EXHIBIT 10.6
SECURITIES ACT
ESCROW AGREEMENT
THIS AGREEMENT made this 18th day of September, 1997.
AMONG:
INZECO HOLDINGS INC., a body corporate pursuant to the laws of
the Province of Alberta
(hereinafter called the "Issuer")
- and -
MONTREAL TRUST COMPANY OF CANADA, a body corporate authorized
to carry on business as a trust company in the Province of
Alberta
(hereinafter called the "Trustee")
- and -
Those parties who execute and deliver this Escrow Agreement as
Security Holders
(hereinafter called the "Security Holders")
WHEREAS in order to comply with the requirements of the Securities
Act, the Security Holders are desirous of depositing in escrow certain
securities in the Issuer owned by them and have for that purpose delivered to
the Trustee the security certificates described in Schedule "A", the receipt of
which certificates the Trustee hereby acknowledges;
AND WHEREAS the Trustee has agreed to undertake and perform its duties
according to the terms and conditions hereof;
NOW THEREFORE this Agreement witnesseth that, in consideration of the
sum of One Dollar ($1.00) paid by the parties to each other, receipt of this
sum being acknowledged by each of the parties, the Security Holders jointly and
severally covenant and agree with the Issuer and with the Trustee, and the
Issuer and the Trustee covenant and agree each with the other and with the
Security Holders jointly and severally, as follows:
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1. In this Escrow Agreement:
(a) "Executive Director" means the Executive Director of
Securities Administration of the Alberta Securities
Commission Agency;
(b) "Common Shares" means fully paid and non-assessable
Common Shares of the Issuer;
(c) "Control Person" means a Control Person as that term
is defined in Alberta Securities Commission Policy
4.11, as amended from time to time, being any person
or company that holds or is one of a combination of
persons or companies that holds:
(i) a sufficient number of securities of the
Issuer so as to affect materially control of
the issuer; or
(ii) more than 20% of the outstanding voting
securities of the Issuer except where there
is evidence showing that the holding of
these securities does not affect materially
control of the Issuer;
(d) "Major Transaction" means a Major Transaction as that
term is used and defined in Alberta Securities
Commission Policy 4.11, and includes a transaction
whereby:
(i) the issuer issues more than 25% of its
issued and outstanding securities prior to
the completion of a Major Transaction to
acquire assets (other than cash) or
securities of another issuer;
(ii) the Issuer enters into an arrangement,
amalgamation, merger or reorganization (all
or any one of which are hereinafter referred
to as a "Reorganization") with another
issuer whereby the ratio of securities which
are distributed to the two sets of security
holders results in the security holders of
the other issuer acquiring control of the
entity arising from the Reorganization;
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(iii) the Issuer acquires significant assets
(other than cash) or a business in any way
other than as set out in (i) and (ii) above;
or
(iv) the Issuer issues more than 25% of its
issued and outstanding securities prior to
the completion of a Major Transaction for
cash;
(e) "Private Placement" means a Major Transaction
referred to in paragraph 1(d)(iv) hereof;
(f) "Prospectus" means the prospects of the Issuer,
approved, signed and certified in accordance with the
Securities Act (Alberta) and relating to the offering
of Common Shares in Alberta by the Issuer;
(g) "Related Party" means a person or company that is a
promoter, officer, director or other insider of the
Issuer, or an associate or affiliate of these persons
or companies.
2. Each of the Security Holders hereby places and deposits in
escrow with the Trustee those of his securities in the Issuer which are
represented by the certificates described in Schedule "A" and the Trustee
hereby acknowledges receipt of those certificates. Each of the Security Holders
agrees to deposit in escrow any further certificates representing securities in
the Issuer which he may receive as a stock dividend on securities hereby
escrowed, and to deliver to the Trustee immediately on receipt thereof the
certificates for any such further securities and any replacement certificates
which may at any time be issued for any escrowed securities.
3. Each of the Security Holders shall be entitled to a letter or
receipt from the Trustee stating the number of securities represented by
certificates held for him by the Trustee subject to the terms of this
Agreement. It is expressly understood and agreed by the parties hereto that
such letter or receipt shall not be assignable.
4. Each of the Security Holders hereby undertakes and agrees to
deposit in escrow any securities of the Issuer watch he may acquire in any of
the following ways:
(a) pursuant to the distribution under the Prospectus;
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(b) pursuant to the exercise, prior to the completion of
a Major Transaction, of any option granted to him by
the Issuer;
(c) in the secondary market, prior to the completion of a
Major Transaction, if the Security Holder is a
Control Person.
5. The securities deposited in escrow as aforesaid shall remain
in escrow and shall be released only on the written consent of the Executive
Director given to the Trustee. Any such release may be either total or partial;
a partial release shall release from escrow only the securities as may from
time to time remain in escrow until all the escrowed securities have been
either released on the written consent of the Executive Director or cancelled
pursuant to paragraph 14 hereof.
6. Except with the written consent of the Executive Director,
the securities held in escrow under this Agreement and the beneficial ownership
or interest in them and the certificates representing them (including any
replacement certificates) shall not be sold, assigned in hypothecated,
transferred within escrow or otherwise dealt with in any manner and the Trustee
shall not acknowledge or implement any of the foregoing. In the event of
bankruptcy or death of a Security Holder, the Trustee, on written notification
to the Executive Director, may transmit the Security Holder'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 in escrow subject to this Agreement.
7. Notwithstanding the provisions of paragraph 5 hereof,
securities deposited with the Trustee pursuant to this Agreement shall be
released with the written consent of the Executive Director, upon the Issuer
completing a Major Transaction (other than a Private Placement) as to one-third
(1/3) of the original number on each of the first, second and third
anniversaries of the completion of the Major Transaction. The Executive
Director, in his discretion, may consent to the release of securities on the
second and third anniversaries of the completion of the Major Transaction when
consent is granted for the release of securities on the occasion of the first
anniversary.
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8. The Executive Director may consent in writing to the transfer
or hypothecation within escrow of any of the escrowed securities, subject to
the transferee or mortgagee agreeing in writing under seal to be bound by this
Agreement and subject also to such other terms and conditions as the Executive
Director may impose, and the Trustee, on receipt of the written consent of the
Executive Director and of the agreement of the transferee or mortgagee as
aforesaid, may permit such transfer or hypothecation within escrow.
9. Any Security Holder applying to the Executive Director for a
consent for a release from escrow or to a transfer or hypothecation within
escrow shall, before applying, give reasonable notice in writing of his
intention to the Issuer and the Trustee.
10. All voting rights attached to the escrowed securities shall
at all times be exercised by the respective registered owners thereof.
11. The Security Holders hereby renounce and release any right to
receive payment of any dividend (other than a stock dividend) xxxx may be
pavable on any securities xxxx in escrow pursuant to this Agreement with the
intent that the dividend shall not be paid on securities which are in escrow on
the record date set for the dividend.
12. The Security Holders agree that, while any of their
securities are held in escrow under this Agreement, they will not, without the
prior written consent of the Executive Director, 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 escrowed securities prior to the
commencement of the winding up of the Issuer.
13. If the Issuer is wound up and any securities remain in escrow
under this Agreement at the time when a distribution of assets to holders of
securities is made by the liquidator, the Security Holders do hereby assign
their right to receive that part of the distribution which is attributable to
the escrowed securities to the Trustee, for the benefit of, and in trust for
the persons and companies who are then holders of securities in the Issuer
which securities are not subject to this escrow agreement, ratably in
proportion to their holdings.
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14. (a) Any securities not released from the escrow hereby
created before the expiration of ten years from the
date of this Agreement shall be canceled forthwith
and the Issuer and the Trustee hereby agree to take
all actions as necessary to expeditiously effect
cancellation.
(b) For the purposes of effecting cancellation of
securities pursuant to paragraph 14(a), the Security
Holders hereby irrevocably appoint the Trustee their
attorney for the purpose of canceling the securities,
with authority to substitute one or more persons with
the like full power.
15. The Trustee accepts the responsibilities placed on it by this
Agreement and agrees to perform them in accordance with the terms hereof and
with the applicable consents, orders or directions of the Executive Director.
16. 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 Trustee's proper charges for its services as trustee
of this escrow.
17. This Agreement may be executed in several parts in 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 and construed as if
all the signing parties hereto had executed one copy of this Agreement.
18. The Issuer and the Security Holder hereby jointly and
severally agree to and do hereby release and indemnify and save harmless the
Trustee from and against all claims, suits, demands, costs, damages and
expenses which may be occasioned by reason of the Trustee's compliance in good
faith with the terms hereof.
19. If the Trustee should wish to retire, the Trustee shall
provide ninety (90) days notice to the Issuer, upon which the Issuer may, with
the written consent of the Executive Director, by writing appoint another
Trustee in its place and such appointment shall be binding on the Security
Holders, and the new Trustee shall assume and be bound by the obligation of the
Trustee hereunder.
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20. The covenants of the Security Holder with the Issuer in this
Agreement are made with the Issuer both in its own right and as trustee for the
holders from time to time of free securities in the issuer, and may be enforced
not only by the Issuer but also by any holder of free securities.
21. In this Agreement, the expression "the Security Holders"
shall include their respective permitted transferees within escrow and any
person to whom the interest of a Security Holder may be transmitted by
operation of law as provided in paragraph 6, and the expression "the Trustee"
shall include a new trustee appointed under paragraph 19, and wherever the
singular or masculine is used, the same shall be construed to include the
plural or feminine or neuter where the context so requires.
22. This Agreement may be amended upon agreement of the Issuer,
the Trustee and the Security Holders and upon the written consent having been
obtained form the Executive Director.
23. The written consent of the Executive Director as to a release
form of all or part of the escrowed securities shall terminate this Agreement
only in respect to those securities so released. For greater certainty this
paragraph does not apply to securities transferred within escrow.
24. 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 and the Trustee have caused their
respective corporate seals to be hereto affixed and the Security Holders have
hereto set their respective hands and seals.
INZECO HOLDINGS, INC.
Per: /s/ Xxxxxx Xxxxxxxx
-----------------------------------------
(c/s)
MONTREAL TRUST COMPANY OF CANADA
Per: /s/ name of signatory illegible
-----------------------------------------
(c/s)
Per: /s/
-----------------------------------------
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SIGNED, SEALED AND DELIVERED by the respective Security Holders whose
names are subscribed in the right-hand column below in the presence of the
respective persons whose names are subscribed in the left-hand column.
Security Holders
/s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
/s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
/s/Xxxxx X. Short
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Xxxxx X. Short
/s/Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
/s/Rob Griesdale
------------------------------
Rob Griesdale
/s/Xxx Xxxxx
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Xxx Xxxxx
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SCHEDULE "A"
TO THE AGREEMENT DATED EFFECTIVE THE 18TH DAY OF SEPTEMBER, 1997.
NAME OF NUMBER OF
SECURITY HOLDER TYPE OF SECURITIES SECURITIES
--------------------------------------------------------------------------------
Xxxxxx X. Xxxx Common Shares 300,000
Xxxxxx X. Xxxx Common Shares 250,000
Xxxx X. Xxxxxx Common Shares 250,000
Xxxxxxx X. Xxxxxxx Common Shares 200,000
Xxxxx X. Short Common Shares 50,000
Xxxxx X. Xxxxxx Common Shares 100,000
Rob Griesdale Common Shares 100,000
Xxx Xxxxx Common Shares 100,000
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