is given to holders
of Exchangeable Shares, upon the determination of a Redemption
Date in accordance with the Share Provisions; and
(e) as soon as practicable upon the issuance by Exchangeco of any
Exchangeable Shares or rights to acquire Exchangeable Shares.
2.5 Delivery of Big Flash Common Shares
-----------------------------------
Upon any event that requires Exchangeco to deliver Big Flash Common Shares to
any holder of Exchangeable Shares, and subject to Big Flash's exercise of the
Liquidation Call Right, the Retraction Call Right or the Redemption Call Right,
Exchangeco shall forthwith cause to be delivered the requisite number of Big
Flash Common Shares to be received by, and transferred to or to the order of,
the former holder of the surrendered Exchangeable Shares, as the respective
Vendors shall direct. All such Big Flash Common Shares shall have been duly
authorized and validly issued as fully paid and non-assessable and shall be free
and clear of any lien, claim or encumbrance except with respect to restrictions
and legends required for purposes of compliance with U.S. federal securities
laws.
2.6 Qualification of Big Flash Common Shares
----------------------------------------
If any Big Flash Common Shares (or other shares or securites into which Big
Flash Common Shares may be reclassified or changed as contemplated by section
2.7 hereof) to be issued or transferred and delivered hereunder require
registration or qualification with or approval of or the filing of any document,
including any prospectus or similar document or the taking of any proceeding
with or the obtaining of any order, ruling or consent from any governmental or
regulatory authority under any Canadian or United States federal, provincial or
state securities or other law or regulation or pursuant to the rules and
regulations of any securities or other regulatory authority or the fulfillment
-4-
of any other United States or Canadian legal requirement before such shares (or
such other shares or securities) may be issued by Big Flash or delivered by the
Trustee at the direction of Big Flash or Exchangeco, or may be transferred and
delivered by the Trustee at the direction of Big Flash or Exchangeco, as the
case may be, if applicable, to the holder of surrendered Exchangeable Shares,
Big Flash will in good faith expeditiously take all such actions and do all such
things as are necessary or desirable to cause such Big Flash Common Shares (or
such other shares or securities) to be and remain duly registered, qualified or
approved under United States and/or Canadian law, as the case may be. Big Flash
will in good faith expeditiously take all such actions and do all such things as
are reasonably necessary or desirable to cause all Big Flash Common Shares (or
such other shares or securities) to be delivered hereunder to be listed, quoted
or posted for trading on all stock exchanges and quotation systems on which
outstanding Big Flash Common Shares (or such other shares or securities) have
been listed by Big Flash and remain listed and are quoted or posted for trading
at such time. For clarity, this Section 2.6 shall not operate to require Big
Flash or Exchangeco to prepare and file any prospectus or similar document or
take any proceeding or obtain any order, ruling or consent from any governmental
or regulatory authority in order to permit the subsequent resale of the
Exchangeable Shares or the Trust Shares.
2.7 Economic Equivalence
--------------------
(a) Big Flash will not without the prior approval of Exchangeco and
the prior approval of the holders of the Exchangeable Shares given
in accordance with Section 11 of the Share Provisions:
(i) issue or distribute Big Flash Common Shares (or securities
exchangeable for or convertible into or carrying rights to
acquire Big Flash Common Shares) to the holders of all or
substantially all of the then outstanding Big Flash Common
Shares by way of stock dividend or other distribution, other
than an issue of Big Flash Common Shares (or securities
exchangeable for or convertible into or carrying rights to
acquire Big Flash Common Shares) to holders of Big Flash
Common Shares who exercise an option to receive dividends in
Big Flash Common Shares (or securities exchangeable for or
convertible into or carrying rights to acquire Big Flash
Common Shares) in lieu of receiving cash dividends; or
(ii) issue or distribute rights, options or warrants to the
holders of all or substantially all of the then outstanding
Big Flash Common Shares entitling them to subscribe for or to
purchase Big Flash Common Shares (or securities exchangeable
for or convertible into or carrying rights to acquire Big
Flash Common Shares); or
(iii) issue or distribute to the holders of all or substantially
all of the then outstanding Big Flash Common Shares (A)
shares or securities of Big Flash of any class other than Big
Flash Common Shares (other than shares convertible into or
exchangeable for or carrying rights to acquire Big Flash
Common Shares), (B) rights, options or warrants other than
those referred to in section 2.7(a)(ii) above, (C) evidences
of indebtedness of Big Flash, or (D) assets of Big Flash;
unless (a) Big Flash is permitted under applicable law to
undertake an action described in items (i), (ii) or (iii) above;
and (b) the same or an economic equivalent change on a per share
basis shall simultaneously be made to or in the rights of the
holders of the Exchangeable Shares; provided that, for greater
certainty, the above restrictions shall not apply to any
securities issued or distributed by Big Flash in order to give
effect to and to consummate the transactions contemplated by, and
in accordance with, the Share Exchange Agreement, or as otherwise
permitted by the parties to the Share Exchange Agreement.
-5-
(b) Big Flash will not without the prior approval of Exchangeco and
the prior approval of the holders of the Exchangeable Shares given
in accordance with Section 11 of the Share Provisions:
(i) subdivide, redivide or change the then outstanding Big
Flash Common Shares into a greater number of Big Flash
Common Shares;
(ii) reduce, combine, consolidate or change the then
outstanding Big Flash Common Shares into a lesser number
of Big Flash Common Shares; or
(iii) reclassify or otherwise change Big Flash Common Shares
or effect an amalgamation, merger, reorganization or
other transaction affecting Big Flash Common Shares,
unless (a) Big Flash is permitted under applicable law to
undertake an action described in items (i), (ii) or (iii)
above; and (b) the same or an economically equivalent change
shall simultaneously be made to, or in the rights of the
holders of, the Exchangeable Shares.
(c) Big Flash will ensure that the record date for any event referred
to in section 2.7(a) or 2.7 (b) above, (or, if no record date is
applicable for such event), the effective date for any such event,
is not less than ten (10) Business Days after the date on which
such event is declared or announced by Big Flash (with
contemporaneous notification thereof by Big Flash to Exchangeco).
(d) The Board of Directors of Exchangeco shall determine, in good
faith and in its sole discretion acting reasonably (with the
assistance of such reputable and qualified independent financial
advisors and/or other experts as the Board of Directors may
determine necessary or desirable), economic equivalence for the
purposes of any event referred to in section 2.7(a) or 2.7(b)
above and each such determination shall be conclusive and binding
on Big Flash. In making each such determination, the following
factors shall, without excluding other factors determined by the
Board of Directors to be relevant, be considered by the Board of
Directors:
(i) in the case of any stock dividend or other distribution
payable in Big Flash Common Shares, the number of such shares
issued in proportion to the number of Big Flash Common Shares
previously outstanding;
(ii) in the case of the issuance or distribution of any rights,
options or warrants to subscribe for or purchase Big Flash
Common Shares (or securities exchangeable for or convertible
into or carrying rights to acquire Big Flash Common Shares),
the relationship between the exercise price of each such
right, option or warrant and the Current Market Price;
(iii) in the case of the issuance or distribution of any other
form of property (including, without limitation, any shares
or securities of Big Flash of any class other than Big Flash
Common Shares), any rights, options or warrants other than
those referred to in section 2.7(d)(ii) above, any evidences
of indebtedness of Big Flash or any assets of Big Flash, the
relationship between the fair market value (as determined by
-6-
the Board of Directors in good faith acting reasonably) of
such property to be issued or distributed with respect to each
outstanding Big Flash Common Share and the Current Market
Price;
(iv) in the case of any subdivision, redivision or change of the
then outstanding Big Flash Common Shares into a greater
number of Big Flash Common Shares or the reduction,
combination, consolidation or change of the then outstanding
Big Flash Common Shares into a lesser number of Big Flash
Common Shares or any amalgamation, merger, reorganization or
other transaction affecting Big Flash Common Shares, the
effect thereof upon the then outstanding Big Flash Common
Shares; and
(v) in all such cases, the general taxation consequences of the
relevant event to holders of Exchangeable Shares to the
extent that such consequences may differ from the taxation
consequences to holders of Big Flash Common Shares as a
result of differences between taxation laws of Canada and the
United States (except for any differing consequences arising
as a result of differing marginal taxation rates and without
regard to the individual circumstances of holders of
Exchangeable Shares).
(e) Exchangeco agrees that, to the extent required, upon due notice
from Big Flash, Exchangeco will use its best efforts to take or
cause to be taken such steps as may be necessary for the purposes
of ensuring that appropriate dividends are paid or other
distributions are made by Exchangeco, or subdivisions, redivisions
or changes are made to the Exchangeable Shares, in order to
implement the required economic equivalent with respect to Big
Flash Common Shares and the Exchangeable Shares as provided for in
this section 2.7.
2.8 Tender Offers
-------------
In the event that a tender offer, share exchange offer, issuer bid, take-over
bid or similar transaction with respect to Big Flash Common Shares (an "Offer")
is proposed by Big Flash or is proposed to Big Flash or its shareholders and is
recommended by the Board of Directors of Big Flash, or is otherwise effected or
to be effected with the consent or approval of the Board of Directors of Big
Flash, and the Exchangeable Shares are not redeemed by Exchangeco or purchased
by Big Flash as contemplated by and in compliance with the Share Provisions,
then Big Flash will use its reasonable efforts expeditiously and in good faith
to take all such actions and do all such things as are necessary or desirable to
enable and permit holders of the Exchangeable Shares to participate in such
Offer to the same extent and on an economically equivalent basis as the holders
of Big Flash Common Shares, without discrimination. Without limiting the
generality of the foregoing, Big Flash will use its reasonable efforts
expeditiously and in good faith (in the case of a transaction by Big Flash or
where Big Flash is a participant in the negotiation thereof) to ensure that
holders of the Exchangeable Shares may participate in all such Offers without
being required to retract the Exchangeable Shares as against Exchangeco (or, if
so required, to ensure that any such retraction, shall be effective only upon,
and shall be conditional upon, the closing of the Offer and only to the extent
necessary to tender or deposit to the Offer). Nothing herein shall affect the
rights of Exchangeco under the Share Provisions to redeem (or Big Flash to
purchase pursuant to the Redemption Call Right) the Exchangeable Shares, in the
event of a Big Flash Control Transaction.
-7-
2.9 Ownership of Voting Outstanding Shares of Exchangeco
----------------------------------------------------
Unless otherwise agreed to by Exchangeco and unless the holders of the
Exchangeable Shares have given their consent in accordance with Section 11 of
the Share Provisions, Big Flash covenants and agrees in favour of Exchangeco
that, as long as any of the Exchangeable Shares outstanding are owned by any
person or entity other than Big Flash or any of its Affiliates, Big Flash will
be and shall remain the direct or indirect beneficial owner of all issued and
outstanding voting shares in the capital of Exchangeco.
2.10 Big Flash and Affiliates Not to Vote Exchangeable Shares
--------------------------------------------------------
Big Flash covenants and agrees that it will appoint and cause to be appointed
proxy holders with respect to all of the Exchangeable Shares held by it and its
Affiliates for the sole purpose of attending each meeting of holders of the
Exchangeable Shares in order to be counted as part of the quorum for each such
meeting. Big Flash further covenants and agrees that it will not, and will cause
its Affiliates not to, exercise any voting rights which may be exercisable by
holders of the Exchangeable Shares from time to time pursuant to the Share
Provisions or pursuant to the provisions of the Act (or any successor or other
statute by which Exchangeco may in the future be governed) with respect to any
of the Exchangeable Shares held by it or by its Affiliates in respect of any
matter considered at any meeting of the holders of the Exchangeable Shares.
2.11 Rule 10b-18 Purchases
---------------------
For certainty, nothing contained in this Agreement, including without limitation
the obligations of Big Flash contained in section 2.8 hereof, shall limit the
ability of Big Flash or Exchangeco to make a "Rule 00x-00 Xxxxxxxx" of Common
Shares pursuant to Rule 10b-18 of the U.S. Securities Exchange Act of 1934, as
amended, or any successor provisions thereof.
2.12 Special Big Flash Representations and Covenants
-----------------------------------------------
(a) Each of Big Flash and Exchangeco, jointly and severally, represent
to the other such party and all other third party beneficiaries of
this Agreement, that (i) the authorized capital of Exchangeco as
of the date hereof is as set forth on Annex A attached hereto and
no change has been made or occurred with respect to such
authorized capital prior to closing of this Agreement; (ii)
immediately prior to issuance of the Exchangeable Shares,
Exchangeco has no issued or outstanding capital stock other than
the Class A Shares, all of which are owned by Big Flash; (iii)
there are no Claims pending or threatened against Big Flash or
Exchangeco in regard to any prior transaction or any other
matters; and (iv) there are no continuing, residual or future
obligations required to be maintained or performed by Exchangeco
with respect to any prior shareholders of Exchangeco or any prior
transaction other than in regard to Big Flash in its capacity as
the sole holder of all Class A Shares of Exchangeco.
(b) Big Flash undertakes, covenants and agrees that unless and until
the first business day immediately following exchange of all of
the Exchangeable Shares: (i) Big Flash shall be and remain the
sole holder of record and beneficial owner of the Class A Shares
of Exchangeco; and (ii) Big Flash shall be and remain in sole
control of Exchangeco.
(c) Each of Big Flash and Exchangeco covenant and agree that
Exchangeco will not be used for any future transaction, or carry
on any business, unless and until all Exchangeable Shares have
been exchanged and/or the rights of the holders of the
Exchangeable Shares have otherwise terminated in accordance with
the Share Provisions.
-9-
ARTICLE 3 - BIG FLASH SUCCESSORS
--------------------------------
3.1 Certain Requirements in Respect of Combination, etc.
----------------------------------------------------
Except as contemplated in the Share Exchange Agreement, Big Flash shall not
consummate any transaction (whether by way of reconstruction, reorganization,
consolidation, merger, transfer, sale, lease or otherwise) whereby all or
substantially all of its undertaking, property and assets would become the
property of any other person or, in the case of a merger, of the continuing
corporation resulting therefrom, unless:
(a) such other person or continuing corporation (the "Big Flash
Successor") by operation of law, becomes, without more, bound by
the terms and provisions of this Agreement or, if not so bound,
executes, prior to or contemporaneously with the consummation of
such transaction, an agreement supplemental hereto and such other
instruments (if any) as are reasonably necessary or advisable to
evidence the assumption by the Big Flash Successor of liability
for all moneys payable and property deliverable hereunder and the
covenant of such Big Flash Successor to pay and deliver or cause
to be delivered the same and its agreement to observe and perform
all the covenants and obligations of Big Flash under this
Agreement; and
(b) such transaction shall be upon such terms and conditions as
substantially to preserve and not to impair in any material
respect any of the rights, duties, powers and authorities of the
other Parties hereunder.
3.2 Vesting of Powers in Successor
------------------------------
Whenever the conditions of section 3.1 have been duly observed and performed,
the Parties, if required by section 3.1, shall execute and deliver a
supplemental agreement hereto and thereupon the Big Flash Successor shall
possess and from time to time may exercise each and every right and power of Big
Flash under this Agreement in the name of Big Flash or otherwise and any act or
proceeding by any provision of this Agreement required to be done or performed
by the Board of Directors of Big Flash or any officers of Big Flash may be done
and performed with like force and effect by the directors or officers of such
Big Flash Successor.
3.3 Wholly-Owned Subsidiaries
-------------------------
Nothing herein shall be construed as preventing the amalgamation or merger of
any direct or indirect subsidiary of Big Flash, except for Exchangeco, with or
into Big Flash or the winding-up, liquidation or dissolution of any direct or
indirect subsidiary of Big Flash, except for Exchangeco, provided that all of
the assets of such subsidiary are transferred to Big Flash or another
wholly-owned direct or indirect subsidiary of Big Flash and any such
transactions are expressly permitted by this Article 3.
ARTICLE 4 - GENERAL
-------------------
4.1 Term
----
This Agreement shall come into force and be effective as of the date hereof and
shall terminate and be of no further force and effect at such time as no
Exchangeable Shares (or securities or rights convertible into or exchangeable
for or carrying rights to acquire Exchangeable Shares) are held by any person or
entity other than Big Flash and any of its Affiliates.
-9-
4.2 Changes in Capital of Big Flash and Exchangeco
----------------------------------------------
Notwithstanding the provisions of section 4.4, at all times after the occurrence
of any event contemplated pursuant to sections 2.7 and 2.8 hereof or otherwise,
as a result of which either Big Flash Common Shares or the Exchangeable Shares
or both are in any way changed, this Agreement shall forthwith be amended and
modified as necessary in order that it shall apply with full force and effect,
with the appropriate changes, to all new securities into which Big Flash Common
Shares or the Exchangeable Shares or both are so changed and the Parties hereto
shall execute and deliver an agreement in writing giving effect to and
evidencing such necessary amendments and modifications.
4.3 Severability
------------
If any provision of this Agreement is held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the remainder of this
Agreement shall not in any way be affected or impaired thereby and this
Agreement shall be carried out as nearly as possible in accordance with its
original terms and conditions.
4.4 Amendments and Modifications
----------------------------
This Agreement may not be amended or modified except by an agreement in writing
executed by Big Flash and Exchangeco and, subject to section 4.5 hereof, with
the approval of the holders of Exchangeable Shares (or their duly appointed
attorney or agent) obtained in accordance with section 11 of the Share
Provisions.
4.5 Administrative Amendments
-------------------------
Notwithstanding the provisions of section 4.4 hereof, the Parties to this
Agreement may in writing at any time and from time to time, without the approval
of the holders of the Exchangeable Shares, amend or modify this Agreement for
the purposes of:
(a) adding to the covenants of Big Flash and Exchangeco, provided that
the board of directors of each of Big Flash and Exchangeco shall
be of the good faith and reasonable opinion that such additions
will not be prejudicial to the rights or interests of the holders
of the Exchangeable Shares;
(b) making such amendments or modifications not inconsistent with this
Agreement as may be necessary or desirable with respect to matters
or questions which, in the good faith opinion of the board of
directors of each of Big Flash and Exchangeco, it may be expedient
to make, provided that each such board of directors shall be of
the good faith and reasonable opinion that such amendments or
modifications will not be prejudicial to the rights or interests
of the holders of the Exchangeable Shares; or
(c) making such changes or corrections which, on the advice of counsel
to Big Flash and Exchangeco are required for the purpose of curing
or correcting any ambiguity or defect or inconsistent provision or
clerical omission or mistake or manifest error, provided that the
board of directors of each of Big Flash and Exchangeco shall be of
the good faith and reasonable opinion that such changes or
corrections will not be prejudicial to the rights or interests of
the holders of the Exchangeable Shares.
-10-
4.6 Meeting to Consider Amendments
------------------------------
Exchangeco, at the request of Big Flash, shall call a meeting or meetings of the
holders of the Exchangeable Shares for the purpose of considering any proposed
amendment or modification requiring approval pursuant to section 4.4 hereof. Any
such meeting or meetings shall be called and held in accordance with the bylaws
of Exchangeco, the Share Provisions and all applicable laws.
4.7 Enforceability and Enurement
----------------------------
This Agreement shall be binding upon and enure to the benefit of the Parties
hereto and their respective successors and assigns. This Agreement has been
incorporated by reference into the Share Exchange Agreement and the Vendors,
jointly and severally, are each an express third-party beneficiary of this
Agreement and as such have any and all rights of direct enforcement of this
Agreement to the same and full extent as if a signatory party hereto.
4.8 Notices to Parties
------------------
All notices, requests, demands and other communications hereunder must be made
in writing and will be deemed to have been duly given if delivered personally or
by courier to the addressee at the address appearing on the first page hereof or
to such other address as may be given in writing by the Party. Any notice given
by personal delivery shall be deemed to be received on the date of delivery. Any
notice sent by courier shall be deemed to be received on the next Business Day
following the deposit of the communication with the courier service.
4.9 Counterparts and Facsimile
--------------------------
This Agreement may be executed in counterparts by original or facsimile
signature, each of which shall be deemed an original, and all of which taken
together shall constitute one and the same instrument.
4.10 Governing Law
-------------
This Agreement shall be governed by and interpreted in accordance with the laws
of the Province of Ontario without giving effect to provisions of conflicts of
law thereto. Each Party irrevocably submits to the non-exclusive jurisdiction of
the courts of the Province of Ontario with respect to any matter arising
hereunder or related hereto.
[Signature Page Follows]
-11-
IN WITNESS WHEREOF the Parties have caused this Agreement to be duly executed as
of the date first above written.
BIG FLASH CORP.
Per:
-----------------------------------
Name:
Title:
6544631 CANADA INC.
Per:
-----------------------------------
Name:
Title:
EQUITY TRANSFER SERVICES INC.
Per:
-----------------------------------
Name:
Title:
-12-
SCHEDULE "A"
The Class A Special Shares of 6544631 Canada Inc. (the "Corporation") shall have
attached thereto, as a class, the following rights, privileges, restrictions,
and conditions:
SECTION 1 INTERPRETATION
1.1 For the purposes of these Share Provisions:
(a) "Act" means the Canada Business Corporations Act, as amended.
(b) "Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by, or under common control of
that Person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by"
and "under common control of"), as applied to any Person, means
the possession by another Person, directly or indirectly, of the
power to direct or cause the direction of the management and
policies of that first mentioned Person, whether through the
ownership of voting securities, by contract or otherwise, provided
that for the purpose of these Share Provisions the Vendors (as
such term is defined in the Support Agreement) shall be deemed not
to be Affiliates of Big Flash..
(c) "Big Flash" means Big Flash Corp., a corporation existing under
the laws of the State of Delaware, and any successor corporation
thereto.
(d) "Big Flash Call Notice" has the meaning ascribed thereto in
section 6.3 of these Share Provisions.
(e) "Big Flash Common Shares" means the shares of common stock in the
capital of Big Flash, as consolidated or subdivided from time to
time, and any other securities into which such shares may be
reclassified or changed.
(f) "Big Flash Control Transaction" means any merger, amalgamation,
tender offer, material sale of shares or rights or interests
therein or thereto, or a sale of all or substantially all of the
assets of Big Flash, or similar transactions involving Big Flash,
or any proposal to do so.
(g) "Big Flash Dividend Declaration Date" means the date on which the
Board of Directors of Big Flash declares any dividend on the Big
Flash Common Shares.
(h) "Board of Directors" means the board of directors of the
Corporation.
(i) "Bulletin Board" means the Over-the-Counter Bulletin Board, an
over-the-counter securities market operated by the National
Association of Securities Dealers.
(j) "Business Day" means any day on which commercial banks are open
for business in the Province of Ontario other than a Saturday, a
Sunday or a day observed as a holiday under the laws of the
Province of Ontario or the Federal laws of Canada.
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(k) "Canadian Dollar Equivalent" means in respect of an amount
expressed in a foreign currency (the "Foreign Currency Amount") at
any date the product obtained by multiplying:
(i) the Foreign Currency Amount by,
(ii) the noon spot exchange rate on such date for such foreign currency
expressed in Canadian dollars as reported by the Bank of Canada
or, in the event such spot exchange rate is not available, such
spot exchange rate on such date for such foreign currency
expressed in Canadian dollars as may be deemed by the Board of
Directors, acting reasonably to be appropriate for such purpose.
(l) "Common Shares" means common shares in the capital of the
Corporation.
(m) "Current Market Price" means the Canadian Dollar Equivalent of the
average of the closing bid and ask prices of a Big Flash Common
Share during a period of twenty (20) consecutive trading days
ending not more than three (3) trading days before such date on
the Bulletin Board, or if the Big Flash Shares are no longer
quoted on the Bulletin Board, then on such other stock exchange or
automated quotation system on which the Big Flash Common Shares
are listed or quoted, as the case may be, as may be selected by
the Board of Directors for such purpose; provided, however, that
if, in the opinion of the Board of Directors, the public
distribution or trading activity of Big Flash Common Shares during
such period does not create a market which reflects the fair
market value of a Big Flash Common Share, then the Current Market
Price of a Big Flash Common Share shall be determined by the Board
of Directors, in good faith and acting reasonably, based upon the
advice of such qualified independent financial advisors as the
Board of Directors may deem appropriate, and in its sole
discretion, and provided further that any such selection, opinion
or determination by the Board of Directors shall be conclusive and
binding.
(n) "Exchange Right" has the meaning ascribed thereto in section 6.6
of these Share Provisions.
(o) "Exchangeable Shares" means the Class A Special Shares in the
capital of the Corporation, being non-voting exchangeable shares
having the rights, privileges, restrictions, and conditions set
forth herein.
(p) "Exchangeable Share Voting Event" means any matter in respect of
which holders of Exchangeable Shares are entitled to vote as
shareholders of the Corporation, other than an Exempt Exchangeable
Share Voting Event, and for greater certainty, excluding any
matter in respect of which holders of Exchangeable Shares are
entitled to vote (or instruct the Trustee to vote) in their
capacity as beneficiaries under the Exchange and Voting Trust
Agreement.
(q) "Exempt Exchangeable Share Voting Event" means any matter in
respect of which holders of Exchangeable Shares are entitled to
vote as shareholders of the Corporation in order to approve any
change to, or in the rights of the holders of, the Exchangeable
Shares, where the approval or disapproval, as applicable, of such
change would be required to maintain the equivalence of the
Exchangeable Shares and the Big Flash Common Shares.
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(r) "Exchange and Voting Trust Agreement" means the exchange and
voting trust agreement between Big Flash, the Corporation, the
Trustee and shareholders of Intelgenx Corp.
(s) "Liquidation Amount" has the meaning ascribed thereto in section
5.1 of these Share Provisions.
(t) "Liquidation Call Purchase Price" has the meaning ascribed thereto
in section 8.1(a) of these Share Provisions.
(u) "Liquidation Call Right" has the meaning ascribed thereto in
section 8.1(a) of these Share Provisions.
(v) "Liquidation Date" has the meaning ascribed thereto in section 5.1
of these Share Provisions.
(w) "Liquidation Distribution" means a distribution of assets of the
Corporation among its shareholders arising on the liquidation,
dissolution, or winding-up of the Corporation, whether voluntary
or involuntary, or any other distribution of the assets of the
Corporation among its shareholders for the purpose of winding-up
its affairs.
(x) "Person" includes any individual, firm, partnership, joint
venture, venture capital fund, association, trust, agent,
executor, administrator, legal personal representative, estate,
group, body corporate, corporation, unincorporated association or
organization, government body, syndicate or other entity, whether
or not having legal status.
(y) "Purchase Price" has the meaning ascribed thereto in section 6.3
of these Share Provisions.
(z) "Redemption Call Purchase Price" has the meaning ascribed thereto
in section 8.2 of these Share Provisions.
(aa) "Redemption Call Right" has the meaning ascribed thereto by
section 8.2 of these Share Provisions.
(bb) "Redemption Date" means the date, established by the Board of
Directors for the redemption by the Corporation of all but not
less than all of the outstanding Exchangeable Shares pursuant to
section 7 of these Share Provisions, which date shall not be
earlier than the tenth anniversary of the date of issuance of the
Exchangeable Shares, unless:
(i) the number of Exchangeable Shares outstanding (other than
Exchangeable Shares held by Big Flash and its Affiliates, and
as such number of shares may be adjusted as deemed
appropriate by the Board of Directors to give effect to any
subdivision or consolidation of or stock dividend on the
Exchangeable Shares, any issue or distribution of rights to
acquire Exchangeable Shares or securities exchangeable for or
convertible into Exchangeable Shares, any issue or
distribution of other securities or rights or evidences of
indebtedness or assets, or any other capital reorganization
or other transaction affecting the Exchangeable Shares) is
less than 10% of the number of Exchangeable Shares issued
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upon the first issuance of Exchangeable Shares, in which case
the Board of Directors may accelerate such redemption date to
such earlier date as it may determine, upon at least sixty
(60) days' prior written notice to the registered holders of
the Exchangeable Shares;
(ii) a Big Flash Control Transaction occurs, in which case,
provided that the Board of Directors determines, in good
faith and in its sole discretion, that it is not reasonably
practicable to substantially replicate the terms and
conditions of the Exchangeable Shares in connection with such
Big Flash Control Transaction and that the redemption of all
but not less than all of the outstanding Exchangeable Shares
is necessary to enable the completion of such Big Flash
Control Transaction in accordance with its terms, the Board
of Directors may accelerate such redemption date to such
earlier date as it may determine, upon such number of days
prior written notice to the registered holders of the
Exchangeable Shares as the Board of Directors may determine
to be reasonably practicable in such circumstances;
(iii) an Exchangeable Share Voting Event is proposed, in which
case, the redemption date shall be the Business Day prior to
the record date for any meeting or vote of the holders of the
Exchangeable Shares to consider the Exchangeable Share Voting
Event and the Board of Directors shall give such number of
days' prior written notice of such redemption to the
registered holders of the Exchangeable Shares as the Board of
Directors may determine to be reasonably practicable in such
circumstances (provided that the Board of Directors has
determined, in good faith and in its sole discretion, that it
is not reasonably practicable to accomplish the business
purpose intended by the Exchangeable Share Voting Event,
which business purpose must be bona fide and not for the
primary purpose of causing the occurrence of a Redemption
Date, in any other commercially reasonable manner that does
not result in an Exchangeable Share Voting Event);
(iv) an Exempt Exchangeable Share Voting Event is proposed and the
holders of the Exchangeable Shares fail to take the necessary
action at a meeting or other vote of holders of Exchangeable
Shares to approve the Exempt Exchangeable Share Voting Event,
in which case the redemption date shall be the Business Day
following the day on which the holders of the Exchangeable
Shares failed to take such action and the Board of Directors
shall be deemed to have given such prior written notice of
such redemption to the registered holders of the Exchangeable
Shares or the Board of Directors may establish another
Business Day as it may determine to be reasonably practicable
in such circumstances; or
(v) if changes are enacted to Canadian tax laws which would allow
an exchange of the Exchangeable Shares for Big Flash Common
Shares on a tax-deferred basis;
provided, however, that the accidental failure or omission to give any
notice of redemption under clauses (i), (ii), (iii), (iv) or (v) above
to less than 10% of such holders of Exchangeable Shares shall not
affect the validity of any such redemption.
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(cc) "Redemption Price" has the meaning ascribed thereto in section 7.1
of these Share Provisions.
(dd) "Retracted Shares" has the meaning ascribed thereto in section
6.1(a) of these Share Provisions.
(ee) "Retraction Call Right" has the meaning ascribed thereto in
section 6.1(c) of these Share Provisions.
(ff) "Retraction Date" has the meaning ascribed thereto in section
6.1(b) of these Share Provisions.
(gg) "Retraction Price" has the meaning ascribed thereto in section 6.1
of these Share Provisions.
(hh) "Retraction Request" has the meaning ascribed thereto in section
6.1 of these Share Provisions.
(ii) "Share Provisions" means these share provisions.
(jj) "Support Agreement" means the exchangeable share support agreement
between Big Flash, the Trustee and the Corporation entered into in
support of the holders of Exchangeable Shares.
(kk) "Transfer Agent" means such Person as may from time to time be
appointed by the Corporation as the registrar and transfer agent
for the Exchangeable Shares, and if no such Person has been
appointed, shall mean the Corporation.
(ll) "Trustee" means Equity Transfer Services Inc.
(mm) "Unpaid Dividend Amount" means the full amount of any and all
declared and unpaid dividends on the Exchangeable Shares.
SECTION 2 RANKING OF EXCHANGEABLE SHARES
2.1 The Exchangeable Shares shall be entitled to a preference over the
Common Shares and any other shares of the Corporation with respect to
the payment of dividends and on a Liquidation Distribution to the
extent provided for in section 5 hereof.
SECTION 3 DIVIDENDS
3.1 The Board of Directors shall, subject to applicable law, on each Big
Flash Dividend Declaration Date, declare a dividend on each
Exchangeable Share as follows:
(i) in the case of a cash dividend declared on the Big Flash
Common Shares, a cash dividend in U.S. dollars, or the
Canadian Dollar Equivalent thereof, on the Big Flash Dividend
Declaration Date, equal to the cash dividend declared on each
Big Flash Common Share;
(ii) in the case of a stock dividend or other distribution
declared on the Big Flash Common Shares to be paid in Big
Flash Common Shares, a stock dividend of such number of
Exchangeable Shares for each Exchangeable Share as is equal
to the number of Big Flash Common Shares to be paid on each
Big Flash Common Share;
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(iii) in the case of a dividend declared on the Big Flash Common
Shares in property other than cash or Big Flash Common
Shares, a dividend in such type and amount of property for
each Exchangeable Share as is the same as or economically
equivalent to the type and amount of property declared as a
dividend on each Big Flash Common Share (to be determined by
the Board of Directors as contemplated by section 3.5
hereof). Such dividends shall be paid out of money, assets or
property of the Corporation properly applicable to the
payment of dividends, or out of authorized but unissued
Exchangeable Shares of the Corporation, as applicable.
3.2 Cheques of the Corporation payable at par at any branch of the bankers
of the Corporation shall be issued in respect of any cash dividends
contemplated by section 3.1(a)(i) hereof and the sending of such a
cheque to each holder of an Exchangeable Share shall satisfy the cash
dividend represented thereby unless the cheque is not paid on
presentation. Certificates representing the applicable number of
Exchangeable Shares registered in the name of the registered holder of
Exchangeable Shares shall be issued or transferred in respect of any
stock dividends contemplated in section 3.1(a) (ii) hereof and the
sending of such a certificate to each holder of an Exchangeable Share
shall satisfy the stock dividend represented thereby. For greater
certainty, in the case of the dividend or distribution on the Big Flash
Common Shares contemplated in sections 3.1 (a) (ii), Big Flash shall
deliver to the Trustee at the same time and in the same manner as to
all other holders as Big Flash Shares, the certificates representing
the Big Flash Common Shares payable as a dividend on the Trust Shares.
Such other type and amount of property in respect of any dividends
contemplated by section 3.1(a)(iii) hereof shall be issued, distributed
or transferred by the Corporation in such manner as it shall determine
and the issuance, distribution or transfer thereof by the Corporation
to each holder of an Exchangeable Share shall satisfy the dividend
represented thereby, provided, however, that no such dividend and/or
distribution shall be constituted of Big Flash Common Shares, all of
which shall be delivered by Big Flash directly to the Trustee. No
holder of an Exchangeable Share shall be entitled to recover by action
or other legal process against the Corporation any dividend that is
represented by a cheque that has not been duly presented to the
Corporation's bankers for payment or that otherwise remains unclaimed
for a period of six years from the date on which such dividend was
payable.
3.3 The record date for the determination of the holders of Exchangeable
Shares entitled to receive payment of, and the payment date for, any
dividend declared on the Exchangeable Shares under section 3.1 hereof
shall be the same dates as the record date and payment date,
respectively, for the corresponding dividend declared on the Big Flash
Common Shares.
3.4 If on any payment date for any dividends declared on the Exchangeable
Shares under section 3.1 hereof the dividends are not paid in full on
all of the Exchangeable Shares then outstanding, any such dividends
that remain unpaid shall be paid on a subsequent date or dates
determined by the Board of Directors on which the Corporation shall
have sufficient moneys, assets or property properly applicable to the
payment of such dividends.
3.5 The Board of Directors shall determine, in good faith and in its sole
discretion, acting reasonably (with the assistance of such reputable
and qualified independent financial advisors and/or other experts as
the Board of Directors may determine necessary or desirable) economic
-18-
equivalence for the purposes of section 3.1(a)(iii) hereof, and each
such determination shall be conclusive and binding on the Corporation
and its shareholders absent manifest error. In making each such
determination, the following factors shall, without excluding other
factors determined by the Board of Directors to be relevant, be
considered by the Board of Directors, and shall be acted upon in
accordance with the provisions herewith:
(a) in the case of the issuance or distribution of any rights, options
or warrants to subscribe for or purchase Big Flash Common Shares
(or securities exchangeable for or convertible into or carrying
rights to acquire Big Flash Common Shares), the relationship
between the exercise price of each such right, option or warrant
and the Current Market Price;
(b) in the case of the issuance or distribution of any other form of
property (including, without limitation, any shares or securities
of Big Flash of any class other than Big Flash Common Shares, any
rights, options or warrants other than those referred to in
section 3.5(a) above, any evidences of indebtedness of Big Flash
or any assets of Big Flash), the relationship between the fair
market value (as determined by the Board of Directors in good
faith acting reasonably) of such property to be issued or
distributed with respect to each outstanding Big Flash Common
Share and the Current Market Price; and
(c) in all such cases, the general taxation consequences of the
relevant event to holders of Exchangeable Shares to the extent
that such consequences may differ from the taxation consequences
to holders of Big Flash Common Shares as a result of differences
between taxation laws of Canada and the United States of America
(except for any differing consequences arising as a result of
differing marginal taxation rates and without regard to the
individual circumstances of holders of Exchangeable Shares).
SECTION 4 CERTAIN RESTRICTIONS
4.1 So long as any of the Exchangeable Shares are outstanding, the
Corporation shall not at any time without the approval of the holders
of the Exchangeable Shares given as specified in section 11.2 of these
Share Provisions:
(a) pay any dividends on the Common Shares or any shares other than
the Exchangeable Shares, other than stock dividends payable in
Common Shares or any such other shares, as the case may be;
(b) redeem or purchase or make any capital distribution in respect of
Common Shares or any shares other than the Exchangeable Shares;
(c) redeem or purchase any shares of the Corporation other than the
Exchangeable Shares; or
(d) issue any Exchangeable Shares or any other shares of the
Corporation other than by way of stock dividends to the holders of
such Exchangeable Shares.
SECTION 5 DISTRIBUTION ON LIQUIDATION
5.1 In the event of a Liquidation Distribution, a holder of Exchangeable
Shares shall be entitled, subject to applicable law, to receive from
the assets of the Corporation in respect of each Exchangeable Share
held by such holder on the effective date (the "Liquidation Date") of
the Liquidation Distribution, before any distribution of any part of
the assets of the Corporation among the holders of the Common Shares or
any other shares of the Corporation, an amount per Exchangeable Share
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(the "Liquidation Amount") equal to (i) the Current Market Price of a
Big Flash Common Share on the last Business Day prior to the
Liquidation Date (which may be satisfied in full by the Corporation
causing an instruction to be given to the Trustee to deliver, in
respect of each Exchangeable Share held by each respective holder
thereof, one Big Flash Common Share, and obtaining written confirmation
of such delivery by the Trustee), plus (ii) the Unpaid Dividend Amount,
if any, on any Exchangeable Share held by such holder on any dividend
record date which occurred prior to the Liquidation Date.
5.2 Big Flash and the Corporation shall notify all holders of the
Exchangeable Shares, of any proposed liquidation, dissolution or
winding-up of the Corporation, at least 60 days before the Liquidation
Date in the case of a voluntary liquidation, dissolution or winding-up
of the Corporation, and promptly upon receiving notice of or becoming
aware of any claim, suit, petition or other proceeding with respect to
an involuntary liquidation, dissolution or winding-up of the
Corporation.
5.3 On or promptly after the Liquidation Date, and subject to the exercise
by Big Flash of the Liquidation Call Right, the Corporation shall cause
to be delivered to the holders of the Exchangeable Shares the
Liquidation Amount for each such Exchangeable Share upon presentation
and surrender of the certificates representing such Exchangeable
Shares, together with such other documents and instruments as may be
required to effect a transfer of Exchangeable Shares under the Act and
the articles and by-laws of the Corporation and such additional
documents and instruments as the Trustee and Transfer Agent may
reasonably require, at the registered office of the Corporation or at
any office of the Trustee or Transfer Agent as may be specified by the
Corporation by notice to the holders of the Exchangeable Shares.
Payment of the total Liquidation Amount for such Exchangeable Shares
shall be made by delivery to each holder, at the address of the holder
recorded in the securities register of the Corporation for the
Exchangeable Shares or by holding for pick-up by the holder at the
registered office of the Corporation or at any office of the Trustee or
Transfer Agent as may be specified by the Corporation by notice to the
holders of Exchangeable Shares, on behalf of the Corporation of the
certificates representing Big Flash Common Shares (which shares shall
be duly issued as fully paid and non-assessable and shall be free and
clear of any lien, claim or encumbrance and a cheque of the Corporation
payable at par at any branch of the bankers of the Corporation in
respect of the remaining portion, if any, of the total Liquidation
Amount (in each case less any amounts withheld on account of tax
required to be deducted and withheld therefrom). On and after the
Liquidation Date, the holders of the Exchangeable Shares shall cease to
be holders of such Exchangeable Shares and shall not be entitled to
exercise any of the rights of holders in respect thereof, other than
the right to receive their proportionate part of the total Liquidation
Amount, unless payment of the total Liquidation Amount for such
Exchangeable Shares shall not be made upon presentation and surrender
of share certificates in accordance with the foregoing provisions, in
which case the rights of the holders shall remain unaffected until the
total Liquidation Amount has been paid in the manner hereinbefore
provided. The Corporation shall have the right at any time after the
Liquidation Date to deposit or cause to be deposited the total
Liquidation Amount in respect of the Exchangeable Shares represented by
certificates that have not at the Liquidation Date been surrendered by
the holders thereof in a custodial account with any chartered bank or
trust company in Canada less any amounts withheld on account of tax
required to be deducted and withheld therefrom. Upon such deposit being
made, the rights of the holders of Exchangeable Shares after such
deposit shall be limited to receiving their proportionate part of the
total Liquidation Amount (in each case less such amounts withheld on
account of tax required to be deducted and withheld therefrom) for such
Exchangeable Shares so deposited, against presentation and surrender of
the said certificates held by them, respectively, in accordance with
the foregoing provisions. Upon such payment or deposit of the total
Liquidation Amount, the holders of the Exchangeable Shares shall
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thereafter be considered and deemed for all purposes to be holders of
the Big Flash Common Shares delivered to them or the custodian on their
behalf.
5.4 After the Corporation has satisfied its obligations to pay the holders
of the Exchangeable Shares the Liquidation Amount per Exchangeable
Share pursuant to section 5.1 of these Share Provisions, such holders
shall not be entitled to share in any further distribution of the
assets of the Corporation.
SECTION 6 RETRACTION OF EXCHANGEABLE SHARES BY HOLDER
6.1 A holder of Exchangeable Shares shall be entitled at any time, subject
to the exercise by Big Flash of the Retraction Call Right and otherwise
upon compliance with the provisions of this section 6, to require the
Corporation to redeem any or all of the Exchangeable Shares registered
in the name of such holder for an amount per Exchangeable Share (the
"Retraction Price") equal to (i) the Current Market Price of a Big
Flash Common Share on the last Business Day prior to the Retraction
Date (which may be satisfied in full by the Corporation causing an
instruction to be given to the Trustee to deliver from trust to such
holder, one Big Flash Common Share for each Exchangeable Share
presented and surrendered by the holder, and obtaining written
confirmation of such delivery by the Trustee), plus (ii) the Unpaid
Dividend Amount, if any, on any such Exchangeable Share held by such
holder on any dividend record date which occurred prior to the
Retraction Date. To effect such redemption, the holder shall present
and surrender at the registered office of the Corporation or at any
office of the Trustee or Transfer Agent as may be specified by the
Corporation by notice to the holders of Exchangeable Shares the
certificate or certificates representing the Exchangeable Shares which
the holder desires to have the Corporation redeem, together with such
other documents and instruments as may be required to effect a transfer
of Exchangeable Shares under the Act and the articles and by-laws of
the Corporation and such additional documents and instruments as the
Trustee and Transfer Agent may reasonably require, and together with a
duly executed statement (the "Retraction Request") in the form attached
hereto as Appendix 1, or in such other form as may be acceptable to the
Corporation:
(a) specifying that the holder desires to have all or any number
specified therein of the Exchangeable Shares represented by such
certificate or certificates (the "Retracted Shares") redeemed by
the Corporation;
(b) stating the Business Day on which the holder desires to have the
Corporation redeem the Retracted Shares (the "Retraction Date"),
provided that the Retraction Date shall be not less than 10
Business Days nor more than 15 Business Days after the date on
which the Retraction Request is delivered to the Corporation and
further provided that, in the event that no such Business Day is
specified by the holder in the Retraction Request, the Retraction
Date shall be deemed to be the 15th Business Day after the date on
which the Retraction Request is delivered to the Corporation; and
(c) acknowledging the overriding right of Big Flash (the "Retraction
Call Right") to purchase all but not less than all the Retracted
Shares directly from the holder, and that the Retraction Request
shall be deemed to be a revocable offer by the holder to sell the
Retracted Shares to Big Flash in accordance with the Retraction
Call Right on the terms and conditions set out in section 6.3
hereof.
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6.2 Subject to the exercise of the Retraction Call Right by Big Flash, upon
receipt by the Corporation or the Trustee or Transfer Agent in the
manner specified in section 6.1 hereof of a certificate or certificates
representing the number of Exchangeable Shares which the holder desires
to have the Corporation redeem, together with a Retraction Request, and
provided that the Retraction Request is not revoked by the holder in
the manner specified in section 6.7 hereof, the Corporation shall
redeem the Retracted Shares effective at the close of business (Toronto
time) on the Retraction Date and shall cause to be delivered to such
holder the total Retraction Price with respect to such shares, provided
that all declared and unpaid dividends for which the record date has
occurred prior to the Retraction Date shall be paid on the payment date
for such dividends, less any amounts withheld on account of tax
required to be deducted and withheld therefrom. If only a part of the
Exchangeable Shares represented by any certificate is redeemed, a new
certificate for the balance of such Exchangeable Shares shall be issued
to the holder at the expense of the Corporation.
6.3 Upon receipt by the Corporation of a Retraction Request, the
Corporation shall immediately provide notice thereof to Big Flash. In
order to exercise the Retraction Call Right, Big Flash must notify the
Corporation of its determination to do so (the "Big Flash Call Notice")
within five (5) Business Days of notification to Big Flash by the
Corporation of the receipt by the Corporation of the Retraction
Request. If Big Flash does not so notify the Corporation within such
five Business Day period, the Corporation will notify the holder as
soon as possible thereafter that Big Flash will not exercise the
Retraction Call Right. If Big Flash delivers the Big Flash Call Notice
within such five Business Day period, and provided that the Retraction
Request is not revoked by the holder in the manner specified in section
6.7, the Retraction Request shall thereupon be deemed to be an offer by
the holder to sell the Retracted Shares to Big Flash in accordance with
the Retraction Call Right. In such event, the Corporation shall not
redeem the Retracted Shares and Big Flash shall purchase from such
holder and such holder shall sell to Big Flash on the Retraction Date
the Retracted Shares for an amount per Retracted Share (the "Purchase
Price") equal to (i) the Current Market Price of a Big Flash Common
Share on the last Business Day prior to the Retraction Date (which may
be satisfied in full by Big Flash instructing the Trustee to deliver to
such holder one Big Flash Common Share for each Exchangeable Share
presented and surrendered by the holder), plus (ii) the Unpaid Dividend
Amount, if any, on those Retracted Shares held by such holder on any
dividend record date which occurred prior to the Retraction Date. For
the purposes of completing a purchase pursuant to the Retraction Call
Right, in addition to Big Flash giving instructions to the Trustee or
the Transfer Agent, Big Flash shall deposit with the Trustee or the
Transfer Agent a cheque or cheques of Big Flash payable at par at any
branch of the bankers of Big Flash representing the Unpaid Dividend
Amount, if any, less any amounts withheld on account of tax required to
be deducted and withheld therefrom. Provided that Big Flash has
complied with the immediately preceding sentence, the closing of the
purchase and sale of the Retracted Shares pursuant to the Retraction
Call Right shall be deemed to have occurred as at the close of business
on the Retraction Date and, for greater certainty, no redemption by the
Corporation of such Retracted Shares shall take place on the Retraction
Date. In the event that Big Flash does not deliver a Big Flash Call
Notice within such five Business Day period, and provided that the
Retraction Request is not revoked by the holder in the manner specified
in section 6.7 hereof, the Corporation shall redeem the Retracted
Shares on the Retraction Date and in the manner otherwise contemplated
in this section 6.
6.4 The Corporation or Big Flash, as the case may be, shall instruct the
Trustee or the Transfer Agent to deliver, to the relevant holder, at
the address of the holder recorded in the securities register of the
Corporation for the Exchangeable Shares or at the address specified in
the holder's Retraction Request or by holding for pick-up by the holder
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at the registered office of the Corporation or at any office of the
Trustee or Transfer Agent as may be specified by the Corporation by
notice to the holders of Exchangeable Shares, certificates representing
the Big Flash Common Shares (which shares shall be duly issued as fully
paid and non-assessable and shall be free and clear of any lien, claim
or encumbrance) registered in the name of the holder or in such other
name as the holder may request, and, if applicable and on or before the
payment date therefore, a cheque payable at par at any branch of the
bankers of the Corporation or Big Flash, as applicable, representing
the aggregate Unpaid Dividend Amount, if any, in payment of the total
Retraction Price or the total Purchase Price, as the case may be, in
each case less any amounts withheld on account of tax required to be
deducted and withheld therefrom, and such delivery of such certificates
by the Trustee or the Transfer Agent and cheques on behalf of the
Corporation or by Big Flash, as the case may be, or by the Trustee or
Transfer Agent, shall be deemed to be payment of and shall satisfy and
discharge all liability for the total Retraction Price or the total
Purchase Price, as the case may be, to the extent that the same is
represented by such share certificates and cheques (plus any tax
deducted and withheld therefrom).
6.5 On and after the close of business on the Retraction Date, the holder
of the Retracted Shares shall cease to be a holder of such Retracted
Shares and shall not be entitled to exercise any of the rights of a
holder in respect thereof, other than the right to receive his
proportionate part of the total Retraction Price or the total Purchase
Price, as the case may be, unless upon presentation and surrender of
certificates in accordance with the foregoing provisions, payment of
the total Retraction Price or the total Purchase Price, as the case may
be, shall not be made as provided in section 6.4, in which case the
rights of such holder shall remain unaffected until the total
Retraction Price or the total Purchase Price, as the case may be, has
been paid in the manner hereinbefore provided. On and after the close
of business on the Retraction Date, provided that presentation and
surrender of certificates and payment of the total Retraction Price or
the total Purchase Price, as the case may be, has been made in
accordance with the foregoing provisions, the holder of the Retracted
Shares so redeemed by the Corporation shall thereafter be considered
and deemed for all purposes to be a holder of the Big Flash Common
Shares so delivered.
6.6 Notwithstanding any other provision of this section 6, the Corporation
shall not be obligated to redeem Retracted Shares specified by a holder
in a Retraction Request to the extent that such redemption of Retracted
Shares would be contrary to solvency requirements or other provisions
of applicable law. If the Corporation believes that on any Retraction
Date it would not be permitted by any of such provisions to redeem the
Retracted Shares tendered for redemption on such date, and provided
that Big Flash shall not have exercised the Retraction Call Right with
respect to the Retracted Shares, the Corporation shall only be
obligated to redeem Retracted Shares specified by a holder in a
Retraction Request to the extent of the maximum number that may be so
redeemed (rounded down to a whole number of shares) as would not be
contrary to such provisions and shall notify the holder at least two
Business Days prior to the Retraction Date as to the number of
Retracted Shares which will not be redeemed by the Corporation. In any
case in which the redemption by the Corporation of Retracted Shares
would be contrary to solvency requirements or other provisions of
applicable law, the Corporation shall redeem the maximum number of
Retracted Shares in accordance with section 6.2 of these Share
Provisions which the Board of Directors determine the Corporation is,
on the Retraction Date, permitted to redeem, on a pro rata basis
(disregarding fractions) in proportion to the total number of
Exchangeable Shares tendered for retraction by each holder thereof, and
the Corporation shall issue to each holder of Retracted Shares a new
certificate, at the expense of the Corporation, representing the
Retracted Shares not redeemed by the Corporation pursuant to section
6.2 hereof. Provided that the Retraction Request is not revoked by the
holder in the manner specified in section 6.7 hereof, the holder of any
such Retracted Shares not redeemed by the Corporation pursuant to
section 6.2 hereof as a result of solvency requirements or other
provisions of applicable law shall be deemed by giving the Retraction
Request to require Big Flash to purchase such Retracted Shares from
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such holder on the Retraction Date or as soon as practicable thereafter
on payment by Big Flash to such holder of the Purchase Price for such
Retracted Shares (the "Exchange Right"), all as more specifically
provided in the Exchange and Voting Trust Agreement.
6.7 A holder of Retracted Shares may, by notice in writing given by the
holder to the Corporation before the close of business on the Business
Day immediately preceding the Retraction Date, withdraw the Retraction
Request, in which event such Retraction Request shall be null and void
and, for greater certainty, the revocable offer constituted by the
Retraction Request to sell the Retracted Shares to the Corporation or
Big Flash, as the case may be, shall be deemed to have been revoked.
SECTION 7 REDEMPTION OF EXCHANGEABLE SHARES BY THE CORPORATION
7.1 Subject to applicable law, and provided Big Flash has not exercised the
Redemption Call Right, the Corporation shall on the Redemption Date
redeem all but not less than all of the then outstanding Exchangeable
Shares for an amount per Exchangeable Share (the "Redemption Price")
equal to (i) the Current Market Price of a Big Flash Common Share on
the last Business Day prior to the Redemption Date (which may be
satisfied in full by the Corporation causing an instruction to be given
to the Trustee to deliver, in respect of each Exchangeable Share held
by each respective holder thereof, one Big Flash Common Share, and
obtaining written confirmation of such delivery by the Trustee), plus
(ii) the Unpaid Dividend Amount, if any, on each such Exchangeable
Share held by such holder on any dividend record date which occurred
prior to the Redemption Date.
7.2 In any case of a redemption of Exchangeable Shares under this section
7, the Corporation shall send or cause to be sent to each holder of
Exchangeable Shares a notice in writing of the redemption by the
Corporation or the purchase by Big Flash under the Redemption Call
Right, as the case may be, of the Exchangeable Shares held by such
holder. In the case of a Redemption Date established in connection with
a Big Flash Control Transaction, an Exchangeable Share Voting Event and
an Exempt Exchangeable Share Voting Event, the written notice of
redemption by the Corporation or the purchase by Big Flash under the
Redemption Call Right will be sent on or before the Redemption Date, on
as many days prior written notice as may be determined by the Board of
Directors of the Corporation to be reasonably practicable in the
circumstances, and in all other cases such notice shall be sent at
least 60 days before the Redemption Date. In any such case, such notice
shall set out the formula for determining the Redemption Price or the
Redemption Call Purchase Price, as the case may be, the Redemption Date
and, if applicable, particulars of the Redemption Call Right.
7.3 On or after the Redemption Date and subject to the exercise by Big
Flash of the Redemption Call Right, the Corporation shall cause to be
delivered to the holders of the Exchangeable Shares to be redeemed the
Redemption Price for each such Exchangeable Share, upon presentation
and surrender at the registered office of the Corporation or at any
office of the Trustee or Transfer Agent as may be specified by the
Corporation in such notice of the certificates representing such
Exchangeable Shares, together with such other documents and instruments
as may be required to effect a transfer of Exchangeable Shares under
the Act and the articles and by-laws of the Corporation and such
additional documents and instruments as the Trustee or Transfer Agent
may reasonably require. Payment of the total Redemption Price for such
Exchangeable Shares shall be made by instruction to the Trustee or the
Transfer Agent to deliver to each holder, at the address of the holder
recorded in the securities register of the Corporation or by holding
for pick-up by the holder at the registered office of the Corporation
or at any office of the Trustee or Transfer Agent as may be specified
by the Corporation in such notice, of certificates representing Big
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Flash Common Shares (which shares shall be duly issued as fully paid
and non-assessable and shall be free and clear of any lien, claim or
encumbrance) and, if applicable, a cheque of the Corporation payable at
par at any branch of the bankers of the Corporation in payment of any
such Unpaid Dividend Amount, in each case, less any amounts withheld on
account of tax required to be deducted and withheld therefrom. On and
after the Redemption Date, the holders of the Exchangeable Shares
called for redemption shall cease to be holders of such Exchangeable
Shares and shall not be entitled to exercise any of the rights of
holders in respect thereof, other than the right to receive their
proportionate part of the total Redemption Price, unless payment of the
total Redemption Price for such Exchangeable Shares shall not be made
upon presentation and surrender of certificates in accordance with the
foregoing provisions, in which case the rights of the holders shall
remain unaffected until the total Redemption Price have been paid in
the manner hereinbefore provided. The Corporation shall have the right
at any time after the sending of notice of its intention to redeem the
Exchangeable Shares as aforesaid to deposit or cause to be deposited
the total Redemption Price for the Exchangeable Shares so called for
redemption, or of such of the said Exchangeable Shares represented by
certificates that have not at the date of such deposit been surrendered
by the holders thereof in connection with such redemption, in a
custodial account with any chartered bank or agent named in such
notice, less any amounts withheld on account of tax required to be
deducted and withheld therefrom. Upon the later of such deposit being
made and the Redemption Date, the Exchangeable Shares in respect
whereof such deposit shall have been made shall be redeemed and the
rights of the holders thereof after such deposit or Redemption Date, as
the case may be, shall be limited to receiving their proportionate part
of the total Redemption Price, for such Exchangeable Shares so
deposited, against presentation and surrender of the said certificates
held by them, respectively, in accordance with the foregoing
provisions. Upon such payment or deposit of the total Redemption Price,
less any amounts withheld on account of tax required to be deducted and
withheld therefrom, the holders of the Exchangeable Shares shall
thereafter be considered and deemed for all purposes to be holders of
the Big Flash Common Shares delivered to them.
SECTION 8 CERTAIN RIGHTS OF BIG FLASH TO ACQUIRE EXCHANGEABLE SHARES
8.1 Big Flash Liquidation Call Right.
(a) Big Flash shall have the overriding right (the "Liquidation Call
Right"), in the event of and notwithstanding the proposed
liquidation, dissolution or winding-up of the Corporation pursuant
to section 5 of these Share Provisions, to purchase from all but
not less than all of the holders of Exchangeable Shares (other
than any holder of Exchangeable Shares which is an Affiliate of
Big Flash) on the Liquidation Date all but not less than all of
the Exchangeable Shares held by each such holder on payment by Big
Flash of an amount per Exchangeable Share (the "Liquidation Call
Purchase Price") equal to (i) the Current Market Price of a Big
Flash Common Share on the last Business Day prior to the
Liquidation Date (which may be satisfied in full by Big Flash
causing instruction to the Trustee to deliver to such holder one
Big Flash Common Share), plus (ii) the Unpaid Dividend Amount, if
any, on each such Exchangeable Share held by such holder on any
dividend record date which occurred prior to the date of purchase
by Big Flash. In the event of the exercise of the Liquidation Call
Right by Big Flash on the Liquidation Date on payment by Big Flash
to the holder of the Liquidation Call Purchase Price for each such
share, the Corporation shall have no obligation to redeem such
shares so purchased by Big Flash.
(b) To exercise the Liquidation Call Right, Big Flash must notify the
Trustee, the holders of Exchangeable Shares, and the Corporation,
of Big Flash's intention to exercise such right at least 45 days
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before the Liquidation Date in the case of a voluntary
liquidation, dissolution or winding-up of the Corporation and at
least five Business Days before the Liquidation Date in the case
of an involuntary liquidation, dissolution or winding-up of the
Corporation. The Corporation will notify the holders of
Exchangeable Shares as to whether or not Big Flash has exercised
the Liquidation Call Right forthwith after the expiry of the
period during which the same may be exercised by Big Flash. If Big
Flash exercises the Liquidation Call Right, then on the
Liquidation Date Big Flash will purchase and the holders will sell
all of the Exchangeable Shares then outstanding for a price per
share equal to the Liquidation Call Purchase Price.
(c) For the purposes of completing the purchase of the Exchangeable
Shares pursuant to the Liquidation Call Right, Big Flash shall
ensure that the Trustee or the Transfer Agent holds, on or before
the Liquidation Date, sufficient certificates representing the
aggregate number of Big Flash Common Shares deliverable in respect
of the Liquidation Call Right and a cheque or cheques of Big Flash
payable at par at any branch of the bankers of Big Flash
representing the aggregate Unpaid Dividend Amount in payment of
the total Liquidation Call Purchase Price, in each case, less any
amounts withheld on account of tax required to be deducted and
withheld therefrom. Provided that Big Flash has complied with the
immediately preceding sentence, on and after the Liquidation Date
the rights of each holder of Exchangeable Shares will be limited
to receiving such holder's proportionate part of the total
Liquidation Call Purchase Price payable by Big Flash upon
presentation and surrender by the holder of certificates
representing the Exchangeable Shares held by such holder and the
holder shall on and after the Liquidation Date be considered and
deemed for all purposes to be the holder of the Big Flash Common
Shares to which it is entitled. Upon surrender to the Trustee or
the Transfer Agent of a certificate or certificates representing
Exchangeable Shares, together with such other documents and
instruments as may be required to effect a transfer of
Exchangeable Shares under the Act and the articles and by-laws of
the Corporation and such additional documents and instruments as
the Trustee may reasonably require, the holder of such surrendered
certificate or certificates shall be entitled to receive in
exchange therefor, and the Trustee or the Transfer Agent on behalf
of Big Flash shall deliver to such holder, certificates
representing the Big Flash Common Shares to which the holder is
entitled and a cheque or cheques of Big Flash payable at par at
any branch of the bankers of Big Flash in payment of the remaining
portion, if any, of the total Liquidation Call Purchase Price, in
each case, less any amounts withheld on account of tax required to
be deducted and withheld therefrom. If Big Flash does not exercise
the Liquidation Call Right in the manner described above, on the
Liquidation Date the holders of the Exchangeable Shares will be
entitled to receive in exchange therefor the liquidation price
otherwise payable by the Corporation in connection with the
liquidation, dissolution or winding up of the Corporation pursuant
to section 5 of these Share Provisions.
(d) Big Flash shall at any time be entitled to assign all of its
rights in this Section to an Affiliate of Big Flash provided that
such company assumes all of Big Flash's obligations under this
Section.
8.2 Big Flash Redemption Call Right.
(a) Big Flash shall have the overriding right (the "Redemption Call
Right"), notwithstanding the proposed redemption of the
Exchangeable Shares by the Corporation pursuant to section 7 of
these Share Provisions, to purchase from all but not less than all
of the holders of Exchangeable Shares (other than any holder of
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Exchangeable Shares which is an Affiliate of Big Flash) on the
Redemption Date all but not less than all of the Exchangeable
Shares held by each such holder on payment by Big Flash to each
holder of an amount per Exchangeable Share (the "Redemption Call
Purchase Price") equal to (i) the Current Market Price of a Big
Flash Common Share on the last Business Day prior to the
Redemption Date (which may be satisfied in full by Big Flash
instructing the Trustee to deliver to such holder one Big Flash
Common Share), plus (ii) the Unpaid Dividend Amount, if any, on
each Exchangeable Share held by such holder on any dividend record
date which occurred prior to the Redemption Date. In the event of
the exercise of the Redemption Call Right by Big Flash, each
holder shall be obligated to sell all the Exchangeable Shares held
by the holder to Big Flash on the Redemption Date on payment by
Big Flash to the holder of the Redemption Call Purchase Price for
each such share, and the Corporation shall have no obligation to
redeem such shares so purchased by Big Flash.
(b) To exercise the Redemption Call Right, Big Flash must notify the
Trustee, the holders of Exchangeable Shares, and the Corporation,
of Big Flash's intention to exercise such right at least 45 days
before the Redemption Date, except in the case of a redemption
occurring as a result of a Big Flash Control Transaction, an
Exchangeable Share Voting Event or an Exempt Exchangeable Share
Voting Event or such shorter period as may be agreed, in writing,
by the Corporation, Big Flash and the holders of the Exchangeable
Shares, in which case Big Flash shall so notify the Trustee, the
holders of Exchangeable Shares and the Corporation on or before
the Redemption Date. The Corporation will notify the holders of
Exchangeable Shares as to whether or not Big Flash has exercised
the Redemption Call Right forthwith after the expiry of the period
during which the same may be exercised by Big Flash. If Big Flash
exercises the Redemption Call Right, on the Redemption Date Big
Flash will purchase and the holders will sell all of the
Exchangeable Shares then outstanding for a price per share equal
to the Redemption Call Purchase Price.
(c) For the purposes of completing the purchase of the Exchangeable
Shares pursuant to the Redemption Call Right, Big Flash shall
ensure that the Trustee or the Transfer Agent holds, on or before
the Redemption Date, sufficient certificates representing the
aggregate number of Big Flash Common Shares deliverable in respect
of the Redemption Call Right and a cheque or cheques of Big Flash
payable at par at any branch of the bankers of Big Flash
representing the aggregate Unpaid Dividend Amount in payment of
the total Redemption Call Purchase Price, in each case, less any
amounts withheld on account of tax required to be deducted and
withheld therefrom. Provided that Big Flash has complied with the
immediately preceding sentence, on and after the Redemption Date
the rights of each holder of Exchangeable Shares will be limited
to receiving such holder's proportionate part of the total
Redemption Call Purchase Price payable by Big Flash upon
presentation and surrender by the holder of certificates
representing the Exchangeable Shares held by such holder and the
holder shall on and after the Redemption Date be considered and
deemed for all purposes to be the holder of the Big Flash Common
Shares to which it is entitled. Upon surrender to the Trustee or
the Transfer Agent of a certificate or certificates representing
Exchangeable Shares, together with such other documents and
instruments as may be required to effect a transfer of
Exchangeable Shares under the Act and the articles and by-laws of
the Corporation and such additional documents and instruments as
the Trustee may reasonably require, the holder of such surrendered
certificate or certificates shall be entitled to receive in
exchange therefor, and the Trustee or the Transfer Agent on behalf
of Big Flash shall deliver to such holder, certificates
representing the Big Flash Common Shares to which the holder is
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entitled and a cheque or cheques of Big Flash payable at par at
any branch of the bankers of Big Flash in payment of the remaining
portion, if any, of the total Redemption Call Purchase Price, in
each case, less any amounts withheld on account of tax required to
be deducted and withheld therefrom. If Big Flash does not exercise
the Redemption Call Right in the manner described above, on the
Redemption Date the holders of the Exchangeable Shares will be
entitled to receive in exchange therefor the redemption price
otherwise payable by the Corporation in connection with the
redemption of the Exchangeable Shares pursuant to section 7 of
these Share Provisions.
(d) Big Flash shall at any time be entitled to assign all of its
rights in this Section to an Affiliate of Big Flash provided that
such company assumes all of Big Flash's obligations under this
Section.
SECTION 9 PURCHASE FOR CANCELLATION
9.1 Subject to applicable law and the articles of the Corporation, the
Corporation may at any time and from time to time offer to purchase for
cancellation all or any part of the outstanding Exchangeable Shares at
any price by tender to all the holders of record of Exchangeable Shares
then outstanding or through the facilities of any stock exchange on
which the Exchangeable Shares are listed or quoted at any price per
share together with an amount equal to the Unpaid Dividend Amount. If
in response to an invitation for tenders under the provisions of this
section 9, more Exchangeable Shares are tendered at a price or prices
acceptable to the Corporation than the Corporation is prepared to
purchase, the Exchangeable Shares to be purchased by the Corporation
shall be purchased as nearly as may be pro rata according to the number
of shares tendered by each holder who submits a tender to the
Corporation, provided that when shares are tendered at different
prices, the pro rating shall be effected (disregarding fractions) only
with respect to the shares tendered at the price at which more shares
were tendered than the Corporation is prepared to purchase after the
Corporation has purchased all the shares tendered at lower prices. If
part only of the Exchangeable Shares represented by any certificate
shall be purchased, a new certificate for the balance of such shares
shall be issued at the expense of the Corporation.
SECTION 10 VOTING RIGHTS
10.1 Except as required by applicable law and by sections 11, 12 and 13
hereof, and by the provisions of the Support Agreement referred to in
section 12 hereof, the holders of the Exchangeable Shares shall not be
entitled as such to receive notice of or to attend any meeting of the
shareholders of the Corporation or to vote at any such meeting. The
holders of Exchangeable Shares shall, however, be entitled to notice of
meetings of the shareholders called for the purpose of authorizing the
liquidation, dissolution or winding up of the Corporation or the sale,
lease, or exchange of all or substantially all of the property of the
Corporation other than in the ordinary course of business of the
Corporation. Nothing herein shall be construed to limit the voting
rights of any issued and outstanding Big Flash Common Shares held in
trust by the Trustee or otherwise limit rights reserved to the holders
of the Exchangeable Shares pursuant to the terms of the Exchange and
Voting Trust Agreement.
SECTION 11 AMENDMENT AND APPROVAL
11.1 The rights, privileges, restrictions, and conditions attaching to the
Exchangeable Shares may be added to, changed or removed but only with
the approval of the holders of the Exchangeable Shares given as
hereinafter specified.
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11.2 Any approval given by the holders of the Exchangeable Shares to add to,
change or remove any right, privilege, restriction or condition
attaching to the Exchangeable Shares or any other matter requiring the
approval or consent of the holders of the Exchangeable Shares shall be
deemed to have been sufficiently given if it shall have been given in
accordance with applicable law subject to a minimum requirement that
such approval be evidenced by resolution passed by not less than
two-thirds (2/3) of the votes cast on such resolution at a meeting of
holders of Exchangeable Shares duly called and held at which the
holders of at least two-thirds (2/3) of the outstanding Exchangeable
Shares at that time are present or represented by proxy; provided that,
if at any such meeting the holders of at least two-thirds (2/3) of the
outstanding Exchangeable Shares at that time are not present or
represented by proxy within one-half hour after the time appointed for
such meeting, then the meeting shall be adjourned to such date not less
than five (5) days thereafter and to such time and place as may be
designated by the Chairman of such meeting. At such adjourned meeting
the holders of Exchangeable Shares present or represented by proxy
thereat may transact the business for which the meeting was originally
called and a resolution passed thereat by the affirmative vote of not
less than two-thirds (2/3) of the votes cast on such resolution at such
meeting shall constitute the approval or consent of the holders of the
Exchangeable Shares.
SECTION 12 RECIPROCAL CHANGES, ETC.
IN RESPECT OF PARENT COMMON SHARES
12.1 Each holder of an Exchangeable Share acknowledges that the Support
Agreement provides that Big Flash will not without the prior approval
of the Corporation and the prior approval of the holders of the
Exchangeable Shares given in accordance with section 11.2 of these
Share Provisions:
(a) issue or distribute Big Flash Common Shares (or securities
exchangeable for or convertible into or carrying rights to acquire
Big Flash Common Shares) to the holders of all or substantially
all of the then outstanding Big Flash Common Shares by way of
stock dividend or other distribution, other than an issue of Big
Flash Common Shares (or securities exchangeable for or convertible
into or carrying rights to acquire Big Flash Common Shares) to
holders of Big Flash Common Shares who exercise an option to
receive dividends in Big Flash Common Shares (or securities
exchangeable for or convertible into or carrying rights to acquire
Big Flash Common Shares) in lieu of receiving cash dividends;
(b) issue or distribute rights, options or warrants to the holders of
all or substantially all of the then outstanding Big Flash Common
Shares entitling them to subscribe for or to purchase Big Flash
Common Shares (or securities exchangeable for or convertible into
or carrying rights to acquire Big Flash Common Shares) ; or
(c) issue or distribute to the holders of all or substantially all of
the then outstanding Big Flash Common Shares:
(i) shares or securities of Big Flash of any class other than Big
Flash Common Shares (other than shares convertible into or
exchangeable for or carrying rights to acquire Big Flash
Common Shares);
(ii) rights, options or warrants other than those referred to in
section 12.1(b) above;
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(iii) evidences of indebtedness of Big Flash; or
(iv) assets of Big Flash,
unless (a) Big Flash is permitted under applicable law to
issue or distribute the economic equivalent on a per share
basis of such rights, options, securities, shares, evidences
of indebtedness or other assets to holders of the Exchangeable
Shares in which any and all such cases, such rights, options,
securities, shares, evidences of indebtedness or other assets
shall be delivered by Big Flash to the Trustee; and (b) the
economic equivalent on a per share basis of such rights,
options, securities, shares, evidences of indebtedness or
other assets is issued or distributed simultaneously by the
Trustee to holders of the Exchangeable Shares.
12.2 Each holder of an Exchangeable Share acknowledges that the Support
Agreement further provides that Big Flash will not without the prior
approval of the Corporation and the prior approval of the holders of
the Exchangeable Shares given in accordance with section 11.2 of these
Share Provisions:
(i) subdivide, redivide or change the then outstanding Big Flash
Common Shares into a greater number of Big Flash Common
Shares;
(ii) reduce, combine, consolidate or change the then outstanding
Big Flash Common Shares into a lesser number of Big Flash
Common Shares; or
(iii) reclassify or otherwise change the Big Flash Common Shares
or effect an amalgamation, merger, reorganization or other
transaction affecting the Big Flash Common Shares,
unless (a) Big Flash is permitted under applicable law to undertake an
action described in items (i), (ii) or (iii) above; and (b) the same or
an economically equivalent change shall on a per share basis
simultaneously be made to, or in the right of the holders of the
Exchangeable Shares.
12.3 Each holder of an Exchangeable Share acknowledges that the Support
Agreement further provides that the aforesaid provisions of the Support
Agreement shall not be changed without the approval of the holders of
the Exchangeable Shares given in accordance with section 11.2 of these
Share Provisions.
SECTION 13 ACTIONS BY THE CORPORATION UNDER THE SUPPORT AGREEMENT
13.1 The Corporation will take all such actions and do all such things as
shall be necessary or advisable to perform and comply with and to
ensure performance and compliance by Big Flash and the Corporation with
all provisions of the Support Agreement and the Share Provisions
applicable to Big Flash, the Corporation and the holders of the
Exchangeable Shares, in accordance with the terms thereof including,
without limitation, taking all such actions and doing all such things
as shall be necessary or advisable to enforce to the fullest extent
possible for the direct benefit of the Corporation and the holders of
the Exchangeable Shares all rights and benefits in favour of the
Corporation and the holders of the Exchangeable Shares under or
pursuant to such agreement.
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13.2 The Corporation shall not propose, agree to or otherwise give effect to
any amendment to, or waiver or forgiveness of its rights or obligations
under, the Support Agreement without the approval of the holders of the
Exchangeable Shares given in accordance with section 11.2 of these
Share Provisions, other than such amendments, waivers and/or
forgiveness as may be necessary or advisable for the purposes of:
(a) adding to the covenants of Big Flash to such agreement for the
protection of the Corporation or the holders of the Exchangeable
Shares thereunder;
(b) making such provisions or modifications not inconsistent with such
agreement as may be necessary or desirable with respect to matters
or questions arising thereunder which, in the good faith opinion
of the Board of Directors, it may be expedient to make, provided
that the Board of Directors shall be of the good faith and
reasonable opinion, after consultation with counsel, that such
provisions and modifications will not be prejudicial to the
interests of the holders of the Exchangeable Shares; or
(c) making such changes in or corrections to such agreement which, on
the advice of counsel to the Corporation, are required for the
purpose of curing or correcting any ambiguity or defect or
inconsistent provision or clerical omission or mistake or manifest
error contained therein, provided that the Board of Directors
shall be of the good faith and reasonable opinion, that such
changes or corrections will not be prejudicial to the interests of
the holders of the Exchangeable Shares.
SECTION 14 LEGEND; CALL RIGHTS
14.1 The certificates evidencing the Exchangeable Shares shall contain or
have affixed thereto a legend in form and on terms approved by the
Board of Directors, with respect to the Support Agreement, the
provisions herein relating to the Liquidation Call Right, the
Retraction Call Right and the Redemption Call Right.
14.2 Each holder of an Exchangeable Share, whether of record or beneficial,
by virtue of becoming and being such a holder shall be deemed to
acknowledge each of the Liquidation Call Right, the Retraction Call
Right and the Redemption Call Right, in each case, in favour of Big
Flash, and the overriding nature thereof in connection with the
liquidation, dissolution or winding-up of the Corporation or the
retraction or redemption of Exchangeable Shares, as the case may be,
and to be bound thereby in favour of Big Flash as therein provided.
SECTION 15 NOTICES
15.1 Any notice, request or other communication to be given to the
Corporation by a holder of Exchangeable Shares shall be in writing and
shall be valid and effective if given by personal or courier delivery
to the registered office of the Corporation and addressed to the
attention of the President. Any such notice, request or other
communication shall only be deemed to have been given and received upon
actual receipt thereof by the Corporation.
15.2 Any presentation and surrender by a holder of Exchangeable Shares to
the Corporation, the Trustee or the Transfer Agent of certificates
representing Exchangeable Shares in connection with the liquidation,
dissolution or winding-up of the Corporation or the retraction or
redemption of Exchangeable Shares shall be made by personal or courier
delivery to the registered office of the Corporation or to such office
of the Trustee or the Transfer Agent as may be specified by the
Corporation, in each case, addressed to the attention of the President
of the Corporation. Any such presentation and surrender of certificates
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shall only be deemed to have been made and to be effective upon actual
receipt thereof by the Corporation, the Trustee or the Transfer Agent,
as the case may be.
15.3 Any notice, request or other communication to be given to a holder of
Exchangeable Shares by or on behalf of the Corporation shall be in
writing and shall be valid and effective if given by personal or
courier delivery to the address of the holder recorded in the
securities register of the Corporation or, in the event of the address
of any such holder not being so recorded, then at the last known
address of such holder. Any such notice, request or other
communication, if given by mail, shall be deemed to have been given and
received on the date of delivery. Accidental failure or omission to
give any notice, request or other communication to one or more holders
of Exchangeable Shares shall not invalidate or otherwise alter or
affect any action or proceeding to be taken by the Corporation pursuant
thereto.
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APPENDIX 1
FORM OF NOTICE OF RETRACTION
To: 6544631 Canada Inc. (the "Corporation")
This notice is given pursuant to section 6 of the provisions (the "Share
Provisions") attaching to the Class A Special Shares of the Corporation
represented by the certificate (the "Certificate") which accompanies this notice
and all capitalized words and expressions used in this notice that are defined
in the Share Provisions have the meanings ascribed to such words and expressions
in such Share Provisions.
The undersigned hereby notifies the Corporation that, subject to the Retraction
Call Right referred to below, the undersigned desires to have the Corporation
redeem in accordance with section 6 of the Share Provisions:
[ ] all share(s) represented by the Certificate; or
[ ] _________________ share(s) only.
The undersigned hereby notifies the Corporation that the Retraction Date shall
be:
NOTE: the Retraction Date must be a Business Day and must not be
less than 10 Business Days or more than 15 Business Days after
the date upon which this notice is delivered to the
Corporation. If no such Business Day is specified above, the
Retraction Date shall be deemed to be the 15th Business Day
after the date on which this notice is delivered to the
Corporation.
The undersigned acknowledges the overriding Retraction Call Right of Big Flash
Corp. ("Big Flash") to purchase all but not less than all the Retracted Shares
from the undersigned and that this notice is and shall be deemed to be a
revocable offer by the undersigned to sell such shares to Big Flash in
accordance with the Retraction Call Right on the Retraction Date for the
Purchase Price and on the other terms and conditions set out in section 6.3 of
the Share Provisions. This notice of retraction, and this offer to sell the
Retracted Shares to Big Flash, may be revoked and withdrawn by the undersigned
only by notice in writing given to the Corporation at any time before the close
of business on the Business Day immediately preceding the Retraction Date as
provided in section 6.7 of the Share Provisions.
The undersigned acknowledges that if, as a result of solvency provisions of
applicable law, the Corporation is unable to redeem all Retracted Shares, the
undersigned will be deemed to have exercised the Exchange Right (as defined in
the Share Provisions) so as to require Big Flash, to purchase the unredeemed
Retracted Shares.
The undersigned hereby represents and warrants to the Corporation and Big Flash
that the undersigned:
(select one):
[ ] is
[ ] is not
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a non-resident of Canada for purposes of the Income Tax Act (Canada). The
undersigned acknowledges that, in the absence of an indication that the
undersigned is not a non-resident of Canada, withholding on account of Canadian
tax may be made from amounts payable to the undersigned on the redemption or
purchase of the Retracted Shares.
The undersigned hereby represents and warrants to the Corporation and Big Flash
that the undersigned has good title to, and owns, the share(s) represented by
the Certificate to be acquired by the Corporation or Big Flash, as the case may
be, free and clear of all liens, claims and encumbrances except with respect to
restrictions and legends required for purposes of compliance with U.S. federal
securities laws.
[ ] Please check box if the securities and any cheque(s) resulting from the
retraction or purchase of the Retracted Shares are to be held for pick-up by the
shareholder from the Transfer Agent, failing which the securities and any
cheque(s) will be mailed to the last address of the shareholder as it appears on
the register.
Date:
-----------------------------------------------------------------------
--------------------------------------------------------------------------------
Name of Person in Whose Name Securities or Cheque(s) are to be Registered,
Issued or Delivered (please print)
--------------------------------------------------------------------------------
Street Address or P.O. Box
--------------------------------------------------------------------------------
Signature of Shareholder
--------------------------------------------------------------------------------
City, Province and Postal Code
--------------------------------------------------------------------------------
Signature Guaranteed by
NOTE: (1) This panel must be completed and the Certificate, together with
such additional documents as the Transfer Agent may require, must be
deposited with the Transfer Agent. The securities and any cheque(s)
resulting from the retraction or purchase of the Retracted Shares will
be issued and registered in, and made payable to, respectively, the
name of the shareholder as it appears on the register of the
Corporation and the securities and any cheque(s) resulting from such
retraction or purchase will be delivered to such shareholder as
indicated above, unless the form appearing immediately below is duly
completed.
(2) If this notice of retraction is for less than all of the shares
represented by the Certificate, a certificate representing the
remaining share(s) of the Corporation represented by the Certificate
will be issued and registered in the name of the shareholder as it
appears on the register of the Corporation, unless the share transfer
power on the reverse side of the Certificate is duly completed in
respect of such share(s).
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ANNEX A
CAPITALIZATION OF EXCHANGECO
The authorized capital of Exchangeco consists of an unlimited number of common
shares and an unlimited number of Class A Special Shares. The rights,
privileges, restrictions and conditions of the Class A Special Shares are
attached to this Agreement as Schedule "A".
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================================================================================
ESCROW AGREEMENT
THIS AGREEMENT is made as of the 28th day of April, 2006.
AMONG:
BIG FLASH CORP.
A Delaware corporation
("Big Flash")
AND:
6544631 CANADA INC.
An corporation incorporated under the Canada Business Corporations Act
(the "Issuer")
AND:
EQUITY TRANSFER SERVICES INC.
A corporation continued under the Canada Business Corporations Act
(the "Escrow Agent")
AND:
EACH OF THE UNDERSIGNED SECURITYHOLDERS OF THE ISSUER
(a "Securityholder" or "you")
(collectively, the "Parties")
WHEREAS:
A. This Agreement is being entered into by the Parties pursuant to and in
compliance with the Share Exchange Agreement (the "Share Exchange
Agreement") by and among the Securityholders, the Issuer, Big Flash and
Intelgenx Corp. dated <>, 2006.
B. The escrow securities (as defined herein) are exchangeable for common
shares of Big Flash pursuant to the terms of a support agreement dated
<>, 2006 among the Issuer, Big Flash and the Escrow Agent and an
exchange and voting trust agreement dated <>, 2006 among the Parties
(the "Collateral Agreements").
For good and valuable consideration, the Parties agree as follows:
PART 1 ESCROW
1.1 Appointment of Escrow Agent
Big Flash, the Issuer and the Securityholders appoint the Escrow Agent to act as
escrow agent under this Agreement. The Escrow Agent accepts the appointment.
1.2 Deposit of Escrow Securities in Escrow
(1) You are depositing the securities ("escrow securities") listed opposite
your name in Schedule "A" with the Escrow Agent to be held in escrow
under this Agreement. You will immediately deliver or cause to be
delivered to the Escrow Agent any share certificates or other evidence
of these securities which you have or which you may later receive.
(2) If you receive any other securities ("additional escrow securities"):
(a) as a dividend or other distribution on escrow securities;
(b) on the exercise of a right of purchase, conversion or exchange
attaching to escrow securities, including all securities of
Big Flash which you may receive in the future in connection
with such exercise of a right of purchase, conversion or
exchange;
(c) on a subdivision, or compulsory or automatic conversion or
exchange of escrow securities; or
(d) from a successor issuer in a business combination, if Part 4
of this Agreement applies,
you will deposit them in escrow with the Escrow Agent. You will deliver
or cause to be delivered to the Escrow Agent any share certificates or
other evidence of those additional escrow securities. When this
Agreement refers to escrow securities, it includes additional escrow
securities.
(3) You will immediately deliver to the Escrow Agent any replacement share
certificates or other evidence of additional escrow securities issued
to you.
1.3 Direction to Escrow Agent
Big Flash, the Issuer and the Securityholders direct the Escrow Agent to hold
the escrow securities in escrow until they are released from escrow under this
Agreement.
PART 2 RELEASE OF ESCROW SECURITIES
2.1 Release Provisions
The provisions of Schedule 2.1 are incorporated into and form part of this
Agreement.
2.2 Additional escrow securities
If you acquire additional escrow securities in connection with the transaction
to which this Agreement relates or otherwise, those securities will be added to
the securities already in escrow, to increase the number of escrow securities.
After that, all of the escrow securities will be released in accordance with the
provisions of schedule 2.1.
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2.3 Delivery of Share Certificates for Escrow Securities
The Escrow Agent will send to each Securityholder any share certificates or
other evidence of that Securityholder's escrow securities in the possession of
the Escrow Agent released from escrow as soon as reasonably practicable after
the release.
2.4 Replacement Certificates
If, on the date a Securityholder's escrow securities are to be released, the
Escrow Agent holds a share certificate or other evidence representing more
escrow securities than are to be released, the Escrow Agent will deliver the
share certificate or other evidence to the Issuer or Big Flash, as the case may
be, or its transfer agent and request replacement share certificates or other
evidence. The Issuer or Big Flash, as the case may be, will cause replacement
share certificates or other evidence to be prepared and delivered to the Escrow
Agent. After the Escrow Agent receives the replacement share certificates or
other evidence, the Escrow Agent will send to the Securityholder or at the
Securityholder's direction, the replacement share certificate or other evidence
of the escrow securities released. The Escrow Agent, Big Flash and Issuer will
act as soon as reasonably practicable.
PART 3. DEALING WITH ESCROW SECURITIES
3.1 Restriction on Transfer, etc.
Unless it is expressly permitted in this Agreement, you will not sell, transfer,
assign, mortgage, enter into a derivative transaction concerning, or otherwise
deal in any way with your escrow securities or any related share certificates or
other evidence of the escrow securities. If a Securityholder is a private
company controlled by one or more directors, officers or employees of Big Flash
or a holder of securities in or securities exchangeable or convertible into
voting securities of Big Flash carrying more than 10% of the votes attached to
all outstanding voting securities of Big Flash (collectively, the "Principals"),
the Securityholder may not participate in a transaction that results in a change
of its control or a change in the economic exposure of the Principals to the
risks of holding escrow securities. Notwithstanding the foregoing, upon receipt
of a written request from a Securityholder, the disinterested directors of Big
Flash (as defined below) may consent to a proposed transfer within escrow of
escrow securities in the circumstances and on such terms and conditions as they,
in their sole discretion, may deem appropriate provided beneficial ownership of
the escrow securities proposed to be transferred shall remain with the
Securityholder following the transfer.
3.2 Pledge, Mortgage or Charge as Collateral for a Loan
Subject to and only with approval by a duly passed resolution of directors of
Big Flash excluding all Securityholders and Principals who own or control
Securityholders (the "disinterested directors of Big Flash"), you may pledge,
mortgage or charge your escrow securities to a financial institution as
collateral for a loan, provided that no escrow securities or any share
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certificates or other evidence of escrow securities will be transferred or
delivered by the Escrow Agent to the financial institution for this purpose. The
loan agreement must provide that the escrow securities will remain in escrow if
the lender realizes on the escrow securities to satisfy the loan.
3.3 Voting of Escrow Securities
Although you may exercise voting rights attached to your escrow securities, you
may not, while your securities are held in escrow, exercise voting rights
attached to any securities (whether in escrow or not) in support of one or more
arrangements that would result in the repayment of capital being made on the
escrow securities prior to a winding up of the Issuer or Big Flash.
3.4 Exercise of Other Rights Attaching to Escrow Securities
You may exercise your rights to exchange or convert your escrow securities in
accordance with this Agreement and the Collateral Agreements.
PART 4 BUSINESS COMBINATIONS
4.1 Business Combinations
This Part applies to the following ("business combinations"):
(a) a formal take-over bid for all outstanding equity securities of the
Issuer or Big Flash or which, if successful, would result in a change
of control of the Issuer or Big Flash, (b) a formal issuer bid for all
outstanding equity securities of the Issuer or Big Flash, (c) a
statutory arrangement involving the Issuer or Big Flash or both, (d) an
amalgamation involving the Issuer or Big Flash or both, (e) a merger
involving the Issuer or Big Flash or both, and (f) a reorganization
that has an effect similar to an amalgamation or merger.
4.2 Delivery to Escrow Agent
You may tender your escrow securities to a person or company in a business
combination pursuant to the terms of this Part 4. At least ten business days
prior to the date the escrow securities must be tendered under the business
combination, you must deliver to the Escrow Agent:
(a) a written direction signed by you that directs the Escrow
Agent to deliver to the depositary under the business
combination any share certificates or other evidence of the
escrow securities, and a completed and executed cover letter
or similar document and, where required, transfer power of
attorney completed and executed for transfer in accordance
with the requirements of the Issuer or Big Flash's
depository, and any other documentation specified or
provided by you and required to be delivered to the
depositary under the business combination;
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(b) written consent of the disinterested directors of Big Flash,
unless the business combination consists of a statutory plan
of arrangement in which case the consent of the disinterested
directors shall not be required; and
(c) any other information concerning the business combination as
the Escrow Agent may reasonably require.
4.3 Delivery to Depositary
As soon as reasonably practicable, and in any event no later than three business
days after the Escrow Agent receives the documents and information required
under section 4.2, the Escrow Agent will deliver to the depositary, in
accordance with the direction, any share certificates or other evidence of the
escrow securities and a letter addressed to the depositary that:
(a) identifies the escrow securities that are being tendered;
(b) states that the escrow securities are held in escrow;
(c) states that the escrow securities are delivered only for the
purposes of the business combination and that they will be
released from escrow only after the Escrow Agent receives the
information described in section 4.4;
(d) if any share certificates or other evidence of the escrow
securities have been delivered to the depositary, requires the
depositary to return to the Escrow Agent, as soon as
practicable, the share certificates or other evidence of
escrow securities that are not released from escrow into the
business combination; and
(e) where applicable, requires the depositary to deliver or cause
to be delivered to the Escrow Agent, as soon as practicable,
share certificates or other evidence of additional escrow
securities that you acquire under the business combination.
4.4 Release of Escrow Securities to Depositary
(1) The Escrow Agent will release from escrow the tendered escrow securities
provided that:
(a) you provide written notice to Big Flash of the proposed release of
the tendered securities; and
(b) the Escrow Agent and Big Flash receives a declaration signed
by the depositary or, if the direction identifies the
depositary as acting on behalf of another person or company in
respect of the business combination, by that other person or
company, that
(i) the terms and conditions of the business combination
have been met or waived; and
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(ii) the escrow securities have either been taken up and
paid for or are subject to an unconditional
obligation to be taken up and paid for under the
business combination.
4.5 Escrow of New Securities
If you receive securities ("new securities") of another issuer ("successor
issuer") in exchange for your escrow securities, the new securities will be
subject to escrow in substitution for the tendered escrow securities.
4.6 Release from Escrow of New Securities
(1) The Escrow Agent will send to a Securityholder share certificates or
other evidence of the Securityholder's new securities as soon as
reasonably practicable after the Escrow Agent receives;
(a) a certificate from the successor issuer signed by a director
or officer of the successor issuer authorized to sign (who is
not a Securityholder):
(i) stating that it is a successor issuer to the Issuer
or Big Flash, as applicable, as a result of a
business combination;
(ii) containing a list of the securityholders whose new
securities are subject to escrow under section 4.5;
(iii) containing a list of the securityholders whose new
securities are not subject to escrow under section
4.5; and
(b) written confirmation from or on behalf of the disinterested
directors of Big Flash that they have accepted the list of
Securityholders whose new securities are not subject to escrow
under section 4.5; and
(2) If your new securities are subject to escrow, the Escrow Agent will
hold your new securities in escrow on the same terms and conditions,
including release dates, as applied to the escrow securities that you
exchanged.
PART 5 RESIGNATION OF ESCROW AGENT
5.1 Resignation of Escrow Agent
(1) If the Escrow Agent wishes to resign as escrow agent, the Escrow Agent
will give written notice to the Issuer and Big Flash.
(2) If the Issuer and Big Flash wish to terminate the Escrow Agent as
escrow agent, the Issuer and Big Flash will give written notice to the
Escrow Agent.
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(3) If the Escrow Agent resigns or is terminated, the Issuer and Big Flash
will be responsible for ensuring that the Escrow Agent is replaced not
later than the resignation or termination date by another escrow agent
that is acceptable to Big Flash and that has accepted such appointment,
which appointment will be binding on the Issuer, Big Flash and the
Securityholders.
(4) The resignation or termination of the Escrow Agent will be effective,
and the Escrow Agent will cease to be bound by this Agreement, on the
date that is 60 days after the date of receipt of the notices referred
to above by the Escrow Agent or Issuer and Big Flash, as applicable, or
on such other date as the Escrow Agent, Big Flash and the Issuer may
agree upon (the "resignation or termination date"), provided that the
resignation or termination date will not be less than 10 business days
before a release date.
(5) If the Issuer and Big Flash have not appointed a successor escrow agent
within 60 days of the resignation or termination date, the Escrow Agent
will apply, at the Issuer's expense, to a court of competent
jurisdiction for the appointment of a successor escrow agent, and the
duties and responsibilities of the Escrow Agent will cease immediately
upon such appointment.
(6) On any new appointment under this section, the successor Escrow Agent
will be vested with the same powers, rights, duties and obligations as
if it had been originally named herein as Escrow Agent, without any
further assurance, conveyance, act or deed. The predecessor Escrow
Agent, upon receipt of payment for any outstanding account for its
services and expenses then unpaid, will transfer, deliver and pay over
to the successor Escrow Agent, who will be entitled to receive, all
securities, records or other property on deposit with the predecessor
Escrow Agent in relation to this Agreement and the predecessor Escrow
Agent will thereupon be discharged as Escrow Agent.
PART 6 OTHER CONTRACTUAL ARRANGEMENTS
6.1 Duties and Liability of Escrow Agent.
(1) The duties of the Escrow Agent under this Agreement are only
ministerial in nature and except for its wilful misconduct, fraud or grossly
negligent acts or omissions and the wilful misconduct, fraud or negligent acts
or omissions of its directors, officers, employees, agents, advisers or other
representatives (collectively, its "Representatives"), the Escrow Agent shall
not be liable for any act or omission by it in good faith or for any mistake of
fact or law.
(2) The Escrow Agent shall have no duties or obligations except those which
are expressly set out in this Agreement which shall be deemed those of a
custodian and shall be entirely administrative and not discretionary, and under
no circumstance shall the Escrow Agent be deemed a fiduciary for the parties.
The Escrow Agent shall not refer to, and shall not be bound by, the provisions
of any agreement other than the terms of this Agreement and no implied duties or
obligations of the Escrow Agent may be read into this Agreement. This Agreement
-7-
sets forth all matters pertinent to the escrow contemplated hereunder, and no
additional obligations of the Escrow Agent shall be inferred from the terms of
this Agreement or any other agreement.
(3) The Escrow Agent shall not be required to defend any legal proceedings
which may be instituted against it in respect of or arising out of any matter
contained in this Agreement unless requested to do so in writing by another
Party and indemnified and funded to its reasonable satisfaction against the cost
and expense of that defence, so long as that legal proceeding does not arise as
a result of an allegation of wilful misconduct, fraud or grossly negligent acts
or omissions on the part of the Escrow Agent or its Representatives.
(4) Each of the other Parties acknowledges that the Escrow Agent shall have
no responsibility or obligation to determine any dispute or evaluate any
equities between the other parties, regardless of any knowledge or any fact that
it may have or receive, its only responsibility as Escrow Agent being to hold,
safeguard and disburse the escrow securities in accordance with the terms of
this Agreement.
(5) The Escrow Agent shall not be under any duty to give the property held
by it under this Agreement any greater degree of care than it gives its own
similar property. The Escrow Agent shall have no responsibility or liability for
any diminution in value of any assets held hereunder which may result from any
investments or reinvestment made in accordance with any provision which may be
contained herein so long as in doing so the Escrow Agent shall not have acted
with wilful neglect, negligence or in bad faith.
(6) The Escrow Agent shall not be required to use, advance or risk its own
funds or otherwise incur financial liability in the performance of any of its
duties or the exercise of any of its rights under this Agreement other than any
such liability as may arise from the failure of the Escrow Agent to perform such
duties as are specifically set forth in this Agreement or as a result of wilful
misconduct, fraud or negligent acts or omissions on the part of the Escrow Agent
or its Representatives.
(7) Notwithstanding anything contained herein or in the Share Exchange
Agreement to the contrary, the Escrow Agent shall have no duty to determine the
performance or non-performance of any term or provision of the Share Exchange
Agreement and shall have no obligations, responsibilities or liability arising
under any other agreement to which the Escrow Agent is not a party, even though
reference to such other agreement may be made in this Agreement or the Share
Purchase Agreement.
(8) The Escrow Agent shall not be responsible to ensure the validity or
legality of the issuance of any escrow securities.
6.2 Reliance on Documents. The Escrow Agent shall be fully protected in
acting and relying on any document delivered to it pursuant to this Agreement as
to its due execution, validity and effectiveness and as to the truth and
accuracy of any information contained therein, whether that document bears
original or facsimile signature(s), so long as the Escrow Agent in good faith
believes that document to be genuine and to be what it purports to be.
6.3
Legal Counsel. The Escrow Agent may consult and obtain advice from
independent legal counsel in the event of any question as to any of the
-8-
provisions of this Agreement or as to its duties under this Agreement and the
Escrow Agent shall incur no liability and shall be fully protected in acting in
good faith in accordance with the opinion and advice of such legal counsel.
6.4 Indemnity.
(1) Subject to Section 6.7, the parties shall jointly and severally
indemnify and hold harmless the Escrow Agent and its Representatives from any
liability, loss, claim, action, cost, and expense, including legal fees and
disbursements, (collectively, the "Liabilities") suffered or incurred by them as
a result of or arising directly or indirectly out of or in connection with the
Escrow Agent acting or having acted as Escrow Agent under this Agreement, except
such as may result from the wilful misconduct, fraud or negligent acts or
omissions of the Escrow Agent or of its Representatives.
(2) The Escrow Agent shall act as trustee for its Representatives of the
covenants of the parties under this Section 6.4 in respect of those
Representatives and accepts the trust and shall hold and enforce the covenants
on their behalf.
(3) The covenants of the parties under this Section 6.4 shall survive the
termination of this Agreement.
6.5 Court Orders.
(1) The Escrow Agent is authorized, in its sole discretion, to rely on and
comply with any order, writ, judgment or decree which it is advised by
independent legal counsel (retained by it pursuant to Section 6.3) is binding on
it without the need for appeal or other action and which purports to:
(a) attach, garnish or be levied on any part of the escrow securities;
(b) stay or enjoin the disbursement, payment or delivery of the escrow
securities or any part thereof; or
(c) affect the escrow securities or any part thereof in any way.
If the Escrow Agent relies on or complies with any such order, writ, judgment or
decree, it shall not be liable to any of the other Parties or to any other
Person by reason of such reliance or compliance even though such order, writ,
judgment or decree may be subsequently reversed, modified, annulled, set aside
or vacated.
6.6 Fees, Expenses and Disbursements.
(1) The other Parties shall jointly and severally be responsible for and
shall pay to the Escrow Agent all Escrow Agent Fees, all reasonable expenses and
disbursements of the Escrow Agent and all reasonable fees, expenses and
disbursements of legal counsel retained by the Escrow Agent pursuant to Section
6.3.
(2) The Escrow Agent Fees are considered compensation for ordinary services
as contemplated by this Agreement. If the Escrow Agent renders any service not
provided for in this Agreement, or if the other Parties request a substantial
-9-
modification of the terms of this Agreement, the Escrow Agent shall be
reasonably compensated for such extraordinary services and reimbursed for all
costs, lawyers' fees, and expenses reasonably occasioned in connection with such
extraordinary services. The other Parties shall jointly and severally be
responsible for and shall pay to the Escrow Agent all such additional
compensation and amounts.
6.7 Prohibition Against Disbursement from Escrow Securities. The Escrow
Agent is not authorized to deliver to itself or any other Persons from the
escrow securities in satisfaction of any amounts due to the Escrow Agent or any
other Person under Section 6.6. Notwithstanding any provisions contained in this
Agreement, if any of the Escrow Agent's Fees to which it is entitled under this
Agreement, or any of the Escrow Agent's expenses and disbursements which it is
entitled to incur pursuant to this Agreement, are in arrears, the Escrow Agent
reserves the right to withhold, to the extent of any those arrears, the release
of any escrow securities from escrow until those fees, expenses and
disbursements are paid in full.
PART 7 NOTICES
7.1 Notice to Escrow Agent
Documents will be considered to have been delivered to the Escrow Agent on the
next business day following the date of transmission, if delivered by fax, the
date of delivery, if delivered by hand or by prepaid courier, or 5 business days
after the date of mailing, if delivered by mail, to the following:
Equity Transfer Services Inc.
000Xxxxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: President
Fax: (000) 000-0000
7.2 Notice to Issuer
Documents will be considered to have been delivered to the Issuer on the next
business day following the date of transmission, if delivered by fax, the date
of delivery, if delivered by hand during normal business hours or by prepaid
courier, or 5 business days after the date of mailing, if delivered by mail, to
the following:
6544631 Canada Inc.
00 Xxxxxxxxxx Xxxxxx Xxxx, Xxxxx 0000, X.X. Xxx 00
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxx Xxxx
Fax: (000) 000-0000
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7.3 Notice to Big Flash
Documents will be considered to have been delivered to Big Flash on the next
business day following the date of transmission, if delivered by fax, the date
of delivery, if delivered by hand during normal business hours or by prepaid
courier, or 5 business days after the date of mailing, if delivered by mail, to
the following:
Big Flash Corp.
00 Xxxx 000 Xxxxx, Xxxxx #000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxxx Xxxxxxxx, Secretary
Fax: (000) 000-0000
7.3 Deliveries to Securityholders
Documents will be considered to have been delivered to a Securityholder on the
date of delivery, if delivered by hand or by prepaid courier, or 5 business days
after the date of mailing, if delivered by mail, to the address on the Issuer's
share register.
Any share certificates or other evidence of a Securityholder's escrow securities
will be sent to the Securityholder's address on the Issuer's share register
unless the Securityholder has advised the Escrow Agent in writing otherwise at
least ten business days before the escrow securities are released from escrow.
The Issuer will provide the Escrow Agent with each Securityholder's address as
listed on the Issuer's share register.
7.4 Change of Address
(1) The Escrow Agent may change its address for delivery by delivering
notice of the change of address to the Issuer and to each
Securityholder.
(2) The Issuer may change its address for delivery by delivering notice of
the change of address to the Escrow Agent and to each Securityholder.
(3) A Securityholder may change that Securityholder's address for delivery
by delivering notice of the change of address to the Issuer and to the
Escrow Agent.
7.5 Postal Interruption
A party to this Agreement will not mail a Document if the party is aware of an
actual or impending disruption of postal service.
PART 8 GENERAL
8.1 Interpretation - holding securities
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Unless the context otherwise requires, all capitalized terms that are not
otherwise defined in this Agreement, shall have the meanings as defined in the
Share Exchange Agreement and, to the extent such definitions do not conflict
with the Share Exchange Agreement, the Collateral Agreements.
When this Agreement refers to securities that a Securityholder "holds", it means
that the Securityholder has direct or indirect beneficial ownership of or
control or direction over the securities.
8.2 Enforcement by Third Parties
Each of the Issuer and Big Flash enters this Agreement both on its own behalf
and as trustee for the stockholders of Big Flash, and this Agreement may be
enforced by either the Issuer, or Big Flash, or the stockholders of Big Flash,
or all of them.
8.3 Termination, Amendment, and Waiver of Agreement
(1) Subject to subsection 8.3(3), this Agreement shall only terminate:
(a) with respect to all the Parties:
(i) as specifically provided in this Agreement;
(ii) subject to section 8.3(2), upon the agreement of all
Parties; or
(iii) when the escrow securities of all Securityholders
have been released from escrow pursuant to this
Agreement; and
(b) with respect to a Party:
(i) as specifically provided in this Agreement; or
(ii) if the Party is a Securityholder, when all of the
Securityholder's escrow securities have been released
from escrow pursuant to this Agreement.
(2) An agreement to terminate this Agreement pursuant to section
8.3(1)(a)(ii) shall not be effective unless and until the agreement to
terminate
(a) is evidenced by a memorandum in writing signed by all Parties;
(b) has been consented to in writing by the disinterested directors of
Big Flash; and
(c) has been approved by a majority of securityholders of Big Flash who
are not Securityholders.
(4) No amendment or waiver of this Agreement or any part of this Agreement
shall be effective unless the amendment or waiver:
(a) is evidenced by a memorandum in writing signed by all Parties;
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(b) has been approved in writing by the disinterested directors of Big
Flash; and
(c) has been approved by a majority of securityholders of Big Flash who
are not Securityholders.
(5) No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision (whether similar or
not), nor shall any waiver constitute a continuing waiver, unless
expressly provided.
8.4 Severance of Illegal Provision
Any provision or part of a provision of this Agreement determined by a court of
competent jurisdiction to be invalid, illegal or unenforceable shall be deemed
stricken to the extent necessary to eliminate any invalidity, illegality or
unenforceability, and the rest of the Agreement and all other provisions and
parts thereof shall remain in full force and effect and be binding upon the
parties hereto as though the said illegal and/or unenforceable provision or part
thereof had never been included in this Agreement.
8.5 Further Assurances
The Parties will execute and deliver any further documents and perform any
further acts reasonably requested by any of the Parties to this Agreement which
are necessary to carry out the intent of this Agreement.
8.6 Time
Time is of the essence of this Agreement.
8.7 Governing Laws
The laws of the Province of Ontario and the applicable laws of Canada will
govern this Agreement.
8.8 Counterparts
The Parties may execute this Agreement by fax and in counterparts, each of which
will be considered an original and all of which will be one agreement.
8.9 Singular and Plural
Wherever a singular expression is used in this Agreement, that expression is
considered as including the plural or the body corporate where required by the
context.
8.10 Benefit and Binding Effect
This Agreement will benefit and bind the Parties and their heirs, executors,
administrators, successors and permitted assigns and all persons claiming
through them as if they had been a Party to this Agreement.
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8.11 Entire Agreement
This is the entire agreement among the Parties concerning the subject matter set
out in this Agreement and supersedes any and all prior understandings and
agreements.
8.12 Successor to Escrow Agent
Any corporation with which the Escrow Agent may be amalgamated, merged or
consolidated, or any corporation succeeding to the business of the Escrow Agent
will be the successor of the Escrow Agent under this Agreement without any
further act on its part or on the part or any of the Parties.
The Parties have executed and delivered this Agreement as of the date set out
above.
EQUITY TRANSFER SERVICES INC.
-----------------------------------------
Authorized signatory
-----------------------------------------
Authorized signatory
BIG FLASH CORP.
-----------------------------------------
Authorized signatory
-----------------------------------------
Authorized signatory
6544631 CANADA INC.
-----------------------------------------
Authorized signatory
-----------------------------------------
Authorized signatory
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Signed, sealed and delivered by )
XXXXX XXXXX in the presence of: )
)
----------------------------------------- )
Name )
)
----------------------------------------- ) ------------------------
Address ) XXXXX XXXXX
)
----------------------------------------- )
)
)
---------------------------------------- )
Occupation )
Signed, sealed and delivered by )
XXXXXX XXXXX in the presence of: )
)
----------------------------------------- )
Name )
)
----------------------------------------- ) ------------------------
Address ) XXXXXX XXXXX
)
----------------------------------------- )
)
)
---------------------------------------- )
Occupation )
Signed, sealed and delivered by )
XXXX XXXXX in the presence of: )
)
----------------------------------------- )
Name )
)
----------------------------------------- ) ------------------------
Address ) XXXX XXXXX
)
----------------------------------------- )
)
)
---------------------------------------- )
Occupation )
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SCHEDULE "A" TO ESCROW AGREEMENT
Securityholder
Name: XXXXX XXXXX
Signature:
Address for Notice:
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Securities:
---------------------------- ---------------------- --------------------------
Class and description Number of Shares Certificate Number(s) (if
applicable)
---------------------------- ---------------------- --------------------------
---------------------------- ---------------------- --------------------------
---------------------------- ---------------------- --------------------------
---------------------------- ---------------------- --------------------------
Securityholder
Name: XXXXXX XXXXX
Signature:
Address for Notice:
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Securities:
---------------------------- ---------------------- --------------------------
Class and description Number of Shares Certificate Number(s) (if
applicable)
---------------------------- ---------------------- --------------------------
---------------------------- ---------------------- --------------------------
---------------------------- ---------------------- --------------------------
---------------------------- ---------------------- --------------------------
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Securityholder
Name: XXXX XXXXX
Signature:
Address for Notice:
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Securities:
---------------------------- ---------------------- --------------------------
Class and description Number of Shares Certificate Number(s) (if
applicable)
---------------------------- ---------------------- --------------------------
---------------------------- ---------------------- --------------------------
---------------------------- ---------------------- --------------------------
---------------------------- ---------------------- --------------------------
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SCHEDULE 2.1 TO ESCROW AGREEMENT
ESCROW SECURITIES RELEASE SCHEDULE
Timed Release
--------------------- ----------------------- ----------------------
Percentage of Total Total Number of
Release Date Escrowed Securities Escrowed Securities
to be Released to be Released
--------------------- ----------------------- -----------------------
April <>, 2009 100% 10,991,000
--------------------- ----------------------- ----------------------
TOTAL 100%
--------------------- ----------------------- ----------------------
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