ESCROW AGREEMENT
(Performance Escrow Agreement)
THIS AGREEMENT made effective this 7th day of May, 1997.
KRAFT INVESTMENTS CORP.
(herein called "KIC')
OF THE FIRST PART
- and -
MONTREAL TRUST COMPANY OF CANADA
(herein called the "Trustee")
OF THE SECOND PART
- and -
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & ASSOCIATES INC.
(herein called "Kraft Inc.")
OF THE THIRD PART
WHEREAS Alpha Ventures Inc. ("Ventures") has made an offer to purchase all
of the shares of Alpha Corporation ("AC") dated April 9, 1997 (the "Offer"),
which Offer was duly accepted by all of the shareholders of AC;
AND WHEREAS KIC is a shareholder of Ventures;
AND WHEREAS 1,315,132 common shares of Ventures owned by KIC (the "KIC
Shares") are subject to a performance based Form C Escrow Agreement dated as of
the date hereof between Ventures, the Trustee and certain other shareholders of
Ventures (the "Escrow Agreement");
AND WHEREAS Kraft Inc. owns all of the issued and outstanding securities of
KIC;
AND WHEREAS to comply with the requirements of The Alberta Stock Exchange,
Kraft Inc. is desirous of depositing in escrow all of the securities in KIC
owned by it (the "Escrowed Shares") which escrow shall be based on the
performance of Ventures;
AND WHEREAS the Trustee has agreed to undertake and perform its duties
according to the terms and conditions hereof;
NOW THEREFORE this agreement witnesses that, in consideration of the sum of
one dollar ($1.00) paid by the parties to each other, receipt of this sum being
acknowledged by each of the parties to each other, Kraft Inc. covenants and
agrees with KIC and with the Trustee, and KIC and the Trustee covenant and agree
each with the other and with Kraft Inc. jointly and severally as follows:
1 Where used in this agreement, or in any amendment of supplement hereto,
unless the context otherwise requires, the following words and phrases
shall have the following ascribed to them below:
(a) "Cash Flow" means net income derived from the business of Ventures, as
shown on the audited financial statements or verified by Ventures'
auditors, adjusted for the following add backs:
(1) depreciation,
(2) depletion,
(3) deferred taxes,
(4) amortization of goodwill,
(5) amortization of research and development costs.
(b) "Related Party" means promoters, officers, directors, other insiders
of Ventures and any associates or affiliates of the foregoing.
2 Kraft Inc. hereby places and deposits in escrow with the Trustee the
Escrowed Shares which are represented by the certificates described in
Schedule "A" and the Trustee hereby acknowledges receipt of those
certificates. Kraft Inc. agrees to deposit in escrow any further
certificates representing securities in KIC which it may receive as a stock
dividend on securities hereby escrowed, and to deliver to the Trustee
immediately on receipt thereof the certificates for any such further
securities and any replacement certificates which may at any time be issued
for any escrowed securities.
3. The Parties hereby agree that, subject to the provisions of paragraph 6
herein, the Escrowed Shares and the beneficial ownership of or any interest
in them and the certificate representing them (including any replacement
securities or certificates) shall not be sold, assigned, hypothecated,
alienated, released from escrow, transferred within escrow, or otherwise in
any manner dealt with, without the written consent of The Alberta Stock
Exchange (hereinafter referred to as the "Exchange") given to the Trustee
or except as may be required by reason of the death or bankruptcy of
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ or the bankruptcy of either Kraft Inc. or KIC, in which
case the Trustee shall hold the said certificates subject to this
agreement, for whatever person, or company shall be legally entitled to
become the registered owner thereof.
4. Kraft Inc. directs the Trustee to retain the Escrowed Shares and the
certificates (including any replacement securities or certificates)
representing them and not to do or cause anything to be done to release
them from escrow or to allow any transfer, hypothecation or alienation
relevant, determine the number of securities to be cancelled or released and
shall communicate its decision in writing to the Trustee. If the Exchange
determines that less than all the securities then held in escrow shall be
cancelled or released shall be taken rateably from the escrowed security holding
of Kraft Inc., unless the Exchange otherwise directs Kraft Inc., with the
consent of the Exchange, otherwise agree in writing.
(d) On receipt by the Trustee of a determination to cancel, Kraft Inc. shall
tender the required number of escrowed securities to KIC by way of gift for
cancellation and, KIC shall thereupon take the necessary action, by way of
reduction of capital or otherwise, to cancel them, and the certificates for
these securities shall be delivered up for cancellation.
(e) Kraft Inc. undertakes and agrees to vote and cause to be voted its
securities in a manner consistent with the terms, conditions and intent of
this agreement in relation to the aforesaid ▇▇▇▇▇▇▇ back of securities for
cancellation.
11. Notwithstanding paragraphs 6 and 10, any shares remaining in escrow on the
fifth anniversary of the date of this agreement, unless otherwise exempted
in writing by the Exchange, shall be cancelled by the Trustee within 6
months of the said fifth anniversary.
12 All voting rights attached to the escrowed securities shall at all times be
exercised by Kraft Inc.
13. Kraft Inc. and KIC hereby jointly and severally agree to and do hereby
release and indemnify and save harmless the Trustee from and against all
claims, suits, demands, costs, damages and expenses which may be occasioned
by reason of the Trustee's compliance in good faith with the terms hereof.
14. KIC hereby acknowledges the terms and conditions of this Agreement and
agrees to take all reasonable steps to facilitate its performance and to
pay the Trustee's proper charges for its services as trustee of this
escrow.
15 If the Trustee should wish to resign, it shall give at least 6 months'
notice to KIC which may, with the written consent of the Exchange, by
writing appoint another Trustee in its place and such appointment shall be
binding on Kraft Inc., and the new Trustee shall assume and be bound by the
obligations of the Trustee hereunder.
16. The convenants of Kraft Inc. with KIC in this agreement are made with KIC
both in its own right and as trustee for the holders from time to time of
free securities in KIC, and may be enforced not only by KIC but also by any
holder of free securities.
17. This agreement may be executed in several parts of the same form and the
parts as so executed shall together constitute one original agreement, and
the parts, if more than one,
shall be read together and construed as if all the signing parties hereto
had executed one copy of this agreement.
18. Wherever the singular or masculine is used, the same shall be construed to
include the plural or feminine or neuter where the context so requires.
19. This agreement shall enure to the benefit of and be binding on the parties
to this agreement and each of their heirs, executors, administrators,
successors and assigns.
IN WITNESS WHEREOF KIC, Kraft Inc. and the Trustee have caused their respective
corporate seals to be hereto affixed.
KRAFT INVESTMENTS CORP.
per:
MONTREAL TRUST COMPANY OF CANADA
per:
per:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & ASSOCIATES INC.
per:
per:
SCHEDULE "A"
Name of Security Holder and Number of Securities Certificate Numbers of
address Type of Securities Escrowed Escrowed Securities
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Associates Common Shares 1,315,132 #7
Inc.