FORM C
ESCROW AGREEMENT
(PERFORMANCE ESCROW AGREEMENT)
THIS AGREEMENT MADE IN TRIPLICATE THIS 5TH DAY OF DECEMBER, 1996.
AMONG:
XXX-XXXXXXX TECHNOLOGIES INC.
(HEREIN CALLED THE "ISSUER")
OF THE FIRST PART
- AND -
MONTREAL TRUST COMPANY OF CANADA
(HEREIN CALLED THE "ESCROW AGENT")
OF THE SECOND PART
- AND -
AVI XXX-XXXXXXX, M.D., XXXXXXX XXX-XXXXXXX, XXXXX XXX-
XXXXXXX, XXXXXXXX XXXXXX, XXXXXX XX, XXXXX X. XXXXXXXX,
M.D., MARBLEGATE HOLDINGS LIMITED, XXXXXX-XXXXXX HOLDINGS
INC., ISLAND INVESTMENTS (SECURITIES) LTD., XXXXX XXXXXX,
M.D., XXXXXX XXXXXXXXX, XXXXX XXXXX, XXX XXXXXXXX, XXXXXXXX
XXXXXXXX
(HEREIN CALLED THE "SECURITY HOLDERS")
OF THE THIRD PART
WHEREAS the Security Holders are all the holders of Class A Special Shares
and Class C Special Shares of BA Tech;
AND WHEREAS BA Tech has entered into an arrangement agreement with
Structured Biologicals Inc. ("SBI") whereby BA Tech and SBI will amalgamate to
continue as called "Xxx-
Xxxxxxx Technologies Inc." (the "Issuer") and BA Tech is entering into this
Agreement in order that the Issuer will be bound by this Agreement;
AND WHEREAS as a result of the amalgamation, the Security Holders will
receive, in exchange for their shares of BA Tech, that number and class of
shares of Amalco, set out in Schedule "A" attached to and forming part of this
Agreement;
AND WHEREAS in order to comply with the requirements of The Alberta Stock
Exchange (the "Exchange"), the Security Holders are desirous of depositing in
escrow certain securities in the Issuer owned or to be received by them;
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 dollar 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 BA Tech and with the Escrow Agent, and BA Tech and the
Escrow Agent covenant and agree with the other and with the Security Holders
jointly and severally as follows:
1. Where used in this Agreement, or in any amendment or supplement
hereto, unless the context otherwise requires, the following words and
phrases shall have the following ascribed to them below:
(a) "R&D EXPENDITURES" means expenditures made for the purpose of
research and/or development activities consistent with the
activities defined in the
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Information Booklet of SBI dated October 23, 1996, whether made
by the Issuer, its subsidiaries, affiliates or joint venture
partners, including, without limitation, (i) direct research
expenditures or expenditures on development of new technologies
and products, (ii) the purchase of assets related to and to be
used in these activities, (iii) expenditures related to the
perfection and/or commercialization of these technologies, (iv)
expenditures related to the seeking, obtaining or maintaining of
any level of governmental or industry approvals, and (v) the
direct or indirect costs of the acquisition of new technologies,
or shares of corporations with developable technologies for
further development by the Issuer;
(b) "RELATED PARTY" means promoters, officers, directors, other
insiders of the Issuer and any associates or affiliates of the
foregoing.
2. Each of the Security Holders hereby places and deposits in escrow with
the Escrow Agent those of his securities in the Issuer which are
represented by the certificates described in Schedule "A" and the
Escrow Agent hereby acknowledges receipt of those certificates. The
Security Holders agree 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 Escrow
Agent 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. The Parties hereby agree that, subject to the provisions of paragraph
6 herein, the securities and the beneficial ownership of or any
interest in them and the certificate
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representing them (including any replacement securities or
certificates) shall not be sold, assigned, hypothecated, alienated,
released from escrow, transferred within escrow, or otherwise in any
manner dealt with, without the written consent of the Exchange given
to the Escrow Agent or except as may be required by reason of the
death or bankruptcy of any Security Holder, in which cases the Escrow
Agent shall hold the said certificates subject to this Agreement, for
whatever person or company shall be legally entitled to become the
registered owner thereof.
4. The Security Holders 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 Exchange. 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,
orders or directions of the Exchange.
5. Any Security Holder applying to the Exchange for a consent for a
transfer within escrow shall, before applying, give reasonable notice
in writing of his intention to the Issuer and the Escrow Agent.
6.
(a) Subject to subparagraph (b) the Exchange will consent to the
release from escrow of one share of the Issuer for each U.S.
$0.50 of R&D Expenditures that the Issuer has incurred since the
date of the amalgamation, provided that if the Subordinate
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Voting Shares are listed on a recognized stock exchange or on
NASDAQ and have traded at a price of more than U.S. $3.00 the
Exchange will consent to the release from escrow of one share of
the Issuer for each U.S. $0.25 of R&D Expenditures that the
Issuer has incurred since the date of the amalgamation.
(b) No shares shall be released from escrow pursuant to clause (a)
unless either (i) the holder has first exercised his right to
acquire Subordinate Voting Shares or Class B Shares by paying to
the Issuer U.S. $0.25 per share or (ii) the Security Holder first
undertakes not to sell, assign or transfer the shares to be
released from escrow without first exercising such right (or
causing the transferee to do so immediately upon the transfer),
unless the Exchange otherwise consents.
(c) The Exchange will consent to the release from escrow of 500,000
shares upon the completion of the Subscription Agreement as
defined in the Information Booklet of SBI dated October 23, 1996.
(d) Releases under subparagraphs (a) and (c) shall be cumulative.
(e) Subject to the approval of the Exchange, nothing contained herein
shall prevent the Security Holders from depositing their escrowed
securities into a take-over bid, as such term is defined in Part
XX of the Securities Act (Ontario), as amended. The Security
Holders or any one of them may direct the Escrow Agent to tender
any or all of their respective escrowed securities to the offer
under the take-over bid by delivery of signed acceptances to the
take-over bid to the Escrow Agent in respect of any or all of the
Security Holders' escrowed securities. The
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Escrow Agent shall thereupon tender certificates for the
specified number of Security Holders' escrowed securities to the
offeror under the bid together with such signed acceptances to
such take-over bid. The tender of Security Holders' escrowed
securities by the Escrow Agent shall be subject to the escrow
herein and, if such Escrowed Securities or any part thereof are
accepted by the offeror, the Escrow Agent shall thereafter hold
such shares for the offeror in accordance with this Agreement.
(f) Any release from escrow under paragraph 6(a) shall be made
pursuant to a written application on behalf of the Issuer or the
Security Holders, which application shall be accompanied by
evidence of the R&D Expenditures incurred in a form satisfactory
to the Exchange or such other evidence of entitlement to release
as is appropriate in the circumstances. Application for release
may only be made twice per year.
(g) All shares released from escrow shall, unless otherwise directed
by the Exchange, be distributed as Avi Xxx-Xxxxxxx shall
determine, until he shall no longer have any shares held in
escrow, and thereafter PRO RATA.
(h) Notwithstanding the other provisions of this paragraph 6, the
minimum number of shares to be released from escrow in any year
shall be one fifth of the original number of shares held in
escrow.
(i) Notwithstanding any other provision hereof, if there is a major
breakthrough in the development or commercialization of the
technology of the Issuer, such that
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the business or prospects of the Issuer are significantly
improved, the Security Holders may apply to the Exchange for the
release of additional shares from escrow.
(j) For the purposes of determining whether the Exchange has granted
its consent or approval, the Escrow Agent shall be entitled to
rely exclusively on written notice from the Exchange.
7. A release from escrow 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.
8. The Security Holders shall, if a dividend is declared while the
Escrowed Shares or any of them continue to be held in escrow under
this Agreement, renounce and release any right to receive payment of
the dividend on the shares then held in escrow.
9. 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 shall
assign their right to receive that part of the distribution which is
attributable to the escrowed securities to the Escrow Agent, for the
benefit of, and in trust for the persons and companies who are then
holders of free securities in the Issuer rateably in proportion to
their holdings.
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10. If the Subordinate Voting Shares cease to be listed on the Exchange
(other than as a result of suspension or involuntary delisting), this
Agreement shall terminate and any shares then remaining in escrow
shall be automatically released from escrow.
11. Notwithstanding paragraphs 6 and 10, any shares remaining in escrow on
the fifth anniversary of the date of this Agreement, unless otherwise
exempted in writing by the Exchange, shall be cancelled by the Escrow
Agent within six months following the said fifth anniversary.
12. All voting rights attached to the escrowed securities shall at all
times be exercised by the respective registered owners thereof.
13. The Issuer and each Security Holder hereby agree, jointly and
severally, to indemnify and hold harmless the Escrow Agent from and
against any liability, loss, claim, action, cost and expense,
including legal fees and disbursements (collectively, the
"Liabilities"), which may be asserted against the Escrow Agent arising
from or out of this Agreement; provided that the Issuer and each
Security Holder shall not be required to indemnify the Escrow Agent in
the event that such Liabilities are a result of the gross negligence
or willful misconduct of the Escrow Agent. This provision shall
survive the resignation or removal of the Escrow Agent or the
termination of this Agreement.
14. The Issuer hereby acknowledges the terms and conditions of this
Agreement and agrees to take all reasonable steps to facilitate its
performance. The Issuer agrees to pay the Escrow Agent's proper
charges for its services as Escrow Agent of this escrow.
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15. If the Escrow Agent should wish to resign, it shall give at least
three months' notice to the Issuer which may, with the written consent
of the Exchange, by writing appoint another Escrow Agent in its place
and such appointment shall be binding on the Security Holders, and the
new Escrow Agent shall assume and be bound by the obligations of the
Escrow Agent hereunder.
16. The covenants of the Security Holders with the Issuer in this
Agreement are made with the Issuer both in its own right and as Escrow
Agent 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.
17. Any notice to be given pursuant to the provisions hereof shall be
deemed to have been validly given if reduced to writing and either
mailed by prepaid ordinary post or delivered to the party to whom the
same is to be given at the following applicable address:
(a) to the Issuer:
Xxx-Xxxxxxx Technologies Inc.
000 Xxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: President
Facsimile No. (000) 000-0000
(b) to the Escrow Agent:
Montreal Trust Company of Canada
000 Xxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
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Attention: Manager, Corporate Trust Services
Facsimile No. (000) 000-0000
(c) to a Security Holder at the address shown for such Security
Holder on Appendix "A"
or to such other address as the parties to whom such notice or
communication is to be given shall have last designated to the party
giving the same in the manner specified in this paragraph 17.
18. The Escrow Agent shall be fully protected in acting and relying
reasonably upon any written notice, direction, instruction, order,
certificate, confirmation, request, waiver, consent, receipt,
statutory declaration or other paper or document (collectively
referred to as "Documents") furnished to it and signed by any person
required to or entitled to execute and deliver to the Escrow Agent any
such Documents in connection with this Agreement, not only as to its
due execution and the validity and effectiveness of its provisions,
but also as to the truth and accuracy of any information therein
contained, which it in good faith believes to be genuine. The Escrow
Agent will have no responsibility for the genuineness or validity of
any security, document or other thing deposited with it.
19. The Escrow Agent shall have no duties or responsibilities except as
expressly provided in this Agreement and shall have no liability or
responsibility arising under any other Agreement, including any
Agreement referred to in this Agreement, to which the Escrow Agent is
not a party.
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20. The Escrow Agent may retain legal counsel and advisors as may be
reasonably required for the purpose of discharging its duties or
determining its rights under this Agreement, and may rely and act upon
the advice of such counsel or advisor. The Issuer shall pay or
reimburse the Escrow Agent for any reasonable fees, expenses and
disbursements of such counsel or advisors.
21. This Agreement shall be governed by the laws of Ontario and the laws
of Canada applicable therein.
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. Whenever the singular or masculine is used, the same shall be
construed to include the plural or feminine or neuter where the
context so requires.
24. This Agreement shall inure to the benefit of and be binding on the
parties to this Agreement and each of their heirs, executors,
administrators, successors and assigns.
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IN WITNESS WHEREOF the Issuer and Escrow Agent have caused their respective
corporate seals to be hereto affixed and the Security Holders have hereto set
their respective hands and seals.
XXX-XXXXXXX TECHNOLOGIES INC.
Per: /s/ Avi Xxx-Xxxxxxx, M.D.
--------------------------------------------
c/s
Per: /s/
--------------------------------------------
MONTREAL TRUST COMPANY OF CANADA
Per: /s/
--------------------------------------------
c/s
Per: /s/ X. Xxxxx
---------------------------------------------
/s/ /s/ Avi Xxx-Xxxxxxx, M.D.
--------------------------- -------------------------------------------------
Witness to the signature of AVI-XXX-XXXXXXX, M.D.
/s/ Xxxx X. Xxxxxxx /s/ Avi Xxx-Xxxxxxx, M.D. under Power of Attorney
--------------------------- -------------------------------------------------
Witness to the signature of For XXXXXXX XXX-XXXXXXX
/s/ Xxxx X. Xxxxxxx /s/ Avi Xxx-Xxxxxxx, M.D. under Power of Attorney
--------------------------- -------------------------------------------------
Witness to the signature of For XXXXX XXX-XXXXXXX
/s/ Xxxx X. Xxxxxxx /s/ Avi Xxx-Xxxxxxx, M.D. under Power of Attorney
--------------------------- -------------------------------------------------
Witness to the signature of For XXXXXXXX XXXXXX
/s/ Xxxx X. Xxxxxxx /s/ Avi Xxx-Xxxxxxx, M.D. under Power of Attorney
--------------------------- -------------------------------------------------
Witness to the signature of For XXXXXX XX
/s/ Xxxxx X. Xxxxxxx /s/ Xxxxx X. Xxxxxxxx, M.D.
--------------------------- -------------------------------------------------
Witness to the signature of XXXXX X. XXXXXXXX, M.D.
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MARBLEGATE HOLDINGS LIMITED
By: /s/ Xxxxx X.X. Xxxxxxxx, Sole Director
----------------------------------------------
XXXXXX-XXXXXX HOLDINGS INC.
/s/ Avi Xxx-Xxxxxxx, M.D. By: /s/ Claus X.X. Xxxxxx-Xxxxxx, Ph.D.
----------------------------------------------
ISLAND INVESTMENTS (SECURITIES) LTD.
By: /s/ Avi Xxx-Xxxxxxx under Power of Attorney
----------------------------------------------
/s/ Xxxxx XxXxxx
/s/ Xxxx X. Xxxxxxx /s/ Avi Xxx-Xxxxxxx under Power of Attorney
--------------------------- -------------------------------------------------
Witness to the signature of For XXXXX XXXXXXX, M.D.
/s/ Xxxx X. Xxxxxxx /s/ Avi Xxx-Xxxxxxx under Power of Attorney
--------------------------- -------------------------------------------------
Witness to the signature of For XXXXXX XXXXXXXXX
/s/ Avi Xxx-Xxxxxxx /s/ Xxxxx Xxxxx
--------------------------- -------------------------------------------------
Witness to the signature of XXXXX XXXXX
/s/ Avi Xxx-Xxxxxxx /s/ Xxx Xxxxxxxx
--------------------------- -------------------------------------------------
Witness to the signature of XXX XXXXXXXX
/s/ Avi Xxx-Xxxxxxx /s/ Xxxxxxxx Xxxxxxxx
--------------------------- -------------------------------------------------
Witness to the signature of XXXXXXXX XXXXXXXX
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SCHEDULE "A"
to agreement dated the 5th day of December, 1996 and made among Xxx-Xxxxxxx
Technologies Inc., Montreal Trust Company of Canada and some security holders of
Xxx-Xxxxxxx Technologies Inc. therein called the "Security Holders."
CERTIFICATE
NUMBER OF NUMBERS OF
NAME AND TYPE OF SECURITIES SECURITIES
ADDRESS SECURITIES ESCROWED ESCROWED
-------------------------------------------------------------------------------
Avi Xxx-Xxxxxxx, Class A 17,000,000 CA-5
M.D.
Avinoam Ben- Class A 877,135 CA-6
Xxxxxxx
Xxxxx Xxx-Xxxxxxx Class A 1,000,000 CA-7
Island Investments Class A 1,000,000 CA-9, 10, 11, 12,
(Securities) Ltd.(4) 13
Xxxxxx Xx Class C 1,000,000 CC-12
Xxxxx X. Xxxxxxxx, Class C 1,000,000 CC-2
M.D.
Avi Xxx-Xxxxxxx, Class C 800,000 CC-3
M.D.(1)
Xxxxxx-Xxxxxx Class C 405,715 CC-4
Holdings Inc.(2)
Xxxxx XxXxxx, M.D. Class C 50,000 CC-6
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CERTIFICATE
NUMBER OF NUMBERS OF
NAME AND TYPE OF SECURITIES SECURITIES
ADDRESS SECURITIES ESCROWED ESCROWED
-------------------------------------------------------------------------------
Xxxxxx Xxxxxxxxx Class C 50,000 CC-7
Xxxxx Xxxxx Class C 200,000 CC-8
Xxx Xxxxxxxx Class C 10,000 CC-9
Xxxxxxxx Xxxxxxxx Class C 7,150 CC-10
Avi Xxx-Xxxxxxx, Class C 250,000 CC-11
M.D. (3) ----------
23,650,000
(1) The beneficial owner is Marblegate Holdings Limited, a corporation
controlled by Xxxxx X.X. Xxxxxxxx
(2) The beneficial owner is Xx. Xxxxx X.X. Xxxxxx-Xxxxxx
(3) The beneficial owner is Xxxxxx Xxxx
(4) The beneficial owner is Xxxxxxx Xxxxxxxx
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