[NOTE: RISK TO SECURITYHOLDERS OF SHAREHOLDERS VOTE, LIQUIDATION, DIVIDEND
PAYMENTS, ETC., DURING THE ESCROW PERIOD].
THIS AGREEMENT is dated for reference the 29th day of February 2000.
AMONG:
EFINANCIAL XXXXX.XXX, INC., (herein called the "Issuer")
- and -
CLARK, WILSON, (herein called the "Escrow Agent")
- and -
XXXXXXXX XXXXXXX AND XXXXXX XXXXXXXX, (herein called the "Securityholders")
- and -
OXFORD CAPITAL CORP., (herein called "Oxford")
- and -
WESTCOR MORTGAGE INC., (herein called "Westcor")
WHEREAS the Securityholders and the Issuer entered into a Share Purchase
Agreement dated for reference on February 29, 2000 (the "Share Purchase
Agreement") whereby the Securityholders agreed to sell certain Class A shares of
Westcor Mortgage Inc. to the Issuer and to enter into other related agreements
dealing with certain Westcor exchangeable shares (the "Exchangeable Shares").
AND WHEREAS Oxford and Westcor entered into a Consulting Agreement dated
February 28, 2000, whereby, among other things, Oxford is to receive shares of
the Issuer ("Oxford's Shares").
AND WHEREAS the number of Exchangeable Shares which should be issued by
Westcor will be unknown at the time that they are to be issued, but it is
intended to be a number of Exchangeable Shares equal to 295,520 less [80% of any
adjustment to the stockholders' equity between the January 31, 2000, unaudited,
management-prepared financial statements of Westcor (the "January Financial
Statements") and the audited financial statements of Westcor as at February 29,
2000, which are yet to be prepared (the "Audited Financial Statements") divided
by the Deemed Share Price (as defined in the Share Purchase Agreement)].
AND WHEREAS the number of Oxford's Shares which should be issued by the
Issuer will be unknown at the time that they are to be issued, but it is
intended to be a number of common shares of the Issuer equal to 73,880 less [20%
of any adjustment to the stockholders' equity between the January Financial
Statements and the Audited Financial Statements divided by the Deemed Share
Price (as defined in the Share Purchase Agreement)].
AND WHEREAS the number of Exchangeable Shares to be issued by Westcor
(pending adjustment) and the names of the Securityholders intended to receive
such securities are more particularly described in Schedule "A" attached to and
forming part of this Agreement, and Oxford's Shares (pending adjustment) are
more particularly described in Schedule "B" attached to and forming part of this
Agreement;
AND WHEREAS the Escrow Agent has agreed to undertake and perform its duties
according to the terms and conditions hereof;
NOW THEREFORE this Agreement witnesses that, in consideration of the sum of
One ($1.00) Dollar paid by the parties to each other, and other good and
valuable consideration, receipt of which is acknowledged by each of the parties,
the parties covenant and agree with each other as follows:
1. Upon execution of this Escrow Agreement, the Issuer will issue to Oxford
73,880 Common Stock shares in EFinancial Xxxxx.xxx, Inc. Oxford's Shares will
be these 73,880 Common Stock shares pending adjustment pursuant to this
Agreement.
2. Each of the Securityholders and Oxford (collectively the "Depositors")
hereby place and deposit in escrow with the Escrow Agent the Exchangeable Shares
and Oxford's Shares, respectively, which are represented by the certificates
described in Schedule "A" and Schedule "B", respectively, (the "Escrowed
Securities") and the Escrow Agent hereby acknowledges receipt of the Escrowed
Securities. The Depositors further undertake and agree to deliver to the Escrow
Agent immediately on receipt thereof the certificates (if any) for any further
securities and any replacement certificates which may at any time be issued for
any of the Escrowed Securities.
3. Each of the Depositors shall be entitled to a receipt from the Escrow
Agent stating the type and number of securities held for that Depositor by the
Escrow Agent subject to the terms of this Agreement. It is expressly understood
and agreed by the parties hereto that such receipt shall not be assignable or
transferrable.
4. The Parties hereby agree that the Escrowed Securities and the beneficial
ownership of or any interest in them and the certificates representing them
(including any replacement securities or certificates) shall remain in escrow
and shall be released only in accordance with the terms hereof.
5. The Depositors direct the Escrow Agent to retain their respective
securities and the certificates (including any replacement securities or
certificates) representing them and not to do or cause anything to be done to
release them from escrow or to allow any transfer, hypothecation or alienation
thereof, without the written consent of the Issuer and the Depositors.
6. The Issuer shall cause Westcor to complete the Audited Financial
Statements as soon as is practical and, in any event, on or before June 30,
2000, and the Securityholders agree to co-operate in the completion of such
audit.
7. The Audited Financial Statements shall be prepared and audited by Ernst &
Young (or some other accounting firm acceptable to the Issuer and the
Securityholders) (the "Auditors") on a basis consistent with the January
Financial Statements.
8. Westcor shall provide the Audited Financial Statements to the Issuer and
to the Depositors as soon as they are available. Thereafter the Issuer and the
Securityholders shall meet and determine the net difference, if any, in the
assets and liabilities of Westcor between the January Financial Statements and
the Audited Financial Statements. The comparison of the difference between the
assets, liabilities and stockholders' equity of these two financial statements
shall exclude, for both sets of financial statements, any sums shown as due to
Westcor from the Securityholders.
9. Should this comparison show a reduction in the stockholders' equity
between the January Financial Statements and the Audited Financial Statements,
then some of the Exchangeable Shares issued to the Securityholders shall be
returned to Westcor for cancellation, and some of Oxford's Shares will be
returned to the Issuer for cancellation. The number of Escrowed Securities to
be returned for cancellation shall be calculated as follows:
absolute value of (A-B)
-----------------------
P = X
where:
"A" means the stockholders' equity in the January Financial Statements;
"B" means the stockholders' equity in the Audited Financial Statements;
"P" means the Deemed Share Price (as defined in the Share Purchase
Agreement);
"X" means the number of Escrowed Securities to be returned for cancellation, 80%
of X is the number of Exchangeable Shares to be returned to Westcor by the
Securityholders, and 20% of X is the number of Oxford's Shares to be returned to
the Issuer by Oxford.
10. The Issuer and the Securityholders shall review and discuss the Audited
Financial Statements and shall settle the number of Escrowed Securities to be
cancelled, if any, as soon as is practical and, in any event, on or before July
15, 2000. Should the Issuer and the Securityholders agree on the number of
Escrowed Securities to be cancelled, if any, then they shall provide a written
direction to the Escrow Agent signed by each of the Depositors instructing the
Escrow Agent to return to Westcor and the Issuer for cancellation the agreed
upon number of Escrowed Securities, if any, and to immediately release to the
Depositors the balance of the Escrowed Securities. Oxford agrees to sign such a
written direction. Westcor agrees to cancel the shares returned to it for
cancellation and to issue to the Securityholders new share certificates for the
remaining Exchangeable Shares. Any shares to be returned to treasury shall be
returned in equal number from the holdings of each of the Securityholders. The
Issuer agrees to cancel the shares returned to it for cancellation and to issue
to Oxford a new share certificate for the remaining Oxford's Shares.
11. Should the Issuer and both the Securityholders not be able to agree on
the number of Escrowed Securities to be cancelled, then any of them may request
the auditor that performed the audit of the Audited Financial Statements to
calculate the difference in the manner set out in this Agreement, acting
reasonably, and such calculation shall be final and binding upon the parties.
Such calculation shall be completed on or before August 15, 2000, and the
results provided to the Issuer, the Depositors and the Escrow Agent.
12. No fractional shares shall be cancelled. Any shares which the above
calculation may require be cancelled shall be rounded down to the next lowest
whole share and those whole shares only shall be cancelled.
13. In the event of bankruptcy or death of a Depositor, the Escrow Agent,
upon receipt of written notification by the Issuer, may transmit that
Depositor's securities by operation of law to the trustee in bankruptcy,
personal representative or surviving joint tenant as the case may be, but,
notwithstanding such transmission, the securities shall remain subject to the
terms of this Agreement.
14. Notwithstanding any other terms of this Agreement, any Escrowed
Securities not released from escrow in accordance with the terms of this
Agreement before August 15, 2000, shall be released to the Depositors forthwith
thereafter, and the Issuer and the Escrow Agent hereby undertake and agree to
take all actions as may be necessary to expeditiously effect such release.
15. For the purposes of effecting a cancellation of Escrowed Securities
pursuant to paragraphs 10 or 11 the Depositors hereby irrevocably appoint the
Escrow Agent as their attorney for the purposes of cancelling the Escrowed
Securities, with authority to substitute one or more persons or entities with
like powers.
16. All voting rights attached to the Escrowed Securities shall at all times
be exercised by the respective registered owners thereof.
17. The Depositors agree that, while any of their securities are held in
escrow under this Agreement, they will not vote any of their securities (whether
escrowed or not) in support of any arrangement that would result in a repayment
of capital being made on the Escrowed Securities prior to the commencement of
any winding up of Westcor.
18. Compensation & Indemnification
(a) The Issuer agrees to pay to the Escrow Agent reasonable compensation for
all of the services rendered by it under this Agreement and will reimburse the
Escrow Agent for all reasonable expenses (including but not limited to taxes,
compensation paid to experts, agents, advisors, and travel expenses) and
disbursements, including the cost and expense of any suit or litigation of any
character and any proceedings before any governmental agency reasonably incurred
by the Escrow Agent in connection with its rights and duties under this
Agreement; provided that the Issuer shall have no obligation to reimburse the
Escrow Agent for any expenses or disbursements paid, incurred or suffered by the
Escrow Agent in any suit or litigation in which the Escrow Agent is determined
to have acted with gross negligence or wilful misconduct.
(b) Indemnification of the Escrow Agent. Subject to paragraph 18(a) above,
the Issuer and the Securityholders jointly and severally agree to indemnify and
hold harmless the Escrow Agent, its partners, employees, agents, successors and
assigns (collectively, the "Indemnified Parties") against all claims, losses,
damages, costs, penalties, and fines (including reasonable expenses of the legal
counsel on a solicitor-and-his-own-client basis) which, without gross negligence
or willful misconduct 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
Escrow Agent'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 Issuer and the Securityholders pursuant hereto. In no case
shall either of the Securityholders or the Issuer be liable under this indemnity
for any claim against any of the Indemnified Parties unless the Issuer and the
Securityholders shall be notified by the Escrow Agent of the written assertion
of a claim or of any action commenced against the Indemnified Parties, promptly
after any of the Indemnified Parties shall have received any such written
assertion of a claim or shall have been served with a summons or other first
legal process giving information as to the nature and basis of the claim.
Subject to (ii), below, the Issuer and the Securityholders shall be entitled to
participate at their own expense in the defence and, if the Issuer and the
Securityholders 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. The
Escrow Agent 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 Escrow Agent unless: (i) the employment of such
counsel has been authorized by the Issuer and the Securityholders, such
authorization not to be unreasonably withheld; or (ii) the named parties to any
such suit include both the Escrow Agent and at least one of the Issuer and the
Securityholders and the Escrow Agent shall have been advised by counsel
acceptable to the Issuer and the Securityholders that there may be one or more
legal defences available to the Escrow Agent that are different from or in
addition to those available to the Issuer and the Securityholders and that an
actual or potential conflict exists (in which case the Issuer and the
Securityholders shall not have the right to assume the defense of such suit on
behalf of the Escrow Agent but shall be liable to pay the reasonable fees and
expenses of counsel for the Escrow Agent).
(c) Limitation of Liability. The Escrow Agent shall not be held liable for
any loss which may occur by reason of depreciation of the value of any part of
the Escrowed Securities or any loss incurred on any investment of funds pursuant
to this Agreement except to the extent that such loss is attributable to the
gross negligence or willful misconduct on the part of the Escrow Agent.
19. The Escrow Agent accepts the responsibilities placed on it by this
Agreement and agrees to perform them in accordance with the terms of this
Agreement and the written consents or directions of the Issuer and the
Depositors.
20. The Issuer hereby acknowledges the terms and conditions of this
Agreement and agrees to take all reasonable steps to facilitate its performance
and to pay the Escrow Agent's proper charges for its services under this
Agreement.
21. In the event the Escrow Agent wishes to resign, retire or otherwise
terminate its obligations pursuant to this Agreement, it shall be required to
provide at least thirty (30) days written notice to the Issuer. Upon receipt of
such notice the Issuer may, with the written consent of the Depositors, by
writing, appoint another Escrow Agent in its place and the new Escrow Agent
shall assume and be bound by the obligations of the Escrow Agent hereunder.
22. This Agreement may be executed in several parts of the same form and the
parts as so executed shall together constitute one original agreement, and the
parts, if more than one, shall be read together and construed as if all the
signing parties hereto had executed one copy of this Agreement.
23. 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.
24. This Agreement shall be interpreted in accordance with and governed in
all respects by the laws of the Province of Alberta. The courts of Alberta
shall have non-exclusive jurisdiction to entertain any action or proceeding
brought by or against any of the parties hereto in connection with this
Agreement or any alleged breach thereof and the parties hereby expressly agree
to attorn to the jurisdiction of such courts for that purpose.
25. This Agreement shall be read with all changes in gender or number as the
context may require, and the word "person" or "persons" as used in this
Agreement shall be deemed to include firms, partnerships, corporations and
associations as well as natural persons. Further, the term "Depositors" shall
include any permitted transferees within escrow and any person to whom the
interest of a Depositor may be transmitted by operation of law as provided
herein, and the term "Escrow Agent" shall include a new Escrow Agent appointed
under this Agreement, and whenever the singular or masculine is used, the same
shall be construed to include the plural, feminine, neuter, or a corporate or
other entity where the context so requires.
26. Any provision or any portion of any provision or provisions 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 or unenforceable
provision or provisions or part or parts thereof had never been included in this
Agreement.
27. The parties hereby confirm and ratify the matters contained and referred
to in the preamble to this Agreement and agree that same are expressly
incorporated into and form part of this Agreement.
28. This Agreement shall enure to the benefit of and be binding on the
parties to this Agreement and each of their heirs, executors, administrators,
successors, and assigns.
IN WITNESS WHEREOF the Issuer, the parties have executed this Agreement
effective as of February 29, 2000.
EFINANCIAL XXXXX.XXX, INC.
Per: /s/ Xxxx Xxxxxx
XXXXX XXXXXX
Per: /s/ signed
Per:
OXFORD CAPITAL CORP.
Per: /s/ signed
WESTCOR MORTGAGE INC.
Per: /s/ Xxxxxxxx Xxxxxxx
WITNESSES SECURITYHOLDERS
/s/ signed /s/ Xxxxxxxx Xxxxxxx
XXXXXXXX XXXXXXX
/s/ signed /s/ Xxxxxx Xxxxxxxx
XXXXXX XXXXXXXX
SCHEDULE "A"
TO THE ESCROW AGREEMENT DATED FOR REFERENCE THE 29TH DAY OF FEBRUARY 2000.
NAMES OF TYPE OF NUMBER OF SHARE CERT-
DEPOSITOR SECURITIES SECURITIES IFICATE NUMBER
--------- ---------- ---------- ------------------------
Xxxxxxxx Xxxxxxx Exchangeable Shares of Westcor 147,760 3ES
----------------- --------------------------------- ------- ---
Xxxxxx Xxxxxxxx Exchangeable Shares of Westcor 147,760 4ES
================ ================================= ======= ===
SCHEDULE "B"
TO THE ESCROW AGREEMENT DATED FOR REFERENCE THE 29TH DAY OF FEBRUARY 2000.
NAMES OF TYPE OF NUMBER OF SHARE CERT-
DEPOSITOR SECURITIES SECURITIES IFICATE NUMBER
--------- ---------- ---------- ------------------------
EFinancial Xxxxx.xxx, Inc.
Oxford Common Stock shares 73,880 # ______
------ --------------------- ------ ------------
