EMPLOYMENT AGREEMENT
(Vice President)
AGREEMENT dated as of November 1, 1996, by and among
HEALTHCARE CAPITAL CORP., a corporation organized under the laws of the province
of Alberta, Canada ("HCC"), HEALTHCARE HEARING CLINICS, INC., a Washington
corporation ("HealthCare"), and XXXXX XXXXXXX ("Employee").
RECITALS:
A. HealthCare operates audiology and hearing aid clinics in
the United States which provide services directly to members of the public and
through referrals from the medical community.
B. Employee is a shareholder and an employee of Hearing Health
Services, Inc., a Delaware corporation ("HSI").
C. Pursuant to an Asset Purchase Agreement dated as of October
31, 1996 (the "Purchase Agreement"), Healthcare is acquiring substantially all
the assets of HSI as a going business.
D. Upon the consummation of the purchase of HSI's assets by
HealthCare, HealthCare wishes to employ Employee and Employee wishes to serve in
the employ of HealthCare on the terms and conditions set forth herein.
E. Because of, among other matters, Employee's detailed
knowledge of HSI and her reputation and relationships with, among others,
clients, customers, suppliers, distributors, and employees of HSI, HealthCare
recognizes and Employee acknowledges the detrimental effect on the business
HealthCare is acquiring from HSI and the decreased value of such business which
would result if Employee were to enter into competition with HealthCare.
F. It is a material condition to HealthCare's obligation to
consummate the transaction provided for in the Purchase Agreement and the other
transactions contemplated thereby that Employee enter into this Agreement.
TERMS:
In consideration of the premises and the mutual covenants
herein contained, the parties agree as follows:
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1. EMPLOYMENT RELATIONSHIP.
1.1 EMPLOYMENT. On the terms and conditions set forth herein,
HealthCare hereby agrees to employ Employee and Employee hereby accepts such
employment with HealthCare as Vice President-Operations. During the period of
employment, Employee shall manage the operations of HealthCare's audiology
clinics throughout North America and perform such additional services not
inconsistent with her position as shall be designated by the President or the
Board of Directors of HealthCare and use her best efforts to promote the
interests of HealthCare. Employee understands that the position of Vice
President-Operations is a Portland, Oregon, based position and that HealthCare
may request employee to relocate her principal residence to Portland. Employee
further understands that the performance of her duties hereunder will require
extensive travel throughout the United States. In light of the travel
requirements of her position, Company will not initially request that Employee
relocate to Portland. Should HealthCare subsequently request that Employee move
to Portland and Employee declines the request, Employee agrees to either accept
a different position with HealthCare at a level of compensation commensurate
with such position or to voluntarily resign her employment with HealthCare. Such
resignation by Employee shall not affect HealthCare's and HCC's
obligation to make the Cash Earn-Out Payments (shall have the meaning set forth
in the Assumption Agreement dated as of October 31, 1996 by and among HCC,
HealthCare, Employee and HSI) to Employee or HealthCare's obligation on the
Promissory Note dated October 31, 1996 payable to Employee.
1.2 EXCLUSIVE EMPLOYMENT. During the term of this Agreement,
Employee will devote her full working time, energy, attention, and skill to her
duties hereunder and to the promotion of HealthCare's business. During the term
of this Agreement, Employee shall not engage in any other business activity,
except as mutually agreed upon by Employee and HealthCare, for gain provided
that this restriction shall not be construed to prohibit Employee from making
personal investments in such form and manner as will neither require any
material amount of time or services or violate any of the terms of this
Agreement.
2. TERM.
This Agreement is being entered into in contemplation of the
acquisition by HealthCare of the assets of HSI. Employee's employment hereunder
shall commence as of the date of closing provided for in the Purchase Agreement
(the "Closing Date") and shall end on the third anniversary of such date unless
sooner terminated pursuant to the terms hereof. Provided Employee's employment
hereunder has not been earlier terminated, upon the expiration of the initial
term hereof, it shall be renewed and continue for successive additional 12-month
periods until terminated. Either party hereto may terminate this Agreement as of
the end of the initial term or any renewal term
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by written notice to the other party given at least 90 days prior to the end of
the initial or a renewal term.
3. COMPENSATION.
3.1 SALARY. For her services under this Agreement, Employee
shall receive a salary of $85,000 per year which shall be paid (subject to
applicable payroll withholding deductions) in accordance with HealthCare's
payroll policy as in effect from time to time. For any partial month worked,
such salary shall be pro rated on a daily basis.
3.2 BENEFITS. During the term of this Agreement, HealthCare
shall provide to or for the benefit of Employee all benefits she currently
receives in connection with her employment by HSI provided that at such time as
HealthCare establishes a benefit program for its senior management employees,
Employee shall thereafter receive only the benefits provided under such program.
In addition to the foregoing, HealthCare shall provide to Employee a car
allowance of $500 per month. Employee shall also become entitled to participate
in any bonus and profit sharing plans HealthCare may establish for the benefit
of its senior management employees.
3.3 STOCK OPTIONS. HCC shall, effective as of the Closing
Date, grant to Employee options to purchase 125,000 shares of the common stock
of HCC ("HCC Shares"). The option exercise price shall be US$1.50 per share.
Provided Employee remains employed by HealthCare as of such dates, the option
shall become exercisable with respect to 50 percent of the shares it covers
after the first anniversary of the Closing Date and shall become exercisable in
full after the second anniversary of the Closing Date. It shall be a condition
to the exercise of such options that Employee must make arrangements
satisfactory to HealthCare for the payment of payroll taxes which HealthCare may
be required to withhold upon such exercise. Such option must be exercised within
a period of five (5) years from the date of the granting of the option, after
which the option shall expire.
3.4 LEGENDS ON CERTIFICATES. Certificates representing the HCC
Shares shall be endorsed with legends substantially in the form set forth in
Exhibit A hereto.
3.5 REGISTRATION OF OPTIONS. HCC shall include the HCC Shares
in any applicable registration statement filed by HCC covering shares issuable
upon the exercise of options owned by any other employee of HCC.
4. NONDISCLOSURE; NONCOMPETITION.
4.1 PROPRIETARY INFORMATION. Employee acknowledges
that as a result of her prior relationship with HSI and in the
course of her employment with HealthCare, she has acquired and
will learn trade secrets and confidential information of HSI
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(which has been acquired by HealthCare under the Purchase Agreement) and
HealthCare which if known to competitors could damage HealthCare's business.
Such confidential information will include, but not be limited to, some or all
of the following categories of information ("Proprietary Information"):
(a) Financial Information including, but not limited to
information relating to revenues, assets, expenses, prices, pricing
structures, volume of purchases or sales or other financial data
whether related to HealthCare generally, or to particular products,
services, geographic areas, or time periods;
(b) Supply and service information including, but not limited
to information relating to suppliers' names and addresses, terms of
supply and service contracts or of particular transactions, and related
information about potential suppliers to the extent that such
information is not generally known to the public, and to the extent
that the combination of suppliers or use of a particular supplier,
though generally known or available, yields advantages to HealthCare
the details of which are not generally known;
(c) Marketing information including, but not limited to
information relating to details of ongoing or proposed marketing
programs or agreements by or on behalf of HealthCare, sales forecasts,
advertising formats and methods or results of marketing efforts or
information about impending transactions;
(d) Personnel information including, but not limited to
information relating to personal or medical histories, compensation or
other terms of employment, actual or proposed promotions, hirings,
resignations, disciplinary actions, terminations or reasons therefore,
training methods, performance, or other information concerning
employees of HealthCare; and
(e) Client information including, but not limited to
information relating to past, existing or prospective client's names,
addresses or backgrounds, records of treatment, terms of sales or
agreements between clients and HealthCare, status of clients' accounts
or credit, or related information about actual or prospective clients
as well as client lists.
Employee agrees to keep all Proprietary Information
confidential. Except as may be necessary in the performance of her duties on
behalf of HealthCare, Employee will make no use of and will not communicate or
divulge to any party whatsoever any Proprietary Information. Employee will not
at any time after her employment with HealthCare terminates use any Proprietary
Information for her own benefit or on behalf of any person, firm,
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partnership, association, corporation, or other party whatsoever. This covenant
shall not apply to any information that by means other than Employee's
deliberate or inadvertent disclosure becomes well known to the public or to
disclosure compelled by judicial or administrative proceedings after Employee
diligently (at HealthCare's expense) tries to avoid each disclosure and affords
HealthCare the opportunity to obtain assurance that compelled disclosures will
receive confidential treatment.
4.2 OWNERSHIP AND RETURN OF DOCUMENTS. Employee agrees that
all records or materials (written or in computer format), notes, memoranda or
other documents and all copies thereof relating to Proprietary Information, some
of which may be prepared by Employee, and all objects associated therewith in
any way shall be HealthCare's property. Employee shall not, except as may be
necessary for use in HealthCare's business operations, copy or duplicate any of
the aforementioned documents or objects, nor remove them from HealthCare's
facilities nor use any information concerning them except for HealthCare's
benefit, either during her employment or thereafter. Employee agrees that she
will deliver all of the aforementioned documents and objects that may be in her
possession to HealthCare on termination of her employment, or at any other time
on HealthCare's request, together with her written certification of compliance
with the provisions of this Section 4.2.
4.3 NONSOLICITATION AND NONCOMPETITION. Employee agrees that
during the term of this Agreement and for a period of 36 full calendar months
following the termination of Employee's employment hereunder, whereby HealthCare
terminates for Good Cause (as defined in Section 6.4) or Employee terminates
without Good Cause, Employee will not, directly or indirectly, for herself or on
behalf of any other party:
(a) Be engaged directly or indirectly (as an individual or
stockholder, officer, director, partner, agent, employee, direct or
indirect owner or representative of any person, firm, corporation or
association) in any audiology and hearing aid multi-clinic business of
national scope competitive with the business being carried on by
HealthCare at such time of termination;
(b) Participate in, assist, engage in, advise or consult for,
lend money to, guarantee the debts or obligations of, permit her name
to be used by or in any way be connected with any audiology and hearing
aid multi-clinic business of national scope similar in nature to all or
any part of HealthCare's business or which competes in multiple regions
with HealthCare's business;
(c) Call upon or endeavor to transact business in competition
with HealthCare with any audiology and hearing aid multi-clinic party
of national scope who was a client or customer of HealthCare while
Employee was employed hereunder
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(such period being hereinafter referred to as the "Employment Period");
or
(d) Disturb, hire, entice away or in any other manner persuade
any employee, client, or customer of HealthCare who was an employee,
client, or customer of HealthCare during the Employment Period, to
alter, modify or terminate his, her, or its relationship with
HealthCare as an employee, client, or customer as the case may be.
Notwithstanding the foregoing, Employee may be a passive investor in up to 5
percent of the stock of any publicly traded company.
4.4 REMEDIES FOR BREACH. Employee acknowledges that in the
event of her breach of this Section 4, damages will be difficult or impossible
to ascertain, and it is therefore agreed that HealthCare, in addition to, and
without limiting any other remedy or right it may have, shall have the right to
an injunction enjoining said breach issued by a court of competent jurisdiction.
In the event any litigation or controversy between the parties hereto arises out
of or in connection with this Agreement, the prevailing party in such litigation
or controversy shall be entitled to recover from the other party all reasonable
attorney fees, expenses and costs, including those associated with any appellate
proceedings or post-judgment collection proceedings.
5. DEVELOPMENTS.
There shall become the exclusive property of HealthCare every
invention and improvement conceived, invented or developed by Employee during
the term hereof and for a period of one year thereafter relating to or usable in
(i) any business then being carried on or actively contemplated by HealthCare or
(ii) the production of any product then being manufactured, sold, used or in the
process of development by HealthCare or which may be sold or used in competition
with any such product. With respect to all such inventive ideas originated or
developed by Employee while in the employ of HealthCare, or developed by
Employee within the period of one year thereafter, which relate to the business
or related products, designs, ideas or techniques sold, used or in the process
of development by HealthCare during the term, or as to which Employee has
acquired information as a result of such employment, and all patents, trademarks
and/or copyrights obtained on such inventive ideas:
(a) Employee agrees to disclose and assign, without charge but
at HealthCare's cost, all such inventive ideas and any patents,
trademarks and/or copyrights obtained thereon to HealthCare;
(b) Employee agrees that all such inventive ideas and any
patents, trademarks and/or copyrights thereof shall be the exclusive
property of HealthCare; and
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(c) Employee will at HealthCare's cost, at any and all times,
furnish such information and assistance, and execute such applications
and other documents as may be requested by HealthCare to obtain both
domestic and foreign patents, trademarks and/or copyrights, title to
which is to be vested in HealthCare, and Employee gives HealthCare full
and exclusive power to prosecute all such applications and all
proceedings in connection therewith.
6. TERMINATION.
6.1 EXPIRATION OF TERM. If not otherwise terminated under this
Section 6, Employee's employment hereunder shall terminate upon expiration of
the term pursuant to Section 2 hereof.
6.2 DEATH. The term and Employee's employment hereunder shall
terminate upon Employee's death. Such death shall not affect HealthCare's
and HCC's obligation to make the Cash Earn-Out Payments to Employee or
HealthCare's obligation on the Promissory Note dated October 31, 1996
payable to Employee.
6.3 DISABILITY. In the event Employee becomes physically or
mentally disabled so as to become unable, for a period of more than 90
consecutive working days or for more than 180 working days in the aggregate
during any 365-day period, to perform her duties hereunder on substantially a
full-time basis, HealthCare may at its option terminate the term and Employee's
employment hereunder upon not less than 90 days' written notice.
6.4 TERMINATION FOR GOOD CAUSE BY HEALTHCARE. HealthCare may
immediately terminate the term and Employee's employment hereunder for "Good
Cause." For the purposes of this Section 6.4, "Good Cause" shall mean
(a) Unlawful use or theft of property or monies of HealthCare;
(b) Continued willful insubordination as to some material
matter after reasonable warning or reprimand;
(c) Conviction of a felony or serious misdemeanor requiring
intent or moral turpitude;
(d) Actively and intentionally pursuing interests of a
competitor to the detriment of the financial interests of HealthCare;
(e) Failure, after 90 days notice or in the event such failure
is of such a nature that it cannot be completely remedied within the 90
day period, such failure shall not constitute Good Cause if Employee
begins correcting the claimed failure within the 90 day period, and
thereafter proceeds with reasonable diligence and in good faith to
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effect a remedy as soon as practicable to maintain a reasonable level
of job performance reasonably satisfactory to HealthCare (including
failure to comply with the provisions of this Agreement); or
(f) Any material breach by Employee of, or material
misrepresentation in, any representation, warranty or covenant of
Employee in the Purchase Agreement.
The determination of whether Good Cause exists shall be made by HealthCare's
Board of Directors acting in good faith after a hearing in which Employee, being
represented by counsel if she so desires, has the opportunity to present and
defend her case.
Such termination shall not affect HealthCare's and HCC's obligation to
make the Cash Earn-Out Payments to Employee or HealthCare's obligation on
the Promissory Note dated October 31, 1996 payable to Employee.
6.5 TERMINATION WITHOUT GOOD CAUSE. This Agreement may be
terminated by HealthCare at any time without Good Cause. In the event this
Agreement is terminated without Good Cause by HealthCare, HealthCare shall pay
to Employee on the effective date of such termination a lump sum equal to the
salary due Employee for the balance of the term hereof.
Termination without Good Cause shall occur upon written notice to Employee,
which notice shall specify the effective date of termination to be no less than
60 days from the date of Employee's receipt of the notice. Employee agrees to
continue to render her normal and usual services consistent with this Agreement
and her normal practice during the entire 60-day notice period, unless the
period of rendition of such services is reduced or excused entirely by
HealthCare. Employee shall not be required to seek other employment in order to
mitigate damages suffered by Employee as a result of her termination without
Good Cause; Employee shall suffer no reduction or set-off in payment made under
this Section 6.5 due to other employment or compensation.
Such termination shall not affect HealthCare's and HCC's obligation to
make the Cash Earn-Out Payments to Employee or HealthCare's obligation on
the Promissory Note dated October 31, 1996 payable to Employee.
6.6 TERMINATION FOR GOOD CAUSE BY EMPLOYEE. Employee may
terminate this Agreement and her employment hereunder for Good Cause. For
purposes of this Section 6.6, "Good Cause" shall mean (i) the continued material
violation by HealthCare of any of the provisions of this Agreement after
HealthCare has been provided with written notice of such violation and
HealthCare fails to cure such violation within 30 days after receipt of such
written notice or (ii) there has been a "change of control" affecting
HealthCare. For purposes of this Section 6.6 a "change
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of control" shall mean that an individual who is not as of the date hereof a
shareholder of HealthCare acquires 40 percent or more of HealthCare's issued and
outstanding common stock. In the event of a termination for Good Cause by
Employee, Employee shall be entitled to receive severance pay as provided in
Section 6.5 hereof. Employee may terminate this Agreement at any time on 60 days
notice without Good Cause but shall, in such case, not be entitled to the
benefits of this Section 6.6. Such termination shall not affect HealthCare's
and HCC's obligation to make the Cash Earn-Out Payments to Employee or
HealthCare's obligation on the Promissory Note dated October 31, 1996
payable to Employee.
6.7 EFFECT OF TERMINATION. Upon the termination of this
Agreement, the obligations of the parties hereunder will cease except for (i)
HealthCare's obligation to pay Employee all amounts due Employee hereunder for
services or otherwise accruing prior to the date of termination, (ii)
HealthCare's obligation, if any, to pay severance to Employee pursuant to
Sections 6.5 and 6.6 hereof, (iii) Employee's obligations under Sections 4 and 5
hereof, and (iv) the parties' obligations under Sections 7 and 9 hereof.
Such termination shall not affect HealthCare's and HCC's obligation to
make the Cash Earn-Out Payments to Employee or HealthCare's obligation on
the Promissory Note dated October 31, 1996 payable to Employee.
7. ARBITRATION.
Except as provided in Section 4 hereof, any controversy or
disagreement between Employee and HealthCare shall be resolved exclusively by
arbitration in Portland, Oregon, in accordance with the rules of the American
Arbitration Association and judgment on any award or determination so made may
be entered for enforcement in any court having jurisdiction. If the matter in
controversy (exclusive of attorney fees and expenses) shall appear, as at the
time of the demand for arbitration, to exceed $50,000, then the panel to be
appointed shall consist of three neutral arbitrators; otherwise, one neutral
arbitrator. The arbitrator(s) shall allow such discovery as the arbitrator(s)
determine appropriate under the circumstances and shall resolve the dispute as
expeditiously as practicable, and if reasonably practicable, within 120 days
after the selection of the arbitrator(s). The arbitrator(s) shall give the
parties written notice of the decision, with the reasons therefor set out, and
shall have 30 days thereafter to reconsider and modify such decision if any
party so requests within ten days after the decision. Thereafter, the decision
of the arbitrator(s) shall be final, binding, and nonappealable with respect to
all persons, including (without limitation) persons who have failed or refused
to participate in the arbitration process.
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8. ASSIGNMENT.
Each party acknowledges that this is a personal service
contract and that no assignment of this Agreement or any interest therein may be
made by either party without the express written consent of the other. This
Agreement shall be assignable and transferable by HealthCare to any
successor-in-interest, parent, subsidiary, or affiliate of HealthCare.
9. GENERAL.
9.1 GOVERNING LAW. This Agreement shall be subject to and
governed by the laws of the State of Oregon, excluding any choice of law rules
that may direct the application of the laws of another jurisdiction.
9.2 BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of HealthCare and Employee and their respective heirs,
legal representatives, executors, administrators, successors, and permitted
assigns.
9.3 INTEGRATION; AMENDMENT; WAIVER. This Agreement sets forth
all of the understandings between the parties with respect to its subject matter
and supersedes any and all other agreements, including but not limited to the
employment agreement by and between Employee and HSI dated December 23, 1994,
either oral or in writing, between the parties with respect to the subject
hereof. No change or modification of this Agreement shall be valid unless in
writing and signed by the party against which it is to be enforced. No waiver of
any provision of this Agreement shall be valid unless written and signed by the
person or party to be charged.
9.4 SEVERABILITY. If any provision of this Agreement shall be
determined to be unenforceable because the terms are excessive or unreasonable
then such provision shall be reduced to the maximum reasonable limit and
enforced as reduced. In the event that any one or more of the provisions
contained in this Agreement shall be determined to be invalid, illegal, or
unenforceable in any respect, the enforceability of such provisions in every
other respect and of the remaining provisions of this Agreement shall not in any
way be impaired.
9.5 NOTICES. All notices or other communications hereunder
shall be given in writing and shall be personally delivered or sent by private,
overnight courier service addressed as follows:
If to HealthCare: HealthCare Hearing Clinics,
Inc.
c/o HealthCare Capital Corp.
000 X.X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxx 00000
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With a copy to: Miller, Nash, Wiener, Hager &
Xxxxxxx
000 X.X. Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Attention: G. Xxxx Xxxxxxx
If to Employee: Xxxxx Xxxxxxx
0000 Xxxxxxxx Xxxx
Xxxxxx, XX 00000
With a copy to: Foster, Swift, Xxxxxxx & Xxxxx P.C.
000 Xxxxx Xxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxx, Xx.
If personally delivered a notice shall be deemed given upon receipt. If sent by
courier, a notice shall be deemed given on the next business day after it is
delivered to the courier addressed as provided above with charges prepaid. Any
party to this Agreement may change its address for notices by giving notice in
accordance with this section.
9.6 HEADINGS. The headings of this Agreement are
inserted for convenience only and are not to be considered in the
construction of the provisions hereof.
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IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above-written.
EMPLOYEE: HEALTHCARE:
HEALTHCARE HEARING CLINICS,
INC.
/S/ XXXXX XXXXXXX By /S/ XXXXXXX X. XXXXXX
Xxxxx Xxxxxxx Xxxxxxx X. Xxxxxx
President
HCC:
HEALTHCARE CAPITAL CORP.
By: /S/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
President
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EXHIBIT A
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"). THE HOLDER HEREOF,
BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE ISSUER THAT SUCH
SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE ISSUER,
(B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER
THE 1933 ACT, (C) PURSUANT TO THE EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT
PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH APPLICABLE
STATE SECURITIES LAWS, (D) UPON RECEIPT BY THE ISSUER OF AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED, OR (E) IN
COMPLIANCE WITH CERTAIN OTHER PROCEDURES SATISFACTORY TO THE ISSUER.
* * *
DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF
TRANSACTIONS ON THE ALBERTA STOCK EXCHANGE. A NEW CERTIFICATE, BEARING NO
LEGEND, DELIVERY OF WHICH WILL CONSTITUTE "GOOD DELIVERY," MAY BE OBTAINED FROM
THE TRANSFER AGENT UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED
DECLARATION, IN A FORM SATISFACTORY TO THE TRANSFER AGENT AND THE CORPORATION,
TO THE EFFECT THAT THE SALE OF THE SECURITIES REPRESENTED HEREBY IS BEING MADE
IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE 1933 ACT.
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