Exhibit 99.3
VOTING AND EXCHANGE TRUST AGREEMENT
THIS AGREEMENT is entered into this 30th day of June, 1998 by and among Applied
Cellular Technology, Inc. ("ACT"), a Missouri corporation, Drummer Enterprises
Ltd. ("Drummer"), an Ontario corporation, Morstar Holdings Ltd. ("Morstar"), a
Manitoba corporation, Scozul Enterprises Ltd. ("Scozul"), an Ontario
corporation, (Drummer, Morstar and Scozul are hereinafter collectively referred
to as "Sellers"), ACT-GFX Canada, Inc. ("ACTsub"), an Ontario corporation, and
Montreal Trust Company of Canada a corporation incorporated under the laws of
Canada (the "Trustee").
RECITALS
WHEREAS ACT, ACTsub, Drummer, Morstar, Scozul, Xxxxx X. Xxxxx and Ground
Effects Ltd. (the "Acquiree"), have entered into a Reorganization Agreement
dated the 30th day of June, 1998;
AND WHEREAS, pursuant to such Reorganization Agreement, the Sellers were
issued Class A Exchangeable Shares in satisfaction of the purchase price for
common shares of the Acquiree and Class B Exchangeable Shares in satisfaction of
the purchase price for Class B Preference Shares and certain debt of the
Acquiree;
AND WHEREAS, in connection with such Exchangeable Shares, it is desirable
that certain rights of exchange be granted to the Sellers by ACT;
AND WHEREAS ACT is to provide voting rights in ACT directly to each holder
(other than ACT) from time to time of Exchangeable Shares, such voting rights
per Exchangeable Share to be equivalent to the voting rights per share of ACT
Common Stock;
AND WHEREAS ACT is to grant directly to and in favour of the holders from
time to time of Exchangeable Shares the right, in the circumstances set forth
herein, to require ACT to purchase from each such holder all or any part of the
Exchangeable Shares held by each holder;
AND WHEREAS the parties desire to make appropriate provision and to
establish a procedure whereby voting rights in ACT shall be exercisable by
holders from time to time of Exchangeable Shares by and through the Trustee,
which will hold legal title to one share of ACT Special Voting Preferred Stock
(the "ACT Special Voting Stock"), to which voting rights attach for the benefit
of such holders and whereby the rights to require ACT to purchase Exchangeable
Shares from the holders 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 in order to implement such voting rights and to issue the ACT
Special Voting Stock to the Trustee an exemption order is required pursuant to
the Security Act (Ontario).
AND WHEREAS these recitals and any statements of fact in this Agreement are
made by ACT, ACTsub, Drummer, Morstar, Scozul and the Principal 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 1
DEFINITIONS AND INTERPRETATION
1.1 Definitions. In this Agreement the following terms shall have the following
meanings:
"ACT Common Stock" means the common shares in the capital of ACT.
"ACT Consent" has the meaning ascribed thereto in Section 4.2 hereof.
"ACT Meeting" has the meaning ascribed thereto in Section 4.2 hereof.
"ACT Special Voting Stock" has the meaning ascribed thereto in the recitals
hereto.
"ACT Successor" has the meaning ascribed thereto in subsection 10.1(a).
"Automatic Exchange Rights" means the benefit of the obligation of ACT to effect
the automatic exchange of shares of ACT Common Stock for Exchangeable Shares
pursuant to Section 5.1 hereof.
"Board of Directors" means the Board of Directors of ACTsub.
"Business Day" means a day other than a Saturday, a Sunday or a day when banks
are not open for business in Toronto.
"Call Rights" means collectively the Liquidation Call Right, the Redemption Call
Right and the Retraction Call Right.
"Class A Exchangeable Shares" means the Class A Exchangeable Shares in the
capital of ACTsub.
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"Class B Exchangeable Shares" means the Class B Exchangeable Shares in the
capital of ACTsub.
"Current Market Price" has the meaning ascribed thereto in the Class A and Class
B Exchangeable Share Provisions.
"Current ACT Common Stock Equivalent" has the meaning ascribed thereto in the
Exchange Share Provisions.
"Default Event" means any failure, other than by reason of an Insolvency Event,
of ACTsub 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" means the rights, privileges, restrictions and
conditions attaching to the Class A and Class B Exchangeable Shares as set forth
in articles of incorporation of ACTsub.
"Exchangeable Shares" means the Class A Exchangeable Shares and the Class B
Exchangeable Shares.
"Holders" means such of the holders who are the registered holders from time to
time of Exchangeable Shares.
"Insolvency Event" means the institution by ACTsub of any proceeding to be
adjudicated a bankrupt or insolvent or to be dissolved or wound up, or the
consent of ACTsub to the institution of bankruptcy, insolvency, 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 ACTsub to contest in good faith
any such proceedings commenced in respect of ACTsub within 15 days of becoming
aware thereof, or the consent by ACTsub to the filing of any such petition or to
the appointment of a receiver, or the making by ACTsub of a general assignment
for the benefit of creditors, or the admission in writing by ACTsub of its
inability to pay its debts generally as they become due, or ACTsub not being
permitted, pursuant to solvency requirements of applicable law, to redeem any
Retracted Shares pursuant to Section 5.6 of the Exchangeable Share Provisions.
"Lien" has the meaning ascribed thereto in the Reorganization Agreement.
"Liquidation Call Right" has the meaning ascribed thereto in the Call Agreement.
"Liquidation Event" has the meaning ascribed thereto in Section 5.11 hereof.
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"Liquidation Event Effective Date" has the meaning ascribed thereto in
subsection 5.11(c) hereof.
"OBCA" means the Business Corporations Act (Ontario).
"Redemption Call Right" has the meaning ascribed thereto in the Call Agreement.
"Retracted Shares" has the meaning ascribed thereto in Section 5.7 hereof.
"Retraction Call Right" has the meaning ascribed thereto in the Call Agreement.
"Support Agreement" means that certain support agreement made as of even date
herewith between ACT and ACTsub.
"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 ACT Special Voting Stock, issued by ACT,
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 ACT 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 2
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.
The obligations of the Trustee pursuant to the Voting Share and Articles 3 and 4
hereof shall not be effective until the delivery by ACT of the Voting Share to
the Trustee pursuant to an exemption order under the Securities Act (Ontario).
ARTICLE 3
VOTING SHARE
3.1 Issue and Ownership of the Voting Share. In consideration of the granting
and transfer of the Call Rights to ACT by the Holders, ACT will, upon receipt of
an applicable exemption order pursuant to the Securities Act (Ontario) issue to
and deposit 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. ACT 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 ACT 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 ACTsub 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. ACT
will cause the certificate representing the Voting Share to bear a legend
stating that such Voting Share is non-transferable 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 4
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 ACT for
their vote at an ACT Meeting or in connection with an ACT 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 ACT
Consent is sought or an ACT 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 ACT at
which Holders of ACT Common Stock are entitled to vote (an "ACT Meeting") and
with respect to all written consents sought from the Holders of ACT Common Stock
(an "ACT 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 ACT Common Stock Equivalent on the
record date established by ACT or by applicable law for such ACT Meeting or ACT
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 ACT Meeting or to be consented to
in connection with such ACT Consent. As at the date hereof the Current ACT
Common Stock Equivalent is 1. Upon each change to the Current ACT Common Stock
Equivalent ACT and the Holders jointly shall deliver to Trustee a certificate
setting out the new Current ACT Common Stock Equivalent. For the purposes of
this Agreement Trustee shall be entitled to rely on the most recent of such
certificates for the purpose of determining the Current ACT Common Stock to be
employed at any time.
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4.3 Mailings to Shareholders. With respect to each ACT Meeting and ACT Consent,
the Trustee shall mail or cause to be mailed (or otherwise communicate in the
same manner as ACT utilizes in communications to Holders of ACT Common Stock),
to each of the Holders named in the List, on the same day as the initial mailing
of notice (or other communication) with respect thereto is given by ACT 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 ACT;
(b) a statement that such Holder is entitled to instruct the Trustee as to
the exercise of the Holder Votes with respect to such ACT Meeting or
ACT Consent, as the case may be, or, pursuant to Section 4.7 hereof,
to attend such ACT Meeting and to exercise personally the Holder Votes
thereat;
(c) a statement as to 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 ACT 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 ACT 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 the Holder Votes to which a Holder is entitled in
respect of any such ACT Meeting or ACT 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 ACT or by applicable law for purposes
of determining stockholders entitled to vote at such ACT Meeting or to give
written consent in connection with such ACT Consent. ACT shall notify the
Trustee of any decision of the board of directors of ACT with respect to the
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calling of any such ACT Meeting or the seeking by ACT of any such ACT Consent
and shall provide all necessary 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. ACT shall deliver to the Trustee copies
of all proxy materials (including notices of ACT Meetings but excluding proxies
to vote ACT Common Stock), information statements, reports (including without
limitation all interim and annual financial statements) and other written
communications that are to be distributed by ACT from time to time to Holders of
ACT Common Stock in sufficient quantities and in sufficient time 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 ACT Common Stock. The Trustee shall mail
or otherwise send to each Holder, at the expense of ACT, copies of all such
materials (and all materials specifically directed to the Holders or to the
Trustee for the benefit of the Holders by ACT) received by the Trustee from ACT
at the same time as such materials are first sent to Holders of ACT 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.
4.5 Other Materials. Immediately after receipt by ACT of any material sent or
given generally to the Holders of ACT 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), ACT 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 ACT, copies of all such materials received by the Trustee from ACT. 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.
4.6 List of Persons Entitled to Vote. ACTsub shall, (a) prior to each annual,
general and special ACT Meeting or the seeking of any ACT 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 ACT Meeting or an ACT Consent, at the close of
business on the record date established by ACT or pursuant to applicable law for
determining the Holders of ACT Common Stock entitled to receive notice of and/or
to vote at such ACT Meeting or to give consent in connection with such ACT
Consent. Each such List shall be delivered to the Trustee promptly after receipt
by the ACTsub of such request or the record date for such meeting or seeking of
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consent, as the case may be, and in any event within sufficient time as to
enable the Trustee to perform its obligations under this Agreement. ACT agrees
to give ACTsub notice (with a copy to the Trustee) of the calling of any ACT
Meeting or the seeking of any ACT 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 ACTsub 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 ACT Meeting or an ACT 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 ACT Meeting and ACT 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 as 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 representatives as are empowered by it to sign
and deliver, on behalf of the Trustee, proxies for Voting Rights to
attend each ACT 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 General
Corporation 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
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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.
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 ACT utilizes in
communications to Holders of ACT Common Stock) to each Holder at its address as
shown on the books of ACTsub or the transfer agent, as applicable. The ACTsub
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 ACT Meeting or ACT
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 surrendered by
the Holder to ACT 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 ACT
shall not have delivered the requisite ACT Common Stock issuable in exchange
therefor to the Trustee for delivery to the Holders), or upon the redemption of
Exchangeable Shares pursuant to Article 4 or Article 5 of the Exchangeable Share
Provisions, or upon the effective date of the liquidation, dissolution or
winding-up of ACTsub pursuant to Article 6 of the Exchangeable Share Provisions,
or upon the purchase of Exchangeable Shares from the Holder thereof by ACT
pursuant to the exercise by ACT 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, ACT will not
issue any shares of ACT Special Voting Stock, in addition to the Voting Share.
ARTICLE 5
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 ACT by the Holders, ACT hereby grants to
Trustee as trustee for and behalf of and for the benefit and use of the Holders
of (a) the right (the "Exchange Right"), upon the occurrence and during the
continuance of an Insolvency Event or Default Event, to require ACT to purchase
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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.
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. ACTsub 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 SectionE6.15 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 ACT for each Exchangeable
Share to be purchased by ACT under the Exchange Right shall be an amount per
share equal to (a) the Current Market Price multiplied by the Current ACT Common
Stock Equivalent determined on the day of Closing of the purchase and sale of
such Exchangeable Share under the Exchange Right, which shall be satisfied in
full in respect of the Exchangeable Shares in respect to which a Holder has
exercised the Exchange Right by causing to be delivered to such Holder such
whole number of shares of ACT Common Stock as is equal to the product obtained
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by multiplying the number of such Exchangeable Shares by the Current ACT Common
Stock Equivalent, rounded down to the nearest whole number, 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 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 ACTsub. To cause the
exercise of the Exchange Right by the Trustee, Holder shall deliver to the
Trustee, in person or by certified or registered mail, at its corporate trust
office in Toronto 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 ACT 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 ACTsub and such additional documents and instruments as the Trustee
may reasonably require together with (a) a duly completed Form of Notice of
exercise of Exchange Right, in the form attached hereto as Schedule "A" or
attached to the Exchangeable Share Certificate stating (a) that the Holder
thereby instructs the Trustee to exercise the Exchange Right so as to require
ACT to purchase from the Holder the number of Exchangeable Shares specified
therein, (b) that such Holder has good title to and owns all such Exchangeable
Shares to be acquired by ACT free and clear of all Liens, (c) the names in which
the certificates representing ACT Common Stock issuable in connection with the
exercise of the Exchange Right are to be issued, (d) the names and addresses of
the persons to whom such new certificates should be delivered, and (e) payment
(or evidence satisfactory to Trustee, ACTsub and ACT 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 ACT under the Exchange Right, a
new certificate for the balance of such Exchangeable Shares shall be issued to
the Holder at the expense of ACTsub.
5.6 Delivery of ACT Common Stock: Effect of Exercise. Promptly after receipt of
the certificates representing the Exchangeable Shares that the Holder desires
ACT 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 ACT, the Trustee shall notify
ACT of its receipt of the same, by notice in the form of Schedule B hereto,
which notice to ACT shall constitute exercise of the Exchange Right by the
Trustee on behalf of the holder of such Exchangeable Shares and ACT shall
immediately thereafter deliver or cause to be delivered to the Trustee, for
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delivery to the Holder of such Exchangeable Share (or to such other persons, if
any, properly designated by such Holder), the certificates for the number of
shares of ACT 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 Act 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 ACT 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
ACT 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 ACT 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 ACT Common Stock are so allotted, issued
and delivered by ACT 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 ACT Common Stock delivered to it pursuant to the Exchange Right. The
Trustee shall deliver to ACTsub the certificates for the Exchangeable Shares so
transferred to be cancelled and new certificates in the name of ACT issued in
respect thereof and shall deliver or cause to be delivered such Exchangeable
Shares to ACT.
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 ACTsub to redeem any or all of the Exchangeable Shares
held by the Holder (the "Retracted Shares") and is notified by ACTsub pursuant
to Section 5.6 of the Exchangeable Share Provisions that ACTsub is not permitted
as a result of solvency requirements of applicable law to redeem all of such
Retracted Shares, and provided that ACT 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 which ACTsub is unable to redeem. In such event, ACTsub
hereby agrees with the Trustee and in favour of the Holder to immediately notify
the Trustee of such prohibition against ACTsub 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 ACTsub (including without
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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 ACTsub is not permitted to
redeem and will require ACT to purchase such shares in accordance with the
provisions of this Article. The Trustee shall cause the Certificates for the
Exchangeable Shares so transferred to be cancelled and new Certificates in the
name of ACT issued in respect thereof and shall deliver or cause to be delivered
such Exchangeable Shares to ACT. 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.
5.8 Stamp or Other Transfer Taxes. Upon any sale of Exchangeable Shares to ACT
pursuant to the Exchange Right or the Automatic Exchange Rights, the share
certificate or certificates representing ACT 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 ACT, ACTsub 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
ACT, ACTsub and the Trustee 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, ACTsub and ACT shall give written notice thereof to the Trustee. As soon
as practicable after receiving notice from the ACTsub and ACT 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 ACT, 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.
5.10 Reservation of ACT Common Stock. ACT hereby represents and warrants that it
has irrevocably reserved for issuance out of its authorized and unissued capital
stock such number of shares of ACT 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 ACT Common Stock
(or other shares or securities into which ACT Common Stock may be reclassified
or changed) as is necessary to enable ACT and ACTsub to perform their respective
obligations pursuant to this Agreement, the Exchangeable Share Provisions and
the Support Agreement.
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5.11 Automatic Exchange on Liquidation of ACT.
(a) ACT 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
ACT to institute voluntary liquidation, dissolution or winding up
proceedings with respect to ACT or to effect any other
distribution of assets of ACT among its stockholders for the
purpose of winding up its affairs, at least sixty (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 ACT of notice of
and (B) ACT otherwise becoming aware of, any threatened or
instituted claim, suit, petition or other proceedings with
respect to the involuntary liquidation, dissolution or winding up
of ACT or to effect any other distribution of assets of ACT among
its stockholders for the purpose of winding up its affairs.
(b) Immediately following receipt by the Trustee from ACT of notice of any
Liquidation Event, the Trustee shall give notice thereof to the
Holders.
(c) In order that the Holders will be able to participate on a pro rata
basis with the Holders of ACT Common Stock in the distribution of
assets of ACT in connection with a Liquidation Event, on the fifth
Business Day prior to the effective date of a Liquidation Event (the
"Liquidation Event Effective Date") all of the then outstanding
Exchangeable Shares shall be automatically exchanged by the Holders
directly with ACT for ACT Common Stock. To effect such automatic
exchange, ACT 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 ACT 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
ACT 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 ACT issuing
to such Holder such whole number of shares of ACT Common Stock as is
equal to the product obtained by multiplying the number of such
Exchangeable Shares by the Current ACT Common Stock 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
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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 ACT 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 ACT
Common Stock shall be deemed to have occurred, and each Holder of
Exchangeable Shares shall be deemed to have transferred to ACT 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 ACT shall issue to the
Holder the ACT Common Stock issuable upon the automatic exchange of
Exchangeable Shares for ACT 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 ACT Common Stock issued to it
pursuant to the automatic exchange of Exchangeable Shares for ACT
Common Stock and the certificates held by the Holder previously
representing the Exchangeable Shares exchanged by the Holder with ACT
pursuant to such automatic exchange shall thereafter be deemed to
represent the ACT Common Stock issued to the Holder by ACT pursuant to
such automatic exchange. Upon the request of a Holder and the
surrender by the Holder of Exchangeable Share certificates deemed to
represent ACT Common Stock, duly endorsed in blank and accompanied by
such instruments of transfer as ACT may reasonably require, ACT shall
deliver or cause to be delivered to the Holder certificates
representing the ACT 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 ACT
to be issued in respect thereof
5.12 Withholding Rights. ACT shall deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any Holder of Exchangeable
Shares such amounts as ACT 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
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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, ACT is hereby authorized to sell or otherwise dispose of at fair market
value such portion of the consideration as is necessary to provide sufficient
funds to ACT 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.
ARTICLE 6
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 the Voting Share from ACT 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 ACT as trustee for and on behalf of the Holders in
accordance with the provisions of this Agreement;
(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 ACT 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;
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(h) taking action on its own initiative or at the direction of a Holder or
Holders to enforce the obligations of ACT 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 reasonable
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 Canada.
6.2 No Conflict of Interest. The Trustee represents to ACTsub and ACT 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 thirty (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. ACTsub and ACT irrevocably
authorizes 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 ACT Common Stock; and
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(b) requisition, from time to time from the transfer agent of ACT 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 this Article 6.
ACT irrevocably authorizes its registrars and transfer agents to comply with all
such requests. ACT 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 this Article 5.
6.4 Books and Records. The Trustee shall keep available for inspection by ACT
and ACTsub, at the Trustee's corporate trust office in Toronto, 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 March 31, 1999, and on or before March 31
in every year thereafter, so long as the Voting Share is on deposit with the
Trustee, the Trustee shall transmit to ACT and ACTsub a brief report, dated as
of the preceding December 31, with respect to:
(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 ACT of
ACT 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 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,
ACT 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
19
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 SectionE6.15 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 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
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 and 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 this Section 6.8, if applicable, and with any
other applicable provisions of this Agreement.
6.9 Evidence and Authority to Trustee. ACTsub and/or ACT 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
20
ACTsub and/or ACT 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 ACTsub and/or ACT 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 ACTsub and/or ACT 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 ACTsub and/or ACT
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.
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 ACTsub and/or ACT 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
opinion 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,
21
appraiser, valuer, engineer or other expert, whether retained by the
Trustee or by ACTsub and/or ACT 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,
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 (2) years after
their purchase by the Trustee, and are invested in such specific securities as
directed in writing by ACTsub and ACT. 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 in the deposit
department of the Trustee at the rate of interest then current on similar
deposits.
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 ACTsub's or ACT'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 ACTsub and/or ACT 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 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 ACTsub and ACT
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
22
shall not be affected in any manner whatsoever by reason only of such event but
the Trustee shall, within thirty (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
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 cairns 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
23
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 ACT Meeting
or the seeking of any ACT Consent or any prohibition of ACTsub against redeeming
any Retracted Shares as set out in Sections 2.4.6 and 3.4.6 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.
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 ACTsub and ACT 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 13.4, of a
change in Authorized Persons with updated specimen signatures.
ARTICLE 7
COMPENSATION
7.1 Fees and Expenses of the Trustee. ACT and ACTsub 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 ACT or ACTsub, 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 ACT and ACTsub shall
24
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.
ARTICLE 8
INDEMNIFICATION AND LIMITATION OF LIABILITY
8.1 Indemnification of the Trustee. ACT and ACTsub 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 ACT or ACTsub pursuant hereto. In no case shall ACT
or ACTsub be liable under this indemnity for any claim against any of the
Indemnified Parties unless ACT and ACTsub 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, ACT and ACTsub shall be entitled to
participate at their own expense in the defense and, if ACT or ACTsub 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 ACT or
ACTsub or (ii) the named parties to any such suit include both the Trustee and
ACT or ACTsub and the Trustee shall have been advised by counsel acceptable to
ACT or ACTsub that there may be one or more legal defenses available to the
Trustee that are different from or in addition to those available to ACT or
ACTsub and that an actual or potential conflict of interest exists (in which
case ACT and ACTsub 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) ACT and/or ACTsub 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
25
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, wilful misconduct or bad faith on the part of the Trustee.
ARTICLE 9
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 ACT and ACTsub
specifying the date on which it desires to resign, provided that such notice
shall never be given less than sixty (60) days before such desired resignation
date unless ACT and ACTsub 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, ACT and ACTsub 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 sixty (60) days' prior notice by written
instrument executed by ACT and ACTsub, 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 or trustee appointed as provided under this
Agreement shall execute, acknowledge and deliver to ACT and the ACTsub 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 ACT and ACTsub 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, ACT, ACTsub 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, ACT and ACTsub shall cause to be mailed notice of
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the succession of such trustee hereunder to each Holder specified in a List. If
ACT or ACTsub shall fail to cause such notice to be mailed within ten (10) days
after acceptance of appointment by the successor trustee, the successor trustee
shall cause such notice to be mailed at the expense of ACT and ACTsub.
ARTICLE 10
ACT SUCCESSORS
10.1 Certain Requirements in Respect of Combination, etc. ACT 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 "ACT Successor") incorporated under the laws of any state
of the United States or the laws of Canada or any province thereof;
and
(b) ACT Successor, by operation of law, becomes, without more, 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
ACT Successor of liability for all moneys payable and property deliverable
hereunder and the covenant of such ACT 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 ACT 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, ACT Successor and the ACTsub shall execute and deliver the
supplemental agreement provided for in Article 11 hereof and thereupon ACT
Successor shall possess and from time to time may exercise each and every right
and power of ACT under this Agreement in the name of ACT 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 ACT or any officers of ACT may be done
and performed with like force and effect by the directors or officers of such
ACT Successor.
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10.3 Wholly-Owned Subsidiaries. Nothing herein shall be construed as preventing
the amalgamation or merger of any wholly-owned subsidiary of ACT with or into
ACT.
ARTICLE 11
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 ACTsub, ACT and the
Trustee and approved by the Holders in accordance with Section 8.2 of the
Exchangeable Share Provisions.
11.2 Ministerial Amendments. Notwithstanding the provisions of SectionE11.1
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
ACT and the ACTsub 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 ACTsub and ACT 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. ACTsub, at the request of ACT, 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 ACTsub,
the Exchangeable Share Provisions and all applicable laws.
11.4 Changes in Capital of ACT and the ACTsub. Notwithstanding Section 11.1, at
all times after the occurrence of any ACT Common Stock Reorganization or Capital
Reorganization (as such terms are respectively defined in the Exchangeable Share
28
Provisions) or other change in either the ACT 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 force and effect, mutatis
mutandis, to all new securities into which ACT 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 ACTsub (when authorized by a resolution of the Board of
Directors), ACT (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 ACT Successors to ACT and the covenants
of and obligations assumed by each such ACT 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 ACT, the ACTsub, 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 12
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;
29
(b) each of ACTsub and ACT elects in writing to terminate the Trust and
such termination is approved by the Holders of the Exchangeable Shares
in accordance with Sections 2.7.2 and 3.7.2 of the Exchangeable Share
Provisions; and
(c) twenty-one (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 9.
ARTICLE 13
GENERAL
13.1 Survival of Representations and Warranties. The respective representations
of Sellers and ACT contained herein or in any certificates delivered prior to or
at the closing of any purchase and sale set out herein shall survive for a
period of twenty-four (24) months from the closing date, except as may be
required by their terms.
13.2 Further Assurances. At any time, and from time to time, after the closing
date, each party will execute such additional instruments and take such action
as may be reasonably requested by the other party to confirm or perfect title to
any property transferred hereunder or otherwise to carry out the intent and
purposes of this Agreement.
13.3 Waiver. Any failure on the part of any party hereto to comply with any of
its obligations, agreements or conditions hereunder may be waived in writing by
the party to whom such compliance is owed.
13.4 Notices. All notices and other communications hereunder shall be in writing
and shall be deemed to have been given if delivered in person or if sent by
prepaid first class registered or certified mail, return receipt requested, fax
or recognized courier then upon receipt thereof to the following addresses:
To Sellers: Drummer Enterprises Ltd.
c/o Del Industrial Metals Inc.
00 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Mr. J. Xxxxxx Xxxxx
Fax No. (000) 000-0000
30
Morstar Holdings Ltd.
c/x Xxxxxx Chevrolet Oldsmobile
000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx X0X 0X0
Attention: Mr. Xxxxx Xxxxxx
Fax No. (000) 000-0000
Scozul Enterprises Ltd.
0000 Xx. Xxxxx Xxxx
Xxxxxx Xxxxx, Xxxxxxx X0X 0X0
Attention: Xx. Xxxxx Xxxxx
Fax No. (000) 000-0000
To Acquiree: Ground Effects Ltd.
0000 Xx. Xxxxxxx Xxxx.
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: The President
Fax No. (000) 000-0000
with copies to: Xxxxxx Xxxxxxxx
Nobbs, Xxxxx & Xxxxx
00 Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx X0X 0X0
Fax No.(000) 000-0000
To ACT: Applied Cellular Technology, Inc.
000 Xxxxx Xxxx Xxx
Xxxxx 000
Xxxx Xxxxx, XX
00000, U.S.A.
Fax No. (000) 000-0000
with copies to: Xxx Xxxxxxxxxxx
Xxxxxxx Xxxxx & Xxxxxxxxx
Suite 2100
00 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxx
X0X 0X0
Fax No. (000) 000-0000
31
and to: Xxxx X. Creme, Esq.
Merra, Kanakis, Creme & Xxxxxx, P.C.
00 Xxxx Xxxxxx
Xxxxxx, XX 00000
Fax No. (000) 000-0000
To Trustee: Montreal Trust Company of Canada
000 Xxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX
X0X 0X0
Attention: Manager, Client Services
Corporate Trust Services
Fax No. (000) 000-0000
13.5 Expenses. Whether or not the transactions contemplated hereby are
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs and expenses.
13.6 Headings. The Section and subsection headings in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.7 Counterparts. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.8 Governing Law. This Agreement shall be governed by the laws of the Province
of Ontario.
13.9 Binding Effect. This Agreement shall be binding upon the parties hereto and
inure to the benefit of the parties, their respective heirs, administrators,
executors, successors and assigns.
13.10 Entire Agreement. This Agreement is the entire agreement of the parties
covering everything agreed upon or understood in the transaction. There are no
oral promises, conditions, representations, understandings, interpretations or
terms of any kind as conditions or inducements to the execution hereof.
13.11 Severability. If any part of this Agreement is deemed to be unenforceable
the balance of this Agreement shall remain in full force and effect.
32
13.12 Attornment. ACT 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 courts in any
such action or proceeding, agrees to be bound by any judgment of the said courts
and 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
Acquiree at its registered office as ACT's attorney for service of process.
13.13 Beneficiaries. The parties acknowledge that Drummer, Morstar and Scozul
are executing this Agreement as beneficiaries of the Trust hereby created only.
Each of Drummer, Morstar and Scozul hereby agree to be bound by the terms of
this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
APPLIED CELLULAR TECHNOLOGY, INC.
Per:
Xxxxxxx X. Xxxxxxxx
Its duly authorized President
DRUMMER ENTERPRISES LTD.
Per:
c/s
Per:
MORSTAR HOLDINGS LTD.
Per:
c/s
Per:
33
SCOZUL ENTERPRISES LTD.
Per:
c/s
Per:
ACT-GFX CANADA, INC.
Per:
c/s
Per:
MONTREAL TRUST COMPANY OF
CANADA
Per:
c/s
Per:
34
SCHEDULE A
NOTICE OF EXERCISE OF EXCHANGE RIGHT
TO: Montreal Trust Company of Canada
RE: Voting and Exchange Trust Agreement (the "Trust Agreement") between Applied
Cellular Technology, Inc. ("ACT"), a Missouri corporation, ACT-GFX Canada,
Inc., an Ontario corporation, Drummer Enterprises Ltd. ("Drummer"), an
Ontario corporation, Morstar Holdings Ltd. ("Morstar"), a Manitoba
corporation, Scozul Enterprises Ltd. ("Scozul"), an Ontario corporation,
(Drummer, Morstar and Scozul are hereinafter collectively referred to as
"Sellers"), Ground Effects Ltd. (the "Acquiree") and Montreal Trust Company
of Canada (the "Trustee")
The undersigned Holder of the Exchangeable Shares instructs the Trustee to
exercise the Exchange Right in accordance with Section 5.5 of the Trust
Agreement so as to require ACTsub to purchase from the undersigned Exchangeable
Shares and to issue and deliver certificates representing shares of ACT Common
Stock as follows:
Name in full:
Name in full: ---------------------------------------------
(Please state full names in which certificates are to be issued)
Address in full: ---------------------------------------------
---------------------------------------------
---------------------------------------------
Number and Class 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 ACTsub free and clear of all liens, claims and encumbrances.
(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.
35
All capitalized terms not defined herein shall have the meanings ascribed to
them in the Exchange Agreement.
DATED this30th day of June, 1998.
-----------------------------------
Name
-----------------------------------
Signature
36
SCHEDULE B
NOTICE OF EXERCISE OF EXCHANGE RIGHT
------------------------------------
TO: ACT-GFX CANADA, INC. ("ACTsub")
This notice is given pursuant to Section 5.6 of the Voting and
Exchange Trust Agreement (the "Trust Agreement") between Applied Cellular
Technology, Inc. ("ACT"), Drummer Enterprises Ltd., Morstar Holdings Ltd.,
Scozul Enterprises Ltd., ACT-GFX Canada, Inc. and Montreal Trust Company of
Canada (the "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 notifies ACTsub 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 ACT 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: ---------------------------
