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-2(g)
AND WHEREAS the Shareholders wish to establish their rights and obligations in respect of
the Shares now or hereafter owned by them, the election or removal of Directors, the
management and control of the Corporation and certain other matters as hereinafter set forth;
AND WHEREAS the parties hereto agree that it is in the best interests of the Corporation to
enter into an agreement providing for the orderly disposition of Shares upon the occurrence
of certain specific events;
AND WHEREAS the parties hereto intend that this Agreement shall operate and be
construed as a Unanimous Shareholder Agreement under the Act;
AND WHEREAS the Shareholders have agreed to provide Initial Financial Contribution to
the Corporation as set out in Article 2.01 of Schedule A;
NOW THEREFORE this Agreement witnesses that in consideration of the premises and
mutual promises, covenants and conditions hereinafter set forth, the parties hereto agree as
follows:
ARTICLE 1 - DEFINITIONS AND INTERPRETATION
1.01
Definitions
Where used in this Agreement unless the context otherwise requires, the following words and
phrases shall have the meaning ascribed to them below:
(a)
"Accountants" means such independent firm of chartered accountants as may, from
time to time, be chosen by the Shareholders as auditors or accountants of the Corporation;
(b)
"Act" means the Business Corporations Act, Statutes of Alberta, 1981, Chapter B-15,
as amended from time to time, and every statute that may be substituted therefor, and in the
case of any such amendment or substitution, any reference in this Agreement to the Act shall
be read as referring to the amended or substituted provisions therefor;
(c)
"Agreement" means this agreement including any and every amendment or
supplement hereto and any and every instrument supplemental or ancillary hereto;
(d)
"Articles" means the articles of incorporation of the Corporation filed _______, 201_;
(e)
"By-laws" means any by-laws of the Corporation which are, from time to time, in
force and effect;
(f)
(g)
(h)
"Directors" means persons who are, from time to time, in accordance with the terms
of this Agreement, duly elected or appointed directors of the Corporation;
-3(i)
(j)
"Disproportionate Advances" means the excess amount of any Shareholder Advance
owing to a Shareholder which, having regard to the total amount owed by the Corporation to
all Shareholders in respect of Shareholder Advances, is more than that Shareholder's
proportionate holdings of Shares;
(k)
"Guarantee Agreement" means an agreement by way of guarantee given or to be
given, as the case may be, by one (1) or more of the Shareholders or the shareholder of a
Corporate Shareholder with the consent of the Shareholders or pursuant to the provisions of
this Agreement, for the repayment of any indebtedness of the Corporation or for the
performance by the Corporation of any of its other obligations;
(l)
"Officers" means persons who are, from time to time, in accordance with the terms of
this Agreement, duly elected or appointed officers of the Corporation;
(m)
Property means the real estate property or properties purchased and held by the
Corporation and, where the context so permits, may mean a specific or individual property
purchased or sold by the Corporation;
(n)
Shareholders means, collectively, ________________________ and any additional
shareholders hereafter acquiring Shares in accordance with this Agreement;
(o)
"Shareholder Advances" means, with respect to each Shareholder, all outstanding
loans due and owing from time to time by the Corporation to such Shareholder;
(p)
"Shareholder Interest" means all the Shares owned by a Shareholder plus all
Shareholder Advances owed to that Shareholder;
(q)
"Shares" means all present and future issued and outstanding shares of the
Corporation of any class or series;
(r)
"Substantial Default" means with respect to a Shareholder that such Shareholder has
been deemed pursuant to Article 9.01 hereof to have made a Disposition of the Shareholder
Interest of that Shareholder.
1.02
Headings
The captions and headings in this Agreement are for convenience of reference only and shall
not affect the interpretation of any provisions in this Agreement or its scope or intent.
1.03
Applicable Law
This Agreement shall be interpreted in accordance with the laws of the Province of Alberta.
1.04
Genders
Wherever the singular is used, it shall be deemed to extend to and include the plural and vice
versa, and where one gender is used, it shall include all genders.
-41.05
Severability
Any provision of this Agreement which is invalid or unenforceable may be severed and such
severance shall not affect the validity or enforceability of any other provision or covenant
herein contained.
ARTICLE 2 - PRECEDENCE OF THIS AGREEMENT
2.01
Compliance By Corporation
Each of the Shareholders will as a shareholder of the Corporation at all times so hold and act
and, in all other respects, use his best endeavors and take all such steps as may be reasonably
within his power so as to cause the Corporation to act in accordance with the spirit and intent
of this Agreement, including the entering into of agreements by the Corporation with one or
more of the Shareholders, or other persons, whereby the Corporation shall bind itself to take
such action as the Shareholders have agreed herein shall be taken by the Corporation, but
excluding the rights and obligations of the Corporation arising or incurred prior to the date of
this Agreement.
2.02
Amendment of Articles
Should there be, or at any time that this Agreement is in force should there hereafter arise,
any conflict between the provisions of this Agreement and the Articles then any of the
Shareholders may, to the extent permitted by law, at any time require the others with him to
cause the Articles to be amended to the extent necessary to remove or correct such conflict.
2.03
The Corporation by its execution hereof, hereby acknowledges that it has actual notice of the
terms of this Agreement, consents thereto and hereby covenants with each of the
Shareholders that it will at all times during the continuance hereof be governed by this
Agreement in carrying out its business and affairs and accordingly, shall give or cause to be
given such notices, execute or cause to be executed such deeds, transfers and documents and
do or cause to be done all such acts, matters and things as may from time to time be necessary
or conducive to the carrying out of the terms and intent hereof.
2.04
The Parties agree that this Agreement is and shall operate as a Unanimous Shareholder
Agreement under the Act and, as such, this Agreement shall be binding upon any person who
becomes a Shareholder after the date hereof with the addition of one or more Parties not
resulting in an amendment to this Agreement or a new Agreement to have been entered into
by the Parties.
ARTICLE 3 - IMPLEMENTATION OF AGREEMENT
3.01
Effect of Agreement
Each of the Shareholders shall vote or cause to be voted the Shares owned by him in such a
way so as to fully implement the terms and conditions of this Agreement and shall, if any
-5Director for any reason refuses to exercise his discretion in accordance with the terms of this
Agreement, forthwith take such steps as are necessary to remove each such Director.
3.02
Deemed Consent
Each of the Shareholders shall be deemed to have consented to any transfer of Shares made in
accordance with this Agreement and each covenant, and agrees to waive any restriction on
transfer contained in the Articles or By-laws in order to give effect to such transfers.
ARTICLE 4 - DIRECTORS AND OFFICERS
4.01
Board of Directors
The board of Directors of the Corporation shall consist of up to five (5) Directors, all of
whom shall be the nominee of Clearview.
4.02
No Director elected by the holders of one of the classes of Shares shall be removed from
office prior to the end of the term of that Director without the consent of the Shareholders of
such class expressed by ordinary resolution of the Shareholders of such class unless such
Director is petitioned into bankruptcy, makes an assignment for the benefit of his creditors, is
judged insane or incompetent to handle his own affairs by a court of competent jurisdiction or
has defaulted in the payment of any sums due and owing by him to the Corporation and such
default continues after twenty one (21) days from the date of notice of such default having
been given to such Director by the Corporation or an Officer.
4.03
Replacement of Directors
Subject to paragraph 4.01, any vacancy on the board of Directors occurring as a result of the
death, incapacity or resignation of any Director elected by the holders of one of the classes of
Shares shall be filled by a nominee elected by the holders of that class of Shares.
4.04
Indemnity
The Shareholders jointly and severally covenant and agree, in proportion to the holdings of
Shares by such Shareholder, to indemnify and save harmless each of the Directors and his
representatives from and against all claims, liability, costs, charges and expenses, including
legal fees on a solicitor/client basis sustained or incurred by each such Director in respect of
any matter by reason of the exercise or purported exercise by the Shareholders or any of them
of the rights, powers, duties and liabilities expressed herein to be assumed from the Directors
by the Shareholders.
ARTICLE 5 - CONDUCT OF THE BUSINESS OF THE CORPORATION
5.01
Unanimous Consent
Unless otherwise agreed by unanimous consent of the Shareholders who are not in
Substantial Default, the Shareholders shall not cause or permit the Corporation, and the board
of Directors shall not authorize the Corporation, to:
-6-
a)
take or institute any proceedings for the winding-up, reorganization or dissolution of
the Corporation;
b)
sell, lease or exchange all or substantially all of the property of the Corporation,
provided, however, that the Voting Shareholders may have a Property (or Properties)
appraised, at its own expense, by a qualified appraiser (Appraiser) acceptable to the other
parties, such approval not to be arbitrarily withheld. If the Appraisers report is acceptable to
the other parties, such approval not to be arbitrarily withheld, and if the appraised value of the
Property is reduced more then ten percent (10%) the sum of the initial purchase price plus all
expenses to the date of closing inclusive of all closing expenses which shall include for the
purposes of this calculation a deemed seven percent (7%) real estate commission (Adjusted
Value) then the Voting Shareholders may direct that the Property be forthwith placed on the
market for sale.
c)
d)
increase or decrease the authorized or issued capital of the Corporation or alter its
capital structure in any way;
e)
permit Shares to be issued by the Corporation nor the Corporation to enter into nor
undergo any reconstruction, or reorganization which would have the effect of altering the
proportionate shareholdings of the Shareholders as set out in the preamble to this Agreement
or the rights attached to such shareholdings;
f)
acquire any leasehold interests in real property with respect to which the underlying
leases cannot be terminated on ninety (90) or fewer days notice;
g)
enter into any financial commitment of any type whatsoever including, without
limitation, any purchase, sale, loan, borrowing or expenditure where:
(i) such financial commitment, individually, is in excess of the sum of $10,000.00; or
(ii) such financial commitment, when added to all the other outstanding financial
commitments of the Corporation, results in such financial commitments
exceeding, in the aggregate, the sum of $20,000.00;
(h)
(i)
enter into any employment agreements, other than as expressly set out in this
agreement, providing for annual salary or compensation; or
(j)
make any investments of any nature whatsoever other than with one or more of the
five largest (by assets) Canadian Schedule A Chartered Banks and Canadian Trust
Companies.
-75.02
Form of Consent
The execution of any written agreement or Shareholders' resolution by all the Shareholders
who are not in Substantial Default shall constitute the consenting agreement of the
Shareholders contemplated in this Article 5.
5.03 Finance Committee
The Shareholders authorize the Directors to form a committee and delegate to the
committee the authority to function and carry out the responsibilities outlined in
Schedule A attached.
ARTICLE 6 - FINANCING
6.01
The parties agree that the Corporation shall be financed according to Article 2 of Schedule
A.
6.02
Shareholder Advances
-8(g)
all Shareholder Advances may be prepaid by the Corporation in whole or in part at
any time or times without notice or bonus, subject however to Article 6.02(f).
6.03
Subordination
Each Shareholder shall, at the request of the board of Directors, subordinate his Shareholder
Advances (other than Disproportionate Advances) in favour of any bank or lending institution
providing financing to the Corporation.
6.04
Disproportionate Advances
Unless otherwise agreed by the parties, Disproportionate Advances shall not bear interest and
shall be repaid by the Corporation to the Shareholder upon demand in priority to other
Shareholder Advances that are not Disproportionate Advances.
6.05
Distributions
It is the intention of the Shareholders that all profits, benefits and advantages accruing or paid
from the Corporation shall be shared in proportion to their Shares held except where
otherwise provided in this Agreement, and except where the board of Directors unanimously
resolves to provide reasonable compensation to any of the Shareholders for services
performed for the Corporation by one of the Shareholders or for benefits received by the
Corporation as a result of the actions of the Shareholder.
6.06
-9Shareholder's proportionate share (based on his holdings of Shares) of the obligations of the
Corporation.
6.08
Notice of Liability
(d)
confirm that the Shareholders decision to invest in the Corporation was made solely
on the basis of:
(i)
the facts surrounding the Shareholders Interest in the Corporation which the
Shareholders hereby confirm that they have independently verified;
(ii)
the provisions of this written Unanimous Shareholder Agreement which the
Shareholders hereby confirm that they fully understand; and
(iii)
the advice received by the Shareholders from their own chosen professional
and personal advisors, competent in the Shareholders' opinion to offer said advice and
totally independent of A.J. Slivinski and Mary Jo Slivinski.
- 10 -
Prohibitions
No additional Shares shall be issued nor shall the Shareholders sell, assign, pledge, transfer,
encumber or dispose of any Shares or Shareholder Interest except in accordance with the
terms of this Agreement.
7.02
No additional securities of any Corporate Shareholder shall be issued nor shall any Corporate
Shareholder authorize or permit the sale, assignment, pledge, transfer, encumbrance or
disposition of any securities of such Corporate Shareholder, thereby resulting in a change in
control of the Corporate Shareholder, except in accordance with the terms of this Agreement.
7.03
The provisions of this Agreement relating to Shares shall apply mutatis mutandis to:
(a)
any shares or securities into which such Shares may be converted, changed,
reclassified, redivided, redesignated, redeemed, subdivided or consolidated;
(b)
any shares or securities that are received by the Shareholders as a stock dividend or
distribution payable in shares or securities of the Corporation; and
(c)
any shares or securities of the Corporation or of any successor or continuing company
or corporation to the Corporation that may be received by the Shareholders on a
reorganization, amalgamation, consolidation or merger, statutory or otherwise.
7.04
Consent Procedure
Any act prohibited by Articles 7.01 and 7.02 will be permitted and will not constitute a
default under this Agreement nor will it constitute a Disposition, provided that it is approved
by the unanimous resolution of all of the Shareholders not in Substantial Default and any
conditions attached to such approval are met. The Shareholders agree that they will not
unreasonably withhold approval of any disposition of the Shareholder Interest of a
Shareholder to a corporation controlled by the Shareholder or, with respect to an existing
Corporate Shareholder, to its shareholders or a corporation controlled by its shareholders.
7.05
Certificate Endorsement
Certificates for all Shares shall be endorsed with reference to the foregoing as follows:
"The Shares represented by this Certificate are subject to the provisions of a
Unanimous Shareholder Agreement made among the Corporation and its
Shareholders and such Shares are not transferable on the books of the
Corporation except in compliance with the terms and conditions of such
Agreement represented thereby, and such Agreement grants to the Shareholder
an option to purchase such Shares in certain events."
- 11 -
Offer to Purchase
If during the operation of this Agreement any Shareholder (in this Article referred to as the
"Initiating Party") desires to sell, transfer or assign all or any portion of the Shareholder
Interest of the Initiating Party, the Initiating Party shall give notice to the other Shareholders
not in Substantial Default, (such Shareholders not in Substantial Default in this Article
referred to as the "Remaining Parties") indicating the intention to offer that Shareholder
Interest or a portion thereof for sale and the price and terms on which it intends to make the
offer. The Remaining Parties shall, in proportion to the respective holdings of Shares of
those who desire to participate, have the right to purchase such Shareholder Interest or
portion thereof offered at such price and upon such terms as are set out in the notice.
8.02
Acceptance of Offer
If within thirty (30) days following the date of giving notice under Article 8.01 no agreement
is reached between the Initiating Party and the Remaining Parties as contemplated under
Article 8.01, then the Initiating Party is at liberty to offer such Shareholder Interest or portion
thereof to any other purchaser, subject however to a right of first refusal in favour of the
Remaining Parties in respect of any proposed sale of such Shareholder Interest and provided
that any such purchaser is a bona fide purchaser and a person, firm or corporation dealing at
arms length which is not directly or indirectly controlled by the Initiating Party or any of the
other parties.
8.03
Prior to concluding a sale of such Shareholder Interest pursuant to Article 8.02, an Initiating
Party shall give notice (in this Article referred to as the "First Refusal Offer") to the
Remaining Parties giving them the name of the proposed purchaser and the price and terms of
the proposed sale and offering them the first right for thirty (30) days (in this Article referred
to as the "Acceptance Period") to purchase the Shareholder Interest upon the terms outlined
in the notice, such terms to be expressed as to consideration, in Canadian Dollars or Canadian
Dollar equivalent. The Remaining Parties may accept the offer by written notice of
acceptance within the Acceptance Period specifying what proportion of the Shareholder
Interest that each desires to purchase. If the acceptance notices from any or all of the
Remaining Parties demonstrate alone or when combined an intention to acquire at least all of
the Shareholder Interest offered in the First Refusal Offer, the Remaining Party or Parties
who have accepted the offer shall be bound to purchase the Shareholder Interest or portion
thereof offered. If the acceptance notices indicate an intention, when combined, to acquire
more than all of the Shareholder Interest offered in the First Refusal Offer, the Shareholder
Interest offered shall be apportioned among the Remaining Parties who have delivered
acceptance notices, based on their respective holdings of Shares. In no event shall any
Remaining Party be bound to purchase any greater proportion of the Shareholder Interest
offered than is specified in the acceptance notice of such Remaining Party.
- 12 8.04
Outside Offer
In the event that the right of first refusal pursuant to Article 8.03 is not exercised as to all of
the Shareholder Interest or portion thereof offered, the Initiating Party shall be at liberty to
sell such Shareholder Interest at the price and upon the terms contained in the notice, but not
at any other price or on other terms, within ninety (90) days of the expiration of the
Acceptance Period, failing which the Initiating Party shall not be permitted to conclude such
sale transaction without giving further notice to the Remaining Parties in accordance with the
terms of this Article 8 extending to them a further right of first refusal.
ARTICLE 9 - OPTION RIGHTS
9.01
he has died;
(ii)
he is petitioned into bankruptcy or makes an assignment for the benefit of his
creditors;
(iii)
he is judged insane or incompetent to handle his own affairs by a court of
competent jurisdiction;
(iv)
an order is made by a court of competent jurisdiction purporting to deal with
his Shareholder Interest pursuant to the Matrimonial Property Act of Alberta or other
similar legislation;
(v)
his Shareholder Interest is seized or attached in any way for the payment of
any judgment or order;
(vi)
he has made or purported to make a sale, transfer or assignment of his
Shareholder Interest in contravention of this Agreement;
(vii) he has defaulted in the payment of any sums due and owing by him to the
Corporation and such default continues after twenty one (21) days from the date of
notice of such default having been given to him by one of the Shareholders indicating
an intention to exercise the option provided for in this Article 9; and
(viii) he is in default of making payment under any Guarantee Agreement and such
default continues after twenty one (21) days from the date of notice of such default
having been given to him by one of the Shareholders indicating an intention to
exercise the option provided for in this Article 9;
(b)
where any one of the following occurs in relation to a Corporate Shareholder, namely:
- 13 (i)
where any of the events listed in Article 9.01(a) (i) to (iii) occur with respect
to the beneficial owner of fifty (50%) per cent or more of all the issued and
outstanding voting shares in the capital of any such Corporate Shareholder;
(ii)
where any of the events described in Article 9.01(a)(iv) or (v) occur with
respect to the shares in the Corporate Shareholder owned by the beneficial owner of
fifty (50%) percent or more of the issued and outstanding voting shares in the capital
of any such Corporate Shareholder;
(iii)
(iv)
proceedings are instituted for the dissolution or winding-up of any such
Corporate Shareholder;
(v)
such Corporate Shareholder is petitioned into bankruptcy or makes an
assignment for the benefit of its creditors;
(vi)
if a Certificate of Dissolution is issued with respect to such Corporate
Shareholder by the Registrar of Corporations or such Corporate Shareholder is
otherwise dissolved and its corporate status terminated in the Province of Alberta;
(vii) such Corporate Shareholder's Shareholder Interest is seized or attached in any
way for the payment of any judgment or order;
(viii) it has made or purported to make a sale, transfer or assignment of its
Shareholder Interest in contravention of this agreement;
(ix)
it has defaulted in the payment of any sums due and owing by it to the
Corporation and such default continues after twenty one (21) days from the date of
notice of such default having been given to it by one of the Shareholders indicating an
intention to exercise the option provided for in this Article 9;
(x)
it is in default of making payment under any Guarantee Agreement and such
default continues after twenty-one (21) days from the date of notice of such default
having been given to it by one of the Shareholders indicating an intention to exercise
the option provided for in Article 9;
(xi)
where, with respect to any shareholder of such Corporate Shareholder, such
shareholder is in default of making payment under any Guarantee Agreement and
such default continues after twenty-one (21) days from the date of notice of such
default having been given to both such shareholder and such Corporate Shareholder
by one of the Shareholders indicating an intention to exercise the option provided for
in this Article 9.
9.02
Option
There shall be deemed to be a grant to the Corporation and the other Shareholders not in
Substantial Default (such Shareholders not in Substantial Default being in this Article
referred to as the "Remaining Parties") of an option (in this Article referred to as the "Option
- 14 Right") to purchase the Shareholder Interest of a Shareholder (in this Article referred to as the
"Initiating Party") in the event:
(a)
of the Disposition by the Initiating Party of his Shareholder Interest or any portion
thereof; or
(b)
if the Initiating Party makes a written offer to sell to the Corporation or the other
Shareholders all of the Initiating Party's Shareholder Interest where no purchase price is
provided in the offer.
9.03
The time within which the Option Right may be exercised (in this Article referred to as the
"Acceptance Period") shall be ninety (90) days and shall commence to run from the date upon
which the last of the Remaining Parties receive actual notice of the Disposition from which
the Option Right arises. The Corporation, if approved by unanimous resolution of the
Directors, other than the nominee or nominees of the Initiating Party, if any, may exercise the
Option Right with respect to all or any portion of the Shareholder Interest subject to the
Option Right. Any portion of such Shareholder Interest not acquired by the Corporation may
be acquired by the Remaining Parties. The Corporation or the Remaining Parties may
exercise the Option Right by notice of acceptance within the Acceptance Period specifying
what proportion of the Shareholder Interest that each desires to purchase. If the acceptance
notices from any or all of the Corporation or the Remaining Parties demonstrate alone or
when combined an intention to acquire at least all of the Shareholder Interest subject to the
Option Right, the Remaining Party or Parties who have exercised the Option Right shall be
bound to purchase such Shareholder Interest. In the case of the acceptance notices indicating
an intention, when combined, to acquire more than all of such Shareholder Interest, the
remainder of such Shareholder Interest after the Corporation's Option Right is exercised shall
be apportioned among the Remaining Party or Parties who have delivered the acceptance
notices, based on their respective holdings of Shares. In no event shall any Remaining Party
be bound to purchase any greater proportion of the Shareholder Interest offered than is
specified in the acceptance notice of such Remaining Party. If the Option Right is not
exercised within the Acceptance Period as to all of the Shareholder Interest subject to the
Option Right, the Option Right shall cease and determine and be of no further effect.
9.04
Option Price
The option price shall be the value of the Shareholder Interest with respect to which the
Option Right is exercised, as of the date that the Option Right arises, determined in the
manner hereinafter provided.
9.05
Evaluation by Accountants
If, following exercise of the Option Right, the Initiating Party and the party or parties
exercising the Option Right (in this Article referred to as the "Purchasing Party") fail to agree
on the value of the Shareholder Interest, either the Initiating Party or the Purchasing Party
may by notice to the other, the Corporation and the Accountants, cause the Accountants to
make an evaluation of the Shareholder Interest of the Initiating Party at the expense of the
Corporation. Upon a determination of such value by the Accountants, notice thereof shall be
served by the Accountants on the Corporation, the Initiating Party and the Purchasing Party.
- 15 The determination of the Accountants shall be final and binding on the Initiating Party and
the Purchasing Party unless a notice to arbitrate is given by one of them in the manner and
within the time period set out in Article 9.06.
9.06
Arbitration Notice
After determination of value by the Accountants or if they do not give notice of their
determination within sixty (60) days after notice to them requiring the valuation pursuant to
the Article 9.05, either the Purchasing Party or the Initiating Party may for a further period of
fifteen (15) days give notice to the other and the Corporation requiring that the value of the
Initiating Party's Shareholder Interest be determined by arbitration in accordance with this
Agreement.
9.07
the total price in Canadian Dollars at which the Shareholder Interest is offered;
(b)
the price per Share for the Shares included in the Shareholder Interest;
(c)
the amount of any Shareholder Advances included in the Shareholder Interest and
whether they are included in the price at par or at a discount;
(d)
the terms of payment required, which terms shall, in the case of any deferred
payments, be expressed as a percentage of the price offered;
(e)
a time period (in this Article referred to as the "Acceptance Period") within which the
Buy-Sell Offer may be accepted, which period for each Remaining Party shall not be less
- 16 than thirty (30) days from the date of giving of notice of the Buy-Sell Offer to that Remaining
Party;
(f)
and the fact that the Buy-Sell Offer is made pursuant to this Article 10.
A Buy-Sell Offer shall be irrevocable and open for acceptance for the Acceptance Period.
10.02 Acceptance
If any Remaining Party desires to purchase the Shareholder Interest offered by the Buy-Sell
Offer or a portion thereof, such party must give to the Initiating Party written notice of
acceptance within the Acceptance Period specifying what portion of the Shareholder Interest
that such Remaining Party desires to purchase. If the acceptance notices from any or all of
the Remaining Parties demonstrate alone or when combined an intention to acquire at least all
of the Shareholder Interest offered in the Buy-Sell Offer the Remaining Party or Parties who
have accepted the Buy-Sell Offer shall be bound to purchase the Shareholder Interest and in
the case of the acceptance notices indicating an intention when combined to acquire more
than all of the Shareholder Interest offered in the Buy-Sell Offer, the Shareholder Interest
offered shall be apportioned among the Remaining Parties who have delivered acceptance
notices based on their respective holdings of Shares. In no event shall any Remaining Party
be bound to purchase any greater proportion of the Shareholder Interest than is specified in
the acceptance notice of such party.
10.03 Sale by Remaining Parties
If the acceptance notices from any or all of the Remaining Parties do not demonstrate alone
or when combined an intention to acquire all of the Shareholder Interest offered in the BuySell Offer, the Remaining Parties shall be bound to sell and the Initiating Party will be bound
to purchase all of the Remaining Parties' Shareholder Interests at a price calculated at the
same price per Share as was specified in the Buy-Sell Offer with the price of any Shareholder
Advances forming part thereof to be at par or if discounted in the Buy-Sell Offer, at the
discount rate provided therein.
ARTICLE 11 - ADDITIONAL TERMS OF SALE
11.01 Closing Date
Any transaction arising out of Articles 8, 9, or 10 hereof shall be closed at the office of the
solicitors for the Corporation on such date (in this Article referred to as the "Closing Date")
as shall be agreed between the Selling Party (as hereinafter defined) and the Purchasing Party
(as hereinafter defined) and, in default of agreement:
(a)
with respect to a transaction pursuant to Article 8, on the sixtieth (60th) day following
the provision of notice under Article 8.01 or 8.03;
(b)
with respect to a transaction pursuant to Article 9, on the ninety (90th) day following
the determination of the value of the applicable Shareholder Interest pursuant to the
provisions of this Agreement;
- 17 (c)
with respect to a transaction pursuant to Article 10, on the thirtieth (30) day following
the last day of the Acceptance Period as defined in Article 10.
11.02 Adjustments to Purchase Price
At closing there shall be deducted from the purchase price any distributions or payments to
the Selling Party or for his benefit made:
(a)
with respect to a transaction pursuant to Article 8, after the date on which notice under
Article 8.01 or 8.03 was been given;
(b)
with respect to a transaction pursuant to Article 9, after the effective date of the
valuation of the Shareholder Interest purchased;
(c)
with respect to a transaction pursuant to Article 10, after the date on which the BuySell Offer is made;
which have the effect of detracting from the value thereof and which were not taken into
consideration in the evaluation process for fixing the purchase price or considering the
purchase price offered.
11.03 Terms Applicable to All Sales
Whenever a sale of a Shareholder Interest or portion thereof occurs pursuant to the provisions
of Articles 8, 9, or 10 hereof, the following terms and conditions shall apply to such sale:
(a)
the party selling the Shareholder Interest (in this Article referred to as the "Selling
Party") shall covenant with and warrant and represent to each of the parties purchasing the
Shareholder Interest (in this Article referred to as the "Purchasing Party") as follows:
(i)
That as of the Closing Date, the Selling Party will be the sole beneficial owner
of the Shareholder Interest and hold a good and marketable title thereto, free and clear
of all mortgages, liens, charges, pledges, security interests, encumbrances and other
claims whatsoever (excepting those securing obligations of the Corporation) and that
the Selling Party is entitled to transfer the Shareholder Interest in accordance with the
terms of this Agreement without restrictions; and
(ii)
all necessary steps and proceedings shall be taken to permit the Shareholder
Interest to be duly and regularly transferred to the Purchasing Party or its nominee;
(b)
there shall be delivered at the Closing Date to the Purchasing Party by the Selling
Party:
(i)
a complete release by the Selling Party and its nominee Director or Officer of
all claims against the Corporation except claims for indemnification with respect to
liabilities incurred in the ordinary course by such Selling Party or nominee acting as
Director or Officer;
- 18 (ii)
a release by the Selling Party of all claims against the Purchasing Party arising
out of or with respect to the Shareholder Interest of the Selling Party except with
respect to the terms incidental to the purchase and sale of that Shareholder Interest;
(iii)
the resignation as Director and Officer by the Selling Party or its nominee
holding office with the Corporation;
(iv)
the share certificates representing the Shares comprised in the Shareholder
Interest included in the purchase with the transfers thereon duly endorsed in favour of
the Purchasing Party; and
(v)
an assignment by the Selling Party to the Purchasing Party of the Shareholder
Advances forming part of the Shareholder Interest purchased.
11.04 Terms Applying to Certain Sales
In the event of a purchase of all or a portion of a Shareholder Interest pursuant to Articles 8
or 10, or pursuant to an option which has been exercised as a result of a Disposition by the
Selling Party pursuant to Article 9.01(a)(i), (ii) or 9.01(b)(i), the Purchasing Party shall use
reasonable efforts to obtain the release of the Initiating Party and its shareholders, if
applicable, from any Guarantee Agreement failing which each of the Purchasing Parties shall,
jointly and severally, covenant and agree, in proportion to the portion of the Shareholder
Interest purchased by them, to indemnify and save harmless the Selling Party and his or its
representatives and successors from and against all claims, liabilities, costs, charges and
expenses, including legal fees on a solicitor/client basis sustained or incurred by the Selling
Party after the Closing Date and in any way arising out of any Guarantee Agreement from
which the Selling Party and its shareholders, if applicable, have not been released.
11.05 Additional Terms - Sale to Outside Party
A sale or transfer of a Shareholder Interest or portion thereof to a person or corporation not
already a Shareholder shall not be effective and the Selling Party shall not be released from
his obligations under this Agreement until the Purchasing Party acknowledges that it is bound
by the terms of this Agreement by executing a counterpart of this Agreement and delivering
an original of such counterpart to each of the parties hereto.
11.06 Additional Terms Death of Principal of Shareholder
Notwithstanding the foregoing, in the event of the death of a Principal of a Corporate
Shareholder, the following terms shall apply:
The closing of the purchase and sale pursuant to section 9 shall occur at the business offices
of the Corporation at 10:00 in the forenoon one month following the last of the following
events:
a)
b)
- 19 c)
d)
one week following delivery by the Corporation of the exercise notice referred
to in section 9;
or at such other time and place as may be mutually agreed among the Parties.
The Deceased's Legal Representative shall deliver to the Solicitors evidence of his authority
to act as representative of the Deceased in the form of a certified or notarial copy of a Grant
of Probate, of Administration, or of an equivalent representation order, if any, or failing that a
notarial copy of the Deceased's Will naming such person as the Deceased's executor, or
failing that, such evidence as the Solicitors shall consider acceptable. In the event that the
Deceased died intestate and a Grant of Administration has not been made, such evidence
might take the form of a written undertaking from such person that he intends to apply for a
Grant of Administration of the Deceased's estate and written consents of the persons
beneficially interested in the Deceased's estate to the appointment of such person as
administrator.
The Deceaseds Legal Representative shall deliver to the Solicitors:
a)
the certificates for the Deceased's Shares endorsed in blank for transfer;
b)
c)
such reasonable evidence as the Corporation may require that the Deceased's
Shares and Deferred Loan, if any, are free and clear of all encumbrances.
The Corporation shall pay the sale price to the Legal Representative as follows against receipt
from the solicitors of a transfer and assignment of the Deceased's Interest:
At closing an amount shall be paid equal to the greatest of:
a)
the amount of tax under the Act required to be paid by the Deceased as a
consequence of the deemed disposition immediately before death of the
Deceased's Interest or (in the case of the death of a deceased Principal) of the
Deceased's interest in its Related Shareholder, as the case may be, to a
maximum of the sale price for the portion of the Deceaseds Interest being
purchased by the Corporation;
b)
c)
The balance, if any, shall be paid in four equal annual installments, one on each of the first
four anniversary dates of the closing, shall be secured by a promissory note, and shall bear no
- 20 interest. If any installment shall be in arrears for more than 30 days then the entire unpaid
balance shall, at the option of the payee, immediately become due and payable.
The Corporation and the Surviving Shareholders shall use their best efforts to cause the
Deceased and his estate to be released from any and all Collateral Security given by a
Deceased to any person for repayment of monies owing by the Corporation or performance
by the Corporation of any of its obligations. In the event it should prove impossible for the
Corporation and the Surviving Shareholders to cause the Deceased to be so released, then the
Corporation and the Surviving Shareholders shall be deemed to have agreed in writing to
indemnify and save harmless the Deceased's estate from and against any loss which the
Deceased's estate may sustain by reason of any and all Collateral Security given by the
Deceased to any person for the repayment of any monies owing by the Corporation or the
performance by the Corporation of any of its obligations. Such indemnity shall be limited, in
the case of the Surviving Shareholders, to the percentage of the Shares that such Surviving
Shareholder would own after giving effect to the purchases of the Deceased's Interest
contemplated by this Article.
On or before the closing, the Deceaseds Legal Representative shall deliver to the Solicitors:
a)
b)
the certificates for any of the Deceaseds Shares being sold to the Surviving
Shareholders, endorsed in blank for transfer;
c)
d)
such reasonable evidence as the Surviving Shareholders may require that such
portion of the Deceaseds Shares and Deferred Loan, if any, are free and clear
of all encumbrances;
the amount of tax under the Act required to be paid by the Deceased as a
consequence of the deemed disposition on death of the Deceaseds Interest or
(in the case of the death of a deceased Principal) of the Deceaseds interest in
its Related Shareholder, as the case may be, to a maximum of the sale price for
the Remaining Portion being purchased by the Surviving Shareholders;
b)
- 21 The balance, if any, shall be paid in four equal annual installments, one on each of the first
four anniversary dates of the closing, and shall not bear interest. The Surviving Shareholders
may prepay the whole or any portion of the balance owing without notice, bonus or penalty,
provided that any partial prepayment shall apply on installments falling due in the reverse
order of their maturity. If any installment shall be in arrears for more than 30 days then the
entire unpaid balance shall, at the option of the payee, immediately become due and payable.
ARTICLE 12 - ARBITRATION
12.01 Application
Any arbitration required or permitted to be conducted pursuant to this Agreement shall be
conducted in the manner set forth in this Article 12.
12.02 Initiation
The party initiating the arbitration may institute the proceedings by delivering to the other
Shareholders (and where otherwise provided in this Agreement, to the Corporation) a notice
(in this Article referred to as the "Arbitration Notice") containing the name of the person
proposed as arbitrator and his address and calling and a copy of the proposed arbitrator's
consent to accept the appointment. If the Shareholders receiving the Arbitration Notice do
not agree with the arbitrator proposed and fail to propose to the party initiating the arbitration
an acceptable alternate, a single arbitrator may be appointed by a Judge of the Superior Court
of the Province of Alberta on the application of any party hereto on notice to the others.
12.03 Scope
The arbitrator shall determine the issues of fact falling for determination by the arbitration
proceedings, including any necessary interpretation of provisions of this Agreement. The
arbitrator shall be the master of his own procedure and the decision of the arbitrator with
regard to any matter properly before him shall be final and binding upon the parties hereto
whether they have entered into the arbitration or not.
12.04 Costs
Any costs arising out of arbitration proceedings hereunder shall be apportioned in the manner
decided by the arbitrator.
12.05 No Appeal
The parties hereto covenant that they will not apply nor will they have any right to apply by
any means to any court to challenge any decision of the arbitrator on a matter properly before
the arbitrator.
ARTICLE 13 - GENERAL
13.01 Amendments
This Agreement may be altered or amended in any of its provisions when any such changes
are reduced to writing and signed by all the parties hereto but not otherwise.
- 22 -
13.02 Undertakings
The parties here to undertake and agree to execute and deliver such further and other
documents and assurances as may be necessary to give effect to all of the terms and
conditions of this Agreement.
13.03 Enurement
This Agreement shall be binding upon and shall enure to the benefit of each party hereto as
well as the heirs, executors, administrators, successors and permitted assigns of such party.
13.04 Notice
All notices, requests or demands to or upon the parties hereto shall be in writing and
delivered or sent by registered mail postage prepaid, by delivery, by telex, by telegram or by
facsimile transmission addressed, to the Corporation, to the address of the president of the
Corporation for the time being, with a concurrent copy to the registered office of the
Corporation, and if to the Shareholders, to the addresses set out at the beginning of this
Agreement, or to such other address as may be specified by one of the parties hereto to the
other in a notice given in the manner herein provided.
Any such notice, request or demand sent as aforesaid shall be deemed to have been received
by the party to whom it is sent on the third business day following the mailing thereof if sent
by registered mail, on the day of delivery, if delivered, and on the business day following the
transmittal thereof, if sent by telex, telegram or facsimile transmission; provided, however,
that in the event normal mail service, telex service, telegraph service or facsimile service
shall be interrupted by strike, slowdown, force majeure or other cause, then the parties
sending the notice, request or demand, shall take whatever steps are necessary to ensure
prompt receipt of such notice, request or demand by the other parties.
13.05 Merger
In the event of a sale of Shares by a Shareholder to another Shareholder the provisions of this
Agreement shall not merge with but shall survive the closing of that sale.
13.06 Execution in Counterparts
This Agreement may be executed in several counterparts, each of which when so executed
shall be deemed to be an original, and such counterparts shall each constitute the one and
same instrument, and notwithstanding their date of execution shall be deemed to bear date as
of the day and year first above written.
13.07 Time
Time shall be of the essence of this Agreement.
13.08 Non-Waiver
SCHEDULE A
THE COMMITTEE AND THE FINANCIAL MANAGER
1.01 Committee and Financial Manager
(a)
(b)
The Committee hereby creates three positions: - (a) Financial Manager ; (b)
Operations Manager and (c) Property Manager who will conduct the day-to-day
affairs of the Property and the Corporation. The Managers may be, in the
discretion of the Committee:
(i)
(ii)
a person; or
a corporation.
(b)
(c)
Meetings of the Committee shall be held at the request of any Member upon at
least six business days' notice unless the Directors waive such notice in writing.
Any such notice of meeting shall include an agenda of the business to be
introduced together with relevant background materials. A quorum for any
meeting shall consist of one Representative or Alternate from each Director who
shall be present in person, by telephone or other approved form of
communication throughout the meeting. The Members present shall represent
and vote their respective Director's Interest. The Financial Manager shall keep
minutes of all meetings.
(d)
Without in any way diminishing the ultimate responsibility of the Committee and
the Directors, the Committee may delegate duties to the Financial Manager or to
any other party by Resolution. The Committee hereby delegates to the Financial
Manager the duties of the Financial Manager itemized in this Agreement. The
Committee may from time to time delegate other duties to the Financial Manager
or cancel or amend previously delegated duties in any way the Committee deems
appropriate. It is hereby acknowledged by all Parties that the Committee retains
to itself and does not by this Agreement delegate to the Financial Manager the
following duties:
(i)
(ii)
Any action involving an expenditure(s), any of which are in a sum less then
TEN THOUSAND ---00/100 DOLLARS SHALL NOT require any consent
of the Directors.
(g)
It is hereby acknowledged by all Parties that the Committee retains to itself and
does not by this Agreement delegate to the Operations Manager the following
duties:
(i) appointment of Operations Manager;
(ii) decision making authorities otherwise provided in this Agreement.
(iii) approval of all reports, budgets and financial statements presented by the
Operations Manager, property manager, auditor or other party;
(iv) approving or disapproving capital improvements to the Property in excess
of one percent (1%) of the purchase price of the Property;
(v) reporting to Directors.
(vi) any matters not in the ordinary course of business.
-3(h)
It is hereby acknowledged by all Parties that the Committee retains to itself and
does not by this Agreement delegate to the Property Manager the following
duties:
(i) appointment of Property Manager;
(ii) decision making authority otherwise provided for in this Agreement
(iii) approval of all reports, property management financial statements presented
by the Property Manager, auditor or other party;
(iv) reporting to Directors.
(v) any matters not in the ordinary course of business.
The Financial Manager shall report to and take direction and instructions from the
Committee and shall serve at the pleasure of the Committee.
(b)
The Financial Manager shall conduct the day-to-day financial business of the
Corporation including negotiating mortgage replacement or re-financing.
(c)
(d)
The Financial Manager shall be an Alternate on the Committee for each Director
and each Director hereby irrevocably appoints the Financial Manager to be his
Alternate on the Committee. The Financial Manager shall assume the role of
Alternate for an Director at any Committee meeting or part thereof in which the
Representative or any Alternate otherwise designated by the Director is not in
attendance in person or by telephone.
(e)
(g)
-4(h)
The Financial Manager shall report in writing to the Committee not less
frequently than annually with respect to the operation and management of the
Corporation and the Property.
(i)
The Financial Manager shall sign all cheques, contracts or other documents,
which require signature of the Corporation in the ordinary course of business,
save and except those delegated to the Operations Manager as described in Duties
of Operations Manager.
(j)
1.03B
The acts of the Operations Manager shall bind the Directors and the Corporation when
such acts are within the Operations Manager's authority. In addition to the duties
delegated to the Operations Manager elsewhere in this Agreement and from time to
time by Resolution of the Committee, the Operations Manager is hereby delegated the
following duties:
(a)
shall report to and take direction and instructions from the Financial Manager and
shall serve at the pleasure of the Financial Manager.
(b)
(c)
with the consent of the Financial Manager, shall appoint, supervise and if
necessary replace a property manager, leasing agent and any other professional
support person or firm the Operations Manager deems appropriate for the proper
operation and management of the Property and the Corporation.
(d)
shall oversee and supervise the acts and duties of the appointed Property
Manager.
(e)
shall inspect the tenanted units periodically (every 12 months) with or without the
Property Manager to ensure the tenanted units are being taken care by the tenants.
Should any problems arises from those inspections, a meeting shall be called
among the Directors to discuss the remedy methods.
(f)
shall arrange, at the expense of the Corporation, all appropriate and necessary
insurance, repairs and maintenance. All costs of day to day repairs and
maintenance, except for those items delegated to the property manager and within
the limits imposed on the property manager, shall be sent to the Financial
Manager for payment with proper invoices. Any such expenses need to be paid
in advance by the Operations Manager will be reimbursed by the Financial
Manager upon receipt of the invoice. (Facsimile followed by actual invoice)
(g)
has the authority to sign cheques for unexpected repairs and maintenance of the
property out of the staying fund held in trust with the Operations Manager. If the
-5staying fund is never used, the Operations Manager will return the said fund back
to the Corporation. If the staying fund is used, the Operations Manager on
periodical basis (monthly) report to the Financial Manager of the spending on the
Staying Fund Account.
(i)
from time to time, shall prepare plans and operating budgets together with the
Financial Manager, which shall include projections for anticipated advisable
repairs, revenue, expense and residual monthly cash balances. The Operating
Plans and updates thereto shall be submitted to the Committee for review and
approval. If after approval thereof, the Operations manager learns of any material
event or circumstance which could lead to a variance of more that fifteen (15)
percent in either the bi-annual revenues, the bi-annual expenses, then the
Operations Manager shall notify the Committee and consult as to desired changes
in the course of actions.
(j)
shall be the main contact for the Property Manager and ensure that the Property
Manager report not less frequently than monthly with respect to the Property
Management of the Corporation and the Property,
(k)
shall arrange, at the expense of the Corporation, all appropriate renovation and
cleaning. All costs of the renovation and cleaning shall be sent to the Operations
Manager for payment with proper invoices. Any such expenses or deposits need
to be paid in advance by the Operations Manager will be reimbursed by the
Financial Manager upon receipt of the invoice (Facsimile followed by actual
invoice)
1.03C
The acts of the Property Manager shall bind the Directors and the Corporation when
such acts are within the Property Manager's authority. In addition to the duties
delegated to the Property Manager elsewhere in this Agreement and from time to time
by Resolution of the Committee, the Property Manager is hereby delegated the
following duties:
(a)
shall report to and take direction and instructions from the Finance and/or
Operations Manager and shall serve at the pleasure of the Finance and or
Operations Manager.
(b)
(c)
Shall deal with the tenants and finalize any lease or tenancy arrangements.
(d)
(e)
(f)
Shall strive to ensure that all suites are fully tenanted and rents optimally priced at
all times.
-6(g)
Shall provide periodical property inspection of the tenanted units and advise the
Committee of any problems arising from the inspection.
(h)
(i)
Shall perform other acts and duties and responsibilities as would a prudent owner.
(j)
Shall maintain ongoing contact with the Operations Manager and consult with the
Operations Manager with respect to the duties outlined herein.
(k)
Shall report in writing to the Operations Manager not less frequently than
monthly with respect to the property management of the Corporation and
Property, provided that any material changes or events in the operation of the
Corporation shall be reported immediately.
In the event that the Property Manager is a 3rd party, a contract shall be signed between
the Property Management Company and the Operations Manager and all the duties of
Property Manager shall be in the contract. Remuneration to the 3rd party Property
Manager shall be a percentage as agreed between the Property Management Company
and the Operations Manager. Rent after all expenses (such as repairs and maintenance,
cleaning etc.) incurred shall be delivered to the Operations Manager or deposited to a
pre-arranged bank account setup by the Operations Manager on time as stipulated in the
contract. The 3rd party Property Manager is authorized to make expenditures only
within the scope and detail of his contract.
1.04 Remuneration of the Financial Manager
(a)
(b)
-7-
the down payment and closing costs to buy the Property (may include share
subscription for ______ Ltd.);
(b)
(c)
-8Manager in the same percentages as their Interests in order to enable the Corporation to
carry out the Purpose of this Agreement.
(a)
(b)
Each Shareholders shall have thirty (30) days ("Date of First Default") from the
date of the Cash Call ("Date of Cash Call") by the Financial Manager to
contribute the Additional Financial Contributions. The Financial Manager shall
be the judge to decide whether additional cash or co-operation ("Co-operation") is
required. Co-operation, without limiting the generality of its common dictionary
meaning requires Shareholders to do any and all things that the Financial
Manager, in its discretion, deems necessary for the operation of the Corporation.
(c)
(d)
If the cash offered by the other Shareholders is more than the Cash Call, then the
Financial Manager shall decide on the amounts that each Contributing
Shareholder shall be allowed to contribute.
(e)
If insufficient funds (the difference being the "Cash Call Shortfall") are offered
by the Shareholders, the Financial Manager is hereby authorized by the
Shareholders to forthwith take any or all of the following actions:
(i)
The Contributing Shareholders shall have a lien or charge on the Interest of the
Defaulting Shareholder. If the Defaulting Shareholder shall remain in default
("Default") in Co-operation or payment of monies for a period of sixty (60) days
("Date of Second Default") from the Date of Cash Call, then the Interest of the
Defaulting Shareholder shall be dealt with as specified in Section 2.03.
(g)
Each Shareholder agrees to indemnify and hold harmless the other Shareholders
from all costs, expenses and damages incurred by the other Shareholders as a
result of the failure of any Shareholder to satisfy a Cash Call or Co-operation.
-9(h)
For an Shareholder to meet a Cash Call after the Date of First Default and before
the Date of Second Default, that Shareholder must pay to the Corporation or, if
there is a Contributing Shareholder, to that Contributing Shareholder, the amount
of the Cash Call plus interest at the rate of Scotia Bank prime plus five percentage
points with interest calculated from the date of first default. Scotia Bank prime
means the variable interest rate declared from time to time to be the Scotia Bank
prime rate for Canadian dollar loans made by Scotia Bank in Canada.
(i)
If and when the failure to meet a Cash Call is remedied in full as specified in this
Section, the Defaulting Shareholder shall be forthwith reinstated in full and any
liens or charges shall be discharged at the expense of the Defaulting Shareholder.
In the case of Default, the Contributing Shareholder, in his sole discretion, shall
opt for a cash settlement ("Cash Settlement") as defined in this Article by
notifying the Committee and the Defaulting Shareholder of his decision within
thirty (30) days of the date of second default. If the Contributing Shareholder
fails to make such notification in the prescribed time allotted, the Committee is
hereby irrevocably authorized to make the decision on the Contributing
Shareholder's behalf.
(b)
(b)
(c)
(d)
where all monies in addition to the Cash Call are liquidated damages and
not a penalty.
- 10 -
(b)