VOTING AND EXCHANGE TRUST AGREEMENT
THIS MEMORANDUM OF AGREEMENT made as of the 30th day of June, 1998,
A M O N G:
APPLIED CELLULAR TECHNOLOGY, INC., a Missouri corporation
(hereinafter called "Applied")
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COMMSTAR LTD., a Canadian corporation
(hereinafter called the "Corporation")
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MONTREAL TRUST COMPANY OF CANADA, a trust company incorporated under the
laws of Canada
(hereinafter called the "Trustee").
AND WHEREAS pursuant to an arrangement (the "Arrangement") effected by
articles of arrangement to be filed pursuant to the Business Corporations Act
(Ontario) (the "OBCA"), all of the issued and outstanding common shares in the
capital of the Corporation are to be exchanged, for either common stock in the
capital of Applied or exchangeable non-voting shares in the capital of the
Corporation (the "Exchangeable Shares");
AND WHEREAS the aforesaid articles of arrangement set forth the rights,
privileges, restrictions and conditions (collectively the "Exchangeable Share
Provisions") attaching to the Exchangeable Shares;
AND WHEREAS Applied is to provide voting rights in Applied directly to each
holder (other than Applied) from time to time of Exchangeable Shares, such
voting rights per Exchangeable Share to be equivalent to the voting rights per
share of the common stock, par value U.S. $0.001 per share, of Applied (the
"Applied Common Stock");
AND WHEREAS Applied is to grant directly to and in favour of the holders
(other than Applied) from time to time of Exchangeable Shares the right, in the
circumstances set forth herein, to require Applied to purchase from each such
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holder all or any part of the Exchangeable Shares held by the holder;
AND WHEREAS the parties desire to make appropriate provision and to
establish a procedure whereby voting rights in Applied shall be exercisable by
holders (other than Applied) from time to time of Exchangeable Shares by and
through the Trustee, which will hold legal title to one share of Applied Voting
Preferred Stock, U.S. $10.00 par value (the "Applied Special Voting Stock"), to
which voting rights attach for the benefit of such holders and whereby the
rights to require Applied to purchase Exchangeable Shares from the holders
thereof shall be exercisable by such holders from time to time of Exchangeable
Shares by and through the Trustee, which will hold legal title to such rights
for the benefit of such holders;
AND WHEREAS these recitals and any statements of fact in this Agreement are
made by Applied and the Corporation and not by the Trustee;
NOW THEREFORE in consideration of the respective covenants and agreements
provided in this Agreement and for other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties agree as
follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 Definitions. In this Agreement the following terms shall have the following
meanings:
"Affiliate" means a person that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control
with, the first-mentioned person; including, without limitation, any
partnership or joint venture in which Commstar Ltd. or Applied, as the case
may be, (either alone, or through or together with any other subsidiary)
has, directly or indirectly, an equity interest of 10 percent or more.
"Applied Common Stock" has the meaning ascribed thereto in the
recitals hereto.
"Applied Consent" has the meaning ascribed thereto in section 4.2 hereof.
"Applied Meeting" has the meaning ascribed thereto in section 4.2 hereof.
"Applied Special Voting Stock" has the meaning ascribed thereto in the
recitals hereto.
"Applied Successor" has the meaning ascribed thereto in subsection 10.1(a).
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"Arrangement" has the meaning ascribed thereto in the recitals hereto.
"Automatic Exchange Rights" means the benefit of the obligation of
Applied to effect the automatic exchange of shares of Applied Common
Stock for Exchangeable Shares pursuant to section 5.12 hereof.
"Authorized Persons" has the meaning ascribed thereto in section 6.20.
"Board of Directors" means the Board of Directors of the Corporation.
"Business Day" means a day other than a Saturday, a Sunday or a day when
banks are not open for business in one or both of Toronto, Ontario and
St. Louis, Missouri.
"Call Rights" means collectively the Liquidation Call Right, the
Redemption Call Right and the Retraction Call Right.
"Canadian Dollar Equivalent" means in respect of an amount expressed in
a foreign currency (the "Foreign Currency Amount") at any date the
product obtained by multiplying (a) the Foreign Currency Amount by (b)
the noon spot exchange rate on such date for such foreign currency
expressed in Canadian dollars as reported by the Bank of Canada or, in
the event such spot exchange rate is not available, such exchange rate
on such date for such foreign currency expressed in Canadian dollars as
may be deemed by the Board of Directors to be appropriate for such
purpose.
"Current Market Price" has the meaning ascribed thereto in the Exchangeable
Share Provisions.
"Current Applied Common Stock Equivalent" has the meaning ascribed thereto
in the Exchangeable Share Provisions.
"Default Event" means any failure, other than by reason of an
Insolvency Event, of the Corporation to perform any of its obligations
pursuant to the Exchangeable Share Provisions, including without
limitation its obligation to redeem any Retracted Shares.
"Exchange Right" has the meaning ascribed thereto in section 5.1 hereof.
"Exchangeable Share Provisions" has the meaning ascribed thereto in the
recitals hereto.
"Exchangeable Shares" has the meaning ascribed thereto in the recitals
hereto.
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"Holder Votes" has the meaning ascribed thereto in section 4.2 hereof.
"Holders" means the registered holders from time to time of
Exchangeable Shares, other than Applied.
"Insolvency Event" means the institution by the Corporation of any
proceeding to be adjudicated a bankrupt or insolvent or to be dissolved
or wound up, or the consent of the Corporation to the institution of
bankruptcy, insolvency, dissolution or winding up proceedings against
it, or the filing of a petition, answer or consent seeking dissolution
or winding up under any bankruptcy, insolvency or analogous laws,
including without limitation the Companies Creditors' Arrangement Act
(Canada) and the Bankruptcy and Insolvency Act (Canada), and the
failure by the Corporation to contest in good faith any such
proceedings commenced in respect of the Corporation within 15 days of
becoming aware thereof, or the consent by the Corporation to the filing
of any such petition or to the appointment of a receiver, or the making
by the Corporation of a general assignment for the benefit of
creditors, or the admission in writing by the Corporation of its
inability to pay its debts generally as they become due, or the
Corporation not being permitted, pursuant to solvency requirements of
applicable law, to redeem any Retracted Shares pursuant to section 5.1
of the Exchangeable Share Provisions.
"Liquidation Call Right" has the meaning ascribed thereto in the Plan of
Arrangement.
"Liquidation Event" has the meaning ascribed thereto in subsection 5.12(a)
hereof.
"Liquidation Event Effective Date" has the meaning ascribed thereto in
subsection 5.12(c) hereof.
"List" has the meaning ascribed thereto in section 4.6 hereof.
"OBCA" means the Business Corporations Act, (Ontario) as amended.
"Officer's Certificate" means, with respect to Applied or the
Corporation, as the case may be, a certificate signed by any one of the
Chairman of the Board, the Chief Executive Officer, the President, any
Vice-President or any other senior officer of Applied or the
Corporation, as the case may be.
"Person" includes an individual, partnership, corporation, company,
unincorporated syndicate or organization, trust, trustee, executor,
administrator and other legal representative.
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"Plan of Arrangement" means the plan of arrangement of the Corporation
providing for the Arrangement.
"Redemption Call Right" has the meaning ascribed thereto in the Plan of
Arrangement.
"Retracted Shares" has the meaning ascribed thereto in section 5.7
hereof.
"Retraction Call Right" has the meaning ascribed thereto in the Plan of
Arrangement.
"Support Agreement" means that certain support agreement made as of
even date herewith between the Corporation and Applied.
"Trust" means the trust created by this Agreement.
"Trust Estate" means the Voting Share, any other securities, the
Exchange Right, the Automatic Exchange Rights and any money or other
property that may be held by the Trustee from time to time pursuant to
this Agreement.
"Voting Rights" means the voting rights attached to the Voting Share.
"Voting Share" means the one share of Applied Special Voting Stock,
issued by Applied, for the benefit of the holders of Exchangeable
Shares, to be deposited with the Trustee, which entitles the holder of
record to a number of votes at meetings of holders of Applied Common
Stock as set forth in section 4.2 hereof.
1.2 Interpretation not Affected by Headings, etc. The division of this Agreement
into articles, sections and paragraphs and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
1.3 Number, Gender, etc. Words importing the singular number only shall include
the plural and vice versa. Words importing the use of any gender shall include
all genders.
1.4 Date for any Action. If any date on which any action is required to be taken
under this Agreement is not a Business Day, such action shall be required to be
taken on the next succeeding Business Day.
1.5 Withholding of Tax. All amounts required to be paid, deposited or delivered
hereunder shall be paid, deposited or delivered after deduction of any amount
required by applicable law to be deducted or withheld on account of tax and the
deduction of such amounts and remittance to the applicable tax authorities
shall, to the extent thereof, satisfy such requirement to pay, deposit or
deliver hereunder.
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ARTICLE II
PURPOSE OF AGREEMENT
2.1 Establishment of Trust. The purpose of this Agreement is to create the
Trust for the benefit of the Holders, as herein provided. The Trustee will hold
the Voting Share in order to enable the Trustee to exercise the Voting Rights
and will hold the Exchange Right and the Automatic Exchange Rights in order to
enable the Trustee to exercise such rights, in each case as trustee for and on
behalf of the Holders as provided in this Agreement.
ARTICLE III
VOTING SHARE
3.1 Issue and Ownership of the Voting Share. In consideration of the granting
and transfer of the Call Rights to Applied by the Holders, which grant and
transfer is hereby ratified and confirmed by the Trustee for and on behalf of
the Holders, Applied hereby issues to and deposits with the Trustee the Voting
Share to be hereafter held of record by the Trustee as trustee for and on behalf
of, and for the use and benefit of, the Holders and in accordance with the
provisions of this Agreement. Applied hereby acknowledges receipt from the
Trustee as trustee for and on behalf of the Holders of good and valuable
consideration (and the adequacy thereof) for the issuance of the Voting Share by
Applied to the Trustee. During the term of the Trust and subject to the terms
and conditions of this Agreement, the Trustee shall possess and be vested with
full legal ownership of the Voting Share and shall be entitled to exercise all
of the rights and powers of an owner with respect to the Voting Share, provided
that the Trustee shall:
(a) hold the Voting Share and the legal title thereto as trustee solely
for the use and benefit of the Holders in accordance with the
provisions of this Agreement; and
(b) except as specifically authorized by this Agreement, have no power or
authority to sell, transfer, vote or otherwise deal in or with the
Voting Share and the Voting Share shall not be used or disposed of by
the Trustee for any purpose other than the purposes for which this
Trust is created pursuant to this Agreement.
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3.2 Legended Share Certificates. The Corporation shall cause each certificate
representing Exchangeable Shares to bear an appropriate legend notifying the
Holders of their right to instruct the Trustee with respect to the exercise of
the Voting Rights with respect to the Exchangeable Shares held by Holders.
Applied will cause the certificate representing the Voting Share to bear a
legend stating that such Voting Share is non-transferrable except as set forth
herein.
3.3 Safe Keeping of Certificate. The certificate representing the Voting Share
shall at all times be held in safe keeping by the Trustee.
ARTICLE IV
VOTING RIGHTS
4.1 Voting Rights. The Trustee, as the holder of record of the Voting Share,
shall be entitled to all of the Voting Rights, including the right to consent to
or to vote in person or by proxy the Voting Share, on any matter, question or
proposition whatsoever that may properly come before the stockholders of Applied
for their vote at an Applied Meeting or in connection with an Applied Consent.
The Voting Rights shall be and remain vested in and exercised by the Trustee.
Subject to section 6.15 hereof, the Trustee shall exercise the Voting Rights
only on the basis of instructions received pursuant to this Article 4 from
Holders entitled to instruct the Trustee as to the voting thereof at the time at
which an Applied Consent is sought or an Applied Meeting is held. To the extent
that no instructions are received from a Holder with respect to the Voting
Rights to which such Holder is entitled to instruct the Trustee hereunder, the
Trustee shall not exercise or permit the exercise of such Voting Rights.
4.2 Number of Votes. With respect to all meetings of stockholders of Applied at
which holders of Applied Common Stock are entitled to vote (an "Applied
Meeting") and with respect to all written consents sought from the holders of
Applied Common Stock (an "Applied Consent"), each Holder shall be entitled to
instruct the Trustee to cast and exercise, in the manner instructed, such number
of votes comprised in the Voting Rights as is equal to the Current Applied
Common Stock Equivalent on the record date established by Applied or by
applicable law for such Applied Meeting or Applied Consent, as the case may be,
for each Exchangeable Share owned of record by such Holder on such record date
(the "Holder Votes") in respect of each matter, question or proposition to be
voted on at such Applied Meeting or to be consented to in connection with such
Applied Consent.
4.3 Mailings to Shareholders. With respect to each Applied Meeting and Applied
Consent, the Trustee shall mail or cause to be mailed (or otherwise communicate
in the same manner as Applied utilizes in communications to holders of Applied
Common Stock), to each of the Holders named in the List, on the same day as the
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initial mailing of notice (or other communication) with respect thereto is given
by Applied to its stockholders:
(a) a copy of such notice, together with any proxy or information
statement and related materials to be provided to stockholders of
Applied;
(b) a statement that such Holder is entitled to instruct the Trustee as to
the exercise of the Holder Votes with respect to such Applied Meeting
or Applied Consent, as the case may be, or, pursuant to section 4.7
hereof, to attend such Applied Meeting and to exercise personally the
Holder Votes thereat;
(c) a statement as to the manner in which such instructions may be given
to the Trustee, including an express indication that instructions may
be given to the Trustee to give:
(i) a proxy to such Holder or his designee to exercise personally the
Holder Votes; or
(ii) a proxy to a designated agent or other representative of the
management of Applied to exercise such Holder Votes;
(d) a statement that if no such instructions are received from the Holder,
the Holder Votes to which such Holder is entitled will not be
exercised;
(e) a form of direction whereby the Holder may so direct and instruct the
Trustee as contemplated herein; and
(f) a statement of (i) the time and date by which such instructions must
be received by the Trustee in order to be binding upon it, which in
the case of an Applied Meeting shall not be earlier than the close of
business on the second Business Day prior to such meeting, and (ii)
the method for revoking or amending such instructions.
For the purpose of determining Holder Votes to which a Holder is entitled in
respect of any such Applied Meeting or Applied Consent, the number of
Exchangeable Shares owned of record by the Holder shall be determined at the
close of business on the record date established by Applied or by applicable law
for purposes of determining stockholders entitled to vote at such Applied
Meeting or to give written consent in connection with such Applied Consent.
Applied shall notify the Trustee of any decision of the board of directors of
Applied with respect to the calling of any such Applied Meeting or the seeking
by Applied of any such Applied Consent and shall provide all necessary
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information and materials to the Trustee in each case promptly and in any event
in sufficient time to enable the Trustee to perform its obligations contemplated
by this section 4.3.
4.4 Copies of Stockholder Information. Applied shall deliver to the Trustee
copies of all proxy materials (including notices of Applied Meetings but
excluding proxies to vote Applied Common Stock), information statements, reports
(including without limitation all interim and annual financial statements) and
other written communications that are to be distributed by Applied from time to
time to holders of Applied Common Stock in sufficient quantities and in
sufficient time so as to enable the Trustee to send those materials to each
Holder at the same time as such materials are first sent to holders of Applied
Common Stock. The Trustee shall mail or otherwise send to each Holder, at the
expense of Applied, copies of all such materials (and all materials specifically
directed to the Holders or to the Trustee for the benefit of the Holders by
Applied) received by the Trustee from Applied at the same time as such materials
are first sent to holders of Applied Common Stock. The Trustee shall make copies
of all such materials available for inspection by any Holder at the Trustee's
corporate trust office in Toronto, Ontario.
4.5 Other Materials. Immediately after receipt by Applied of any material sent
or given generally to the holders of Applied Common Stock by or on behalf of a
third party, including without limitation dissident proxy and information
circulars (and related information and material) and tender and exchange offer
circulars (and related information and material), Applied shall use all
commercially reasonable efforts to obtain and deliver to the Trustee copies
thereof in sufficient quantities so as to enable the Trustee to forward such
material (unless the same has been provided directly to Holders by such third
party) to each Holder as soon as possible thereafter. As soon as practicable
after receipt thereof, the Trustee shall mail or otherwise send to each Holder
at the expense of Applied, copies of all such materials received by the Trustee
from Applied. The Trustee shall also make copies of all such materials available
for inspection by any Holder at the Trustee's corporate trust office in Toronto,
Ontario.
4.6 List of Persons Entitled to Vote. The Corporation shall, (a) prior to each
annual, general and special Applied Meeting or the seeking of any Applied
Consent and (b) forthwith upon each request made at any time by the Trustee in
writing, prepare or cause to be prepared a list (a "List") of the names and
addresses of the Holders arranged in alphabetical order and showing the number
of Exchangeable Shares held of record by each such Holder, in each case at the
close of business on the date specified by the Trustee in such request or, in
the case of a List prepared in connection with an Applied Meeting or an Applied
Consent, at the close of business on the record date established by Applied or
pursuant to applicable law for determining the holders of Applied Common Stock
entitled to receive notice of and/or to vote at such Applied Meeting or to give
consent in connection with such Applied Consent. Each such List shall be
delivered to the Trustee promptly after receipt by the Corporation of such
request or the record date for such meeting or seeking of consent, as the case
may be, and in any event within sufficient time as to enable the Trustee to
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perform its obligations under this Agreement. Applied agrees to give the
Corporation notice (with a copy to the Trustee) of the calling of any Applied
Meeting or the seeking of any Applied Consent, together with the record dates
therefor, sufficiently prior to the date of the calling of such meeting or
seeking of such consent so as to enable the Corporation to perform its
obligations under this section 4.6.
4.7 Entitlement to Direct Votes. Any Holder named in a List prepared in
connection with any Applied Meeting or an Applied Consent shall be entitled (a)
to instruct the Trustee in the manner described in section 4.3 hereof with
respect to the exercise of the Holder Votes to which such Holder is entitled or
(b) to attend such meeting and personally to exercise thereat or to exercise
(with respect to any written consent), as the proxy of the Trustee, the Holder
Votes to which such Holder is entitled pursuant to the procedure set forth in
section 4.8 hereof.
4.8 Voting by Trustee, and Attendance of Trustee Representative, at Meeting.
(a) In connection with each Applied Meeting and Applied Consent, the
Trustee shall exercise, either in person or by proxy, in accordance
with the instructions received from a Holder pursuant to section 4.3
hereof, the Holder Votes to which such Holder is entitled to direct
the vote (or any lesser number thereof as may be set forth in the
instructions); provided, however, that such written instructions are
received by the Trustee from the Holder prior to the time and date
fixed by it for receipt of such instructions in the notice given by
the Trustee to the Holder pursuant to section 4.3 hereof.
(b) The Trustee shall cause such representatives as are empowered by it to
sign and deliver, on behalf of the Trustee, proxies for Voting Rights
and to attend each Applied Meeting. Upon submission by a Holder (or
its designee) of identification satisfactory to the Trustee's
representatives, at the Holder's request, such Trustee representatives
shall sign and deliver to such Holder (or its designee) a proxy to
exercise personally the Holder Votes as to which such Holder is
otherwise entitled hereunder to direct the vote, if such Holder either
(i) has not previously given the Trustee instructions pursuant to
section 4.3 hereof in respect of such meeting, or (ii) submits to the
Trustee's representatives written revocation of any such previous
instructions. At such meeting to the extent permitted by the Missouri
U.S. Law, the Holder exercising such Holder Votes as provided in the
immediately preceding sentence shall have the same rights as the
Trustee to speak at the meeting in respect of any matter, question or
proposition, to vote by way of ballot at the meeting in respect of any
matter, question or proposition and to vote at such meeting by way of
a show of hands in respect of any matter, question or proposition.
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4.9 Distribution of Written Materials. Any written materials to be distributed
by the Trustee to the Holders pursuant to this Agreement shall be delivered or
sent by mail (or otherwise communicated in the same manner as Applied utilizes
in communications to holders of Applied Common Stock) to each Holder at its
address as shown on the books of the Corporation or the transfer agent, as
applicable. The Corporation shall provide or cause to be provided to the Trustee
for this purpose on a timely basis and without charge or other expense:
(a) a List; and
(b) mailing labels to enable the Trustee to carry out its duties under
this Agreement.
4.10 Termination of Voting Rights. Except with respect to an Applied Meeting or
Applied Consent for which the record date has occurred, all of the rights of a
Holder with respect to the Holder Votes exercisable in respect of the
Exchangeable Shares held by such Holder, including the right to instruct the
Trustee as to the voting of or to vote personally such Holder Votes, shall be
deemed to be surrendered by the Holder to Applied and such Holder Votes and the
Voting Rights represented thereby shall cease immediately upon the delivery by
such Holder to the Trustee of the certificates representing such Exchangeable
Shares in connection with the exercise by the Holder of the Exchange Right or
the occurrence of the automatic exchange pursuant to the Automatic Exchange
Rights (unless in either case Applied shall not have delivered the requisite
Applied Common Stock issuable in exchange therefor to the Trustee for delivery
to the Holders), or upon the redemption of Exchangeable Shares pursuant to
Article 5 or Article 6 of the Exchangeable Share Provisions, or upon the
effective date of the liquidation, dissolution or winding-up of the Corporation
pursuant to Article 4 of the Exchangeable Share Provisions, or upon the purchase
of Exchangeable Shares from the Holder thereof by Applied pursuant to the
exercise by Applied of the Retraction Call Right, the Redemption Call Right or
the Liquidation Call Right.
4.11 Issue of Additional Shares. During the term of this Agreement, Applied
will not issue any shares of Applied Special Voting Stock, in addition to the
Voting Share.
ARTICLE V
EXCHANGE RIGHT AND AUTOMATIC EXCHANGE
5.1 Grant and Ownership of the Exchange Right. In consideration of the granting
and transfer of the Call Rights to Applied by the Holders, Applied hereby grants
to the Trustee as trustee for and on behalf of, and for the use and benefit of,
the Holders (a) the right (the "Exchange Right"), upon the occurrence and during
the continuance of an Insolvency Event or Default Event, to require Applied to
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purchase from each Holder all or any part of the Exchangeable Shares held by
such Holder and (b) the Automatic Exchange Rights, all in accordance with the
provisions of this Agreement. Applied hereby acknowledges receipt from the
Trustee as trustee for and on behalf of the Holders of good and valuable
consideration (and the adequacy thereof) for the grant of the Exchange Right and
the Automatic Exchange Rights by Applied to the Trustee for the benefit of the
Holders. During the term of the Trust and subject to the terms and conditions of
this Agreement, the Trustee shall possess and be vested with full legal
ownership of the Exchange Right and the Automatic Exchange Rights and shall be
entitled to exercise all of the rights and powers of an owner with respect to
the Exchange Right and the Automatic Exchange Rights, provided that the Trustee
shall:
(a) hold the Exchange Right and the Automatic Exchange Rights and the
legal title thereto as trustee solely for the use and benefit of the
Holders in accordance with the provisions of this Agreement; and
(b) except as specifically authorized by this Agreement, have no power or
authority to exercise or otherwise deal in or with the Exchange Right
or the Automatic Exchange Rights, and the Trustee shall not exercise
any such rights for any purpose other than the purposes for which this
Trust is created pursuant to this Agreement.
5.2 Legended Share Certificates. The Corporation shall cause each certificate
for Exchangeable Shares to bear an appropriate legend notifying the Holders of:
(a) their right to instruct the Trustee with respect to the exercise of
the Exchange Right in respect of the Exchangeable Shares held by a
Holder; and
(b) the Automatic Exchange Rights.
5.3 General Exercise of Exchange Right. The Exchange Right shall be and remain
vested in and exercisable by the Trustee. Subject to section 6.15 hereof, the
Trustee shall exercise the Exchange Right only on the basis of instructions
received pursuant to this Article 5 from Holders entitled to instruct the
Trustee as to the exercise thereof. To the extent that no instructions are
received from a Holder with respect to the Exchange Right, the Trustee shall not
exercise or permit the exercise of the Exchange Right.
5.4 Purchase Price The purchase price payable by Applied for each Exchangeable
Share to be purchased by Applied under the Exchange Right shall be an amount per
share equal to (a) the Current Market Price multiplied by the Current Applied
Common Stock Equivalent, in each case determined on the day of closing of the
purchase and sale of such Exchangeable Share under the Exchange Right, which
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shall be satisfied in full in respect of the Exchangeable Shares in regard to
which a Holder has exercised the Exchange Right by causing to be delivered to
such Holder such whole number of shares of Applied Common Stock as is equal to
the product obtained by multiplying the number of such Exchangeable Shares by
the Current Applied Common Stock Equivalent, rounded down to the nearest whole
number, plus (b) the aggregate of all dividends declared and unpaid on each such
Exchangeable Share (provided that if the record date for any such declared and
unpaid dividends occurs on or after the day of closing of such purchase and sale
the purchase price shall not include such declared and unpaid dividends).
5.5 Exercise Instructions. Subject to the terms and conditions herein set forth,
a Holder shall be entitled, upon the occurrence and during the continuance of an
Insolvency Event or a Default Event, to instruct the Trustee to exercise the
Exchange Right with respect to all or any part of the Exchangeable Shares
registered in the name of such Holder on the books of the Corporation or the
transfer agent, as applicable. To cause the exercise of the Exchange Right by
the Trustee, the Holder shall deliver to the Trustee, in person or by certified
or registered mail, at its corporate trust office in Toronto, Ontario or at such
other place as the Trustee may from time to time designate by written notice to
the Holders, the certificates representing the Exchangeable Shares that such
Holder desires Applied to purchase, duly endorsed in blank, and accompanied by
such other documents and instruments as may be required to effect a transfer of
Exchangeable Shares under the OBCA and the by-laws of the Corporation and such
additional documents and instruments as the Trustee may reasonably require
together with (a) a duly completed form of notice of exercise of the Exchange
Right, in the form attached hereto as Schedule A, or attached to the
Exchangeable Share certificates, stating (i) that the Holder thereby instructs
the Trustee to exercise the Exchange Right so as to require Applied to purchase
from the Holder the number of Exchangeable Shares specified therein, (ii) that
such Holder has good title to and owns all such Exchangeable Shares to be
acquired by Applied free and clear of all liens, (iii) the names in which the
certificates representing Applied Common Stock issuable in connection with the
exercise of the Exchange Right are to be issued and (iv) the names and addresses
of the persons to whom such new certificates should be delivered and (b) payment
(or evidence satisfactory to the Trustee, the Corporation and Applied of
payment) of the taxes (if any) payable as contemplated by section 5.8 of this
Agreement. If only a part of the Exchangeable Shares represented by any
certificate or certificates delivered to the Trustee are to be purchased by
Applied under the Exchange Right, a new certificate for the balance of such
Exchangeable Shares shall be issued to the holder at the expense of the
Corporation.
5.6 Delivery of Applied Common Stock: Effect of Exercise. Promptly after receipt
of the certificates representing the Exchangeable Shares that the Holder desires
Applied to purchase under the Exchange Right (together with such documents and
instruments of transfer and a duly completed form of notice of exercise of the
Exchange Right (and payment of taxes, if any, or evidence thereof in accordance
with section 5.8)), duly endorsed for transfer to Applied, the Trustee shall
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notify Applied of its receipt of the same, by notice in the form of Schedule B
hereto, which notice to Applied shall constitute exercise of the Exchange Right
by the Trustee on behalf of the holder of such Exchangeable Shares and Applied
shall immediately thereafter deliver or cause to be delivered to the Trustee,
for delivery to the Holder of such Exchangeable Shares (or to such other
persons, if any, properly designated by such Holder), the certificates for the
number of shares of Applied Common Stock issuable in connection with the
exercise of the Exchange Right, which shares shall be duly issued as fully paid
and non-assessable and shall be free and clear of any liens, and cheques for the
balance, if any, of the total purchase price therefor (or, if part of the
purchase price consists of dividends payable in property, such property or
property the same as or economically equivalent to such property). Immediately
upon the giving of notice by the Trustee to Applied of the exercise of the
Exchange Right, as provided in this section 5.6, the closing of the transaction
of purchase and sale contemplated by the Exchange Right shall be deemed to have
occurred, and the Holder of such Exchangeable Shares shall be deemed to have
transferred to Applied all of its right, title and interest in and to such
Exchangeable Shares and in the related interest in the Trust Estate and shall
cease to be a holder of such 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 purchase price therefor, unless the requisite number of shares of
Applied Common Stock (together with a cheque for the balance, if any, of the
purchase price therefor or, if part of the purchase price consists of dividends
payable in property, such property or property the same as or economically
equivalent to such property) is not allotted, issued and delivered by Applied to
the Trustee for delivery to such Holder (or to other persons, if any, properly
designated by such Holder) within five Business Days of the date of the giving
of such notice by the Trustee, in which case the rights of the Holder shall
remain unaffected until such shares of Applied Common Stock are so allotted,
issued and delivered by Applied and any such cheque or property is so delivered
and paid. Concurrently with such Holder ceasing to be a holder of Exchangeable
Shares, the Holder shall be considered and deemed for all purposes to be the
holder of the shares of Applied Common Stock delivered to it pursuant to the
Exchange Right. The Trustee shall deliver to the Corporation's transfer agent
and registrar the certificates for the Exchangeable Shares so transferred to be
cancelled and new certificates in the name of Applied issued in respect thereof
and shall deliver or cause to be delivered such Exchangeable Shares to Applied.
The Trustee shall not be responsible or liable in any manner whatsoever
for the sufficiency, correctness, genuineness or validity of any security
deposited with it. The Trustee shall incur no liability with respect to the
delivery or non-delivery of any certificate or certificates whether delivered by
hand, mail or any other means.
5.7 Exercise of Exchange Right Subsequent to Retraction. In the event that a
Holder has exercised its right under Article 5 of the Exchangeable Share
Provisions to require the Corporation to redeem any or all of the Exchangeable
Shares held by the Holder (the "Retracted Shares") and is notified by the
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Corporation pursuant to section 5.6 of the Exchangeable Share Provisions that
the Corporation is not permitted as a result of solvency requirements of
applicable law to redeem all of such Retracted Shares, and provided that Applied
shall not have exercised the Retraction Call Right with respect to the Retracted
Shares, the retraction request shall constitute and shall be deemed to
constitute notice from the Holder to the Trustee instructing the Trustee to
exercise the Exchange Right with respect to those Retracted Shares that the
Corporation is unable to redeem. In any such event, the Corporation hereby
agrees with the Trustee and in favour of the Holder immediately to notify the
Trustee of such prohibition against the Corporation redeeming all of the
Retracted Shares and immediately to forward or cause to be forwarded to the
Trustee all relevant materials delivered by the Holder to the Corporation or to
the transfer agent of the Exchangeable Shares (including without limitation a
copy of the retraction request delivered pursuant to section 5.1 of the
Exchangeable Share Provisions) in connection with such proposed redemption of
the Retracted Shares and the Trustee shall thereupon exercise the Exchange Right
with respect to the Retracted Shares that the Corporation is not permitted to
redeem and will require Applied to purchase such shares in accordance with the
provisions of this Article. The Trustee shall deliver to the Corporation's
transfer agent and registrar the certificates for the Exchangeable Shares so
transferred to be cancelled and new certificates in the name of Applied issued
in respect thereof and shall deliver or cause to be delivered such Exchangeable
Shares to Applied.
5.8 Stamp or Other Transfer Taxes. Upon any sale of Exchangeable Shares to
Applied pursuant to the Exchange Right or the Automatic Exchange Rights, the
share certificate or certificates representing Applied Common Stock to be
delivered in connection with the payment of the purchase price therefor shall be
issued in the name of the Holder of the Exchangeable Shares so sold or in such
names as such Holder may otherwise direct in writing without charge to the
holder of the Exchangeable Shares so sold, provided, however, that such Holder
(a) shall pay (and neither Applied, the Corporation nor the Trustee shall be
required to pay) any documentary, stamp, transfer or other similar taxes that
may be payable in respect of any transfer involved in the issuance or delivery
of such shares to a person other than such Holder and (b) shall establish to the
satisfaction of the Trustee, Applied and the Corporation that such taxes, if
any, have been paid.
5.9 Notice of Insolvency Event or Default Event. Immediately upon the occurrence
of an Insolvency Event or Default Event or any event that with the giving of
notice or the passage of time or both would be an Insolvency Event or Default
Event, the Corporation and Applied shall give written notice thereof to the
Trustee. As soon as practicable after receiving notice from the Corporation and
Applied or from any other person of the occurrence of an Insolvency Event or
Default Event, the Trustee shall mail to each Holder, at the expense of Applied,
a notice of such Insolvency Event or Default Event, which notice shall contain a
brief statement of the right of the Holders with respect to the Exchange Right.
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5.10 Qualification of Applied Common Stock. Applied shall use all reasonable
efforts to obtain all orders required from the applicable Canadian securities
authorities to permit the issuance of the shares of Applied Common Stock upon
any such exchange of the Exchangeable Shares without registration or
qualification with or approval of or the filing of any document including any
prospectus or similar document or the taking of any proceeding with or the
obtaining of any order, ruling or consent from any governmental or regulatory
authority under any Canadian federal or provincial law or regulation or pursuant
to the rules and regulations of any regulatory authority or the fulfillment of
any other legal requirement before such shares of Applied Common Stock may be
issued by Applied and delivered by the Corporation or Applied to the holder
thereof or in order that such Applied Common Stock may be freely traded under
the laws of Canada and the United States thereafter (other than any restrictions
on transfer by reason of a holder being a "control person" of the Corporation or
Applied for purposes of Canadian federal or provincial securities law or an
"affiliate" for purposes of the United States Federal or state securities law).
5.11 Reservation of Applied Common Stock. Applied hereby represents and warrants
that it has irrevocably reserved for issuance out of its authorized and unissued
capital stock such number of shares of Applied Common Stock as is equal to the
number of Exchangeable Shares outstanding at the date hereof and covenants that
it will at all times keep available, free from pre-emptive and other rights, out
of its authorized and unissued capital stock such number of shares of Applied
Common Stock (or other shares or securities into which Applied Common Stock may
be reclassified or changed) as is necessary to enable Applied and the
Corporation to perform their respective obligations pursuant to this Agreement,
the Exchangeable Share Provisions and the Support Agreement.
5.12 Automatic Exchange on Liquidation of Applied.
(a) Applied shall give the Trustee written notice of each of the following
events (a "Liquidation Event") at the time set forth below:
(i) in the event of any determination by the Board of Directors of
Applied to institute voluntary liquidation, dissolution or
winding-up proceedings with respect to Applied or to effect any
other distribution of assets of Applied among its stockholders
for the purpose of winding up its affairs, at least 60 days prior
to the proposed effective date of such liquidation, dissolution,
winding-up or other distribution; and
(ii) immediately, upon the earlier of (A) receipt by Applied of notice
of and (B) Applied otherwise becoming aware of, any threatened or
instituted claim, suit, petition or other proceedings with
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respect to the involuntary liquidation, dissolution or winding up
of Applied or to effect any other distribution of assets of
Applied among its stockholders for the purpose of winding up its
affairs, provided, however, that if, in the reasonable
determination of the Board of Directors of Applied there is no
valid basis for such proceedings, Applied need not provide such
notice if the proceedings are dismissed, withdrawn or otherwise
terminated within 30 days of Applied becoming aware thereof.
(b) Immediately following receipt by the Trustee from Applied of notice of
any Liquidation Event, the Trustee shall give notice thereof to the
Holders. Such notice shall include a brief description of the
automatic exchange of Exchangeable Shares for Applied Common Stock
provided for in subsection 5.12(c) below.
(c) In order that the Holders will be able to participate on a pro rata
basis with the holders of Applied Common Stock in the distribution of
assets of Applied in connection with a Liquidation Event, on the fifth
Business Day prior to the effective date of any liquidation, winding
up or dissolution giving rise to a Liquidation Event (the "Liquidation
Event Effective Date") all of the then outstanding Exchangeable Shares
shall be automatically exchanged by the Holders directly with Applied
for Applied Common Stock. To effect such automatic exchange, Applied
shall purchase each Exchangeable Share outstanding on the fifth
Business Day prior to the Liquidation Event Effective Date and held by
Holders, and each Holder shall sell to Applied the Exchangeable Shares
held by it at such time, for a purchase price per share equal to (a)
the Current Market Price multiplied by the Current Applied Common
Share Equivalent on such fifth Business Day prior to the Liquidation
Event Effective Date, which shall be satisfied in full in respect of
the Exchangeable Shares held by each Holder by Applied issuing to such
Holder such whole number of shares of Applied Common Stock as is equal
to the product obtained by multiplying the number of such Exchangeable
Shares by the Current Applied Common Share Equivalent, plus (b) an
additional amount equal to the aggregate of all dividends declared and
unpaid on each such Exchangeable Share (provided that if the record
date for any such declared and unpaid dividends occurs on or after the
day of closing of such purchase and sale, the purchase price shall not
include such additional amount equal to such declared and unpaid
dividends). No certificates or scrip representing fractional Applied
Common Stock shall be delivered to holders of Exchangeable Shares
pursuant to the provisions hereof.
(d) On the fifth Business Day prior to the Liquidation Event Effective
Date, the closing of the transaction of purchase and sale contemplated
by the automatic exchange of Exchangeable Shares for shares of Applied
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Common Stock shall be deemed to have occurred, and each Holder of
Exchangeable Shares shall be deemed to have transferred to Applied all
of the Holder's right, title and interest in and to such Exchangeable
Shares and the related interest in the Trust Estate and shall cease to
be a Holder of such Exchangeable Shares and Applied shall issue to the
Holder the Applied Common Stock issuable upon the automatic exchange
of Exchangeable Shares for Applied Common Stock and shall deliver to
the Trustee for delivery to the Holder a cheque for the balance, if
any, of the purchase price for such Exchangeable Shares (or, if any
part of the purchase price consists of dividends payable in property,
such property or property that is the same as or economically
equivalent to such property). Concurrently with such Holder ceasing to
be a holder of Exchangeable Shares, the Holder shall be considered and
deemed for all purposes to be the holder of the Applied Common Stock
issued to it pursuant to the automatic exchange of Exchangeable Shares
for Applied Common Stock and the certificates held by the Holder
previously representing the Exchangeable Shares exchanged by the
Holder with Applied pursuant to such automatic exchange shall
thereafter be deemed to represent the Applied Common Stock issued to
the Holder by Applied pursuant to such automatic exchange. Upon the
request of a Holder and the surrender by the Holder of Exchangeable
Share certificates deemed to represent Applied Common Stock, duly
endorsed in blank and accompanied by such instruments of transfer as
Applied may reasonably require, Applied shall deliver or cause to be
delivered to the Holder certificates representing the Applied Common
Stock of which the Holder is the holder. The Trustee shall cause the
certificates for the Exchangeable Shares so transferred to be
cancelled and new certificates in the name of Applied issued in
respect thereof.
5.13 Withholding Rights. Applied and the Trustee shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of Exchangeable Shares such amounts as Applied or the Trustee is
required or permitted to deduct and withhold with respect to the making of such
payment under the United States Internal Revenue Code of 1986, as amended, the
Income Tax Act (Canada) or any provision of state, local or provincial tax law.
To the extent that amounts are so withheld, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the Exchangeable Shares in respect of which such deduction and withholding was
made, provided that such withheld amounts are actually remitted to the
appropriate taxing authority. To the extent that the amount so required or
permitted to be deducted or withheld from any payment to a holder exceeds the
cash portion of the consideration otherwise payable to the holder, Applied or
the Trustee is hereby authorized to sell or otherwise dispose of at fair market
value such portion of the consideration as is necessary to provide sufficient
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funds to Applied or the Trustee, as the case may be, in order to enable it to
comply with such deduction or withholding requirement and shall account to the
relevant Holder for any balance of any such sale proceeds.
If upon the occurrence of an Insolvency Event, a non-Canadian resident
Holder instructs the Trustee to exercise the Exchange Right, Applied shall
provide the Trustee, by certified cheque money order or bank draft, with
sufficient funds to satisfy any withholding taxes applicable in connection with
the sale of such Holder's Exchangeable Shares to Applied, otherwise such
exchange shall not have occurred or be deemed to have occurred. The "fair market
value" of a share of Applied Common Stock at a particular date shall, for the
purposes of calculating any applicable withholding taxes, be the Current Market
Price or shall be determined by such other method of valuation which has been
recommended or suggested by Revenue Canada as providing a satisfactory
assessment of such fair market value. Any determination of Current Market Price
or other fair market value assessment shall be made by Applied, who shall
provide the Trustee and Holders of Exchangeable Shares with written notice of
the same. Such determination shall be binding on the Trustee and Holders, who
shall be able to rely on such determination without further verification of the
same. Prior to making any distribution to Holders of Exchangeable Shares,
Applied or the Corporation, as the case may be, shall ensure that the Trustee
has access to sufficient funds (by directly providing, if necessary, such funds
to the Trustee) to enable the Trustee to comply with any applicable withholding
taxes in connection with such distribution.
ARTICLE VI
CONCERNING THE TRUSTEE
6.1 Powers and Duties of the Trustee. The rights, powers and authorities of the
Trustee under this Agreement, in its capacity as trustee of the Trust, shall
include:
(a) receipt and depositing of the Voting Share from Applied as trustee for
and on behalf of the Holders in accordance with the provisions of this
Agreement;
(b) granting proxies and distributing materials to Holders as provided in
this Agreement;
(c) voting the Holder Votes in accordance with the provisions of this
Agreement;
(d) receiving the grant of the Exchange Right and the Automatic Exchange
Rights from Applied as trustee for and on behalf of the Holders in
accordance with the provisions of this Agreement;
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(e) exercising the Exchange Right and enforcing the benefit of the
Automatic Exchange Rights, in each case in accordance with the
provisions of this Agreement and in connection therewith receiving
from Holders Exchangeable Shares and other requisite documents and
distributing to such Holders the Applied Common Stock and cheques, if
any, to which such Holders are entitled upon the exercise of the
Exchange Right or pursuant to the Automatic Exchange Rights, as the
case may be;
(f) holding title to the Trust Estate;
(g) investing any moneys forming, from time to time, a part of the Trust
Estate as provided in this Agreement;
(h) taking action on its own initiative or at the direction of a Holder or
Holders to enforce the obligations of Applied under this Agreement;
and
(i) taking such other actions and doing such other things as are
specifically provided in this Agreement.
In the exercise of such rights, powers and authorities the Trustee shall
have (and is granted) such incidental and additional rights, powers and
authority not in conflict with any of the provisions of this Agreement as the
Trustee, acting in good faith and in the reasonable exercise of its discretion,
may deem necessary, appropriate or desirable to effect the purpose of the Trust.
Any exercise of such discretionary rights, powers and authorities by the Trustee
shall be final, conclusive and binding upon all persons. For greater certainty,
the Trustee shall have only those duties as are set out specifically in this
Agreement.
The Trustee in exercising its rights, powers, duties and authorities
hereunder shall act honestly and in good faith with a view to the best interests
of the Holders and shall exercise the care, diligence and skill that a
reasonably prudent trustee would exercise in comparable circumstances.
Notwithstanding any other provision of this Agreement, nothing in this
Agreement shall obligate the Trustee to have knowledge of, comply with or
otherwise act in accordance with laws or regulations of a jurisdiction other
than the Province of Ontario and the laws of Canada applicable therein.
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6.2 No Conflict of Interest. The Trustee represents to the Corporation and
Applied that at the date of execution and delivery of this Agreement there
exists no material conflict of interest in the role of the Trustee as a
fiduciary hereunder and the role of the Trustee in any other capacity. The
Trustee shall, within 30 days after it becomes aware that such a material
conflict of interest exists, either eliminate such material conflict of interest
or resign in the manner and with the effect specified in Article 9 hereof. If,
notwithstanding the foregoing provisions of this section 6.2, the Trustee has
such a material conflict of interest, the validity and enforceability of this
Agreement shall not be affected in any manner whatsoever by reason only of the
existence of such material conflict of interest. If the Trustee contravenes the
foregoing provisions of this section 6.2, any interested party may apply to the
Ontario Court (General Division) for an order that the Trustee be replaced as
trustee hereunder.
6.3 Dealings with Transfer Agents, Registrars, etc. The Corporation and Applied
irrevocably authorize the Trustee, from time to time, to:
(a) consult, communicate and otherwise deal with the respective registrars
and transfer agents, and with any such subsequent registrar or
transfer agent, of the Exchangeable Shares and Applied Common Stock;
and
(b) requisition, from time to time, (i) from any such registrar or
transfer agent any information readily available from the records
maintained by it which the Trustee may reasonably require for the
discharge of its duties and responsibilities under this Agreement and
(ii) from the transfer agent of Applied Common Stock, and any
subsequent transfer agent of such shares, the share certificates
issuable upon the exercise from time to time of the Exchange Right and
pursuant to the Automatic Exchange Rights in the manner specified in
Article 5 hereof.
The Corporation and Applied irrevocably authorize their respective registrars
and transfer agents to comply with all such requests. Applied covenants that it
will supply its transfer agent with duly executed share certificates for the
purpose of completing the exercise from time to time of the Exchange Right and
the Automatic Exchange Rights, in each case pursuant to Article 5 hereof.
6.4 Books and Records. The Trustee shall keep available for inspection by
Applied and the Corporation, at the Trustee's corporate trust office in Xxxxxxx,
Xxxxxxx, correct and complete books and records of account relating to the
Trustee's actions under this Agreement, including without limitation all
information relating to mailings and instructions to and from Holders and all
transactions pursuant to the Voting Rights, the Exchange Right and the Automatic
Exchange Rights for the term of this Agreement. On or before October 31, 1998
and on or before October 31 in every year thereafter, so long as the Voting
Share is on deposit with the Trustee, the Trustee shall transmit to Applied and
the Corporation a brief report, dated as of the preceding October 31, with
respect to:
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(a) the property and funds comprising the Trust Estate as of that date;
(b) the number of exercises of the Exchange Right, if any, and the
aggregate number of Exchangeable Shares received by the Trustee on
behalf of Holders in consideration of the issue and delivery by
Applied of Applied Common Stock in connection with the Exchange Right,
during the calendar year ended on such date; and
(c) all other actions taken by the Trustee in the performance of its
duties under this Agreement that it had not previously reported.
6.5 Income Tax Returns and Reports. The Trustee shall, to the extent necessary,
prepare and file on behalf of the Trust applicable United States and Canadian
income tax returns, if any, and any other returns or reports as may be required
by applicable law or pursuant to the rules and regulations of any securities
exchange or other trading system through which the Exchangeable Shares are
traded and, in connection therewith, may obtain the advice and assistance of
such experts as the Trustee may consider necessary or desirable. If requested by
the Trustee, Applied shall retain such experts for purposes of providing such
advice and assistance.
6.6 Indemnification Prior to Certain Actions by Trustee. The Trustee shall
exercise any or all of the rights, duties, powers or authorities vested in it by
this Agreement at the request, order or direction of any Holder upon such Holder
furnishing to the Trustee reasonable funding, security and indemnity against the
costs, expenses and liabilities that may be incurred by the Trustee therein or
thereby, provided that no Holder shall be obligated to furnish to the Trustee
any such funding, security or indemnity in connection with the exercise by the
Trustee of any of its rights, duties, powers and authorities with respect to (i)
the Voting Share pursuant to Article 4 hereof, subject to section 6.15 hereof,
(ii) the Exchange Right pursuant to Article 5 hereof, subject to section 6.15
hereof, and (iii) the Automatic Exchange Rights pursuant to Article 5 hereof.
None of the provisions contained in this Agreement shall require the
Trustee to expend or risk its own funds or otherwise incur financial liability
in the exercise of any of its rights, powers, duties or authorities unless
funded and given security and indemnity as aforesaid.
6.7 Actions by Holders. No Holder shall have the right to institute any action,
suit or proceeding or to exercise any other remedy authorized by this Agreement
for the purpose of enforcing any of its rights or for the execution of any trust
or power hereunder unless the Holder has requested the Trustee to take or
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institute such action, suit or proceeding and furnished the Trustee with the
funding, security and indemnity referred to in section 6.6 hereof and the
Trustee shall have failed to act within a reasonable time thereafter. In such
case, but not otherwise, the Holder shall be entitled to take proceedings in any
court of competent jurisdiction such as the Trustee might have taken, it being
understood and intended that no one or more Holders shall have any right in any
manner whatsoever to affect, disturb or prejudice the rights hereby created by
any such action, or to enforce any right hereunder or under the Voting Rights,
the Exchange Right or the Automatic Exchange Rights except subject to the
conditions and in the manner herein provided, and that all powers and trusts
hereunder shall be exercised and all proceedings at law shall be instituted, had
and maintained by the Trustee, except only as herein provided, and in any event
for the benefit of all Holders.
6.8 Reliance upon Declarations. The Trustee shall not be considered to be in
contravention of any of its rights, powers, duties and authorities hereunder if,
when required, it acts and relies in good faith upon lists, mailing labels,
notices, statutory declarations, certificates, opinions, reports or other papers
or documents furnished pursuant to the provisions hereof or required by the
Trustee to be furnished to it in the exercise of its rights, powers, duties and
authorities hereunder and such lists, mailing labels, notices, statutory
declarations, certificates, opinions, reports or other papers or documents
comply with the provisions of section 6.8 hereof, if applicable, and with any
other applicable provisions of this Agreement.
6.9 Evidence and Authority to Trustee. The Corporation and/or Applied shall
furnish to the Trustee evidence of compliance with the conditions provided for
in this Agreement relating to any action or step required or permitted to be
taken by the Corporation and/or Applied or the Trustee under this Agreement or
as a result of any obligation imposed under this Agreement, including, without
limitation, in respect of the Voting Rights, the Exchange Right or the Automatic
Exchange Rights and the taking of any other action to be taken by the Trustee at
the request of or on the application of the Corporation and/or Applied forthwith
if and when:
(a) such evidence is required by any other section of this Agreement to be
furnished to the Trustee in accordance with the terms of this section
6.9; or
(b) the Trustee, in the exercise of its rights, powers, duties and
authorities under this Agreement, gives the Corporation and/or Applied
written notice requiring it to furnish such evidence in relation to
any particular action or obligation specified in such notice.
Such evidence shall consist of an Officer's Certificate of the Corporation
and/or Applied or a statutory declaration or a certificate made by persons
entitled to sign an Officer's Certificate stating that any such condition has
been complied with in accordance with the terms of this Agreement.
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Whenever such evidence relates to a matter other than the Voting Rights,
the Exchange Right or the Automatic Exchange Rights, and except as otherwise
specifically provided herein, such evidence may consist of a report or opinion
of any solicitor, auditor, accountant, appraiser, valuer, engineer or other
expert or any other person whose qualifications give authority to a statement
made by him, provided that if such report or opinion is furnished by a director,
officer or employee of the Corporation and/or Applied it shall be in the form of
an Officer's Certificate or a statutory declaration.
Each statutory declaration, certificate, opinion or report furnished to the
Trustee as evidence of compliance with a condition provided for in this
Agreement shall include a statement by the person giving the evidence:
(a) declaring that he has read and understands the provisions of this
Agreement relating to the condition in question;
(b) describing the nature and scope of the examination or investigation
upon which he based the statutory declaration, certificate, statement
or opinion; and
(c) declaring that he has made such examination or investigation as he
believes is necessary to enable him to make the statements or give the
opinions contained or expressed therein.
6.10 Experts, Advisers and Agents.
The Trustee may:
(a) in relation to this Agreement act and rely on the opinion or advice of
or information obtained from any solicitor, auditor, accountant,
appraiser, valuer, engineer or other expert, whether retained by the
Trustee or by the Corporation and/or Applied or otherwise, and may
employ such assistants as may be necessary to the proper discharge of
its powers and duties and determination of its rights hereunder and
may pay proper and reasonable compensation for all such legal and
other advice or assistance as aforesaid; and
(b) employ such agents and other assistants as it may reasonably require
for the proper discharge of its powers and duties hereunder, and may
pay reasonable remuneration for all services performed for it in the
discharge of the trusts hereof and compensation for all disbursements,
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costs and expenses made or incurred by it in the discharge of its
duties hereunder and in the management of the Trust.
6.11 Investment of Moneys Held By Trustee. Unless otherwise provided in this
Agreement, any moneys held by or on behalf of the Trustee that under the terms
of this Agreement may or ought to be invested or which may be on deposit with
the Trustee or that may be in the hands of the Trustee may be invested and
reinvested in the name or under the control of the Trustee in securities in
which, under the laws of Canada, trustees are authorized to invest trust moneys,
provided that such securities are stated to mature within two years after their
purchase by the Trustee, and are invested in such specific securities as
directed in writing by the Corporation and Applied. Pending the receipt of any
direction and investment of any moneys as hereinbefore provided, such moneys may
be deposited in the name of the Trustee in an interest-bearing trust account of
the Trustee.
6.12 Trustee Not Required to Give Security. The Trustee shall not be required
to give any bond or security in respect of the execution of the trusts, rights,
duties, powers and authorities of this Agreement.
6.13 Trustee Not Bound to Act on Corporation's or Applied's Request. Except as
in this Agreement otherwise specifically provided, the Trustee shall not be
bound to act in accordance with any direction or request of the Corporation
and/or Applied or of the directors thereof until a duly authenticated copy of
the instrument or resolution containing such direction or request shall have
been delivered to the Trustee, and the Trustee shall be empowered to act and
rely upon any such copy purporting to be authenticated and believed by the
Trustee in good faith to be genuine.
6.14 Authority to Carry on Business. The Trustee represents to the Corporation
and Applied that at the date of execution and delivery by it of this Agreement
it is authorized to perform its obligations pursuant to this Agreement under all
applicable laws but if, notwithstanding the provisions of this section 6.14, it
ceases to be so authorized, the validity and enforceability of this Agreement
and the Voting Rights, the Exchange Right and the Automatic Exchange Rights
shall not be affected in any manner whatsoever by reason only of such event but
the Trustee shall, within 30 days after ceasing to be so authorized, either
become so authorized or resign in the manner and with the effect specified in
Article 9 hereof.
6.15 Conflicting Claims. If conflicting claims or demands are made or asserted
with respect to any interest of any Holder in any Exchangeable Shares, including
any disagreement between the heirs, representatives, successors or assigns
succeeding to all or any part of the interest of any Holder in any Exchangeable
Shares resulting in conflicting claims or demands being made in connection with
such interest, then the Trustee shall be entitled, at its sole discretion, to
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refuse to recognize or to comply with any such claim or demand. In so refusing,
the Trustee may elect not to exercise any Voting Rights, Exchange Rights or
Automatic Exchange Rights subject to such conflicting claims or demands and, in
so doing, the Trustee shall not be or become liable to any person on account of
such election or its failure or refusal to comply with any such conflicting
claims or demands. The Trustee shall be entitled to continue to refrain from
acting and to refuse to act until:
(a) the rights of all adverse claimants with respect to the Voting Rights,
Exchange Rights or Automatic Exchange Rights subject to such
conflicting claims or demands have been adjudicated by a final
judgment of a court of competent jurisdiction; or
(b) all differences with respect to the Voting Rights, Exchange Right or
Automatic Exchange Rights subject to such conflicting claims or
demands have been conclusively settled by a valid written agreement
binding on all such adverse claimants, and the Trustee shall have been
furnished with an executed copy of such agreement.
If the Trustee elects to recognize any claim or comply with any demand made by
any such adverse claimant, it may in its discretion require such claimant to
furnish such surety bond or other security satisfactory to the Trustee as it
shall deem appropriate fully to indemnify it as between all conflicting claims
or demands.
6.16 Acceptance of Trust. The Trustee hereby accepts the Trust created and
provided for by and in this Agreement and agrees to perform the same upon the
terms and conditions herein set forth and to hold all rights, privileges and
benefits conferred hereby and by law in trust for the various persons who shall
from time to time be Holders, subject to all the terms and conditions herein set
forth.
6.17 Notice to Trustee. The Trustee shall not be bound to give any notice or do
or take any act, action or proceeding by virtue of the powers conferred on it
hereby unless and until it shall have been required to do so under the terms of
this Agreement; nor shall the Trustee be required to take notice of, be deemed
to have actual or constructive notice or knowledge of any matter under this
Agreement, or take any action in connection with any notice of any Applied
Meeting or the seeking of any Applied Consent or any prohibition of the
Corporation against redeeming any Retracted Shares as set out in section 5.6 of
the Exchangeable Share Provisions or of any Insolvency Event, Default Event or
Liquidation Event as set out in Article 5 of this Agreement, respectively
(collectively, a "Notice Event"), unless and until notified in writing of such
Notice Event in accordance with this Agreement, which notice shall distinctly
specify the Notice Event desired to be brought to the attention of the Trustee
and in the absence of any such notice the Trustee may for all purposes of this
Agreement conclusively assume that no such Notice Event has occurred.
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6.18 Merger or Consolidation of Trustee. Any corporation into or which the
Trustee may be merged or consolidated or amalgamated, or any corporation
resulting therefrom to which the Trustee may be a party, or any corporation
succeeding to the trust business of the Trustee shall be the successor to the
Trustee under this Agreement without any further act on its part or any of the
parties hereto, provided that such corporation would be eligible for appointment
as a successor trustee under the provisions of this Agreement.
6.19 No Personal Liability. In the exercise of the powers, authorities or
discretion conferred upon the Trustee under this Agreement, the Trustee is and
shall be conclusively deemed to be acting as trustee of the Trust and shall not
be subject to any personal liability for any of the liabilities, obligations,
claims, demands, judgments, costs or expenses against or with respect to the
Trust.
6.20 Incumbency Certificate. Each of the Corporation and Applied shall file
with the Trustee a certificate of incumbency setting forth the names of the
individuals authorized to give instructions, directions or other instruments to
the Trustee ("Authorized Persons"), together with specimen signatures of such
persons, and the Trustee shall be entitled to rely on the latest certificate of
incumbency filed with it unless it receives notice, in accordance with Section
13.3, of a change in Authorized Persons with updated specimen signatures.
ARTICLE VII
COMPENSATION
7.1 Fees and Expenses of the Trustee. Applied and the Corporation jointly and
severally agree to pay to the Trustee reasonable compensation for all of the
services rendered by it under this Agreement and will reimburse the Trustee for
all reasonable expenses and disbursements, including fees and expenses for
attendance at any meeting of shareholders, if so requested by Applied or the
Corporation, fees and expenses of experts, advisors and agents retained pursuant
to Section 6.10, the cost and expense of any suit or litigation of any character
and any proceedings before any governmental agency reasonably incurred by the
Trustee in connection with its rights and duties under this Agreement; provided
that Applied and the Corporation shall have no obligation to reimburse the
Trustee for any expenses or disbursements paid, incurred or suffered by the
Trustee in any suit or litigation in which the Trustee is determined to have
acted fraudulently, in bad faith or with gross negligence or wilful misconduct.
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ARTICLE VIII
INDEMNIFICATION AND LIMITATION OF LIABILITY
8.1 Indemnification of the Trustee. Applied and the Corporation jointly and
severally agree to indemnify and hold harmless the Trustee and each of its
directors, officers, employees and agents appointed and acting in accordance
with this Agreement (collectively the "Indemnified Parties") against all claims,
losses, damages, costs, penalties, fines and reasonable expenses (including
reasonable expenses of the Trustee's legal counsel) which, without fraud, gross
negligence, willful misconduct or bad faith on the part of such Indemnified
Party, may be paid, incurred or suffered by the Indemnified Party by reason of
or as a result of the Trustee's acceptance or administration of the Trust, its
compliance with its duties set forth in this Agreement, or any written or oral
instructions delivered to the Trustee by Applied or the Corporation pursuant
hereto. In no case shall Applied or the Corporation be liable under this
indemnity for any claim against any of the Indemnified Parties unless Applied
and the Corporation shall be notified by the Trustee of the written assertion of
a claim or of any action commenced against the Indemnified Parties, promptly
after any of the Indemnified Parties shall have received any such written
assertion of a claim or shall have been served with a summons or other first
legal process giving information as to the nature and basis of the claim.
Subject to (ii), below, Applied and the Corporation shall be entitled to
participate at their own expense in the defense and, if Applied or the
Corporation so elect at any time after receipt of such notice, either of them
may assume the defense of any suit brought to enforce any such claim. The
Trustee shall have the right to employ separate counsel in any such suit and
participate in the defense thereof but the fees and expenses of such counsel
shall be at the expense of the Trustee unless: (i) the employment of such
counsel has been authorized by Applied or the Corporation or (ii) the named
parties to any such suit include both the Trustee and Applied or the Corporation
and the Trustee shall have been advised by counsel acceptable to Applied or the
Corporation that there may be one or more legal defenses available to the
Trustee that are different from or in addition to those available to Applied or
the Corporation and that an actual or potential conflict of interest exists (in
which case Applied and the Corporation shall not have the right to assume the
defense of such suit on behalf of the Trustee but shall be liable to pay the
reasonable fees and expenses of counsel for the Trustee),or (iii) Applied and/or
the Corporation shall not have retained legal counsel on behalf of the Trustee
within a reasonable time after it has given them notice of a written assertion
of a claim or action against any Indemnified Party.
8.2 Limitation of Liability. The Trustee shall not be held liable for any
loss that may occur by reason of depreciation of the value of any part of the
Trust Estate or any loss incurred on any investment of funds pursuant to this
Agreement, except to the extent that such loss is attributable to fraud, gross
negligence, willful misconduct or bad faith on the part of the Trustee.
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ARTICLE IX
CHANGE OF TRUSTEE
9.1 Resignation. The Trustee, or any trustee hereafter appointed, may at any
time resign by giving written notice of such resignation to Applied and the
Corporation specifying the date on which it desires to resign, provided that
such notice shall never be given less than 60 days before such desired
resignation date unless Applied and the Corporation otherwise agree and provided
further that such resignation shall not take effect until the date of the
appointment of a successor trustee and the acceptance of such appointment by the
successor trustee. Upon receiving such notice of resignation, Applied and the
Corporation shall promptly appoint a successor trustee by written instrument in
duplicate, one copy of which shall be delivered to the resigning trustee and one
copy to the successor trustee. Failing acceptance by a successor trustee, a
successor trustee may be appointed by an order of the Ontario Court (General
Division) upon application of one or more of the parties hereto.
9.2 Removal. The Trustee, or any trustee hereafter appointed, may be removed
with or without cause, at any time on 60 days' prior notice by written
instrument executed by Applied and the Corporation, in duplicate, one copy of
which shall be delivered to the trustee so removed and one copy to the successor
trustee.
9.3 Successor Trustee. Any successor trustee appointed as provided under this
Agreement shall execute, acknowledge and deliver to Applied and the Corporation
and to its predecessor trustee an instrument accepting such appointment.
Thereupon the resignation or removal of the predecessor trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, duties and
obligations of its predecessor under this Agreement, with like effect as if
originally named as trustee in this Agreement. However, on the written request
of Applied and the Corporation or of the successor trustee, the trustee ceasing
to act shall, upon payment of any amounts then due it pursuant to the provisions
of this Agreement, execute and deliver an instrument transferring to such
successor trustee all the rights and powers of the trustee so ceasing to act.
Upon the request of any such successor trustee, Applied, the Corporation and
such predecessor trustee shall execute any and all instruments in writing for
more fully and certainly vesting in and confirming to such successor trustee all
such rights and powers.
9.4 Notice of Successor Trustee. Upon acceptance of appointment by a successor
trustee as provided herein, Applied and the Corporation shall cause to be mailed
notice of the succession of such trustee hereunder to each Holder specified in a
List. If Applied or the Corporation shall fail to cause such notice to be mailed
within 10 days after acceptance of appointment by the successor trustee, the
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successor trustee shall cause such notice to be mailed at the expense of Applied
and the Corporation.
ARTICLE X
APPLIED SUCCESSORS
10.1 Certain Requirements in Respect of Combination, etc. Applied shall not
enter into any transaction (whether by way of reconstruction, 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) such other person or continuing corporation is a corporation (herein
called the "Applied Successor") incorporated under the laws of any
state of the United States or the laws of Canada or any province
thereof; and
(b) Applied Successor, by operation of law, becomes, bound by the terms
and provisions of this Agreement or, if not so bound, 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 the Trustee acting reasonably to evidence the
assumption by Applied Successor of liability for all moneys payable
and property deliverable hereunder and the covenant of such Applied
Successor to pay and deliver or cause to be delivered the same and its
agreement to observe and perform all the covenants and obligations of
Applied under this Agreement.
10.2 Vesting of Powers in Successor. Whenever the conditions of section 10.1
hereof have been duly observed and performed, the Trustee, if required, by
section 10.1 hereof, Applied Successor and the Corporation shall execute and
deliver the supplemental agreement provided for in Article 11 hereof and
thereupon Applied Successor shall possess and from time to time may exercise
each and every right and power of Applied under this Agreement in the name of
Applied or otherwise and any act or proceeding by any provision of this
Agreement required to be done or performed by the board of directors of Applied
or any officers of Applied may be done and performed with like force and effect
by the directors or officers of such Applied Successor.
10.3 Wholly-Owned Subsidiaries. Nothing herein shall be construed as preventing
the amalgamation or merger of any wholly-owned subsidiary of Applied with or
into Applied.
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ARTICLE XI
AMENDMENTS AND SUPPLEMENTAL TRUST AGREEMENTS
11.1 Amendments, Modifications, etc. This Agreement may not be amended or
modified except by an agreement in writing executed by the Corporation, Applied
and the Trustee and approved by the Holders in accordance with section 11.2 of
the Exchangeable Share Provisions.
11.2 Ministerial Amendments. Notwithstanding the provisions of section 11.1
hereof, the parties to this Agreement may in writing, at any time and from time
to time, without the approval of the Holders, amend or modify this Agreement for
the purposes of:
(a) adding to the covenants of any or all of the parties hereto for the
protection of the Holders hereunder;
(b) making such amendments or modifications not inconsistent with this
Agreement as may be necessary or desirable with respect to matters or
questions that, in the opinion of the Board of Directors of each of
Applied and the Corporation and in the opinion of the Trustee, on the
advice of counsel having in mind the best interests of the Holders as
a whole, such amendments and modifications will not be prejudicial to
the interests of the Holders as a whole; or
(c) making such changes or corrections required for the purpose of curing
or correcting any ambiguity or defect or inconsistent provision or
clerical omission or mistake or manifest error, provided that the
Trustee and the Board of Directors of each of the Corporation and
Applied shall be of the opinion, on the advice of counsel, that such
changes or corrections will not be prejudicial to the interests of the
Holders as a whole.
11.3 Meeting to Consider Amendments. The Corporation, at the request of Applied,
shall call a meeting or meetings of the Holders for the purpose of considering
any proposed amendment or modification requiring approval pursuant hereto. Any
such meeting or meetings shall be called and held in accordance with the by-laws
of the Corporation, the Exchangeable Share Provisions and all applicable laws.
11.4 Changes in Capital of Applied and the Corporation. Notwithstanding section
11.1, at all times after the occurrence of any Applied Common Stock
Reorganization or Capital Reorganization (as such terms are respectively defined
in the Exchangeable Share Provisions) or other change in either the Applied
Common Stock or the Exchangeable Shares or both, this Agreement shall forthwith
be amended and modified as necessary in order that it shall apply with full
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force and effect, mutatis mutandis, to all new securities into which Applied
Common Stock or the Exchangeable Shares or both are so changed and the parties
hereto shall execute and deliver a supplemental agreement giving effect to and
evidencing such necessary amendments and modifications.
11.5 Execution of Supplemental Trust Agreements. Notwithstanding section 11.1,
from time to time the Corporation (when authorized by a resolution of the Board
of Directors), Applied (when authorized by a resolution of its board of
directors) and the Trustee may, subject to the provisions hereof, and they
shall, when so directed by these presents, execute and deliver by their proper
officers, agreements or other instruments supplemental hereto, which thereafter
shall form part hereof, for any one or more of the following purposes:
(a) evidencing the succession of Applied Successors to Applied and the
covenants of and obligations assumed by each such Applied Successor in
accordance with the provisions of Article 10 and the succession of any
successor trustee in accordance with the provisions of Article 9;
(b) making any additions to, deletions from or alterations of the
provisions of this Agreement or the Voting Rights, the Exchange Right
or the Automatic Exchange Rights that, in the opinion of counsel to
the Trustee are necessary or advisable in order to incorporate,
reflect or comply with any legislation the provisions of which apply
to Applied, the Corporation, the Trustee or this Agreement; and
(c) for any other purposes not inconsistent with the provisions of this
Agreement including, without limitation, to make or evidence any
amendment or modification to this Agreement as contemplated hereby,
provided that, in the opinion of the Trustee, on the advice of
counsel, the rights of the Trustee and the Holders as a whole will not
be prejudiced thereby.
ARTICLE XII
TERMINATION
12.1 Term. The Trust created by this Agreement shall continue until the
earliest to occur of the following events:
(a) no outstanding Exchangeable Shares are held by any Holder;
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(b) each of the Corporation and Applied elects in writing to terminate the
Trust and such termination is approved by the Holders of the
Exchangeable Shares in accordance with Section 11.2 of the
Exchangeable Share Provisions; and
(c) 21 years after the death of the last survivor of the descendants of
His Majesty King Xxxxxx VI of the United Kingdom of Great Britain and
Northern Ireland living on the date of the creation of the Trust.
12.2 Survival. The provisions of Article 7 and 8 hereof shall survive any
termination of the Trust pursuant to section 12.1 or the resignation or removal
of the Trustee pursuant to Article IX.
ARTICLE XIII
GENERAL
13.1 Severability. If any provision of this Agreement is held to be invalid,
illegal or unenforceable, the validity, legality or enforceability of the
remainder of this Agreement shall not in any way be affected or impaired thereby
and this Agreement shall be carried out as nearly as possible in accordance with
its original terms and conditions; provided, however, that if the provision or
provisions so held to be invalid, in the reasonable judgment of the parties, is
or are so fundamental to the intent of the parties and the operation of this
Agreement that the enforcement of the other provisions hereof, in the absence of
such invalid provision or provisions, would damage irreparably the intent of the
parties in entering into this Agreement, the parties shall agree (i) to
terminate this Agreement, or (ii) to amend or otherwise modify this Agreement so
as to carry out the intent and purposes hereof and the transactions contemplated
hereby.
13.2 Enurement. This Agreement shall be binding upon and enure to the benefit
of the parties hereto and their respective successors and permitted assigns and
to the benefit of the Holders.
13.3 Notices to Parties. All notices and other communications between the
parties hereunder shall be in writing and shall be deemed to have been given if
delivered personally or by confirmed telecopy to the parties at the following
addresses (or at such other address for such party as shall be specified in like
notice):
(a) if to Applied at:
000 Xxxx Xxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Fax: (000) 000-0000
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(b) if to the Corporation at:
000 Xxxxxxxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxxx Xxxxx
Fax: (000) 000-0000
(c) if to the Trustee at:
000 Xxxxx Xxxxxx Xxxx
Xxxxx 000,
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Manager, Client Services
Fax: (000) 000-0000
Any notice or other communication given personally shall be deemed to have been
given and received upon delivery thereof and if given by telecopy shall be
deemed to have been given and received on the date of receipt thereof unless
such day is not a Business Day in which case it shall be deemed to have been
given and received upon the immediately following Business Day.
13.4 Notice to Holders. Any and all notices to be given and any documents to
be sent to any Holders may be given or sent to the address of such Holder shown
on the register of Holders in any manner permitted by the by-laws of the
Corporation from time to time in force in respect of notices to shareholders and
shall be deemed to be received (if given or sent in such manner) at the time
specified in such by-laws, the provisions of which by-laws shall apply mutatis
mutandis to notices or documents as aforesaid sent to such Holders.
13.5 Risk of Payments by Post. Whenever payments are to be made or documents
are to be sent to any Holder by the Trustee or by the Corporation, or by such
Holder to the Trustee or to Applied or the Corporation, the making of such
payment or sending of such document sent through the post shall be at the risk
of the Corporation, in the case of payments made or documents sent by the
Trustee or the Corporation, and the Holder, in the case of payments made or
documents sent by the Holder.
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13.6 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
13.7 Jurisdiction. This Agreement shall be construed and enforced in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein.
13.8 Attornment. Applied agrees that any action or proceeding arising out of
or relating to this Agreement may be instituted in the courts of Ontario, waives
any objection which it may have now or hereafter to the venue of any such action
or proceeding, irrevocably submits to the jurisdiction of the said court in any
such action or proceeding, agrees to be bound by any judgment of the said courts
and agrees not to seek, and hereby waives, any review of the merits of any such
judgment by the courts of any other jurisdiction and hereby appoints the
Corporation at its registered office in the Province of Ontario as Applied's
attorney for service of process.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed the day and year first above written.
APPLIED CELLULAR TECHNOLOGY, INC.
Per: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
XXXXXXXX XXX.
Per: /s/ DA Swift
-----------------------------------
MONTREAL TRUST COMPANY OF CANADA
Per: /s/ R Wyse
-----------------------------------
Per: /s/ Xxxxx Xxxxxxxx
-----------------------------------
SCHEDULE "A"
NOTICE OF EXERCISE OF EXCHANGE RIGHT
TO: Montreal Trust Company of Canada
RE: Voting and Exchange Trust Agreement between Applied Cellular Technology,
Inc.("Applied"), Commstar Ltd.(the "Corporation"), and Montreal Trust
Company of Canada as Trustee (the "Trust Agreement").
The undersigned holder of Exchangeable Shares instructs Montreal Trust
Company of Canada (the "Trustee") to exercise the Exchange Right in accordance
with Section 5.5 of the Trust Agreement so as to require Applied to purchase
from the undersigned Exchangeable Shares and to issue and deliver certificates
representing shares of Applied Common Stock as follows:
Name in full:
(Please state full names in which certificates are to be issued)
Address in full:
------------------------------------------------------------
Number of
Exchangeable Shares:
-------------------------------------------------------
The undersigned hereby represents and warrants as follows:
(i) the undersigned has good title to and owns all such Exchangeable Shares
to be acquired by Applied free and clear of all liens.
(ii) the undersigned shall pay any documentary, stamp, transfer or other
taxes that may be payable in respect of any transfer involved in the
issuance or delivery of shares.
All capitalized terms not defined herein shall have the meanings ascribed to
them in the Voting and Exchange Trust Agreement.
DATED this day of , 19 .
--------------------------------------
Name
--------------------------------------
Signature
SCHEDULE "B"
NOTICE OF EXERCISE OF EXCHANGE RIGHT
TO: Applied Cellular Technology, Inc. ("Applied")
This notice is given pursuant to Section 5.6 of the Voting and Exchange
Trust Agreement (the "Trust Agreement") between Applied Cellular Technology,
Inc. ("Applied"), Commstar Ltd. and Montreal Trust Company of Canada as Trustee
(the "Trust Agreement"). All capitalized words and expressions used in this
notice that are defined in the Trust Agreement have the meanings ascribed to
such words and expressions in such Trust Agreement.
The Trustee hereby notifies Applied that it is exercising the Exchange
Right on behalf of the Holder of the Exchangeable Shares referred to in the
notice received from such Holder, a copy of which is attached hereto (the
"Holder Notice"). Please issue the Applied Common Stock issuable in connection
with the exercise of the Exchange Right in accordance with the instructions set
forth in the attached Holder Notice.
By:
-----------------------------------
Name:
Title:
Date:
----------------------
