EXHIBIT 10.13
MEMORANDUM OF AGREEMENT made effective the 30th day of September, 2003.
BETWEEN:
XXXXXXX INTERNATIONAL RESOURCES INC., a corporation incorporated under the
laws of the State of Nevada (hereinafter referred to as "SHIR")
- and -
SHIR INVESTMENTS LTD., a corporation incorporated under the laws of the
Province of Alberta and having its head and principal office at Calgary,
Alberta (hereinafter referred to as "SIL")
SUPPORT AGREEMENT
-----------------
WHEREAS pursuant to the provisions of a Share Purchase Agreement dated the
30th day of September, 2003 among SHIR, SIL, Logical Sequence Incorporated
("Logical") and certain shareholders of Logical, and any amendments thereto
(hereinafter referred to as the "Share Purchase Agreement") the parties agreed
that SHIR and SIL would deliver this Support Agreement;
WHEREAS the Articles of Amendment of SIL create an infinite number of
Exchangeable Shares having the attributes as set out in the Articles of
Amendment of SIL attached hereto as Schedule "A" (the "Exchangeable Shares");
and
WHEREAS pursuant to the Share Purchase Agreement the parties agreed to
exchange Five Million One Hundred Thousand (5,100,000) common shares of Logical
(the "Purchased Shares") for Five Million One Hundred Thousand (5,100,000)
Exchangeable Shares pursuant to the terms of the Share Purchase Agreement;
WHEREAS the Exchangeable Shares shall be issued to certain shareholders of
Logical in accordance with the terms of Section 3.2 of the Share Purchase
Agreement; and
WHEREAS the parties hereto wish to provide for and establish a procedure
whereby SHIR will take certain actions and make certain payments and deliveries
necessary to ensure that SIL will be able to make certain payments and to
deliver or cause to be delivered shares of SHIR common shares in satisfaction of
the obligations of SIL under the Exchangeable Share provisions with respect to
the payment and satisfaction of dividends, Liquidation Amounts, Retraction
Prices and Redemption Prices, all in accordance with the Exchangeable Share
Provisions;
2
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:
1. Definitions
1.1 Interpretation
(a) Defined Terms. Each term denoted herein by initial capital
letters and not otherwise defined herein shall have the meaning
attributed thereto in the Exchangeable Share Provisions, unless
the context requires otherwise.
(b) 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.
(c) 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.
(d) 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.
2. Implementing the Transaction
2.1 The parties agree that the Effective Date for all agreements shall be
September 30th, 2003 and that the Exchangeable Shares shall be issued
by SIL to the shareholders of Logical in accordance with the terms and
conditions of the Share Purchase Agreement as more particularly set
forth in Section 3.2 of the said Agreement.
2.2 The parties agree that the purchase and sale of the Purchased Shares
shall be carried out in the following manner:
(a) SIL shall create the Exchangeable Shares;
(b) SHIR shall create a Special Voting Preferred Share (the "Voting
Share") having the terms and conditions set out in Schedule
"B"hereto and shall issue to and deposit with the Trustee such
Voting Share, in consideration of the payment to SHIR of U.S. $1,
to be held by the Trustee as trustee for and on behalf of, and
for the use and benefit of, the holders of the Exchangeable
Shares, in accordance with the Voting and Exchange Trust
Agreement, hereinafter defined;
3
(c) SHIR shall subscribe for 100 common shares in the share capital
of SIL at a subscription price of $1 per share.
(d) The shareholders of Logical shall exchange the Purchased Shares
for the Exchangeable Shares as set out in the Share Purchase
Agreement;
(e) SHIR, SIL and the Trustee will execute and deliver the Voting and
Exchange Trust Agreement attached hereto as Schedule "C" (the
"Voting and Exchange Trust Agreement"); and
(f) SHIR shall reserve for issuance such number of shares of Common
Stock as shall be necessary for the issuance on exchange of the
Exchangeable Shares.
3. Covenants of SHIR and SIL
3.1 Covenants of SHIR Regarding Exchangeable Shares.
SHIR covenants and agrees that so long as any Exchangeable Shares are
outstanding, it will:
(a) not declare or pay any dividend on SHIR Common Stock unless (A)
SIL will have sufficient assets, funds and other property
available to enable the due declaration and the due and punctual
payment in accordance with applicable law of an equivalent
dividend on the Exchangeable Shares and (B) shall simultaneously
declare or pay, as the case may be, an equivalent dividend on the
Exchangeable Shares, in each case in accordance with the
Exchangeable Share Provisions;
(b) advise SIL sufficiently in advance of the declaration by SHIR of
any dividend on SHIR Common Stock and take all such other actions
as are necessary, in cooperation with SIL, 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
record date, declaration date and payment date for the
corresponding dividend on SHIR Common Stock;
4
(c) ensure that the record date for any dividend declared on SHIR
Common Stock is not less than 10 calendar days after the
declaration date for such dividend;
(d) take all such actions and do all such things as are necessary or
desirable to enable and permit SIL, in accordance with applicable
law, to pay and otherwise perform its obligations with respect to
the satisfaction of the Liquidation Amount in respect of each
issued and outstanding Exchangeable Share upon the liquidation,
dissolution or winding-up of SIL, including without limitation
all such actions and all such things as are necessary or
desirable to enable and permit SIL to cause to be delivered
shares of SHIR Common Stock to the holders of Exchangeable Shares
in accordance with the provisions of Article 5 of the
Exchangeable Share Provisions;
(e) take all such actions and do all such things as are necessary or
desirable to enable and permit SIL, in accordance with applicable
law, to pay and otherwise perform its obligations with respect to
the satisfaction of the Retraction Price and the Redemption
Price, including without limitation all such actions and all such
things as are necessary or desirable to enable and permit SIL to
cause to be delivered shares of SHIR Common Stock to the holders
of Exchangeable Shares, upon the retraction or redemption of the
Exchangeable Shares in accordance with the provisions of Article
6 or Article 7 of the Exchangeable Share Provisions, as the case
may be; and
(f) not exercise its vote as a direct or indirect shareholder to
initiate the voluntary liquidation, dissolution or winding-up of
SIL nor take any action or omit to take any action that is
designed to result in the liquidation, dissolution or winding-up
of SIL.
3.2 Reservation of Shares of SHIR Common Stock. SHIR hereby represents,
warrants and covenants that it has irrevocably reserved for issuance
and will at all times keep available, free from preemptive and other
rights, out of its authorized and unissued capital stock such number
of shares of SHIR Common Stock (or other shares or securities into
which SHIR Common Stock may be reclassified or changed as contemplated
by Section 2(e) hereof) (i) as is equal to the sum of (A) the number
of Exchangeab1e Shares issued and outstanding from time to time and
(B) the number of Exchangeable Shares issuable upon the exercise of
all rights to acquire Exchangeable Shares outstanding from time to
time and (ii) as are now and may hereafter be required to enable and
permit SHIR to meet its obligations hereunder, under the Voting and
Exchange Trust Agreement, under the Exchangeable Share Provisions and
under any other security or commitment pursuant to the Share Purchase
Agreement with respect to which SHIR may now or hereafter be required
to issue shares of SHIR Common Stock.
5
3.3 Notification of Certain Events. In order to assist SHIR to comply with
its obligations hereunder, SIL covenants and agrees to give SHIR
notice 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
SIL to institute voluntary liquidation, dissolution or winding-up
proceedings with respect to SIL or to effect any other
distribution of the assets of SIL among its shareholders for the
purpose of winding-up its affairs, at least 60 days prior to the
proposed effective date of such liquidation, dissolution,
winding-up or other distribution;
(b) immediately, upon the earlier of (A) receipt by SIL of notice of,
or (B) SIL 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 SIL or to effect any other distribution of the assets of SIL
among its shareholders for the purpose of winding-up its affairs;
(c) immediately, upon receipt by SIL of a Retraction Request (as
defined in the Exchangeable Share Provisions); and,
(d) as soon as practicable upon the issuance by SIL of any
Exchangeable Shares or rights to acquire Exchangeable Shares.
3.4 Delivery of Shares of SHIR Common Stock. In furtherance of its
obligations hereunder, upon notice of any event which requires SHIR to
cause to be delivered shares of SHIR Common Stock to any holder of
Exchangeable Shares, SHIR shall and covenants and agrees to forthwith
issue and deliver the requisite shares of SHIR Common Stock to or to
the order of the former holder of the surrendered Exchangeable Shares,
as SHIR shall direct. All such shares of SHIR Common Stock shall be
duly issued as fully paid and non-assessable and shall be free and
clear of any lien, claim, encumbrance, security interest or adverse
claim.
3.5 Equivalence. SHIR covenants and agrees that it will not without the
prior approval of SIL and the prior approval of the holders of the
Exchangeable Shares given in accordance with Section 9.2 of the
Exchangeable Share Provisions:
(a) issue or distribute shares of SHIR Common Stock (or securities
exchangeable for or convertible into or carrying rights to
acquire shares of SHIR Common Stock) to the holders of all or
substantially all of the then outstanding SHIR Common Stock by
way of stock dividend or other distribution; or
6
(b) issue or distribute rights, options or warrants to the holders of
all or substantially all of the then outstanding shares of SHIR
Common Stock entitling them to subscribe for or to purchase
shares of SHIR Common Stock (or securities exchangeable for or
convertible into or carrying rights to acquire shares of SHIR
Common Stock); or
unless
(c) SHIR 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; and
(d) SHIR shall issue or distribute the economic equivalent on a per
share basis of such rights, options, securities, shares,
evidences of indebtedness or other assets simultaneously to
holders of the Exchangeable Shares.
3.6 SHIR will not without the prior approval of SIL and the prior approval
of the holders of the Exchangeable Shares given in accordance with
Section 9.2 of the Exchangeable Share Provisions:
(a) subdivide, divide or change the then outstanding shares of SHIR
Common Stock into a greater number of shares of SHIR Common
Stock; or
(b) reduce, combine or consolidate or change the then outstanding
shares of SHIR Common Stock into a lesser number of shares of
SHIR Common Stock; or
(c) reclassify or otherwise change the shares of SHIR Common Stock or
effect an amalgamation, merger, reorganization or other
transaction affecting the shares of SHIR Common Stock;
unless
(d) SHIR is permitted under applicable law to simultaneously make the
same or an equivalent change to, or in the rights of holders of,
the Exchangeable Shares; and
7
(e) the same or an equivalent change is made to, or in the rights of
the holders of, the Exchangeable Shares.
3.7 SHIR will ensure that the record date for any event referred to in
section 3.5 or 3.6 above, or (if no record date is applicable for such
event) the effective date for any such event, is not less than 10
calendar days after the date on which such event is declared or
announced by SHIR (with simultaneous notice thereof to be given by
SHIR to SIL).
3.8 Tender Offers, etc. In the event that a tender offer, share exchange
offer, issuer bid, take-over bid or similar transaction with respect
to SHIR Common Stock (an "Offer") is proposed by SHIR or is proposed
to SHIR or its shareholders and is recommended by the Board of
Directors of SHIR, or is otherwise effected or to be effected with the
consent or approval of the Board of Directors of SHIR, SHIR shall take
all such actions and do all such things as are necessary or desirable
to enable and permit holders of Exchangeable Shares to participate in
such Offer to the same extent and on an equivalent basis as the
holders of shares of SHIR Common Stock, without discrimination,
including, without limiting the generality of the foregoing, SHIR will
use its good faith efforts expeditiously to (and shall, in the case of
a transaction proposed by SHIR or where SHIR is a participant in the
negotiation thereof) ensure that holders of Exchangeable Shares may
participate in all such Offers without being required to retract
Exchangeable Shares as against SHIR (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).
3.9 Ownership of Outstanding Shares. Without the prior approval of SIL and
the prior approval of the holders of the Exchangeable Shares given in
accordance with Section 9.2 of the Exchangeable Share Provisions, SHIR
covenants and agrees in favor of SIL that, as long as any outstanding
Exchangeable Shares are owned by any person or entity other than SHIR
or any of its Subsidiaries, SHIR will be and remain the direct or
indirect beneficial owner of all issued and outstanding shares in the
capital of SIL and all outstanding securities of SIL carrying or
otherwise entitled to voting rights in any circumstances, in each case
other than the Exchangeable Shares.
3.10 SHIR Not to Vote Exchangeable Shares. SHIR covenants and agrees that
it will appoint and cause to be appointed proxy holders with respect
to all Exchangeable Shares held by SHIR and its Subsidiaries for the
sole purpose of attending each meeting of holders of Exchangeable
Shares in order to be counted as part of the quorum for each such
meeting. SHIR further covenants and agrees that it will not, and will
cause its Subsidiaries not to, exercise any voting rights which may be
exercisable by holders of Exchangeable Shares from time to time
pursuant to the Exchangeable Share Provisions or pursuant to the
provisions of any corporate statute by which SHIR may be governed with
respect to any Exchangeable Shares held by it or by its Subsidiaries
in respect of any matter considered at any meeting of holders of
Exchangeable Shares.
8
3.11 Due Performance. On and after the Effective Date, SHIR shall duly and
timely perform all of its obligations provided for under the Share
Purchase Agreement, this agreement and all of the agreements to which
it is a party in connection with the transactions contemplated under
the Share Purchase Agreement including any obligations that may arise
upon the exercise of SIL rights under the Exchangeable Share
Provisions.
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
securities Exchangeable Shares) are held by any party other than SHIR
and any of its Subsidiaries.
4.2 Changes in Capital of SHIR and SIL. Notwithstanding the provisions of
Section 4.4 hereof, at all times after the occurrence of any event
effected pursuant to Section 3.5 or 3.8 hereof, as a result of which
either SHIR Common Stock 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 SHIR Common Stock
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, Modifications, etc. This Agreement may not be amended or
modified except by an agreement in writing executed by SHIR and SIL
and approved by the holders of the Exchangeable Shares in accordance
with Section 9.2 of the Exchangeable Share Provisions.
9
4.5 Ministerial Amendments. Notwithstanding the provisions of section
3(d), 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 either or both parties for the
protection 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 opinion of the board of
directors of each of SHIR and SIL, it may be expedient to make,
provided that each such board of directors shall be of the
opinion that such amendments or modifications will not be
prejudicial to the interests of the holders of the Exchangeable
Shares; or
(c) making such changes or corrections which, on the advice of
counsel to SHIR and SIL, 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 SHIR and SIL shall be of the
opinion that such changes or corrections will not be prejudicial
to the interests of the holders of the Exchangeable Shares.
4.6 Meeting to Consider Amendments. SIL, at the request of SHIR, 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 of such shareholders. Any such meeting or meetings
shall be called and held in accordance with the by-laws of SIL, the
Exchangeable Share Provisions and all applicable laws.
4.7 Amendments Only in Writing. 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 both
of the parties hereto.
4.8 Inurement. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and the holders, from time to time, of
Exchangeable Shares and each of their respective heirs, successors and
assigns.
4.9 Notices to Parties. All notices and other communications between the
parties shall be in writing and shall be deemed to have been given if
delivered personally or by confirmed telecopy to the parties at the
following addresses (or at such other address for either such party as
shall be specified in like notice):
10
(i) if to SHIR at:
Xxxxxxx International Resources Inc.
0000 - 000 0 Xxxxxx XX
Xxxxxxx Xxxxxxx X0X 0X0
Attention: Xxxxx Xxxxx - President
(ii) if to SIL at:
Xxxxxxx Investments Ltd.
0000 - 000 0 Xxxxxx XX
Xxxxxxx Xxxxxxx X0X 0X0
Attention: Xxxxx Xxxxx - President
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 confirmed 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.
4.10 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, and all of which taken together
shall constitute one and the same instrument.
4.11 Jurisdiction. This Agreement shall be construed and enforced in
accordance with the laws of the Province of Alberta and the laws of
Canada applicable therein.
4.12 Attornment. SHIR agrees that any action or proceeding arising out of
or relating to this Agreement may be instituted in the courts of
Alberta, waives any objection which it may have now or hereafter to
the venue of any such action or proceeding, irrevocably submits to the
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 and hereby appoints SHIR at its
registered office in the Province of Alberta as SHIR's attorney for
service of process.
11
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed effective as of the date first above written.
Xxxxxxx International Resources Inc.
Per: /s/ Xxxxx Xxxxx
------------------------------
Per:
------------------------------
Xxxxxxx Investments Ltd.
Per: /s/ Xxxxx Xxxxx
------------------------------
Per:
------------------------------
