Exhibit 10.14
SHARE EXCHANGE AGREEMENT
SHARE EXCHANGE AGREEMENT, dated as of May 16, 2000 (this "Agreement"), by and
among UNIVERSE2U INC., a Nevada Corporation, (formerly known as XXXXXX MINING
CORPORATION and referred to herein as "Xxxxxx"), 1418276 Ontario Inc., an
Ontario Corporation and a subsidiary of Xxxxxx ("Newco"), and Xxxxxx Xxxxxx,
Xxxxx Xxxxxx, Xxxxx Xxxxxx, in trust, Xxxx XxXxxx and Xxxxxx Xxxxx (collectively
the "Sellers").
W I T N E S S E T H
WHEREAS, pursuant to a Stock Purchase Agreement entered into among Xxxxxx,
Newco, Universe2U Inc., an Ontario corporation (the "Company"), and Sellers
dated as of May 16, 2000 (the "Purchase Agreement"), the parties thereto have
agreed, subject to the terms and conditions set forth therein, that Newco shall
acquire from Sellers all of the issued and outstanding shares of the Company,
and Sellers shall receive Non-Voting Exchangeable Shares of Newco (the "Newco
Exchangeable Shares");
WHEREAS, Sellers desire the right to exchange from time to time pursuant to the
terms of this Agreement their Newco Exchangeable Shares for common shares,
without par value, of Xxxxxx (the "Xxxxxx Common Shares"); and
WHEREAS, Xxxxxx desires the right to purchase from time to time, pursuant to the
terms of this Agreement, Newco Exchangeable Shares from Sellers;
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements herein contained, the parties agree as follows:
ARTICLE 1
EXCHANGE RIGHT AND AUTOMATIC EXCHANGE
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ON LIQUIDATION OF XXXXXX
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1.1. Exchange Right.
1.1.1. Xxxxxx agrees with Sellers that, at any time and from time to time
(including at any time during which Newco is insolvent or is in the course of
liquidation, dissolution or winding up), each Seller shall have the right (the
"Exchange Right") to request Xxxxxx to purchase any or all of his Newco
Exchangeable Shares for a purchase price per share (the "Exchange Price") equal
to (a) the Current Market Price of the Specified Number of Xxxxxx Common Shares
on the last Business Day prior to the Exchange Date (as hereinafter defined)
plus (b) the amount by which the declared and unpaid dividends on one Newco
Exchangeable Share then exceed, if at all, the declared and unpaid dividends on
the Specified Number of Xxxxxx Common Shares (calculated as
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of the date of the declaration of such dividend or dividends in accordance
with Newco's Articles of Incorporation) (less any Taxes or U.S. Taxes).
1.1.2. If any of Sellers wishes to exercise his/her Exchange Right in respect
of all or any of the Newco Exchangeable Shares registered in his/her name,
he/she shall deliver to Xxxxxx (or cause the Escrow Agent to deliver to Xxxxxx
in the case of Newco Exchangeable Shares held in escrow pursuant to the Escrow
Agreement), in person or by certified or registered mail, at its principal
office (attention: Chief Financial Officer), or at such other place as may be
specified by Xxxxxx from time to time, one or more certificates representing
such Newco Exchangeable Shares accompanied by one or more stock transfer powers
endorsed in blank by such Seller, together with a duly completed exercise notice
executed by Seller in the form set forth in Exhibit A attached hereto (the
"Exchange Notice"):
(a) specifying the number of Newco Exchangeable Shares in respect
of which the Exchange Right is being exercised;
(b) stating the Business Day on which Seller desires to exchange
such Newco Exchangeable Shares (the "Exchange Date"); provided
that the Exchange Date shall be not less than ten Business
Days nor more than 15 Business Days after the date on which
the Exchange Notice is received by Xxxxxx and provided,
further, that, if no Exchange Date is specified in the
Exchange Notice, the Exchange Date shall be deemed to be the
tenth Business Day after the date on which the Exchange Notice
is received by Xxxxxx; and
(c) representing and warranting that Seller is not a non-resident
of Canada within the meaning of the Income Tax Act (Canada);
if Seller does not so represent and warrant, the provisions of
Section 5.9 shall apply.
1.1.3. Subject to compliance with the provisions of Section 5.9, on the
Exchange Date, Xxxxxx shall pay or cause to be paid to Seller the Exchange Price
for each Newco Exchangeable Share surrendered on this Exchange Date for exchange
pursuant to Section 1.1.2. Payment of the total Exchange Price for such Newco
Exchangeable Shares shall be made by delivery to Seller at the registered office
of Xxxxxx or at such other location as may be specified by Xxxxxx by notice to
Seller of one or more certificates representing the Specified Number of Xxxxxx
Common Shares with respect to each such Newco Exchangeable Share (less any
Xxxxxx Common Shares withheld by Xxxxxx in respect of Taxes) and a cheque of
Xxxxxx, payable at any branch of the bankers of Xxxxxx, in respect of the total
amount set forth in Section 1.1.1(b). As of and with effect from the Exchange
Date, Seller shall cease to be the holder of such Newco Exchangeable Shares and,
subject to Section 5.1 hereof, shall not be entitled to exercise any of the
rights of a holder in respect thereof, other than the right to receive the
Exchange Price, unless payment of the total Exchange Price for such Newco
Exchangeable Shares shall not be made in accordance with this provision, in
which case the rights of Seller shall remain unaffected to the extent payment of
the Exchange Price has not been made until the Exchange Price has been fully
paid in the manner herein before provided. Upon such payment or deposit of the
Exchange Price, Seller shall thereafter be considered and deemed for all
purposes to be the holder of the Xxxxxx Common Shares delivered to him or her,
as the case may be.
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1.2. Automatic Exchange on Liquidation of Xxxxxx.
1.2.1. Xxxxxx shall give Sellers notice of each of the following events at
the time set forth below:
(a) in the event of any determination by the Board of Directors of
Xxxxxx to institute voluntary liquidation, dissolution or
winding-up proceedings with respect to Xxxxxx or to effect any
other distribution of assets of Xxxxxx among its shareholders
for the purpose of winding-up its affairs, at least 45 days
prior to the proposed effective date of such liquidation,
dissolution or winding-up or other distribution; and
(b) immediately, upon the earlier of (i) receipt by Xxxxxx of
notice of and (ii) Xxxxxx otherwise becoming aware of any
threatened or instituted claim, suit, petition or other
proceedings with respect to the involuntary liquidation,
dissolution or distribution of assets of Xxxxxx among its
shareholders for the purpose of winding-up its affairs.
1.2.2. In order to enable Sellers to participate on a pro rata basis with the
holders of Xxxxxx Common Shares in the distribution of assets of Xxxxxx in
connection with any of the events set forth in Section 1.2.1(a) or 1.2.1(b)
above (a "Xxxxxx Liquidation Event"), on the fifth Business Day (the "Automatic
Exchange Date") prior to the date on which Xxxxxx shall be liquidated all of the
then outstanding Newco Exchangeable Shares shall be automatically exchanged for
Xxxxxx Common Shares (the "Automatic Exchange"). To effect the Automatic
Exchange, Xxxxxx shall purchase each Newco Exchangeable Share outstanding on the
Automatic Exchange Date and held by Sellers, and Sellers shall sell all Newco
Exchangeable Shares held by them at such time, for a purchase price per share
(the "Xxxxxx Liquidation Amount") equal to (a) the Current Market Price of the
Specified Number of Xxxxxx Common Shares on the last Business Day prior to the
Automatic Exchange Date plus (b) the amount by which the declared and unpaid
dividends on one Newco Exchangeable Share then exceed, if at all, the declared
and unpaid dividends on the Specified Number of Xxxxxx Common Shares (calculated
as of the date of the declaration of such dividend or dividends in accordance
with the Articles of Incorporation of Newco) (less any Taxes or U.S. Taxes).
1.2.3. On the Automatic Exchange Date, Xxxxxx shall pay or cause to be paid
to Sellers the Xxxxxx Liquidation Amount for each such Newco Exchangeable Share
upon presentation and surrender at the registered office of Xxxxxx (attention:
Chief Financial Officer), or at such other place as may be specified by Xxxxxx
from time to time, of the certificates representing such Newco Exchangeable
Shares, together with one or more stock transfer powers endorsed in blank by
Sellers and containing a representation and warranty by Sellers that Sellers are
not non-residents of Canada within the meaning of the Income Tax Act (Canada).
If Sellers do not so represent and warrant, the provisions of Section 5.9 shall
apply. Payment of the total Xxxxxx Liquidation Amount for such Newco
Exchangeable Shares shall be made by delivery to Sellers of one or more
certificates of Xxxxxx Common Shares representing the Specified Number of Xxxxxx
Common Shares with respect to each such Newco Exchangeable Share (less any
Xxxxxx Common Shares withheld by Xxxxxx in respect of Taxes) and a cheque of
Xxxxxx, payable at any branch of
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the bankers of Xxxxxx in respect of the total amount specified in Section
1.2.2(b) with respect to all such Newco Exchangeable Shares. As of and with
effect from the Automatic Exchange Date, Sellers shall cease to be the holders
of the Newco Exchangeable Shares exchanged on such date and shall not be
entitled to exercise any of the rights of a holder in respect thereof, other
than the right to receive the Xxxxxx Liquidation Amount, unless payment of the
total Xxxxxx Liquidation Amount shall not be made upon presentation and
surrender of the share certificates representing such Newco Exchangeable Shares
in accordance with the foregoing provisions, in which case the rights of Sellers
shall remain unaffected to the extent payment of the Xxxxxx Liquidation Amount
has not been made until the Xxxxxx Liquidation Amount has been fully paid in the
manner herein before provided. Xxxxxx shall have the right to deposit or cause
to be deposited in a custodial account with any chartered bank or trust company
in Canada (the "Xxxxxx Liquidation Amount Depository"), the Xxxxxx Liquidation
Amount in respect of the Newco Exchangeable Shares represented by certificates
that have not been surrendered on the Automatic Exchange Date. Immediately upon
making such deposit, Xxxxxx shall give notice thereof to Sellers. The Newco
Exchangeable Shares in respect of which such deposit shall have been made shall
be deemed to be exchanged as of the date of such deposit and, subject to Section
5.1 hereof, the rights of Sellers with respect to such Newco Exchangeable Shares
shall thereafter be limited to the right to receive the Xxxxxx Liquidation
Amount deposited against presentation and surrender of the certificates
representing such Newco Exchangeable Shares to the Xxxxxx Liquidation Amount
Depository. Upon such payment or deposit of the Xxxxxx Liquidation Amount,
Sellers shall thereafter be considered and deemed for all purposes to be the
holder of the Xxxxxx Common Shares either (i) delivered to him or (ii) deposited
with the Xxxxxx Liquidation Amount Depository.
1.3. Exercise of Exchange Right Subsequent to Retraction.
In the event that any Sellers have exercised their right under Article 6 of the
Articles of Incorporation of Newco to require Newco to redeem any or all of the
Newco Exchangeable Shares held by Sellers (the "Retracted Shares"), provided
that Xxxxxx shall not have exercised the Retraction Call Right (as hereinafter
defined) with respect to the Retracted Shares, and Sellers are notified by Newco
pursuant to Section 6.6 of the Articles of Incorporation of Newco that Newco
will not be permitted as a result of solvency requirements of applicable law to
redeem all such Retracted Shares, Newco hereby agrees to immediately notify
Xxxxxx of such prohibition against Newco redeeming all of the Retracted Shares
and to immediately forward or cause to be forwarded to Xxxxxx all relevant
materials delivered by Sellers to Newco (including, without limitation, a copy
of the Retraction Request delivered pursuant to Section 6.1 of the Articles of
Incorporation of Newco) in connection with such requested retraction of the
Retracted Shares. In any such event, the Retraction Request will constitute and
will be deemed to constitute notice from Sellers to Xxxxxx that Sellers are
exercising the Exchange Right with respect to those Retracted Shares which Newco
is not permitted to redeem, and Xxxxxx agrees to purchase such Retracted Shares
in accordance with the provisions of Section 1.1.3.
ARTICLE 2
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PURCHASE BY XXXXXX
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2.1. Purchase of Shares.
Subject to Section 2.2.1 hereof, on the Purchase Date Xxxxxx shall purchase all
of the then outstanding Newco Exchangeable Shares (the "Purchase") for an amount
per share (the "Purchase Price") equal to (a) the Current Market Price of the
Specified Number of Xxxxxx Common Shares on the last Business Day prior to the
Purchase Date, which amount shall be paid and satisfied in full by Xxxxxx
causing to be delivered to Sellers the Specified Number of Xxxxxx Common Shares
(less any Taxes) plus (b) the amount by which the declared and unpaid dividends
on one Newco Exchangeable Share then exceed, if at all, the declared and unpaid
dividends on the Specified Number of Xxxxxx Common Shares (calculated as of the
date of the declaration of such dividend or dividends in accordance with the
Articles of Incorporation of Newco) (less any Taxes or U.S. Taxes).
2.2. Purchase Procedure.
2.2.1. In any case of a purchase of Newco Exchangeable Shares under this
Article 2, Xxxxxx shall at least 30 days (or, if impracticable, such lesser time
period as is practicable) before the Purchase Date send or cause to be sent to
Sellers a notice in writing of the Purchase. Such notice shall set out the
formula for determining the Purchase Price and the Purchase Date.
2.2.2. Subject to Section 2.2.1 hereof, on the Purchase Date Xxxxxx shall pay
or cause to be paid to Sellers the Purchase Price for each Newco Exchangeable
Share upon presentation and surrender at the registered office of Xxxxxx
(attention: Chief Financial Officer), or at such other place as may be specified
by Xxxxxx from time to time, of the certificates representing such Newco
Exchangeable Shares, together with one or more stock transfer powers endorsed in
blank by Sellers and containing a representation and warranty by Sellers that
Sellers are not non-residents of Canada within the meaning of the Income Tax Act
(Canada). If Sellers do not so represent and warrant, the provisions of Section
5.9 shall apply. Payment of the total Purchase Price for such Newco Exchangeable
Shares shall be made by delivery to Sellers at the registered office of Xxxxxx
or at such other location as may be specified by Xxxxxx by notice to Sellers of
one or more certificates representing the Specified Number of Xxxxxx Common
Shares with respect to each such Newco Exchangeable Share (less any Xxxxxx
Common Shares withheld by Xxxxxx in respect of Taxes) and a cheque of Xxxxxx,
payable at any branch of the bankers of Xxxxxx, in respect of the total amount
set forth in Section 2.1(b). As of and with effect from the Purchase Date,
Sellers shall cease to be the holders of such Newco Exchangeable Shares and,
subject to Section 5.1 hereof, shall not be entitled to exercise any of the
rights of a holder in respect thereof, other than the right to receive the
Purchase Price, unless payment of the total Purchase Price for such Newco
Exchangeable Shares shall not be made upon presentation and surrender of share
certificates representing such Newco Exchangeable Shares in accordance with the
foregoing provisions, in which case the rights of Sellers shall remain
unaffected to the extent payment of the Purchase Price has not been made until
the Purchase Price has been fully paid in the manner herein before provided.
Xxxxxx shall have the right, on or after the Purchase Date, to deposit or cause
to be deposited in a custodial account with any chartered bank or trust company
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in Canada (the "Purchase Price Depository") the Purchase Price in respect of the
Newco Exchangeable Shares represented by certificates that have not at the date
of such deposit been surrendered by Sellers in connection with the Purchase;
provided that, in the event of an acceleration of the Purchase Date pursuant to
clause (i) of the last sentence of the definition of "Purchase Date", Xxxxxx
shall be required to make such deposit, if any, on the Purchase Date.
Immediately upon making such deposit, Xxxxxx shall give notice thereof to
Sellers. The Newco Exchangeable Shares in respect of which such deposit shall
have been made shall be deemed to be exchanged as of the date of such deposit
and, subject to Section 5.1 hereof, Sellers' rights with respect to such Newco
Exchangeable Shares shall thereafter be limited to the right to receive the
Purchase Price so deposited against presentation and surrender of the
certificates representing such Newco Exchangeable Shares to the Purchase Price
Depository. Upon such payment or deposit of the Purchase Price, Sellers shall
thereafter be considered and deemed for all purposes to be the holder of the
Xxxxxx Common Shares either deposited with the Purchase Price Depository.
ARTICLE 3
DISTRIBUTION ON LIQUIDATION OF NEWCO
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3.1. Liquidation Call Right.
In the event of the liquidation, dissolution or winding-up of Newco, whether
voluntary or involuntary, or any other distribution of the assets of Newco among
its shareholders for the purpose of winding-up its affairs, Xxxxxx shall have
the overriding right (the "Liquidation Call Right") to purchase all, but not
less than all, of the Newco Exchangeable Shares from Sellers for an amount per
share (the "Liquidation Call Price") equal to (a) the Current Market Price of
the Specified Number of Xxxxxx Common Shares on the last Business Day prior to
the date on which Newco's assets shall be distributed to its shareholders in
connection with such liquidation, dissolution or winding-up (the "Newco
Liquidation Date"), which amount shall be satisfied in full by Xxxxxx causing to
be delivered to Sellers the Specified Number of Xxxxxx Common Shares (less any
Taxes) plus (b) the amount by which the declared and unpaid dividends on one
Newco Exchangeable Share exceed, if at all, the declared and unpaid dividends on
the Specified Number of Xxxxxx Common Shares (calculated as of the date of
declaration of such dividend or dividends in accordance with the Articles of
Incorporation of Newco) (less any Taxes or U.S. Taxes).
3.2. Exercise of Liquidation Call Right.
To exercise the Liquidation Call Right, Xxxxxx shall notify Sellers and Newco of
Xxxxxx'x intention to exercise the Liquidation Call Right (a) in the case of a
voluntary liquidation, dissolution or winding-up of Newco at least 30 days
before the Newco Liquidation Date and (b) in the case of an involuntary
liquidation, dissolution or winding-up of Newco at least five Business Days
before the Newco Liquidation Date. If Xxxxxx exercises the Liquidation Call
Right, on the Newco Liquidation Date Xxxxxx will purchase, and Sellers will
sell, all of the Newco Exchangeable Shares then outstanding for a price per
share equal to the Liquidation Call Price.
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3.3. Procedure for Payment of Liquidation Call Price.
In the event Xxxxxx has exercised the Liquidation Call Right as provided herein,
then on or after the Newco Liquidation Date, Xxxxxx shall pay or cause to be
paid to Sellers the Liquidation Call Price for each Newco Exchangeable Share
upon presentation and surrender at the registered office of Xxxxxx (attention:
Chief Financial Officer), or at such other place as may be specified by Xxxxxx
from time to time, of the certificates representing such Newco Exchangeable
Shares, together with one or more stock transfer powers endorsed in blank by
Sellers and containing a representation and warranty by Sellers that Sellers are
not non-residents of Canada within the meaning of the Income Tax Act (Canada).
If Sellers do not so represent and warrant, the provisions of Section 5.9 shall
apply. Payment of the total Liquidation Call Price for such Newco Exchangeable
Shares shall be made by delivery to Sellers at the address of the Sellers, at
the registered office of Xxxxxx or at such other location as may be specified by
Xxxxxx by notice to Sellers, of the certificates representing Xxxxxx Common
Shares (less any Xxxxxx Common Shares withheld by Xxxxxx in respect of Taxes)
and a cheque of Xxxxxx payable at any branch of the bankers of Xxxxxx in respect
of the total amount specified in Section 3.1(b) with respect to all such
Exchangeable Shares. In the event Xxxxxx has exercised the Liquidation Call
Right as provided herein, then as of and with effect from the Newco Liquidation
Date, Sellers shall cease to be the holders of such Newco Exchangeable Shares
and shall not be entitled to exercise any of the rights of a holder in respect
thereof, other than the right to receive the Liquidation Call Price with respect
to each Newco Exchangeable Share held by them on the Newco Liquidation Date,
unless payment of the total Liquidation Call Price for such Newco Exchangeable
Shares shall not be made upon presentation and, subject to Section 5.1 hereof,
surrender of the share certificates representing such Newco Exchangeable Shares
in accordance with the foregoing provisions, in which case the rights of Sellers
shall remain unaffected to the extent payment of the Liquidation Call Price has
not been made until the Liquidation Call Price has been fully paid in the manner
herein before provided. Xxxxxx shall have the right to deposit or cause to be
deposited in a custodial account with any chartered bank or trust company in
Canada (the "Liquidation Call Price Depository") the Liquidation Call Price in
respect of the Newco Exchangeable Shares represented by certificates that have
not at the date of such deposit been surrendered by Sellers in connection with
the exercise by Xxxxxx of the Liquidation Call Right. Immediately upon making
such deposit, Xxxxxx shall give notice thereof to Sellers. The Newco
Exchangeable Shares in respect of which such deposit shall have been made shall
be deemed to be exchanged on the date of such deposit and, subject to Section
5.1 hereof, Sellers' rights with respect to such Newco Exchangeable Shares shall
thereafter be limited to the right to receive the Liquidation Call Price so
deposited against presentation and surrender of the certificates representing
such Newco Exchangeable Shares to the Liquidation Call Price Depository. Upon
such payment or deposit of the Liquidation Call Price, Sellers shall thereafter
be considered and deemed for all purposes to be the holder of the Xxxxxx Common
Shares deposited with the Liquidation Call Price Depository.
ARTICLE 4
EXERCISE OF THE RETRACTION CALL RIGHT
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4.1. Retraction.
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In the event that any Sellers have exercised Sellers' rights under Article 6 of
the Articles of Incorporation of Newco to require Newco to redeem any or all of
the Newco Exchangeable Shares held by them (the "Retraction Right"), Xxxxxx
shall have the overriding right (the "Retraction Call Right") to purchase all,
but not less than all, of such Newco Exchangeable Shares from Sellers for an
amount per share (the "Retraction Call Price") equal to (a) the Current Market
Price of the Specified Number of Xxxxxx Common Shares on the last Business Day
prior to the Retraction Date (as such term is defined in Section 6.1 of the
Articles of Incorporation of Newco) which amount shall be paid and satisfied in
full by Xxxxxx causing to be delivered to Sellers the Specified Number of Xxxxxx
Common Shares plus (b) the amount by which the declared and unpaid dividends on
one Newco Exchangeable Share then exceed, if at all, the declared and unpaid
dividends on the Specified Number of Xxxxxx Common Shares (calculated as of the
date of the declaration of such dividend or dividends in accordance with the
Articles of Incorporation of Newco) (less any Taxes or U.S. Taxes).
4.2. Exercise of Retraction Call Right.
To exercise the Retraction Call Right, Xxxxxx shall notify Sellers and Newco in
writing of Xxxxxx'x intention to exercise such right within five Business Days
after Xxxxxx has been notified by Newco that Sellers have exercised the
Retraction Right. If Xxxxxx exercises the Retraction Call Right, on the
Retraction Date Xxxxxx will purchase, and Sellers will sell, such Newco
Exchangeable Shares for a price per share equal to the Retraction Call Price.
4.3. Procedure for Payment of Retraction Call Price.
In the event that Xxxxxx has exercised the Retraction Call Right with respect to
any Newco Exchangeable Shares as provided herein, then, on or after the
Retraction Date, Xxxxxx shall pay or cause to be paid to Sellers the Retraction
Call Price for each such Newco Exchangeable Share upon presentation and
surrender at the registered office of Xxxxxx (attention: [Chief Financial
Officer]), or at such other place as may be specified by Xxxxxx from time to
time, of the certificates representing such Newco Exchangeable Shares together
with one or more stock transfer powers endorsed in blank by Sellers and
containing a representation and warranty by Sellers that Sellers are not non-
residents of Canada within the meaning of the Income Tax Act (Canada). If
Sellers do not so represent and warrant, the provisions of Section 5.9 shall
apply. Payment of the total Retraction Call Price for such Newco Exchangeable
Shares shall be made by delivery to Sellers at the registered office of Xxxxxx
or at such other location as may be specified by Xxxxxx by notice to Sellers, of
certificates representing Xxxxxx Common Shares (less any Xxxxxx Common Shares
withheld in respect of Taxes) and a cheque of Xxxxxx payable at any branch of
the bankers of Xxxxxx in respect of the total amount specified in Section 4.1(b)
with respect to all such Exchangeable Shares. In the event Xxxxxx has exercised
the Retraction Call Right as provided herein, then as of and with effect from
the Retraction Date Sellers shall cease to be the holders of such Newco
Exchangeable Shares with respect to which Xxxxxx has exercised the Retraction
Call Right and, subject to Section 5.1 hereof, shall not be entitled to exercise
any of the rights of a holder in respect thereof, other than the right to
receive the Retraction Call Price with respect to each such Newco Exchangeable
Share, unless payment of the total Retraction Call
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Price for such Newco Exchangeable Shares shall not have been made upon
presentation and surrender of the share certificates representing such Newco
Exchangeable Shares in accordance with the foregoing provisions, in which case
Sellers' rights shall remain unaffected to the extent the Retraction Call Price
has not been paid until the Retraction Call Price has been fully paid in the
manner herein before provided. Xxxxxx shall have the right to deposit or cause
to be deposited in a custodial account with any chartered bank or trust company
in Canada (the "Retraction Call Price Depository") the Retraction Call Price in
respect of the Newco Exchangeable Shares represented by certificates that have
not at the date of such deposit been surrendered by Sellers in connection with
the exercise by Xxxxxx of the Retraction Call Right. Immediately upon making
such deposit, Xxxxxx shall give notice thereof to Sellers. The Newco
Exchangeable Shares in respect of which such deposit has been made shall be
deemed to be exchanged as of the date of such deposit and, subject to Section
5.1 hereof, Sellers' rights with respect to such Newco Exchangeable Shares shall
thereafter be limited to the right to receive the Retraction Call Price so
deposited against presentation and surrender of the certificates representing
such Newco Exchangeable Shares to the Retraction Call Right Depository. Upon
such payment or deposit of the Retraction Call Price, Sellers shall thereafter
be considered and deemed for all purposes to be the holder of the Xxxxxx Common
Shares deposited with the Retraction Call Price Depository.
ARTICLE 5
COVENANTS OF XXXXXX, NEWCO AND SELLERS
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5.1. Right to Dividends.
There shall be no payment or adjustment by Xxxxxx, Newco or Sellers on account
of any dividends on any Newco Exchangeable Shares on a Share Exchange in respect
of the Newco Exchangeable Shares exchanged on such occasion. Dividends payable
on any such Newco Exchangeable Shares for which the record date has occurred
prior to the date of exchange or deemed exchange with respect to such Newco
Exchangeable Shares shall be paid by Newco, even if the distribution date with
respect to such dividends occurs after such date of exchange or deemed exchange;
provided, however, that, if Xxxxxx shall have exercised the Liquidation Call
Right and the Newco Liquidation Date occurs after the record date with respect
to such dividends, but prior to the distribution date with respect thereto,
Sellers shall be treated with respect to each Newco Exchangeable Share to be
purchased by Xxxxxx on the Newco Liquidation Date pursuant to Article 3 hereof,
as if they had been holders of the Specified Number of Xxxxxx Common Shares on
such record date and shall be deemed to have assigned to Xxxxxx all rights
against Newco with respect to such dividends.
5.2. Stamp or Other Transfer Taxes.
Sellers shall be solely responsible for the payment of any stamp, documentary,
transfer or other like taxes or charges that may be payable to any governmental
body or agency in respect of the disposition by Sellers to Xxxxxx of Newco
Exchangeable Shares or the issuance of Xxxxxx Common Shares to Sellers pursuant
to a Share Exchange and for any taxes which must be
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deducted or withheld by Xxxxxx by reason of such holders being non-residents of
Canada within the meaning of the Income Tax Act (Canada) or otherwise. Except as
aforesaid and as otherwise provided in this Agreement, exchanges of Newco
Exchangeable Shares shall be effected at no cost to Sellers.
5.3. Fractional Shares.
Xxxxxx shall not be required to issue fractional Xxxxxx Common Shares upon any
Share Exchange, but in lieu thereof shall pay an amount in cash equal to the
same fraction of the Current Market Price of one Xxxxxx Common Share at the
effective date of the Share Exchange.
5.4. Issuance of New Certificates.
Subject to compliance with the provisions of Section 5.9, Xxxxxx shall deliver
or cause to be delivered to Sellers, if necessary, one or more certificates
representing the Newco Exchangeable Shares in respect of which the Exchange
Right or the Retraction Right, as the case may be, was not exercised by Sellers
but which were evidenced by the certificate or certificates delivered to Xxxxxx
pursuant to Section 1.1.2 or 4.3 hereof.
5.5 Xxxxxx'x Shares.
(a) Xxxxxx hereby represents, warrants and covenants that it has
irrevocably reserved for issuance and will at all times keep available, free
from pre-emptive and other rights, out of its authorized and unissued capital
stock such number of Xxxxxx Common Shares as is equal to the sum of the maximum
number of Xxxxxx Common Shares which may be issuable from time to time to
Sellers upon a Share Exchange.
(b) Whenever Xxxxxx is required to deliver Xxxxxx Common Shares pursuant
to this Agreement, such shares shall be duly issued as fully paid and non-
assessable and free and clear of any lien, claim and encumbrance, other than the
restriction on transfer imposed by Section 5.6 hereof and applicable securities
laws.
5.6 Restrictions on Transfers of Xxxxxx Shares.
(a) As long as Sellers are directors, officers or employees of Xxxxxx or
Newco or any of their respective subsidiaries, Sellers shall comply with all
Xxxxxx policies in force from time to time concerning the purchase and sale of
securities of Xxxxxx by directors, officers or employees of Xxxxxx and its
subsidiaries to the extent such policies are applicable to Sellers pursuant to
its terms.
(b) At any time that Sellers intend to sell any Xxxxxx Common Shares
(whether acquired pursuant to this Agreement or otherwise), Sellers shall (i)
sell such Xxxxxx Common Shares only in compliance with all applicable securities
laws, including, but not limited to, the U.S. Securities Act of 1933 and the
rules and regulations promulgated thereunder, and (ii) use their best efforts
not to sell any such Xxxxxx Common Shares to a person (other than a person
11
who would be entitled to file a Schedule 13G under the U.S. Securities Exchange
Act of 1934, as amended (the "1934 Act"), with respect to such sale) who would
"beneficially own" (as such term is used in the regulations promulgated pursuant
to Section 13(d) of the 1934 Act), after giving effect to the purchase of such
Xxxxxx Common Shares, more than 5% of the Xxxxxx Common Shares outstanding at
such time (other than to an underwriter in connection with a registration of
Xxxxxx Common Shares pursuant to the Registration Rights Agreement).
5.7. Transfer Agent.
Xxxxxx covenants that it will supply its transfer agent with duly executed share
certificates for the purpose of completing a Share Exchange.
5.8. Newco Liquidation.
Xxxxxx covenants that prior to the Purchase Date it will use its best efforts to
prevent the liquidation, dissolution or winding-up of Newco.
5.9. Non-Resident of Canada at Time of Exchange.
Notwithstanding the provisions of any section of this Agreement, in the event
that Sellers do not represent and warrant that they are not non-residents of
Canada within the meaning of the Income Tax Act (Canada) when Sellers or Xxxxxx
are entitled to exercise any exchange right hereunder or any such exchange
occurs automatically, Sellers shall provide to Xxxxxx a certificate pursuant to
section 116 of the Income Tax Act (Canada) or any successor provision thereto
(such certificate being hereinafter referred to as a "Certificate") having a
certificate limit that is not less than fair market value of the Xxxxxx Common
Shares which Sellers are entitled to receive upon such exchange and otherwise
conforming in all respects with the provisions of section 116 of the Income Tax
Act (Canada) or any successor provisions thereto. If Sellers do not provide such
Certificate to Xxxxxx on or before the date on which the exchange is to occur,
Xxxxxx shall be entitled to hold back Xxxxxx Common Shares having a fair market
value equal to the amount of any Taxes that Xxxxxx would be required to pay on
behalf of Sellers pursuant to section 116 of the Income Tax Act (Canada) or any
successor thereto. Xxxxxx shall be entitled to sell such Xxxxxx Common Shares
and to remit the sale price to Revenue Canada on account of any such Taxes
within such time (determined by Xxxxxx acting reasonably) as will enable it to
comply with the requirements of subsection 116(5) of the Income Tax Act (Canada)
or any successor thereto in the event that Sellers fail to provide such
Certificate before such time and Sellers hereby appoint Xxxxxx as their lawful
attorney with full and irrevocable power and authority to execute all
agreements, documents and instruments and to take such other action as may be
required to effect such sale. If Sellers provide such Certificate before such
time, Xxxxxx shall release to Sellers any Xxxxxx Common Shares so held back or
the proceeds from a sale thereof if not remitted to Revenue Canada.
5.10. Reincorporation of Xxxxxx.
The parties hereto agree that, in the event Xxxxxx ceases to be a Nevada
corporation and is
12
reincorporated in another jurisdiction, the parties hereto shall amend or
modify, or cause, or consent to, the amendment or modification of, such
Transaction Documents, and enter into such additional agreements and execute, or
cause the execution of, such additional documents, as may be required to provide
the parties hereto with substantially the same rights and obligations and
economic benefits under the laws of such jurisdiction of reincorporation.
ARTICLE 6
SUCCESSORS AND ASSIGNS
----------------------
6.1. Successors and Assigns.
The provisions of this Agreement shall be binding upon, and inure to the benefit
of, the respective transferees and assigns (if the transfer or assignment of
this Agreement is permitted hereunder), or the successors, executors,
administrators and legal representatives of the parties hereto, provided,
--------
however, that this Agreement may not be assigned by the parties hereto in whole
-------
or in part except as otherwise expressly provided herein.
6.2. Xxxxxx Successors.
Xxxxxx shall not enter into any transaction (whether by way of restructuring,
reorganization, consolidation, merger, transfer, sale, lease or otherwise)
whereby all or substantially all of its undertaking, property and assets would
become the property of any other person or, in the case of a merger, of the
continuing corporation resulting therefrom unless;
(a) (i) such other person or continuing corporation (the "Xxxxxx
Successor"), by operation of law, becomes automatically bound by the
terms and provisions of this Agreement or (ii) if the Xxxxxx
Successor does not become so bound, the Xxxxxx Successor executes,
prior to or contemporaneously with the consummation of such
transaction, an agreement supplemental hereto and such other
instruments (if any) as are satisfactory to Sellers and, in the
opinion of legal counsel to Sellers, are necessary or advisable to
evidence the assumption by the Xxxxxx Successor of the liability for
all moneys payable and property deliverable hereunder and the
covenant of such Xxxxxx Successor to pay and deliver or cause to be
delivered the same and its agreement to observe and perform all the
covenants and obligations under this Agreement; and
(b) such transaction shall, to the satisfaction of Sellers and in the
opinion of such legal counsel, be upon such terms as are required to
substantially preserve and not to impair in any material respect any
of the rights, duties, powers and authorities of the Sellers
hereunder.
6.3. Transfer by Sellers.
13
Sellers shall not transfer (other than to Xxxxxx) all or any portion of Sellers'
Newco Exchangeable Shares, except to the Trustee under the Trust Agreement
pursuant to the terms of the Guaranty and the Trust Agreement.
ARTICLE 7
TERMINATION
-----------
7.1. Term.
This Agreement shall continue until the earliest to occur of the following
events:
(a) no outstanding Newco Exchangeable Shares are held by Sellers, and
(b) the execution of an instrument in writing terminating this Agreement,
signed by duly authorized officers or representatives of Xxxxxx and
Newco and by all Sellers.
ARTICLE 8
DEFINITION AND MISCELLANEOUS
----------------------------
8.1. Definitions of Certain Terms.
As used herein, the following terms shall have the following meanings:
"1934 Act" means the U.S. Securities Exchange Act of 1934, as amended.
"Agreement" has the meaning given thereto in the first paragraph
hereof.
"Articles of Incorporation of Newco" has the meaning given thereto in
the Purchase Agreement.
"Automatic Exchange" has the meaning given thereto in Section 1.2.2.
"Automatic Exchange Date" has the meaning given thereto in Section
1.2.2.
"Business Day" means a day other than a Saturday, Sunday or any other day
treated as a holiday in the municipality in Canada in which Newco's
registered office is then situated.
"Certificate" has the meaning given thereto in Section 5.9.
"Company" has the meaning given thereto in the second paragraph hereof.
14
"Current Market Price' means, in respect of a Xxxxxx Common Share, on any
date, the average of the closing prices of a Xxxxxx Common Share on such
stock exchange or automated quotation system on which the Xxxxxx Common
Shares are then listed or quoted, as the case may be, on the twenty
trading days immediately preceding such date, and, if the Xxxxxx Common
Shares are listed or quoted on more than one such exchange or automated
quotation system, on such exchange or automated quotation system as may be
selected by the Board of Directors of Xxxxxx for the purpose of
establishing such average price.
"Exchange Date" has the meaning given thereto in Section 1.1.2.
"Exchange Notice' has the meaning given thereto in Section 1.1.2.
"Exchange Price" has the meaning given thereto in Section 1.1.1.
"Exchange Right" has the meaning given thereto in Section 1.1.1.
"Guaranty" has the meaning given thereto in the Purchase Agreement.
"Liquidation Call Price" has the meaning given thereto in Section 3.1.
"Liquidation Call Price Depositary" has the meaning given thereto in
Section 3.3.
"Liquidation Call Right" has the meaning given thereto in Section 3.1.
"Newco" has the meaning given thereto in the first paragraph hereof.
"Newco Exchangeable Shares" has the meaning given thereto in the second
paragraph hereof.
"Newco Liquidation Date" has the meaning given thereto in Section 3.1.
"person" means an individual, a corporation, partnership, trust, any other
entity and any group (which term includes a "group" as defined in Section
13(d)(3) of the 1934 Act).
"Purchase" has the meaning given thereto in Section 2.1.
"Purchase Agreement" has the meaning ascribed thereto in the second
paragraph hereof.
"Purchase Date" means, if any of the following events occurs: (i) Xxxxxx
merges with or into any other entity, other than a wholly owned subsidiary
of Xxxxxx, (ii) all or substantially all of the Xxxxxx Common Shares or
the assets of Xxxxxx are sold, (iii) the bankruptcy of any of the Sellers,
whether voluntary or involuntary, or (iv) the death of any of the Sellers,
the following: in the case of (i) or (ii), the effective date of the
merger or sale, in the case of (iii) 30 days after the Seller has been
declared bankrupt and, in the case
15
of (iv), the date which is 120 days after the date of Seller's death,
as the case may be. In the case of (iii) and (iv), the events that
occur pursuant to this agreement on the Purchase Date shall only occur
with respect to the holdings of the Seller(s) that have been declared
bankrupt or become deceased.
"Purchase Price" has the meaning given thereto in Section 2.1.
"Purchase Price Depository" has the meaning given thereto in Section
2.2.2.
"Retracted Shares" has the meaning given thereto in Section 1.3.
"Retraction Call Price" has the meaning given thereto in Section 4.1.
"Retraction Call Price Depository" has the meaning given thereto in
Section 4.3.
"Retraction Call Right" has the meaning given thereto in Section 4.1.
"Retraction Date" has the meaning given thereto in Section 4.1.
"Retraction Request" has the meaning given thereto in the Articles of
Incorporation of Newco.
"Retraction Right" has the meaning given thereto in section 4.1.
"Sellers" has the meaning given thereto in the first paragraph hereof.
"Share Exchange" means, with respect to any Newco Exchangeable Share,
the acquisition by Xxxxxx hereunder of such Newco Exchangeable Share,
whether pursuant to exercise (i) by Sellers of the Exchange Right, the
Automatic Exchange, the Purchase or (ii) by Xxxxxx of the Liquidation
Call Right or the Retraction Call Right.
"Specified Number" has the meaning given thereto in the Articles of
Incorporation of Newco.
"Subsidiary" means any corporation, association, or other business
entity a majority (by number of votes on the election of directors) of
the shares of capital stock (or other voting interests) of which is
owned, directly or indirectly, by Xxxxxx.
"Subscription Agreement" means the Subscription Agreement, dated as of
the date hereof, between Xxxxxx and the Irrevocable Trust for the
Benefit of *.
"Support Agreement" has the meaning given thereto in the Purchase
Agreement.
"Taxes" means any taxes that Xxxxxx may be required to pay on behalf
of, or withhold from, any person pursuant to the Income Tax Act
(Canada) or any successor thereto or
16
pursuant to any applicable provincial tax legislation.
"U.S Taxes" means any U.S. dividend withholding taxes that Xxxxxx
believes may be required to be withheld.
"Transaction Documents" means this Agreement, Newco's Articles of
Incorporation, the Support Agreement, the Subscription Agreement, the
Trust Agreement and the Guaranty.
"Trust Agreement" has the meaning given thereto in the Purchase
Agreement.
"Xxxxxx" has the meaning given thereto in the first paragraph hereof.
"Xxxxxx Common Shares" has the meaning given thereto in the third
paragraph hereof.
"Xxxxxx Liquidation Amount" has the meaning given thereto in Section
1.2.2.
"Xxxxxx Liquidation Amount Depository" has the meaning given thereto in
Section 1.2.3.
"Xxxxxx Liquidation Event" has the meaning given thereto in Section
1.2.2.
"Xxxxxx Successor" has the meaning given thereto in Section 6.2.
8.2. Amendments, Modifications, etc.
This Agreement may not be amended, modified or supplemented by the parties
hereto in any manner, except by an instrument in writing signed by duly
authorized officers or representatives of Xxxxxx and Newco and by each of the
Sellers.
8.3. Changes in Capital of Xxxxxx and Newco.
At all times after the occurrence of any event effected pursuant to Section 2.6
of the Support Agreement or Article 11 of Newco's Articles of Incorporation, as
a result of which either the Xxxxxx Common Shares or the Newco Exchangeable
Shares or both are in any way changed, this Agreement shall forthwith be amended
and modified as necessary in order that it shall apply with full force and
effect, mutatis mutandis, to all new securities into which the Xxxxxx Common
Shares or the Newco Exchangeable Shares or both are so changed and the parties
hereto shall execute, in accordance with Section 8.2, such amendments,
modifications and supplement to this Agreement as are necessary to effect such
changes.
8.4. No Waiver.
The failure of any party hereto to enforce at any time any of the provisions of
this Agreement shall in no way be construed to be a waiver of any such
provision, nor in any way to affect the validity of this Agreement or any party
hereof or the right of such party thereafter to enforce each and every such
provision. No waiver of any breach of or non-compliance with this Agreement
shall be
17
held to be a waiver of any other or subsequent breach or non-compliance.
8.5. Governing Law.
This Agreement shall be governed by and construed and enforced in accordance
with the laws of Ontario (and the laws of Canada applicable therein), without
regard to their respective conflict of law rules.
8.6. Notices.
All notices and other communications hereunder shall be in writing and shall be
deemed given if delivered in person or sent by facsimile or via a reputable
international overnight courier service to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice), and shall be deemed given on the date on which delivered by hand or
otherwise on the date of receipt:
If to Xxxxxx or Newco:
c/o 00 Xxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxx
X0X 0X0
Attention: Xxx Xxxxx
Facsimile Number: (000) 000-0000
With a copy to:
Wuersch & Xxxxxx
00 Xxxxxxx Xxxxxx
00/xx/ Xxxxx
Xxx Xxxx, Xxx Xxxx
00000
Attention: Xxxxxx Xxxxxx
Facsimile Number: (000) 000-0000
If to the Sellers:
c/o 00 Xxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxx
X0X 0X0
18
Attention: Xxxxxx Xxxxxx
Facsimile Number: (000) 000-0000
With a copy to:
Chitiz Pundit Pathak & Xxxxxxxx
00 Xxxxxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: S. Xxxx Xxxxxx
Facsimile Number: (000) 000-0000
8.7. Construction of Agreement.
A reference to an Article or Section shall mean an Article of or a Section in
this Agreement unless otherwise expressly stated. The titles and headings herein
are for reference purposes only and shall not in any manner limit the
construction of this Agreement which shall be considered as a whole. The words
"include", "includes" and "including" when used herein shall be deemed in each
case to be followed by the words, "without limitation."
8.8. Entire Agreement.
This Agreement (a) constitutes the entire agreement, and supersedes all other
prior agreements and understandings, both written and oral between the parties
with respect to the subject matter hereof, and (b) is not intended to confer
upon any person other than the parties hereto any rights or remedies hereunder,
except as otherwise expressly provided herein.
8.9. Validity.
The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity of any other provision of this Agreement, each of which
shall remain in full force and effect.
8.10. Counterparts. This Agreement may be executed in one or more counterparts,
all of which together shall constitute one and the same Agreement.
19
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
UNIVERSE2U INC.
(formerly Xxxxxx Mining Corporation)
By: /s/ Xxxxx Xxxxxx
---------------------------
Xxxxx Xxxxxx
Title: President
1418276 ONTARIO INC.
By: /s/ Xxxxx Xxxxxx
---------------------------
Xxxxx Xxxxxx
Title: President
UNIVERSE2U INC.
By: /s/ Xxx Xxxxx
---------------------------
Xxx Xxxxx
Title: CEO
/s/ Xxxxxx Xxxxxx
______________________________ ---------------------------
Witness Xxxxxx Xxxxxx
/s/ Xxxxx Xxxxxx
______________________________ ---------------------------
Witness Xxxxx Xxxxxx
/s/ Xxxxx Xxxxxx
______________________________ ---------------------------
Witness Xxxxx Xxxxxx, in trust
/s/ Xxxx XxXxxx
______________________________ ---------------------------
Witness Xxxx XxXxxx
/s/ Xxxxxx Xxxxx
______________________________ ---------------------------
Witness Xxxxxx Xxxxx
20
Exhibit A
---------
EXERCISE NOTICE
TO XXXXXX MINING CORPORATION
Reference is made to a certain Share Exchange Agreement, dated as of
________________ , 2000 (the "Share Exchange Agreement"), by and among Xxxxxx
Mining Corporation, a Nevada Corporation ("Xxxxxx"), 1418276 Ontario Inc., an
Ontario Corporation and a subsidiary of Xxxxxx ("Newco"), and those shareholders
listed in Schedule A to the Share Exchange Agreement ("Sellers"). Capitalized
terms used herein and not otherwise defined herein shall have the meanings
ascribed thereto in the Share Exchange Agreement.
The undersigned (the "Seller) hereby notifies Xxxxxx, pursuant to
Section 1.1.2 of the Share Exchange Agreement, of his election to exercise
Seller's Exchange Right in respect of _______ Newco Exchangeable Shares (the
"Shares").
Seller represents, warrants and agrees that:
(a) Seller has delivered herewith the certificate(s) representing
the Shares together with one or more stock transfer powers
endorsed in blank by Seller;
(b) Seller has good title to and beneficially owns the Shares free
and clear of all liens, claims and encumbrances;
(c) Seller is not a "U.S. person" (as such term is defined under
Rule 902 of Regulation S of the U.S. Securities Act of 1933,
as amended (the "Securities Act")) and the Shares are not
being exchanged on behalf of a "U.S. person";
(d) Seller agrees that the Xxxxxx Common Shares that Sellers will
receive in exchange for the Shares may be resold only in
accordance with the provisions of the Securities Act, pursuant
to registration under the Securities Act, or pursuant to an
available exemption from registration; and
(e) Seller is not a non-resident of Canada within the meaning of
the Income Tax Act (Canada).
The certificate or certificates representing the Xxxxxx Common Shares issuable
in exchange for the Shares are to be registered in the name of Sellers as set
forth below and (subject to the provisions of the Share Exchange Agreement)
should be delivered to Sellers at the following address.
21
Name and Address for delivery, if different than address specified in
the Share Exchange Agreement:
Seller: _________________________
Date: _________________
