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EXHIBIT 4.38
AMENDING AGREEMENT NO. 2
THIS AMENDING AGREEMENT NO. 2 ("AGREEMENT") is dated for reference the
4th day of September 2001.
AMONG:
686545 ALBERTA INC., 1187247 ONTARIO INC. AND 1188273 ONTARIO INC.
(together the "VENDORS")
AND:
XXX XXXXXXXX, XXXXXXX XXXXXXX and XXXXX DEL XXXXXXXX (collectively, the
"PRINCIPALS")
AND:
COMMERCIAL CONSOLIDATORS CORP., 0000 Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxx, X0X 0X0 (herein called the "PURCHASER").
WHEREAS:
The parties hereto entered into a share purchase agreement dated for
reference November 28, 2000 (the "SHARE PURCHASE AGREEMENT"), pursuant to which
the Vendors sold to the Purchaser all of the outstanding shares in the capital
of Max Systems Group, Inc., an Alberta corporation; and
The parties hereto entered into an amending agreement to the Share
Purchase Agreement dated for reference June 18, 2001 ("AMENDMENT NO. 1"); and
In connection with the consummation of the transactions contemplated by
the Share Purchase Agreement (a) the Purchaser and the Pledge Agent entered into
the Pledge Agreement, which is dated December 28, 2000, and (b) the Purchaser,
the Vendors and the Escrow Agent entered into the Escrow Agreement, which is
dated December 28, 2000; and
The parties are desirous of (a) further clarifying the parties intent
as to the acquisition of the Company by amending the Share Purchase Agreement,
as amended by Amendment No. 1, in the manner detailed herein, and (b) amending
the Pledge Agreement and the Escrow Agreement in the manner detailed herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements herein set forth, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties covenant
and agree as follows:
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1. PURPOSE OF AGREEMENT; CAPITALIZED TERMS.
(a) Each of the parties hereto do hereby acknowledge and agree that
under the laws of Canada and under generally accounting principles ("GAAP")
prevailing in Canada (i) the Purchaser took control over the business and
operations of the Company on December 1, 2000 (the "CONTROL ACQUISITION DATE"),
and (ii) the Closing of the transactions contemplated by the Share Purchase
Agreement were completed effective as of December 28, 2000 (the "COMPLETION
DATE"). The Purchaser has recently filed a registration statement under the
United States Securities Act of 1933, as amended (the "U.S. SECURITIES ACT") to
register its common stock for future trading on one or more United States
securities exchanges. The Vendors and the Principals have been advised by
Purchaser that under applicable United States securities laws and accounting
principles and policies based on U.S. GAAP, regulatory authorities in the United
States may consider that the transactions contemplated by the Share Purchase
Agreement were not consummated as of such Control Acquisition Date or Completion
Date. The purpose of this amendment Agreement is to clarify the mutual intention
of each of the Vendors, the Principals and the Purchaser that the Purchaser's
acquisition of control over the business and assets of the Company were
consummated as of the Control Acquisition Date, and that the Closing and
consummation of the transactions contemplated by the Share Purchase Agreement,
as amended hereby, was consummated on and is, for all purposes, deemed to have
been effective as of the Completion Date.
(b) All capitalized terms not otherwise defined herein shall have the
meanings given to them in the Share Purchase Agreement.
2. SHARE PURCHASE AGREEMENT. The Share Purchase Agreement, as amended by
Amendment No. 1 is hereby further amended as follows:
(a) The definition of "EBT" set forth in clause (k) of Section 1.1 is
deleted in its entirety, and the following definition is inserted in lieu
thereof:
"(k) "EBT" for any period means the Earnings Before Tax of the
Company for that period;"
(b) The definition of "Financial Statements" set forth in clause (o) of
Section 1.1 is deleted in its entirety, and the following definition is inserted
in lieu thereof:
"(o) "Financial Statements" means (i) the audited consolidated
financial statements of the Company as at February 28, 2002 and for the
twelve consecutive months then ended, prepared in accordance with
Canadian GAAP and accompanied by the audit report thereon of Xxxxx &
Partners, and (ii) the unaudited consolidated financial statements of
the Company as at the Statement Date and for the three consecutive
months ended May 31, 2002, also prepared in accordance with Canadian
GAAP and accompanied by a Certificate of the Chief Financial Officer of
the Purchaser addressed to the Sellers and certifying to that effect;
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(c) The definition of "Statement Date" set forth in clause (cc) of
Section 1.1 is amended by changing the same from "February 28, 2002" to "May 31,
2002;"
(d) The definition of "Settlement Date" set forth in clause (aa) of
Section 1.1 is deleted in its entirety, and the following definition is inserted
in lieu thereof:
"(aa) "Settlement Date" means that date which is 10 business
days following the date of publication of the Financial Statements, or
August 15, 2002, whichever is the earlier;"
(e) Section 2.2 is deleted in its entirety, and the following Section
2.2 is inserted in lieu thereof:
"2.2 The Purchase Price to be paid by the Purchaser for all of
the Vendors' Shares shall be equal to the product of multiplying by two
and one half (2.5), the total of (a) the EBT of the Company for the
twelve (12) consecutive months ended February 28, 2002, PLUS (b) the
EBT of the Company for the three consecutive months ended May 31, 2002,
all as reflected on the Financial Statements. Notwithstanding the
foregoing, or any other provision in this Agreement to the contrary, in
no event shall the total Purchase Price be (i) less than One Million
Seven Hundred and Fifty Thousand Dollars ($1,750,000) or (ii) greater
than Two Million Seven Hundred and Fifty Thousand Dollars
($2,750,000)."
(f) Section 12.1 is hereby deleted in its entirety and the following
Section 12.1 is substituted in lieu thereof:
"12.1 The Shareholders' Loans, as identified in the Present
Statements may only be withdrawn as follows:
(a) the entirety of the Shareholders' Loans which are
presently owing to Computer Enhancement Corporation, plus so much of
the remaining amount of the Shareholders' Loans (other than those
presently owing to Computer Enhancement Corporation), as when added to
the then amount of the Shareholders' Loans which are presently owing to
Computer Enhancement Corporation do not exceed 50% of the entire amount
of the Shareholders' Loans which are owing on the Settlement Date, may
be withdrawn on the Settlement Date, and
(b) the balance of such Shareholders' Loans may be withdrawn
on November 1, 2002."
(g) Section 12.3 is amended by deleting all words commencing with the
phrase "Until the earlier of the Settlement Date and the date..." on the first
line of such Section 12.3, and ending with the word "herein" on the third line
of such Section 12.3, and substituting in place thereof, the phrase "Until the
$750,000 cash portion of the Purchase Price is paid by the Purchaser,...".
Section 12.3 is further amended by changing "for the twelve months ending July
31, 2001" as it appears in clause (f) thereof to "any period ending on or before
the earlier of the date on which (1) the Purchase Cash is paid by the Purchaser,
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and (2) pursuant to the Pledge Agreement, the Pledge Agent, as the sole
registered shareholder of the Company appoints as the directors of the Company
one or more individuals designated for that purpose by the Vendors."
(h) Section 12.4 is amended by deleting the phrase "If prior to the
earlier of the Settlement Date and the Cancellation Date" and substituting in
place thereof, the phrase, "If prior to the Settlement Date...". Section 12.4 is
further amended by deleting in its entirety the last sentence of such Section
12.4.
(i) Section 12.6 is deleted in its entirety, and the following Section
12.6 is hereby substituted in lieu thereof:
"12.6 Purchaser covenants and agrees that it will in good
faith and as promptly as reasonably is possible in the
circumstances:
(a) cause there to be prepared and to be
audited by Xxxxx & Partners and published, the audited
consolidated financial statements of the Company as at
February 28, 2002 and for the 12 consecutive months then
ended, together with the certificate of Xxxxx & Partners
provided for in Section 15.1 hereof; and
(b) cause there to be prepared and published
the unaudited consolidated financial statements of the Company
as at the Statement Date and for the three consecutive months
then ended, and accompanied by the Certificate of the Chief
Financial Officer of the Purchaser which is provided for in
the definition of "Financial Statements" appearing herein;
the foregoing together to comprise the "Financial Statements" as defined herein.
The Purchaser covenants and agrees that it will deliver or cause a copy of each
of the same to be delivered to each of the Vendors forthwith after they
respectively have been published. Additionally, Purchaser covenants and agrees
as follows:
(i) if during the whole or any part of the
period covered by either of the financial statements which
together comprise the Financial Statements the Company has
accrued or paid to the Purchaser head office administration
fees, there will be particularized in a note to the relevant
financial statements the amount thereof which were accrued by
the Company to the Purchaser during the period covered by
those financial statements together with the respective months
during which the same were accrued and the months in which the
same were paid; and
(ii) there will be disclosed in a note to
the relevant financial statements whether or not the Company
has done or permitted any act to be done which constitutes a
contravention by the Purchaser of any of the covenants of the
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Purchaser set forth in Section 12.3 hereof, and if so,
particularizing the same."
(j) Section 13 is deleted in its entirety as of the Completion Date and
shall be of no further force or effect from and after the Completion Date.
(k) Section 15 is hereby amended as follows:
(i) Section 15.1 is amended so as to change "Financial
Statements" as it appears therein, in each case, to "the consolidated
financial statements of the Company as a February 28, 2002 and for the
12 consecutive months then ended",
(ii) The third sentence of Section 15.1 is hereby amended to
read as follows: "A majority of the Vendors may, by notice in writing
signed by them and delivered to the Purchaser within 15 business days
following the last of the following two dates, object to the audited
consolidated financial statements of the Company as at February 28,
2002 and for the 12 consecutive months then ended; such dates are (i)
the date upon which each of the Vendors has received such financial
statements and the audit certificate pertaining thereto, and (ii) the
date upon which each of the Vendors has received the "Unaudited
Financial Statements", as defined in Section 15.2 hereof."
(iii) Section 15.2 is hereby deleted in its entirety and the
following Section 15.2 inserted in lieu thereof:
"15.2 Upon the written request of a majority of the
Vendors, the Purchaser shall cause its Chief Financial Officer
to provide to a representative designated in writing by a
majority of the Vendors a copy of the working papers which the
Chief Financial Officer prepared or caused to be prepared or
reviewed with respect to his preparation or review of the
unaudited consolidated financial statements of the Company as
at the Statement Date and for the three consecutive months
ended on the Statement Date (the "UNAUDITED STATEMENTS"), and
shall cause the Chief Financial Officer of the Purchaser to
meet with that representative to answer that representative's
reasonable questions and inquiries as regards the Unaudited
Financial Statements. A majority of the Vendors may, by notice
in writing signed by them and delivered to the Purchaser
within 15 days of the Vendors' receipt of the Unaudited
Financial Statements together with the mandated Certificate of
the Chief Financial Officer of the Purchaser, object to the
Unaudited Financial Statements. In such event, unless within
the next following 15 business days the objections are
resolved and the Unaudited Financial Statements and the
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Certificate of the Purchaser's Chief Financial Officer are
revised to the extent necessary to give effect to such
resolutions, a majority of the Vendors shall designate a
representative of the Vendors (the "REPRESENTATIVE") to meet
with the Chief Financial Officer of the Purchaser and agree on
a firm of independent chartered accountants (the "ARBITRATOR")
to be appointed to (i) review the Unaudited Financial
Statements and such books and records of the Company as they
consider necessary to provide the following opinions, (ii)
hear the disputes of the parties as regards the Unaudited
Financial Statements, (iii) formulate opinions as regards the
matters in dispute, and (iv) revise the Unaudited Financial
Statements as necessary to accord with such opinions. If the
Representative and the Chief Financial Officer of the
Purchaser cannot agree on the firm to be appointed as the
Arbitrator for this purpose, the Purchaser and a majority of
the Vendors shall make application to the appropriate Court in
the Province of Ontario requesting that the Court appoint an
independent firm of chartered accountants to be the Arbitrator
for these purposes. The Unaudited Financial Statements (as so
revised, if so revised) as so reviewed by the Arbitrator
shall, absent manifest error, be final and binding on the
parties hereto for all purposes of this Agreement. If a
majority of the Vendors fail to deliver a notice objecting to
the Unaudited Financial Statements, as accompanied by the
mandated Certificate of the Chief Financial Officer of the
Purchaser, within the time provided for above or to nominate
the Representative within the time provided for above, absent
manifest error the Unaudited Financial Statements as delivered
to the Vendors and accompanied by the said Certificate shall
be final and binding on the parties hereto for all purposes of
this Agreement."
(iv) The following is hereby added as Section 15.3 of the
Purchase Agreement:
"15.3 At any time after the delivery to the Vendors
of the Financial Statements a majority of the Vendors may, by
notice in writing signed by them and delivered to the
Purchaser, require the Purchaser on not less than five
business days' prior notice to pay or cause to be paid and to
cause to be delivered the applicable amount of the Purchase
Cash and Purchase Shares which are to be paid and delivered by
the Purchaser on the Settlement Date, notwithstanding that any
query, question, or dispute may have been made or raised but
remain unresolved pursuant to Section 15.1 or 15.2. In that
event, the Purchaser shall do so on the assumption that the
Financial Statements in their then form are correct. In such
event, if pursuant to Section 15.1 or 15.2 there shall be any
revision to any of the financial statements which together
comprise the Financial Statements which has the effect of
increasing the Purchase Price to more than it would otherwise
have been based on the calculations set forth in the Financial
Statements delivered by Purchaser, the Purchaser shall cause
the Escrow Agent to deliver to the Vendors the additional
Purchase Shares to which they are entitled. Pending a
resolution of such queries, questions or disputes, the Escrow
Agent shall retain all of such additional Purchase Shares."
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(v) The following is added as Section 15.4 of the Purchase
Agreement:
"15.4 The costs of an objection process pursuant to
Section 15.1 or 15.2, including the fees and disbursements
charged by the Arbitrator and the costs related to any Court
proceedings, shall be borne by the Purchaser in circumstances
where as a result thereof the Purchase Price exceeds by 2% or
more the amount of the Purchase Price which would have
pertained had no such objection been raised; otherwise such
costs shall be borne by the Vendors on a joint and several
basis and as between themselves each as to one-third of the
amount thereof."
2A. HEAD OFFICE ADMINISTRATION FEES. Purchaser and Vendors confirm that the
provisions of Section 3 of the Amending Agreement dated for reference the 18th
day of June, 2001 remains in force. Purchaser and Vendors further agree as
follows as regards the "Administrative Fees", as defined in the said Section 3:
(i) There will be no payment of Administrative Fees which
accrue from and after May 31, 2002, until the Purchase Cash has been
paid to the Vendors and all Purchase Shares to which they respectively
are entitled have been delivered to them; and
(ii) If there is an "Event of Default" under the Pledge
Agreement, the Purchaser shall thereupon release and be deemed to have
released the Company and the Subsidiary from their obligations, if any,
to pay to the Purchaser any Administrative Fees which are then owing to
the Purchaser but unpaid.
3. PLEDGE AGREEMENT. The Pledge Agreement is hereby amended as follows:
(a) Section 2 of the Pledge Agreement is hereby deleted and
the following Section 2 is substituted in lieu thereof:
"2. You will hold the Certificates and Pledged
Shares, subject to the following terms and conditions:
(a) Upon receipt of a written document
signed by the Purchaser and a majority of the Vendors
stating that the Purchase Price has been paid in full
to the Vendors in accordance with the Share Purchase
Agreement, you shall endorse all of the Certificates
evidencing the Pledged Shares to the Purchaser and
otherwise take such steps as shall be necessary to
cause the Certificates to be transferred into the
name of the Purchaser and delivered up to the
Purchaser. In such connection, the Pledge Agent shall
deliver the Pledged Shares to the Purchaser, by
delivering to the Purchaser the share certificates
representing the Pledged Shares, duly endorsed by the
Pledge Agent for transfer in blank.
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(b) Upon receipt of a written document
signed by a majority of the Vendors to the effect
that the Purchase Cash has not been paid in full on
the Settlement Date, unless the Purchaser shall
promptly provide the Pledge Agent with evidence
satisfactory to the Pledge Agent that the Purchase
Cash has, in fact, been paid in full, an "Event of
Default" under this Pledge Agreement shall be deemed
to have occurred. Following the occurrence and during
the continuation of such Event of Default, the
following terms and conditions shall apply:
(i) All Pledged Shares shall continue
to be held by the Pledge Agent under the
terms of this Pledge Agreement.
(ii) All or any portion of the
Purchase Cash which is not paid when due
shall bear interest from the date that it
became payable, and until it is paid, and
both before and after judgment, at the
simple rate of 10% per annum.
(iii) The Purchaser shall be liable to
reimburse the Vendors for all reasonable
out-of-pocket costs (including their
solicitor's fees on the basis of a solicitor
and his own client) which they incur from
time to time in consequence of the
Purchaser's default, including but without
limitation the out-of-pocket costs which
they incur in obtaining legal advice with
respect to, and making, their elections as
provided for herein, and the reasonable
out-of-pocket costs which they incur in
pursuing their rights and remedies against
the Purchaser and the Pledged Shares and in
realizing upon the security of the Pledged
Shares. To the extent not paid by the
Purchaser within ten (10) days from being
invoiced for such costs (subject only to
Purchaser's right to question in good faith
the appropriateness of any such cost item),
the amount of reimburseable costs shall bear
interest commencing after ten days following
the respective date(s) of invoicing thereof
by the Vendors, and until reimbursed to them
by or for the account of the Purchaser, and
both before and after judgment, at the
simple rate of 10% per annum.
(iv) The Pledge Agent shall vote the
Pledged Shares, or as the sole registered
shareholder of the Company pass written
resolutions of the sole shareholder, on all
matters requiring the affirmative vote or
consent of shareholders of the Company in
accordance with the written instructions of
a majority of the Vendors which instructions
shall be provided to the Pledge Agent and
the Purchaser; provided, however, that the
Pledge Agent shall not follow such written
instructions if they would cause any of the
affirmative and negative covenants set forth
in clause (iii) of Section 2(c) below to be
violated.
(v) The Vendors shall advise the
Pledge Agent and the Purchaser in writing
(the "ELECTION NOTICE") on or before a date
which shall be ninety (90) days following
the Settlement Date (the "NOTIFICATION
PERIOD") as to whether the Vendors shall
elect to either (A) re-acquire legal and
beneficial ownership of the Pledged Shares
(the "SHARE RECOUPMENT"), or (B) effect a
sale and transfer for value of the Pledged
Shares ("SALE OPTION"). In the event that
the Vendors do not submit an Election Notice
by the expiration of the Notification
Period, unless the Event of Default shall
have been cured by Purchaser by such date,
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the Vendors shall be deemed to have elected
the Sale Option. Once an Election Notice
shall be delivered, the Vendors may not
change the election contained therein
without the prior written consent of the
Purchaser.
(vi) The Purchaser shall have the
right to cure the Event of Default in the
manner provided in clause (v) below at any
time during the thirty (30) day period
immediately following the Settlement Date,
and thereafter until a date which shall be
the EARLIEST to occur of (A) the expiration
of the ninety (90) day Notification Period,
(B) the Purchaser's receipt of an Election
Notice for a Share Recoupment, or (C) the
execution by the Vendors of an agreement to
sell the Pledged Shares (the "CURE PERIOD").
(vii) In order to cure such Event of
Default, the Purchaser shall, within the
Cure Period, pay to Robins, Xxxxxxx & Xxxx
(the Vendors' solicitors), in trust, by bank
cashiers' or certified cheque or wire
transfer of immediately available funds, the
full amount of the Purchase Cash not paid by
the Settlement Date, plus simple interest on
such unpaid amount, accrued from the
Settlement Date to the date of payment at
the rate of 10% per annum (collectively, the
"DEFAULT CASH PAYMENT"). In addition to the
Default Cash Payment, to the extent not
previously delivered, the Purchaser shall
instruct the Escrow Agent to deliver to the
Vendors in the manner provided in the Share
Purchase Agreement and the Escrow Agreement
all remaining shares of common stock of the
Purchaser representing the balance of the
Purchase Shares payable as part of the
Purchase Price under the Share Purchase
Agreement. Upon timely payment and delivery
of the foregoing payments and instructions,
the Pledge Agent (in its capacity as Escrow
Agent) shall in accordance with the Share
Purchase Agreement (A) deliver to the
Vendors all such Purchase Shares, and (B)
deliver to the Purchaser the share
certificates representing the Pledged Shares
in the manner provided in Section 2(a)
above.
(c) In the event that the Purchaser shall not cure
the Event of Default within the Cure Period and the Vendors
shall timely elect the Share Recoupment option described in
clause (v) of Section 2(b) above, such election shall be
deemed to be in full satisfaction of all debts and other
obligations owed by Purchasers to the Vendors and the
Principals under the Share Purchase Agreement, including the
sums referred to in clause (ii) of Section 2(b) above, but not
the sums referred to in clause (iii) of Section 2(b) above. In
addition, by a date which shall be not later than ten (10)
days following the expiration of the Cure Period, the Vendors
shall, in the manner described herein, repay the Purchaser the
full Purchase Price under the Share Purchase Agreement, as
finally calculated on the Settlement Date. The Vendors shall
repay such Purchase Price by (1) returning to the Purchaser
any and all Purchase Shares (valued at $4.25 per share)
previously delivered to the Vendors by the Purchaser or the
Escrow Agent and not sold by such Vendors, (2) instructing the
Escrow Agent to deliver back to the Purchaser legal and
beneficial title to all stock certificates evidencing all
shares of Purchaser's common stock then being held by the
Escrow Agent under the Escrow Agreement, and (3) if
applicable, issuing to the Purchaser the Vendors' non-interest
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bearing non-negotiable (but transferable) promissory note (the
"VENDORS NOTE") in an amount equal to the product of (i)
$4.25, multiplied by (ii) the number of Purchase Shares
previously delivered by Purchaser or the Escrow Agent to
Vendors and which have shall been sold by the Vendors. Such
Vendors Note shall:
(i) be non-interest bearing and be payable
in full on a date which shall be eighteen months from
the date of the Election Notice;
(ii) be secured as to payment by a
continuing pledge of the Pledged Shares which shall
be retained by the Pledge Agent under this Pledge
Agreement;
(iii) provide that until such Vendors Note
shall have been paid in full, each of the Vendors
shall cause the Company to comply with all of the
affirmative and negative covenants contained in
Section 12.3 of the Share Purchase Agreement; and
(iv) provide that the Vendors may satisfy
their obligation to pay the whole or any part of the
principal amount thereof by delivering to the
Purchaser issued and outstanding shares of common
stock of the Purchaser, for which deliveries the
Vendors shall receive credit at the rate of $4.25 for
each such share so delivered.
In the event that for any reason the Vendors shall fail to
timely pay, when due, the Vendors Note, the Purchaser shall have the right, by
written instructions to the Pledge Agent, to realize on the security of the
Pledged Shares and shall have all of the rights of a secured creditor with
respect to such Pledged Shares and in that regard the provisions of all but the
first two sentences of Section 2(e) shall apply MUTATIS MUTANDIS, as if the
references therein to the Vendors were references to the Purchaser and vice
versa. If the Vendors timely pay the Vendors Note, the Pledge Agent shall
deliver the Pledged Shares to the Vendors, by delivering to them the share
certificates representing the Pledged Shares, duly endorsed by the Pledge Agent
for transfer in blank.
(d) In the event that the Purchaser shall not cure the Event
of Default within the Cure Period and the Vendors shall timely elect
(or be deemed to have elected) the Sale Option described in clause (v)
of Section 2(b) above, all remaining Purchase Shares not previously
delivered to the Vendors shall be delivered to them.
(e) In the event that the Purchaser shall not cure the Event
of Default within the Cure Period and the Vendors shall timely elect
(or be deemed to have elected) the Sale Option described in clause (v)
of Section 2(b) above, the Pledge Agent shall hold the Pledged Shares
on behalf of the Vendors, as security for the payment by the Purchaser
to the Vendors of all sums owing by the Purchaser to the Vendors, and
the Vendors shall as regards the Pledged Shares have all rights of a
secured creditor under all applicable legislation; and the following
clauses (i) through (viii) shall apply. In that event, the Vendors
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shall be entitled to sell or cause the Pledged Shares to be sold so as
to realize on the security thereof. The Pledge Agent shall release to
the Vendors as required, so that they may complete such a sale, the
share certificate representing the Pledged Shares, duly endorsed by the
Pledge Agent for transfer in blank. In addition:
(i) The Purchaser shall have thirty (30) days from
the date that the Vendors have elected or are deemed to have
elected the Sale Option, by written notice to the Vendors to
that effect, to require the Vendors to retain at the sole cost
and expense of the Purchaser a reputable investment banker,
who shall be named in such notice, to attempt to arrange on
behalf of the Vendors for a sale of the Pledged Shares;
(ii) In the event that such notice is timely given by
the Purchaser, the Vendors shall attempt to engage the
designated investment banker, provided that it shall be a term
of such engagement that the investment banker agrees with the
Vendors that it shall look solely to the Purchaser for payment
of its fees and expenses;
(iii) The investment banker shall have the period of
ninety (90) days from the date of its engagement to identify a
buyer for the Pledged Shares who is prepared to pay therefor a
cash price which is not less than that mandated below or such
lesser price as a majority of the Vendors are prepared to
accept;
(iv) The investment banker shall provide to the
Vendors and the Purchaser a copy of each written offer or
expression of interest to purchase the Pledged Shares which
the investment banker receives from any third party, and
forthwith after the time that the investment banker receives
the same;
(v) If the investment banker is able to identify
within the said period of ninety (90) days a third party buyer
who is prepared to purchase the Pledged Shares for a cash sum,
to be paid to the Vendors, which will net them from the sale
an amount sufficient to pay the sums referred to in clause
(vi) below, the Vendors shall be obliged to sell the Pledged
Shares to such third party for the purchase price offered,
provided that (i) by agreeing to the sale none of the Vendors
assumes any liability or obligation whatsoever to the third
party purchaser but for the obligation to complete such sale
if the Vendors are legally entitled to complete such, and (ii)
any one or more of the Vendors may, by a date which shall not
be later than ten (10) days prior to the date of the proposed
sale of the Pledged Shares to such third party, elect to
purchase the Pledged Shares for its or their own account and
benefit, for a cash purchase price which is not less than the
cash purchase price which would be payable to the Vendors by
such third party for the Pledged Shares if the Vendors agreed
to sell the Pledged Shares to that third party on the terms
that such third party is prepared to purchase the same;
(vi) The Vendors shall not be obliged to sell the
Pledged Shares unless the net cash proceeds of such a sale
which at the completion of such sale are to be received by the
Vendors shall be sufficient (A) to pay the sums referred to in
clause (iii) of Section 2(b) hereof, (B) to pay the sums
referred to in clause (ii) of Section 2(b) hereof, (C) to pay
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the then amount of Purchase Cash which is owing to the
respective Vendors, and (D) to pay all other sums, if any,
which are owing by the Purchaser to the respective Vendors;
(vii) In the event that (1) Purchaser shall not
timely provide to the Vendors the notice provided for by
clause (i) above, or (2) the designated investment banker
shall be unwilling to accept the engagement provided for in
clause (ii) above, or (3) the investment banker shall be
unable to identify within the said period of ninety (90) days
a buyer who is prepared to purchase the Pledged Shares for a
price and on terms as provided for in clauses (iv) and (v)
above, or (4) the Vendors shall have complied with all of the
above but the Pledged Shares shall remain unsold, the Vendors
shall be entitled upon fifteen (15) days prior written notice
to the Purchaser to effect a sale of the Pledged Shares at
public auction, and any one or more of the Vendors may
purchase the Pledged Shares thereat; and
(viii) The proceeds of the sale by the Vendors of the
Pledged Shares shall be applied in the following orders of
priority: (A) to pay the sums referred to in clause (iii) of
Section 2(b) hereof, (B) to pay the sums referred to in clause
(ii) of Section 2(b) above, (C) to pay the then unpaid amount
of the Purchase Cash which is owing to the respective Vendors,
(D) to pay all other sums, if any, which may be owing by the
Purchaser to the respective Vendors; and (E) any balance
thereafter remaining shall be paid to the Purchaser.
4. ESCROW AGREEMENT. The Escrow Agent shall forthwith deliver to each of
the Vendors a share certificate or share certificates representing 78,431
Purchase Shares, and each Vendor agrees that such delivery will satisfy the
obligation of the Purchaser to pay to that Vendor $333,333.33 of the portion of
the Purchase Price which is to be paid to that Vendor and satisfied by Purchase
Shares. This delivery is provided for in recognition of the fact that (i) in
consequence of the amendments which are made by this Agreement the minimum
Purchase Price is $1,750,000; and (ii) since the maximum Purchase Price is
$2,750,000, the amount of the Purchase Cash is fixed at $750,000. After the
distribution of an aggregate of 235,293 Purchase Shares to all of the Vendors,
as aforesaid, the Escrow Agent shall (i) continue to retain in escrow an
additional 700,000 shares of common stock of the Purchaser, to be held in
accordance with the terms of the Share Purchase Agreement, as amended hereby,
and the Escrow Agreement, and (ii) redeliver to the Purchaser the remaining
shares of Purchaser common stock then held subject to the Escrow Agreement.
(a) The Escrow Agreement is hereby amended to the extent
necessary to give effect to Section 15.3 of the Purchase Agreement, as
added to the Purchase Agreement by clause (iv) of Section 2(k) of this
Agreement.
(b) The Escrow Agreement is hereby amended to the extent
necessary to give effect to the provisions of subsections 2(b)(vii) and
2(d) of the Pledge Agreement, as those subsections have been enacted by
Section 3 of this Agreement.
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(c) The Escrow Agent shall effect its delivery of Purchase
Shares to any particular Vendor in one of the following two manners:
(i) by causing there to be transferred into the name
of that Vendor out of the Purchase Shares which it is holding
under the Escrow Agreement, the appropriate number of Purchase
Shares and delivering the share certificate representing the
same, as so registered in the name of that Vendor, to that
particular Vendor; or
(ii) by delivering to that Vendor a share certificate
or share certificates registered in the name of the Escrow
Agent and representing the appropriate number of Purchase
Shares, duly endorsed by the Escrow Agent for transfer in
blank, with the Escrow Agent's endorsement signature
guaranteed in manner such, and the share certificate(s) being
accompanied by other documents evidencing the power and
authority of the individual signing on behalf of the Escrow
Agent, and with respect to the Escrow Agent itself, in form
such, that without further documentation the transfer agent
for the shares represented by such share certificate or share
certificates will upon receipt of all of the same process a
transfer on the share books of the Purchaser of the relevant
shares from the name of the Escrow Agent into the name of such
Vendor.
(d) Purchaser hereby covenants and agrees with each Vendor
that the share certificates representing the Purchase Shares as
delivered by the Escrow Agent to that Vendor will not bear any legend
restricting the transfer thereof.
(e) Each Vendor hereby acknowledges that none of the shares in
the capital of the Purchaser, including the Purchase Shares, will have
been registered under the UNITED STATES SECURITIES ACT OF 1933, as
amended (the "U.S. SECURITIES ACT"), and accordingly that none of them
may be publicly sold or otherwise transferred or distributed in the
United States except pursuant to the registration requirements of the
U.S. Securities Act or receipt of an opinion of duly qualified counsel
to the effect that registration of the same is not required under the
U.S. Securities Act. This provision is in addition to Section 2.7 of
the Share Purchase Agreement.
5. MISCELLANEOUS.
(a) Except to the extent amended hereby, each of the Share
Purchase Agreement, the Pledge Agreement and the Escrow Agreement shall
continue in full force and effect, and is deemed incorporated by this
reference herein.
(b) This Agreement may be executed in one or more counterparts
and by facsimile transmission, each of which shall be deemed to be an
original and all of which will together constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and
delivered on this 4th day of September 2001, to be effective as of the
Completion Date.
686545 ALBERTA INC. ACCEPTED AND AGREED,
AS PLEDGE AGENT AND ESCROW AGENT
XXXXX, XXXXXX
PER:__________________________
AUTHORIZED SIGNATORY
PER:__________________________
1187247 ONTARIO INC. AUTHORIZED SIGNATORY
PER:__________________________
AUTHORIZED SIGNATORY
1188273 ONTARIO INC.
PER:__________________________
AUTHORIZED SIGNATORY
/S/ Xxx Xxxxxxxx
__________________________
XXX XXXXXXXX
/S/ Xxxxxxx Xxxxxxx
__________________________
XXXXXXX XXXXXXX
/S/ Xxxxx Del Xxxxxxxx
__________________________
XXXXX DEL XXXXXXXX
COMMERCIAL CONSOLIDATORS
CORP.
BY:__________________________
AUTHORIZED SGINATORY
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