THIS ESCROW AGREEMENT made as of this 2nd day of September, 2005
THIS
ESCROW AGREEMENT
made
as
of this
2nd
day of
September, 2005
BETWEEN:
EVENTS
INTERNATIONAL HOLDING CORPORATION
a
corporation incorporated
under
the
federal laws of Canada
(the
“Issuer”)
OF
THE
FIRST PART;
-
and
-
SWEIBEL
NOVEK L.L.P.
a
limited
liability partnership established
Under
the
laws of Quebec
(the
“Escrow Agent”)
OF
THE
SECOND PART;
-
and
-
| - |
XXX
XXXXXXXXXXX
businessman
of Montreal, Quebec
-
and
-
XXXXXXX
XXXXX
businessman
of Liechtenstein
(collectively,
the “Securities Holders”)
OF
THE
THIRD PART;
WHEREAS
upon the closing of the transaction contemplated by that certain share purchase
agreement (the “Share Purchase Agreement”) made as of the 10th
day of
June 2005 between the Issuer and the Securities Holders, the Securities Holders
are to become the holders of 9,000,000 common shares of the Issuer;
AND
WHEREAS the Security Holders have agreed to deposit the 9,000,000 shares in
escrow with the Escrow Agent such that such shares shall not be sold or
otherwise dealt with except in accordance with this Agreement;
AND
WHEREAS the Escrow Agent has agreed to hold such shares in accordance with
the
terms of this Agreement;
NOW
THEREFORE, in consideration for the mutual covenants contained herein and other
good and valuable consideration (the receipt and sufficiency of which is
acknowledged), the parties hereto agree as follows:
ARTICLE
1. INTERPRETATION
In
this
Agreement:
|
1.1
|
“Additional
Securities” means securities (including a right to acquire securities)
that a Security Holder acquires after the date upon which the Security
Holder executes this Agreement that
are
|
1.1.1 securities
of the Issuer acquired:
(i) as
a
dividend or other distribution on Securities;
|
(ii)
|
upon
the exercise of a right of purchase, conversion or exchange attaching
to
Securities; or
|
(iii) upon
a
subdivision or compulsory conversion or exchange of Securities; or
1.1.2 New
Securities of a Successor Issuer acquired by a Security Holder which are subject
to
escrow
in accordance with this Agreement;
|
1.2
|
“Agreement”
means this Escrow Agreement including all Schedules attached hereto,
all
of which are incorporated herein by reference and form part hereof
and all
amendments and supplements hereto and the terms “herein”, “hereof’,
“hereto”, “hereunder” and like terms refer to this
Agreement;
|
|
1.3
|
“Closing
Date” means the closing date as defined in the Share Purchase
Agreement;
|
|
1.4
|
“Combination”
means a bona fide formal take-over bid, plan of arrangement, amalgamation,
merger or similar transaction;
|
|
1.5
|
“Exchange”
means the TSX Venture Exchange;
|
|
1.6
|
“Securities”
means, in relation to a Security Holder, those securities of the
Security
Holder, including Additional Securities, that are held in escrow
by the
Escrow Agent pursuant to this
Agreement:
|
|
1.7
|
“Security
Holder” means a holder of securities of the Issuer who executes this
Agreement;
|
|
1.8
|
“Share
Purchase Agreement” means the share purchase agreement made as of the
10th
day of June, 2005 between the Issuer, the Securities Holders, Mahjong
Systems Limited and 0000-0000 Xxxxxx Inc.;
and
|
|
1.9
|
“Successor
Issuer”, with respect to an Issuer, means an issuer that issues securities
to a Security Holder in connection with a Combination involving the
first
Issuer.
|
2
ARTICLE
2. DEPOSIT
OF SECURITIES IN ESCROW
|
2.1
|
Each
Security Holder hereby deposits with the Escrow Agent, to be held
in
escrow under this Agreement, the Securities described in Schedule
A,
and agrees to deliver to the Escrow Agent forthwith any certificates
evidencing such Securities.
|
|
2.2
|
Each
Security Holder shall deposit in escrow with the Escrow Agent all
Additional Securities and shall deliver to the Escrow Agent forthwith
upon
receipt thereof any certificates evidencing Additional Securities
and any
replacement certificates which may at any time be issued for any
Securities held in escrow.
|
|
2.3
|
The
parties hereto agree and undertake to make any amendments to this
Agreement as may be required pursuant to any order, directive or
other
communication of the Exchange.
|
ARTICLE
3. DIRECTION
TO ESCROW AGENT
|
3.1
|
The
Issuer and each Security Holder direct the Escrow Agent to retain
the
Securities in escrow and the Escrow Agent agrees to retain the Securities
in escrow until the Securities are released from escrow pursuant
to the
terms of this Agreement.
|
ARTICLE
4. RESTRICTIONS
ON DEALING WITH SECURITIES
|
4.1
|
Securities
may only be dealt with as specifically allowed by this Agreement.
No
Securities and no interest in, control or direction over or certificate
evidencing Securities shall directly or indirectly be sold, assigned,
transferred, redeemed, surrendered for consideration, mortgaged,
hypothecated, charged, pledged, or encumbered or otherwise dealt
with in
any manner except as provided in this Agreement, or except as may
be
required by reason of the death of one of the Securities
Holders.
|
|
4.2
|
There
shall be no restriction or prohibition on any transfer of any Securities
for estate or tax planning or other similar purposes, provided that
the
Issuer’s prior written approval to such transfer is obtained (which
approval will not be unreasonably withheld), and further provided
that the
transferee agrees to be bound by the terms and conditions of this
Agreement and to execute such further documents or instruments as
the
Issuer and/or the Escrow Agent consider necessary or
desirable.
|
|
4.3
|
In
the event that a take-over bid is made to a class of shareholders
of the
Issuer which includes the Securities, provided that the board of
directors
of the Issuer has approved of the take-over bid, each of the Securities
Holders shall be entitled to instruct the Escrow Agent to tender
all or
part of the Securities held by such Securities Holders to the take-over
bid, provided that if the take-over bid does not proceed, the share
certificates evidencing the Securities shall be returned to the Escrow
Agent and reinstated as Securities pursuant to this
Agreement.
|
|
4.4
|
There
shall be no restriction or prohibition on any express order or direction
in writing from the board of directors of the Issuer to the Escrow
Agent
instructing the Escrow Agent to release all of the Securities from
escrow
at any time.
|
ARTICLE
5. VOTING
OF SECURITIES IN ESCROW
|
5.1
|
Subject
to any restriction found in this Agreement, a Security Holder may
exercise
voting rights attaching to Securities. No Security Holder, while
his, her
or its Securities are held in escrow, shall vote 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 Securities prior to
a
winding up of the Issuer.
|
3
ARTICLE
6. DIVIDENDS
AND DISTRIBUTIONS ON SECURITIES IN ESCROW
|
6.1
|
Subject
to any specific restrictions found in this Agreement, the escrow
of
Securities will not impair any right of a Security Holder to receive
a
dividend or other distribution on Securities or to elect the form
and
manner in which the dividend or other distribution on Securities
is
paid.
|
|
6.2
|
Subject
to section 6.3, if, during the period in which any of the Securities
are
retained in escrow pursuant to this Agreement, any dividend or other
distribution, other than one paid in securities of the Issuer, is
received
by the Escrow Agent in respect of Securities, the Escrow Agent shall
forthwith transfer such dividend or distribution to the Security
Holder
entitled thereto.
|
|
6.3
|
Additional
Securities distributed on Securities shall be subject to the same
terms
and conditions under this Agreement as the Securities on which the
distribution was made. Additional Securities distributed on Securities,
if
received by the Escrow Agent, shall be retained in escrow. Additional
Securities distributed on Securities, if received by the Security
Holder,
shall be deposited in escrow in accordance with Article 2. All such
Additional Securities shall be held in and released from escrow on
the
same terms and conditions as apply to the Securities on which the
distribution was paid.
|
ARTICLE
7. EXERCISE
OF OTHER RIGHTS ATTACHING TO SECURITIES
|
7.1
|
Subject
to any specific restrictions found in this Agreement, the escrow
of
Securities will not impair any right of a Security Holder to exercise
a
right attaching to a Security that entitles the Security Holder to
purchase or otherwise acquire another security or to exchange or
convert a
Security into another security.
|
ARTICLE
8. RELEASE
OF SECURITIES AND SECURITIES CERTIFICATES
|
8.1
|
Subject
to the terms and conditions hereof, the Escrow Agent shall release
the
Securities to each Security Holder in the following amounts and at
the
following time:
|
|
8.1.1
|
an
amount equal to ten percent (10%) of the Securities to each of the
Securities Holders on a pro rata bases at the time of the Exchange
Bulletin confirming final acceptance of the transaction (the “First
Release Date”), the exact number of such Securities available for release
on such date to each Security Holder being detailed on Schedule
B
hereto; and
|
|
8.1.2
|
an
amount equal to fifteen percent (15%) of the Securities to each of
the
Securities Holders on a pro rata basis every six (6) months thereafter,
with all remaining securities being released 36 months from the Exchange
Bulletin, the exact number of such Securities available for release
on
such date to each Security Holder being detailed on Schedule
B
hereto.
|
|
8.2
|
Delivery of Certificates to Security Holder |
If
a
Security Holder wishes to receive a certificate evidencing Securities released
or to be released from escrow on a release date set out in section 8.1 above,
as
applicable, the Security Holder will provide written notice to the Escrow Agent
to that effect. If the Escrow Agent receives notice from a Security Holder
that
the Security Holder wishes to receive certificates for released Securities,
the
Escrow Agent will, as soon as reasonably practicable after the applicable
release date or after receipt by the Escrow Agent of the notice from the
Security Holder, whichever is later, deliver to or at the direction of the
Security Holder, certificates evidencing the Securities released from escrow
on
the applicable release date.
4
|
8.3
|
Replacement Securities |
Where
a
Security Holder has, in accordance with section 8.2, provided notice to the
Escrow Agent that the Security Holder wishes to receive a certificate evidencing
Securities released or to be released from escrow, and where the relevant
certificate held by the Escrow Agent evidences a combination of Securities
released from escrow on the applicable release date and Securities that are
to
remain in escrow, the Escrow Agent, as soon as reasonably practicable after
the
applicable release date or after receipt by the Escrow Agent of the notice
from
the Security Holder, whichever is later, shall deliver such certificates to
the
Issuer or its transfer agent, together with a request that separate replacement
certificates be prepared and delivered to the Escrow Agent. Where certificates
evidencing Securities are delivered to the Issuer in accordance with the
foregoing, the Issuer, as soon as reasonably practicable, shall cause separate
replacement certificates to be prepared and delivered to the Escrow Agent.
As
soon as reasonably practicable after the receipt by the Escrow Agent of the
replacement certificates, the Escrow Agent shall deliver, to or at the direction
of the Security Holder, all replacement certificates evidencing Securities
released from escrow on the applicable release date.
|
8.4
|
Exchange Discretion to Terminate |
If
the
Escrow Agent receives a request from the Exchange to halt or terminate the
release of Securities from escrow, then the Escrow Agent shall comply with
that
request, and shall not release any Securities from escrow unless and until
the
written consent of the Exchange is received.
ARTICLE
9. RELEASE
UPON DEATH
|
9.1
|
Upon
the death of a Security Holder, the Securities of that Security Holder
shall be released from escrow and the Escrow Agent shall deliver
all
certificates evidencing such Securities to the legal representative
of the
deceased Security Holder, provided
that:
|
|
9.1.1
|
the
legal representative of the deceased Security Holder provides written
notice to the Exchange of the intent to release the Securities as
at a
specified date, such notice being provided at least 10 business days
and
not more than 30 business days prior to the proposed release and
the
Exchange does not provide notice to its objection to the Escrow Agent
prior to 10:00 a.m. (Toronto time) on such specified date;
and
|
|
9.1.2
|
the
Escrow Agent first receives:
|
(i) a
certified copy of the death certificate; and
(ii) such
evidence of the legal representative’s status that the Escrow Agent may
reasonably
require.
5
ARTICLE
10. ESCROW
AGENT HAS NO RESPONSIBILITY AFTER RELEASE
|
10.1
|
The
Escrow Agent shall have no further responsibility for Securities
that have
been delivered to or at the direction of the Security Holder in accordance
with the terms of this Agreement. Delivery may be made by registered
mail
or physical delivery, at the discretion of the Escrow
Agent.
|
ARTICLE
11. RELEASE,
UNDERTAKING NOT TO XXX, AND INDEMNITY
| 11.1 |
In
this section,
|
|
11.1.1
|
“Act
or Omission” means any good-faith act or omission that is in any way
connected with this Agreement, and
includes:
|
(i) the
performance, and non-performance, of duties under this Agreement;
(ii) the
exercise of discretion, and failure to exercise discretion, in
connection
this
Agreement;
(iii) the
interpretation of this Agreement, or of any law, policy (including
the
Exchange
Policy), rule, regulation or order; and
(iv) the
enforcement of, and failure to enforce, this Agreement.
|
11.1.2
|
“Escrow
Agent” includes the directors, officers, employees, assigns and insurers
of the Escrow Agent.
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|
11.2
|
The
Security Holders and the Issuer, solidarily (jointly and
severally):
|
|
11.2.1
|
release,
indemnify and save harmless the Escrow Agent from all costs (including
legal costs), charges, claims, demands, damages, losses and expenses
incurred by the Escrow Agent resulting from the Escrow Agent’s
performance, in good faith, of its duties under this
Agreement;
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|
11.2.2
|
agree
not to make or bring a claim or demand, or commence any action, against
the Escrow Agent in respect of its performance in good faith of its
duties
under this Agreement; and
|
|
11.2.3
|
agree
to indemnify and save harmless the Escrow Agent from all costs (including
legal costs) and damages that the Escrow Agent incurs or is required
by
law to pay as a result of any person’s claim, demand, or action in
connection with the Escrow Agent’s good faith performance of the Escrow
Agent’s duties under this
Agreement.
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11.3
|
The Issuer agrees to pay the
fees and
disbursements of the Escrow Agent in connection with the holding
and
release of the Securities in accordance with this Agreement. Any
fees and
disbursements incurred by the Escrow Agent as a result of any claim
or
dispute involving the Securities shall be borne by the Securities
Holders
and the Issuer, on a solidary basis as provided in section 11.2
above
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6
ARTICLE
12. RESPONSIBILITY
FOR FURNISHING INFORMATION
| 12.1 |
The
Escrow Agent shall bear no responsibility for seeking, obtaining,
compiling, preparing or determining the accuracy of, any information
or
document that must be received by the Escrow Agent as a condition
under
this Agreement to a release of Securities from escrow or a transfer
of
Securities within escrow.
|
ARTICLE
13. RESIGNATION
OR TERMINATION OF ESCROW AGENT
| 13.1 |
The
Escrow Agent may resign by providing written notice of resignation
to the
Issuer.
|
| 13.2 |
The
Issuer may terminate the services of the Escrow Agent under this
Agreement
by providing written notice of termination to the
parties.
|
| 13.3 |
The
resignation or termination of the Escrow Agent shall be effective,
and the
Escrow Agent shall cease to be bound by this
Agreement:
|
|
13.3.1
|
30
days after the date of receipt by the Escrow Agent or Issuer, as
applicable, of a notice referred to in subsection 13.2 or 13.3
or
|
|
13.3.2
|
upon
such date as may be mutually agreed to by the Escrow Agent and the
Issuer,
provided that the resignation or termination date must not be less
than 10
business days before a release date set forth in section
8.1.
|
|
13.4
|
If
the Escrow Agent resigns or is terminated, the Issuer shall be responsible
for ensuring that the Escrow Agent is replaced not later than the
resignation or termination date.
|
|
13.5
|
The
Issuer’s appointment of a replacement escrow agent shall be binding on the
Issuer and the Security Holders.
|
ARTICLE
14. NOTICES
14.1 Documents
delivered to a party’s address for notice shall be considered to have been
received:
|
14.1.1
|
on
the next business day following the date of transmission, if delivered
by
telecopier;
|
|
14.1.2
|
on
the date of physical delivery, if delivered by hand or by prepaid
courier;
or
|
|
14.1.3
|
five
business days after the date of mailing, if delivered by
mail.
|
14.2 The
address for notice
|
|
14.2.1
|
of
the Escrow Agent is:
|
SWEIBEL
NOVEK L.L.P.
0000
Xxxxxx xx Xxxxx
Xxxxxxxx,
XX X0X 0X0
Attention:
Xxxxxxx X. Xxxxx,
Fax:
(000) 000-0000
|
14.2.2
|
of
the Issuer is:
|
EVENTS
INTERNATIONAL HOLDING CORPORATION
000
Xxxxxx Xxxxxxxx, Xxxxx 000
Xxxxxxxx,
Xxxxxx X0X 0X0
Attention:
President
Fax:
(000) 000-0000
7
|
14.2.3
|
of
a Security Holder is the applicable address for notice noted in
Schedule
A.
|
|
14.3
|
The
Issuer and the Escrow Agent may change their respective addresses
for
notice by delivering written notice to all parties of such
change.
|
| 14.4 |
A
Security Holder may change his or her address for notice, and Schedule
A
shall be deemed to have been amended accordingly, by delivering written
notice of such change to the Issuer and to the Escrow
Agent.
|
| 14.5 |
A
change is a party’s address for notice shall not be effective with respect
to another party until that other party has received written notice
of the
change.
|
| 14.6 |
A
party shall not effect a delivery by mail if the party is aware of
an
actual or impending disruption of postal
service.
|
ARTICLE
15. TIME
| 15.1 |
Time
is of the essence of this
Agreement.
|
ARTICLE
16. GOVERNING
LAW
| 16.1 |
This
Agreement shall be construed in accordance with and governed by the
laws
of the Province of Quebec and the laws of Canada applicable
therein.
|
ARTICLE
17. COUNTERPARTS
| 17.1 |
This
Agreement may be executed by facsimile and in two or more counterparts,
each of which will be deemed to be an original and all of which will
constitute one agreement.
|
ARTICLE
18. LANGUAGE
| 18.1 |
Singular
expressions used in this Agreement shall be deemed to include the
plural,
and plural expressions the singular, where required by the
context.
|
ARTICLE
19. ENUREMENT
| 19.1 |
This
Agreement will enure to the benefit of and be binding upon the parties
and
their heirs, executors, administrators, successors and permitted
assigns.
|
ARTICLE
20. ENTIRE
AGREEMENT
| 20.1 |
This
Agreement, including the Schedules attached hereto, constitute the
entire
understanding between the parties with respect to the subject matter
hereof and supersede all prior agreements, understandings, negotiations
and discussions, whether oral or written, between the parties and
there
are no warranties, representations or other agreements between the
parties
in connection with this Agreement, except as specifically set forth
herein.
|
8
ARTICLE 21. TERMINATION,
AMENDMENT, AND WAIVER OF AGREEMENT
| 21.1 |
Subject
to section 21.2, this Agreement shall only terminate with respect
to all
the parties,
|
(i) as
specifically provided in this Agreement;
(ii) subject
to Exchange approval, upon the agreement of all parties; or
|
(iii)
|
when
the Securities of all Security Holders have been released from escrow
pursuant to this Agreement.
|
| 21.2 |
Notwithstanding
any other provision in this Agreement, the obligations set forth
in
Article 14 shall survive the termination of this
Agreement.
|
| 21.3 |
No
amendment or waiver of this Agreement or any part of this Agreement
shall
be effective unless the amendment or waiver is evidenced by a memorandum
in writing signed by all parties.
|
| 21.4 |
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.
|
ARTICLE
22. SEVERENCE
OF ILLEGAL PROVISION
| 22.1 |
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.
|
ARTICLE
23. FURTHER
ASSURANCES
| 23.1 |
The
parties will execute and deliver any further documents and perform
any
further acts necessary to carry out the intent of this
Agreement.
|
ARTICLE
24. ENGLISH
LANGUAGE
| 24.1 |
The
parties hereto have required that this Agreement and related documents
be
drafted in the English language. Les
parties aux présentes ont exigé que cette entente et les documents y
afférents soient rédigés dans la langue
anglaise.
|
THE
PARTIES HAVE EXECUTED AND DELIVERED
this
Agreement as of the date set out above.
9
EVENTS
INTERNATION HOLDING
CORPORATION
_______________________________________
Per:
_______________________________________
And
per:
SWEIBEL
NOVEK L.L.P.
_______________________________________
Per:
Xxxxxxx X. Xxxxx
_______________________________________
XXX
XXXXXXXXXXX
_______________________________________
XXXXXXX
XXXXX
