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Exhibit 10.1
HYDROGENICS CORPORATION
AMENDED AND RESTATED
UNANIMOUS SHAREHOLDERS' AGREEMENT
January 24, 2000
(superseding the Unanimous Shareholders Agreement
dated December 21, 1998, as amended)
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TABLE OF CONTENTS
PAGE
ARTICLE 1
INTERPRETATION........................................................ 1
1.1 Defined Terms................................................... 1
1.2 Headings, etc................................................... 4
1.3 Gender and Number............................................... 4
1.4 Governing Law................................................... 4
1.5 Severability.................................................... 4
1.6 Currency........................................................ 4
1.7 Entire Agreement................................................ 4
1.8 Amendment....................................................... 5
1.9 Waiver.......................................................... 5
1.10 Time of Essence................................................. 5
1.11 Further Acts.................................................... 5
1.12 Accounting Principles........................................... 5
ARTICLE 2
TERM OF AGREEMENT..................................................... 5
2.1 Term............................................................ 5
ARTICLE 3
IMPLEMENTATION OF AGREEMENT........................................... 6
3.1 Shareholder Covenants........................................... 6
3.2 Conflict........................................................ 6
3.3 Covenants by the Corporation.................................... 6
ARTICLE 4
CORPORATION'S BUSINESS AND PURPOSE.................................... 7
4.1 Business and Purpose............................................ 7
ARTICLE 5
DIRECTORS AND SHAREHOLDERS............................................ 7
5.1 Number of Directors............................................. 7
5.2 Nomination and Election of Directors............................ 7
5.3 Term of Office.................................................. 8
5.4 Powers and Duties of Directors.................................. 8
5.5 Insurance....................................................... 9
5.6 Board Meetings.................................................. 9
5.7 Exercise of Authority........................................... 9
5.8 Senior Officers................................................. 10
5.9 Directors Compensation and Fees................................. 10
5.10 Extraordinary Matters........................................... 10
5.11 Meetings of Shareholders........................................ 12
5.12 Key Person Insurance............................................ 13
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TABLE OF CONTENTS
(CONTINUED)
PAGE
5.13 Independent Director and Chairman............................... 13
5.14 Future Financing................................................ 13
ARTICLE 6
FINANCIAL AND ACCOUNTING PRACTICES.................................... 13
6.1 Financial Information........................................... 13
6.2 Maintain Books.................................................. 14
6.3 Review of Books................................................. 15
6.4 Fiscal Year..................................................... 15
ARTICLE 7
ARTICLE SALE AND ISSUANCE OF SHARES................................... 15
7.1 Sale and Issue Restrictions..................................... 15
7.2 Offer........................................................... 16
7.3 Tag-Along and Purchase Rights................................... 16
7.4 Right of First Refusal.......................................... 17
7.5 Sale of Shares - Right of First Refusal Not Exercised........... 18
7.6 Drag-Along Rights............................................... 18
7.7 Put Option...................................................... 19
7.8 Price Resolution................................................ 20
7.9 Substitute Purchaser............................................ 21
7.10 Rights of Purchaser............................................. 22
ARTICLE 8
NON-COMPETITION....................................................... 22
8.1 Non-Competition................................................. 22
8.2 Non-Solicitation of Customers................................... 22
8.3 Non-Solicitation of Employees................................... 23
8.4 Non-Interference................................................ 23
8.5 Portfolio Exception............................................. 23
ARTICLE 9
REPRESENTATIONS AND WARRANTIES........................................ 24
9.1 General......................................................... 24
9.2 The Corporation................................................. 24
ARTICLE 10
ADDITIONAL CAPITAL.................................................... 25
10.1 Related Party Loans............................................. 25
10.2 Future Debt Financings.......................................... 27
10.3 Future Equity Financings........................................ 28
10.4 Exceptions to Pre-emptive Rights................................ 28
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TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE 11
GENERAL MATTERS....................................................... 28
11.1 No Agency or Partnership........................................ 28
11.2 Notice.......................................................... 29
11.3 Endorsement of Share Certificates............................... 29
11.4 Assignment...................................................... 29
11.5 Counterparts.................................................... 30
11.6 Publicity....................................................... 30
11.7 Power of Attorney............................................... 30
ARTICLE 12
CONFIDENTIALITY....................................................... 30
12.1 Confidentiality................................................. 30
12.2 Survival........................................................ 31
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AMENDED AND RESTATED
UNANIMOUS SHAREHOLDERS' AGREEMENT
Amended and Restated Unanimous shareholders' agreement dated January 24, 2000
between Hydrogenics Corporation (the "Corporation"), CIBC Capital Partners
("CIBC"), Micro-Generation Technology Fund, L.L.C. ("MG Fund"), Working Ventures
Canadian Fund Inc. ("WV"), Development Ventures, Inc. ("DVI"), the investors
listed on Schedule "A" hereto (the "Legacy Investors"), ▇▇▇▇▇▇ ▇▇▇▇▇▇
("▇▇▇▇▇▇"), ▇▇▇ ▇▇▇▇▇▇▇▇▇ ("Cargnelli") and ▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇").
WHEREAS:
A. CIBC, MG Fund, WV, DVI, the Legacy Investors, ▇▇▇▇▇▇, Cargnelli and
▇▇▇▇▇▇ are the registered and beneficial owners of all the outstanding
shares in the capital of the Corporation.
B. The authorized capital of the Corporation is an unlimited number of
Common Shares, an unlimited number of Preferred Shares issuable in
series, an unlimited number of Series A Preferred Shares and an
unlimited number of Series B Preferred Shares.
C. On the date hereof there are issued and outstanding 2,812,500 Common
Shares, 750,000 Series A Preferred Shares and 510,500 Series B
Preferred Shares which are legally and beneficially owned by and
recorded on the Corporation's books as set out in Schedule "B" hereto.
D. The Corporation and the Shareholders have entered into this Agreement
to establish their respective rights and obligations in respect of the
issued and unissued shares of the Corporation, the management and
conduct of its business and various other matters hereinafter set
forth.
E. It is intended that this Agreement will supersede and replace the
unanimous shareholders agreement originally entered into on December
21, 1998, as amended.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the respective
covenants and agreements hereinafter contained and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged by
each of the parties hereto), the parties hereto covenant and agree with each
other as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINED TERMS.
As used in this Agreement, the following terms have the following meanings:
"ACT" means the Canada Business Corporations Act as may be amended from
time to time, and shall be deemed to be any act substituted therefor.
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"AFFILIATE" means an "affiliate" as that term is defined in the Act.
"AGREEMENT" means this agreement and all schedules attached hereto and
any and all amendments made hereto by written agreement among the
parties hereto.
"ANNUAL BUSINESS PLAN" has the meaning specified in Section 6.1(2).
"ARM'S LENGTH" has the meaning specified to such term by the Income Tax
Act (Canada).
"ARTICLES" means the Articles of Incorporation attached to the
Certificate of Incorporation of the Corporation as may be amended or
restated from time to time.
"ASSOCIATE" means an "associate" as that term is defined in the
Securities Act (Ontario).
"BOARD" means the Board of Directors of the Corporation.
"BYLAWS" means the bylaws of the Corporation from time to time in force
and effect.
"CHAIRMAN" means the chairman of the Board.
"COMMON SHARES" means the issued and outstanding common shares in the
capital of the Corporation.
"CONTROL" has the meaning specified thereto in the Act as in effect on
the date hereof and without reference to any amendments thereto after
the date hereof.
"CORPORATION'S BUSINESS" has the meaning specified thereto in Section
4.1.
"DIRECTORS", "BOARD OF DIRECTORS" and "BOARD" means the persons who
are, from time to time, duly elected as directors of the Corporation.
"EXPERTS" means two national accounting firms, one as selected by CIBC,
MG Fund, WV and DVI (acting together), and the other as selected by
▇▇▇▇▇▇, Cargnelli and ▇▇▇▇▇▇ (acting together).
"FAIR MARKET VALUE" means, for the purposes of valuation by the Experts
hereunder, the highest cash price in terms of money which would be
obtained as at the date specified in the applicable Section hereof if
all the Shareholders of the Corporation sold all of their respective
Shares in an open and unrestricted market (recognizing that the Shares
are securities of a corporation which cannot offer its securities to
the public) without compulsion to a willing and knowledgeable purchaser
acting at arms' length and where in determining such Fair Market Value:
(1) the value of each Common Share is based on the value of all Common
Shares; (2) no diminution or accretion in value is attributed to any
majority or minority interest (other than in determining Fair Market
Value for a purchase by the Corporation from a trustee in bankruptcy);
(3) the value of any insurance on the
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life of any shareholder or employee and the proceeds of such insurance
shall be excluded; (4) the value of all intangible and unrecorded
assets is included; (5) the value of each Preferred Share shall be
equal to the redemption price for such share set forth in the Articles.
"INDEPENDENT" means, with respect to any member of the Board of
Directors, a person who is not (a) a shareholder of the Corporation
other than a director who has become a shareholder through the exercise
of options or rights granted to him as a result of being a director, or
(b) a shareholder of an Affiliate of (a), or (c) a professional adviser
to, director, officer, employee of or party to any written or oral
contract with the Corporation, a shareholder or an Affiliate of any of
them, or (d) an employee of CIBC, MG Fund, WV or DVI, or (e) any person
related by blood, adoption or marriage to any of the foregoing.
"PERSON" means an individual, partnership, corporation or other entity.
"PREFERRED SHARES" means the issued and outstanding Series A Preferred
Shares and the Series B Preferred Shares in the capital of the
Corporation.
"PROSPECTIVE CUSTOMERS" shall mean, for the purposes of Article 8,
Persons canvassed or solicited by the Corporation at any time up to the
date upon which a Person ceases to be a Shareholder, officer, director
or an employee of the Corporation.
"PURCHASER" has the meaning specified in Section 7.7.
"PUT OPTION" has the meaning specified in Section 7.7.
"RELATED PARTIES" means Shareholders and Persons related to
Shareholders as the term "related" is defined in the Income Tax Act
(Canada); and "Related Party" shall mean any one of such parties.
"SENIOR MANAGEMENT GROUP" means collectively, ▇▇▇▇▇▇, Cargnelli and
▇▇▇▇▇▇.
"SERIES A PREFERRED SHARES" means the issued and outstanding series A
preferred shares in the capital of the Corporation.
"SERIES B PREFERRED SHARES" means the issued and outstanding series B
preferred shares in the capital of the Corporation.
"SHARE SUBSCRIPTION AGREEMENT" means the share subscription agreement
dated the date hereof among the Corporation, CIBC, MG Fund, WV, DVI and
the Legacy Investors.
"SHAREHOLDERS" means collectively CIBC, MG Fund, WV, DVI, the Legacy
Investors, ▇▇▇▇▇▇, Cargnelli and ▇▇▇▇▇▇ and any person to whom a
Shareholder transfers any Shares,
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or to whom Shares are issued, in accordance with the terms of this
Agreement and "Shareholder" means, individually, any one of them.
"SHARES" means collectively the Common Shares and the Preferred Shares.
"SUBSIDIARY" means a corporation Controlled by the Corporation
"TERRITORY" means North America.
1.2 HEADINGS, ETC.
The provision of a Table of Contents, the division of this Agreement into
Articles and Sections and the insertion of headings are for convenient reference
only and are not to affect its interpretation.
1.3 GENDER AND NUMBER.
Any reference in this Agreement or any Ancillary Agreement to gender includes
all genders and words importing the singular number only shall include the
plural and vice versa.
1.4 GOVERNING LAW.
This Agreement shall be governed and interpreted and enforced in accordance with
the laws of the Province of Ontario and the federal laws of Canada applicable
therein.
1.5 SEVERABILITY.
Each provision of this Agreement is intended to be severable. If any provision
hereof is illegal or invalid, such provision shall be deemed to be severed and
deleted herefrom and such illegality and invalidity shall not affect the
validity or enforceability of the remainder hereof.
1.6 CURRENCY.
All references to dollars in this Agreement shall be to Canadian dollars.
1.7 ENTIRE AGREEMENT.
This Agreement (and, with respect to the Corporation, CIBC, MG Fund, WV, DVI and
the Legacy Investors and the Share Subscription Agreement) constitutes the
entire agreement among the parties hereto with regard to the subject matter
hereof and supersedes all prior agreements, understandings, representations or
warranties, negotiations and discussions, whether oral or written, among the
parties hereto with respect thereto, including without limitation any agreements
among the shareholders of the Corporation entered into prior to the date hereof,
which are hereby terminated.
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1.8 AMENDMENT.
This Agreement may be amended if such amendments are approved in writing by each
of CIBC, MG Fund, WV, DVI, Cargnelli, ▇▇▇▇▇▇ and ▇▇▇▇▇▇ and any amendment so
approved shall be binding on all Shareholders.
1.9 WAIVER.
No waiver by any party hereto of any breach of any of the provisions of this
Agreement shall take effect or be binding upon such party unless in writing and
signed by such party. Unless otherwise provided therein, such waiver shall not
limit or affect the rights of such party with respect to any other breach.
1.10 TIME OF ESSENCE.
Time shall be of the essence of this Agreement.
1.11 FURTHER ACTS.
The parties hereto agree to execute and deliver such further and other documents
and perform and cause to be performed such further and other acts and things as
may be necessary or desirable in order to give full effect to this Agreement and
every part hereof.
1.12 ACCOUNTING PRINCIPLES.
References in this Agreement to generally accepted accounting principles shall
be deemed to be the generally accepted accounting principles from time to time
approved by the Canadian Institute of Chartered Accountants, or any successor
institute, applicable as of the date on which such calculation is made or
required to be made in accordance with generally accepted accounting principles.
ARTICLE 2
TERM OF AGREEMENT
2.1 TERM.
Subject to Section 12.2, this Agreement shall come into force and effect on the
date hereof and shall terminate on the earlier of:
(a) the date on which only one Shareholder holds Shares;
(b) the date this Agreement is terminated by written agreement of
CIBC, MG Fund, WV, DVI, Cargnelli, ▇▇▇▇▇▇ and ▇▇▇▇▇▇ and any
termination so agreed to shall be binding on all Shareholders;
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(c) the date of the closing of an offering or offerings pursuant
to a receipted prospectus under the Securities Act (Ontario),
as amended, or similar document filed under other applicable
securities laws in Canada or the United States, covering the
offer and sale of Common Shares for the account of the
Corporation to the public in which:
(i) the Common Shares are listed on a North American
stock exchange or The NASDAQ Stock Market; and
(ii) the net proceeds to the Corporation from such
offering or offerings aggregate not less than $15
million;
(d) the date upon which all of the Shares are acquired by a
reporting issuer within the meaning of the Securities Act
(Ontario); and
(e) the sale of all of the Shares of the Corporation to a third
party in compliance with this Agreement.
ARTICLE 3
IMPLEMENTATION OF AGREEMENT
3.1 SHAREHOLDER COVENANTS.
Each of the Shareholders covenants and agrees that it shall vote or cause to be
voted the Shares of the Corporation owned by it to accomplish and give effect to
the terms and conditions of this Agreement and that it shall otherwise act in
accordance with the provisions and intent of this Agreement.
3.2 CONFLICT.
Subject to the provisions of the Act, in the event of any conflict between the
provisions of this Agreement and the Articles and the Bylaws, the provisions of
this Agreement shall govern. The parties hereto acknowledge and agree that as
the date hereof conflicts may exist between this Agreement and the Articles and
the Bylaws. Each of the Shareholders agrees to vote or cause to be voted the
Shares owned by it so as to cause the Articles or the Bylaws to be amended to
resolve each such conflict and any other conflicts in favour of the provisions
of this Agreement.
3.3 COVENANTS BY THE CORPORATION.
The Corporation consents to the terms of this Agreement and hereby covenants
with each of the other parties hereto that it will at all times during the term
of this Agreement be governed by the terms and provisions hereof in carrying on
its business and affairs, and shall duly comply with, perform or otherwise
satisfy all representations, warranties, covenants and agreements contained in
the Share Subscription Agreement on its part to be complied with, performed or
otherwise satisfied, and each of the Shareholders shall vote or cause to be
voted their respective Shares of the Corporation to cause the Corporation to
fulfil its foregoing covenants.
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ARTICLE 4
CORPORATION'S BUSINESS AND PURPOSE
4.1 BUSINESS AND PURPOSE.
The business and purpose of the Corporation shall be the development and
marketing of technologies and products that include, or are related to, the
utilization of hydrogen as an energy source (the "CORPORATION'S BUSINESS"). The
Corporation's Business shall be conducted at all times so as to implement to the
fullest extent possible the Annual Business Plan as contemplated therein.
ARTICLE 5
DIRECTORS AND SHAREHOLDERS
5.1 NUMBER OF DIRECTORS.
The Corporation shall, subject to Section 5.2, have 6 Directors who shall be
nominated and elected as provided for in Section 5.2.
5.2 NOMINATION AND ELECTION OF DIRECTORS.
(a) Nomination. The Board of Directors shall consist of one
nominee of WV, one nominee of CIBC, three nominees of ▇▇▇▇▇▇,
Cargnelli and ▇▇▇▇▇▇ (acting together) and one Independent
Director, who shall also act as chairman, mutually acceptable
to all parties. In the event that any of ▇▇▇▇▇▇, Cargnelli and
▇▇▇▇▇▇ are nominated to the Board, and in the event of the
death of any of them, the Shareholders shall nominate a person
who is Independent in the deceased's place as Director.
(b) Replacement. The party entitled under subsection 5.2(a) to
nominate a Director may replace any Director nominated by it
at any time and from time to time in accordance with the
requirements of subsection 5.2(a). Any such party who wishes
to replace a Director may have such Director replaced at any
duly constituted meeting of the Shareholders of the
Corporation or shall forward a written resolution to that
effect, signed by that Shareholder, as the case may be, to the
Shareholders not less than 48 hours before a meeting of
Directors at which such replacement director is expected to
attend. Upon receipt of such written resolution, the
Shareholders shall execute the resolution and promptly return
it to the party initiating the same, who, upon receipt
thereof, shall forward the signed resolution to the
Corporation for filing in the corporate minute book.
(c) Sale of Shares. In the event that any Shareholder sells all of
its Shares in accordance with this Agreement, the nominated
Directors of such Shareholder shall resign and shall provide a
release to the Corporation and the purchaser shall
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be entitled to the same rights, if any, to nominate Directors
as such Shareholder had.
(d) Indemnity. The Corporation hereby indemnifies each Director.
and his or her heirs and legal representatives against all
costs, charges and expenses, including an amount paid to
settle an action or satisfy a judgment, reasonably incurred by
him or her in respect of any civil, criminal or administrative
proceeding to which he or she is made a party by reason of
being or having been a director of the Corporation provided
(i) he or she acted honestly and in good faith with a view to
the best interests of the Corporation; and (ii) in the case of
a criminal or administrative proceeding that is enforced by a
monetary penalty, he or she had reasonable grounds for
believing that his or her conduct was lawful.
(e) Observer Status for MG Fund. For so long as MG Fund is a
Shareholder, MG Fund shall be entitled to receive notice of
all meetings of the Board and shall be invited to attend all
such meetings but shall have no voting or other rights
thereat. ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇. (or an alternative representative
of MG Fund) shall be entitled to compensation for reasonable
travel and out-of-pocket expenses incurred in attending such
meetings, upon presentation of receipts therefor.
(f) Observer Status for DVI. For so long as DVI is a Shareholder,
DVI shall be entitled to receive notice of all meetings of the
Board and shall be invited to attend all such meetings but
shall have no voting or other rights thereat. The
representative of DVI shall be entitled to compensation for
reasonable travel and out-of-pocket expenses incurred in
attending such meetings, upon presentation of receipts
therefor.
5.3 TERM OF OFFICE.
The term of office of a Director shall commence on the date of that individual's
election to the Board and shall terminate at the close of the next following
annual meeting of the Shareholders, or until his or her successor is elected, or
at any time prior thereto if the Shareholder nominating a Director replaces such
Director in accordance with subsection 5.2(b) or otherwise in accordance with
subsection 5.2(a).
5.4 POWERS AND DUTIES OF DIRECTORS.
Subject to the Act and the provisions hereof, the Directors shall manage or
supervise the Corporation's Business except as such authority may be delegated
by the Directors from time to time, and in exercising such authority the
Directors and their delegates shall conduct the Corporation's Business or cause
it to be conducted in all material respects in accordance with the Annual
Business Plan unless the parties hereto shall otherwise agree in writing.
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5.5 INSURANCE.
The Corporation shall arrange director's insurance coverage for the Directors of
the Corporation on terms and conditions and in an amount acceptable to CIBC and
WV.
5.6 BOARD MEETINGS.
The Board shall meet at least once every three months. Any Director shall be
entitled to convene a meeting of Directors upon notice given as specified in
Section 5.7.
5.7 EXERCISE OF AUTHORITY.
(a) Quorum. Unless otherwise agreed to in writing by all of the
Directors, but always subject to section 114(2) of the Act and
subsection 5.7(b), a quorum of any meeting of the Board shall
consist of 4, one of whom shall be a nominee of CIBC and one
of whom shall be a nominee of WV.
(b) Proceeding Without Quorum. Notwithstanding the provisions of
subsection 5.7(a), if proper original notice of a meeting of
the Board, specifying the business to be transacted at the
meeting, is given and a quorum of Directors is not present,
then a meeting of the Board may thereafter be held on 48 hours
written notice of the second meeting to transact the business
set forth in the original notice and, subject to the Act, any
members of the Board present at that meeting shall constitute
a quorum for the transaction of the business set out in the
original notice in respect of that meeting and such business
may be transacted by a majority vote of those Directors in
attendance at the meeting.
(c) Notice. Unless all of the Directors are present (except where
a Director attends a meeting for the express purpose of
objecting to the transaction of any business on the grounds
that the meeting is not lawfully called) or those absent waive
notice, no meeting of Directors shall be validly convened
unless 48 hours' written notice thereof is given in accordance
with the provisions of the Bylaws.
(d) Content of Notice. No resolution with respect to any matter
may be put to any meeting of the Board unless the notice of
the meeting contains reasonable detail of the matter or unless
all of the Directors either are present and do not object to
the matter being put to the meeting or otherwise waive the
provisions of this subsection 5.7(d).
(e) Voting. Decisions of the Board shall be effective only if
approved by a majority of the votes cast at a meeting of the
Directors or by written resolution signed by all of the
Directors. In the event of a deadlock the chairman shall be
entitled to a second or deciding vote.
(f) Compensation Committee. The Board shall appoint a Compensation
Committee and shall delegate to the Compensation Committee the
responsibility for
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reviewing matters relating employee compensation and making
recommendations to the Board. The Compensation Committee shall
consist of three members, one of whom shall be the nominee of
CIBC, one of whom shall be a nominee of WV and one of whom
shall be the Independent Director. In order to be effective,
all decisions of the Compensation Committee shall be made by a
unanimous vote of its members at a meeting or in writing.
(g) Audit Committee. The Board shall appoint an Audit Committee
and shall delegate to the Audit Committee the responsibility
for the review of matters relating to the preparation of the
financial statements of the Corporation and making
recommendations to the Board. The Audit Committee shall
consist of three members, one of whom shall be the nominee of
CIBC, one of whom shall be a nominee of WV and one of whom
shall be the Independent Director. In order to be effective,
all decisions of the Audit Committee shall be made by a
unanimous vote of its members at a meeting or in writing.
5.8 SENIOR OFFICERS.
Throughout the currency of this Agreement, members of the Senior Management
Group may be compensated as determined by the Board.
5.9 DIRECTORS COMPENSATION AND FEES.
Directors shall be entitled to such compensation as shall be determined by the
Board from time to time.
5.10 EXTRAORDINARY MATTERS.
Notwithstanding any provision to the contrary in the Articles, the Bylaws or
this Agreement, the following matters shall require the written approval of not
less than three of CIBC, MG Fund, WV and DVI in addition to any requirements
required by law:
(a) the taking or institution of any proceedings for the winding
up, reorganization or dissolution of the Corporation or any of
its Affiliates;
(b) the making of an assignment for the benefit of any creditors
of the Corporation or of any of its Affiliates;
(c) the amalgamation, consolidation, merger of, or the entering
into of any agreement to amalgamate, consolidate or merge, the
Corporation with any corporation, partnership, joint venture
or firm, or the continuance or corporate reorganization of the
Corporation of any kind or the purchase of any securities of
any Person;
(d) the sale, lease, exchange or other disposition of all or
substantially all of the assets of the Corporation or of any
of its Affiliates or any sale, lease, exchange, or other
disposition of any such assets out of the ordinary course of
business;
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(e) the sale, or the intent to market the sale, of any shares held
by the Corporation in any of its Subsidiaries;
(f) the purchase or redemption by the Corporation of any Shares
other than as expressly provided in this Agreement;
(g) the declaration, payment or setting aside for payment of any
dividend, the distribution of any surplus or earnings, the
return of any capital, the repayment or retirement of any
indebtedness of the Corporation to any Shareholder, or any
other payment or distribution of assets of the Corporation to
any Shareholder;
(h) the amendment of the Articles or Bylaws (other than as
contemplated by Section 3.2 hereof);
(i) the guarantee or indemnification by the Corporation of, or the
grant of security by the Corporation for, the debts or
obligations of any corporation, partnership, joint venture,
firm or person;
(j) the making of any loans with; the granting of any other
financial assistance to or the entering into of any agreements
with any Shareholder or Associate of such Shareholder, or the
making of any loans otherwise than on commercially reasonable
terms to any Person with whom any Shareholder or the
Corporation does not deal at Arm's Length;
(k) the Annual Business Plan;
(l) other than as set forth in Section 5.8, the payment of any
advance, salary, bonus, consulting fee, management fee,
incentive compensation or bonus or other payment to any
Director, former director, officer, Shareholder, employee or
Affiliate (excluding the market value of goods sold or
services provided in the ordinary course of business) of the
Corporation or to any person related by blood, adoption or
marriage to any of the foregoing or to any corporation not
dealing at Arm's Length with any such person or the creation
of any agreement which would obligate the Corporation to make
any such payment, except to the extent that such fees, bonuses
or other payments constitute normal remuneration payable to
bona fide employees of the Corporation and have been
specifically approved in connection with the Annual Business
Plan;
(m) the acquisition or agreement to acquire any capital asset, any
lease or agreement to lease of real or personal property or
any acquisition or agreement to acquire property which is not
contemplated by the duly approved Annual Business Plan or
which would exceed the aggregate amount approved by the by the
duly approved Annual Business Plan for such matters;
(n) any material change in the Corporation's Business or the
taking of any action which may lead to or result in such
material change;
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(o) the incorporation or acquisition of any corporation that would
be an Affiliate of the Corporation;
(p) the hypothecation, mortgage, lease, pledge or any act
otherwise encumbering the Corporation's assets or any of them
except as may be required by bankers in connection with the
Corporation's normal banking activities and arranged lines of
credit or, in the case of leases, except those leases made in
the ordinary course of the Corporation's business (provided
that the written approval of CIBC, MG Fund and WV shall only
be required relative to the matters referred to in this
paragraph (p) if reserving such a right in its favour shall
not cause CIBC's, MG Fund's or WV's Shares to cease being an
"eligible investment", as such term is defined in the Income
Tax Act (Canada) of a registered labour-sponsored venture
capital corporation);
(q) the borrowing of money upon the credit of the Corporation or
incurring of debts in excess of $100,000 in the aggregate
during any 12 month period;
(r) the issuance or allotment of Shares or the granting of any
right, option or privilege to acquire any Shares, other than
pursuant to the Share Subscription Agreement or as
contemplated in this Agreement;
(s) any change in the number of issued and outstanding shares in
the capital of the Corporation or any increase or reduction in
the capitalization of the Corporation, including, without
limitation, by way of any split, conversion or exchange of
Shares; and
(t) the appointment of any firm of chartered accountants to act as
auditor.
5.11 MEETINGS OF SHAREHOLDERS.
(1) The quorum for the transaction of business at any meeting of the
Shareholders shall be 4 persons present in person or by proxy holding at least
60% of the Shares entitled to vote at the meeting, provided Shares owned by at
least one of CIBC, MG Fund or WV are represented at such meeting. No meeting
shall continue with the transaction of business in the absence of a quorum.
(2) Subject to Section 5.10, all questions before the Shareholders shall be
decided by a majority of votes cast at the meeting. The chairman of the meeting
of the Shareholders shall be decided by a majority of votes cast at the meeting.
The chairman of the meeting of the Shareholders will not have a second or
deciding vote.
(3) Notwithstanding the provisions of subsection 5.11(1), if proper notice of a
meeting of the Shareholders is given and a quorum of Shareholders is not
present, then a meeting of the Shareholders may thereafter be held on 48 hours
written notice of the second meeting to transact the business set forth in the
original notice and, subject to the Bylaws and the Act, any Shareholders present
at that meeting shall constitute a quorum for the transaction of the business
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set out in the original notice in respect of that meeting and such business may
be transacted by a majority of voting Shares of Shareholders in attendance at
the meeting.
5.12 KEY PERSON INSURANCE.
The Corporation covenants with the Shareholders that it will insure and keep
insure the life of each of ▇▇▇▇▇▇, Cargnelli and ▇▇▇▇▇▇ under a policy of "KEY
PERSON LIFE INSURANCE" for each in the amount of $500,000 per person with the
Corporation as the sole beneficiary under such policy.
5.13 INDEPENDENT DIRECTOR AND CHAIRMAN.
If at any time, any three of CIBC, MG Fund, WV, DVI, ▇▇▇▇▇▇, Cargnelli or ▇▇▇▇▇▇
determine, acting reasonably, that the Chairman, or any successor, is unwilling
or unable to fulfil his duties and responsibilities as Independent Director and
Chairman and shall refuse to resign as requested, then the Shareholders shall
take all necessary steps to remove him as Independent Director and Chairman.
Upon such removal, the Board shall commence a search for a suitable replacement
acceptable to all Shareholders.
5.14 FUTURE FINANCING.
The parties acknowledge that additional financing for the operations of the
Corporation's Business may be required. The parties agree to act in a
commercially reasonable manner in connection with any consents which may be
required in connection with such future financing. Furthermore, the parties
acknowledge that the new investors will require board seats and that the Board
of Directors will be increased so as to accommodate such persons.
ARTICLE 6
FINANCIAL AND ACCOUNTING PRACTICES
6.1 FINANCIAL INFORMATION.
(1) The Corporation shall deliver to all Shareholders within 90 days of the
financial year end of the Corporation one copy of its annual financial
statements, which shall be prepared on a consolidated basis and be audited by
independent auditors of the Corporation, qualified and entitled to carry on in
the Province of Ontario the practice of public accounting and auditing,
including the balance sheet and statements of income, retained earnings and
changes in financial position, together with all supporting schedules. Such
financial statements shall be signed by an authorized officer of the Corporation
and shall be accompanied by a detailed report of the auditors of the Corporation
(which report shall not be qualified). The Corporation shall furnish to all
Shareholders with the annual consolidated financial statements a certificate
signed by the chief financial officer of the Corporation or another senior
officer satisfactory to CIBC, MG Fund, WV and DVI to the effect that such annual
financial statements have been prepared in accordance with generally accepted
accounting principles and present fairly the financial position of the
Corporation and its Subsidiaries at the date thereof and to the effect that
neither the Corporation nor its Subsidiaries is in breach of any of the
covenants or representations and
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warranties contained herein, or, if such is not the case, detailed particulars
of all breaches of covenants or representations and warranties, together in
either case with reasonably detailed evidence of compliance with all financial
covenants contained herein.
(2) The Corporation shall furnish to CIBC, MG Fund, WV and DVI no later than 60
days prior to the end of each financial year the Annual Business Plan (which
shall be acceptable to CIBC, MG Fund and WV, acting reasonably) for the next
financial year which shall consist of the detailed budget for such financial
year providing information supplementary to and consistent with the Annual
Business Plan and the Five Year Plan. For the purposes of this Agreement,
"Annual Business Plan" means, for any financial year, monthly detailed pro forma
balance sheets, income statements and statements of changes in financial
position for the Corporation prepared in accordance with generally accepted
accounting principles on a consolidated basis and approved by its Board of
Directors together with such explanations, notes and information which in the
reasonable opinion of the Corporation explain and supplement the information so
provided and a capital expenditure plan indicating the nature and amount of
capital expenditures proposed to be incurred in such financial year.
(3) The Corporation shall provide a monthly financial report to CIBC, MG Fund,
WV and DVI within 25 days after the end of each month consisting of the monthly
and year to date financial statements on a consolidated basis in a form
consistent with the Annual Business Plan and the Five Year Plan and as normally
prepared by management for its own use which, shall contain a comparison of
budget to actual and, from and after one year from the date hereof, to the prior
year for the same period.
(4) The Corporation shall provide to CIBC, MG Fund, WV and DVI within 10 days of
the end of each financial quarter, a certificate signed by the duly appointed
president, vice-president or chief executive officer of the Corporation in the
form of Schedule "C".
(5) The Corporation shall provide to each of CIBC, MG Fund, WV and DVI, their
representatives and agents, any other information concerning its financial
position and business operations which CIBC, MG Fund, WV or DVI, their
representatives and agents, may from time to time request.
(6) The Corporation shall provide information on the business, employees and
assets of the Corporation and the Subsidiaries necessary to determine that the
securities of the Corporation constitute "ELIGIBLE INVESTMENTS" for purposes of
section 204.8 of the Income Tax Act (Canada) and, if applicable, Part III of the
Community Small Business Investment Funds Act (Ontario), as amended.
6.2 MAINTAIN BOOKS.
The Corporation shall maintain accurate and complete books and records of all
transactions, receipts, expenses, assets and liabilities of the Corporation in
accordance with generally accepted accounting principles, consistently applied
as approved and adopted by the Board.
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6.3 REVIEW OF BOOKS.
The Shareholders agree that each of CIBC, MG Fund and WV shall, at their expense
unless otherwise agreed by the parties hereto, be entitled to appoint a
representative, agent or designee to review, on reasonable notice, all books,
documents and records of the Corporation and shall be entitled to make copies
thereof for their own purposes. Each of CIBC, MG Fund and WV and their
representatives, agents and designees shall have the right to discuss at any
time with management personnel of the Corporation, such matters pertaining to
the financial position, operations, investments and financings as may be of
interest to CIBC, MG Fund or WV or such representative, agent or designee from
time to time.
6.4 FISCAL YEAR.
The fiscal year of the Corporation shall end on the 31st day of December in each
year, or such other date as is agreed to by the Board.
ARTICLE 7
ARTICLE SALE AND ISSUANCE OF SHARES
7.1 SALE AND ISSUE RESTRICTIONS.
(a) Except as otherwise set forth in this Agreement, none of the
Shareholders may sell, grant an option to sell, encumber,
pledge or create a security interest in or otherwise deal with
any of its Shares in the Corporation provided however that
Shares may be pledged to the banker of the Corporation from
time to time as security for indebtedness of the Corporation
owed to such banker.
(b) No proposed dealing with any Shares (including the issuance
thereof) in violation of this Agreement shall be valid, and
the Corporation shall not record or transfer any of the Shares
dealt with in violation of this Agreement in the records of
the Corporation nor shall any voting rights attached to such
Shares be exercised, nor shall any dividends be paid on such
Shares during the period of such violation. Such
disqualification shall be in addition to and not in lieu of
any other remedies to enforce the provisions of this
Agreement.
(c) Notwithstanding anything else herein contained other than
Sections 7.6, 7.7 and 7.9 prior to the redemption in full of
the Shares held by CIBC, MG Fund, WV and DVI at the redemption
price contained in the Articles, no Shares may be transferred
without the prior written consent of not less than three of
CIBC, MG Fund, WV and DVI which may be arbitrarily withheld.
(d) Notwithstanding anything else herein contained, every transfer
of all or a portion of the Shares held by a Shareholder, and
any issue of Shares by the Corporation, in addition to the
requirements of the Articles, shall be subject to the
condition that the proposed transferee, or holder, if not
already bound by this Agreement, shall first enter into an
agreement with the other parties hereto to be bound
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hereby. For greater certainty, but without limiting the
foregoing, each of the Shareholders shall be bound by the
provisions of this Agreement in respect of any Shares which
may be acquired by such Shareholder after the date hereof in
accordance with the provisions of this Agreement.
(e) Notwithstanding anything else herein contained, on any sale of
Shares by CIBC, MG Fund, WV or DVI pursuant to Section 7.7,
CIBC, MG Fund, WV or DVI shall be required to represent and
warrant only that (i) its Shares are owned by it with a good
and marketable title thereto, free and clear of any liens,
charges, mortgages and encumbrances, (ii) it has the power to
convey the Shares, and, in the case of CIBC and WV only, that
(iii) it is not a non-resident of Canada within the meaning of
the Income Tax Act (Canada). MG Fund and DVI shall deliver on
closing a certificate issued pursuant to section 116 of the
Income Tax Act (Canada) showing a "certificate limit" of at
least the purchase price payable to it.
(f) on the winding-up of MG Fund, it shall be entitled to transfer
its shares to one or more Affiliates subject to compliance
with Section 7.1(d).
(g) Notwithstanding anything else herein contained, CIBC shall be
entitled to transfer all or part of its Shares to: (i) an
Affiliate; and (ii) a fund created by CIBC in order to enable
CIBC's employees to co-invest with CIBC.
7.2 OFFER.
If at any time a Shareholder or group of Shareholders, acting in concert
(hereinafter collectively referred to as the "Selling Shareholder"), desires to
sell to a third party with whom the Selling Shareholder is dealing at Arm's
Length all but not less than all of the Shares of the Selling Shareholder, the
Selling Shareholder shall obtain from the third party a bona fide offer in
writing which offer shall be irrevocable for a period of 60 days (hereinafter in
this Section 7.2 and Sections 7.3, 7.4 and 7.5 referred to as the "Offer") which
it is ready and willing to accept, to purchase all of the Shares for the amount
thereof set forth in the Offer by cash or certified cheque and shall give notice
in writing to the other Shareholders of the receipt of the Offer within 10 days
thereof together with a copy thereof. The Offer may but need not also provide
for the purchase of indebtedness owed by the Corporation to the Selling
Shareholder.
7.3 TAG-ALONG AND PURCHASE RIGHTS.
If CIBC, MG Fund, WV or DVI is not a Selling Shareholder, under Section 7.2,
CIBC, MG Fund, WV and DVI shall each have the right to elect (hereinafter
referred to as the "Electing Shareholder"), by notice in writing to the Selling
Shareholder, within 30 days from the date of receipt of a copy of the Offer, to:
(a) as a condition precedent to any sale of the Shares by the
Selling Shareholder, require the third party to amend the
Offer to provide for the purchase of that number of Shares
which are the subject matter of the Offer such that each of
the Selling Shareholder and the Electing Shareholder shall
sell from their respective
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holdings of Shares a fraction of the number of Shares which
are the subject matter of the Offer, which fractions shall
have as their numerators, in the case of Selling Shareholder,
the number of Shares held by the Selling Shareholder, and in
the case of the Electing Shareholder, the number of Shares
held by the Electing Shareholder, and the denominator of both
such fractions shall be the sum of the number of Shares held
by the Selling Shareholder and the Electing Shareholder, for
the same price per Share, and at the same time and on the same
terms and conditions as contained in the Offer, in which case
the Electing Shareholder shall become a "SELLING SHAREHOLDER"
for purposes of this Article 7; or
(b) if the Selling Shareholder is any of ▇▇▇▇▇▇, Cargnelli or
▇▇▇▇▇▇, as a condition precedent to any sale of the Shares by
the Selling Shareholder, require the third party to amend the
Offer to provide for the purchase of all of the Shares (or
such lesser number as is the subject matter of the Offer) held
by the Electing Shareholder, for the same price per Share, and
at the same time and on the same terms and conditions as
contained in the Offer, in which case the Electing Shareholder
shall become a "Selling Shareholder" for purposes of this
Article 7.
7.4 RIGHT OF FIRST REFUSAL.
Except in the case where Section 7.6 shall apply, the other Shareholders shall
have the irrevocable right, exercisable by written notice given to the Selling
Shareholder within 30 days after the giving of the notice by the Selling
Shareholder, to purchase all but not less than all of the Shares of the Selling
Shareholder or, if CIBC, MG Fund, WV or DVI has exercised its option set forth
in Section 7.3, the number of Shares of the initial Selling Shareholder and of
CIBC, MG Fund, WV and DVI which are the subject matter of the Offer (in either
case, the "Selling Shareholders Shares"), and, if provided for in the Offer,
indebtedness owed by the Corporation to the Selling Shareholder on the terms and
conditions and for the amount set forth in the Offer by cash or certified cheque
pro rata in proportion to their respective holdings of Shares (or in such other
proportions as they may agree among themselves). In the event that one or more
of the Shareholders elects to purchase his or its pro rata proportion of the
Selling Shareholders Shares and, if applicable, indebtedness owed to the Selling
Shareholder and one or more of the Shareholders declines to elect to so
purchase, the Shareholder(s) electing to so purchase shall have the further
right and option, exercisable by notice in writing within 5 days of being
notified by the Selling Shareholder that one or more of the Shareholders has
declined to so purchase, to purchase the remaining Selling Shareholders Shares
and, if applicable, indebtedness owed to the Selling Shareholder on the same
terms and conditions and for the amount set forth in the Offer by cash or
certified cheque pro rata in proportion to their respective holdings of Shares
of such Shareholders (or in such other proportions as they may agree among
themselves). The foregoing procedure shall be repeated as often as is necessary
until either one or more of the Shareholders have elected to acquire all of the
Selling Shareholders Shares and, if applicable, the indebtedness owed to the
Selling Shareholder or until there remain Shares which no Shareholder has
elected to purchase. Where one or more of the Shareholders have elected to
purchase all of the Selling Shareholders Shares, the Offer of the Shareholders
so electing for the Shares and, if applicable, the indebtedness owe to the
Selling Shareholder shall be completed in accordance with its terms.
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If there shall remain Shares which no Shareholder has elected to purchase,
notwithstanding that one or more Shareholders has elected to purchase Selling
Shareholders Shares pursuant to this Section 7.4, the right of any Shareholders
to acquire the Selling Shareholders Shares and, if applicable, the indebtedness
owed to the Selling Shareholder shall be null and void and the provisions of
Section 7.5 shall apply.
7.5 SALE OF SHARES - RIGHT OF FIRST REFUSAL NOT EXERCISED.
If following compliance with Section 7.4 there shall remain Shares which no
Shareholder has elected to purchase, the Selling Shareholder shall accept the
Offer and complete the transaction with the said third party in accordance with
the terms and conditions of such third party's Offer and the parties hereby
agree to take all steps and proceedings required to have such third party
entered on the books of the Corporation as a shareholder and, if applicable, as
a debtholder of the Corporation, provided that if the sale of such Shares to the
third party is not completed, the provisions of Article 7 shall again apply to
any proposed sale of Shares. The Selling Shareholder is hereby irrevocably
appointed the agent and attorney of the Shareholders and each of them for the
purposes of effecting registration of the third party as a Shareholder of the
Corporation. The Board of Directors or the Shareholders (including the Selling
Shareholder), as the case may be, before consenting to the transfer of the
purchased Shares to the third party, shall require proof that the sale took
place in accordance with the third party's Offer and the Board of Directors
shall refuse the recording of the transfer of the purchased Shares which may
have been sold otherwise than in accordance with the provisions of such Offer
and of this Agreement.
7.6 DRAG-ALONG RIGHTS.
If any of the Shareholders receive a Take-Over Bid, as hereinafter defined,
which such Shareholder(s) wish to accept, such recipient Shareholder(s) shall
forthwith provide a copy of the Take-Over Bid to the other Shareholders together
with a notice that he, she or it wishes to invoke the provisions of this Section
7.6 in which case if Shareholders holding not less than 77% of the total number
of issued and outstanding Shares, and including at least one of CIBC, MG Fund,
or WV, wish to accept such Take-Over Bid, such Shareholders shall have the right
to require the other Shareholders, on 10 days notice in writing to such other
Shareholders, to sell all of the Shares held by them to the third party pursuant
to the terms of the Take-Over Bid for the amount set forth in the Take-Over Bid.
The Corporation is hereby irrevocably appointed the agent and attorney of all
the Shareholders and each of them for the purposes of effecting registration of
the third party as a Shareholder and, if applicable, debtholder of the
Corporation in completing the sale of the Shares of such other Shareholders to
the third party in accordance with this Section 7.6. For purposes hereof,
"Take-Over Bid" shall mean an offer for all of the Shares made by a third party
dealing at Arm's Length with all of the Shareholders and the Corporation which
complies with the following:
(a) the Take-Over Bid must provide for a purchase of the Preferred
Shares at a price in cash and which is the greater of the
Minimum Purchase Price as defined in the Articles and the
price which should be payable if all of the Preferred Shares
were converted to Common Shares in accordance with the
Articles;
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(b) the Take-Over Bid shall not provide for the provision of
management, consulting or other fees, the payment for any
non-competition covenant, or the payment of salary which any
two of CIBC, MG Fund, WV and DVI in their sole discretion
determine to be reasonably attributable to the purchase price
as opposed to fair consideration for future services to be
rendered by the Shareholders or any of their Affiliates,
including the purchaser, or any other Person with whom the
Shareholder does not deal at Arm's Length. In addition, no
other consideration may be paid by the offeror or its
Affiliates otherwise than as set forth in the offer;
(c) the liability of each Shareholder under the purchase agreement
including, without limitation, liability for a breach of
representation or warranty or for a claim under an indemnity
shall be several and not joint and several and shall not,
under any circumstances, exceed the lesser of their pro rata
proportion of any claim and the purchase price payable to each
Shareholder as the case may be; and
(d) the Take-Over Bid shall contain no provision which would
prevent or restrict CIBC's, MG Fund's or WV's ability to make
investments in any business.
7.7 PUT OPTION.
Each of CIBC, MG Fund, WV and DVI shall have the right (the "Put Option") at any
time after five years from the date hereof to require the Corporation to
purchase from CIBC, MG Fund, WV or DVI, as the case may be, all, but not less
than all, of CIBC's, MG Fund's, WV's or DVI's Shares (hereinafter in Sections
7.7, 7.8 and 7.9 referred to as the "Putting Shareholder"). Any purchase of the
Putting Shareholder's Shares in accordance with this Section by the Corporation,
or, if the Shareholders elect in accordance with subsection 7.7(c), by the
Shareholders (such Shareholders or the Corporation, as the case may be, being
hereinafter referred to in this Section as the "Purchaser(s)"), shall be subject
to the following terms and conditions, notwithstanding the provisions of Section
7.2.
(a) the Put Option shall be exercised by the Putting Shareholder
giving to the Corporation and each of the other Shareholders
notice in writing (in this Article called the "Put Notice") of
the Putting Shareholder's intention to exercise the Put
Option;
(b) the Put Notice shall also set forth the Putting Shareholder's
best estimate, stated in dollars, of the Fair Market Value of
its Shares, which, subject to Section 7.8, shall be the
purchase price payable by the Purchaser(s);
(c) the Shareholders other than the Putting Shareholder shall have
the option, exercisable in writing to purchase the Putting
Shareholder's Shares, in place of or in addition to the
Corporation, in such proportions as may be specified in a
notice given by the Shareholders other than the Putting
Shareholder to the Putting Shareholder and to the Corporation
within 30 days of receipt of the Put Notice. If the
Shareholders other than the Putting Shareholder so elect, such
of them who
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have elected to be Purchasers, shall be obligated to purchase
the Putting Shareholder's Shares, but the Corporation shall
not thereby be relieved of its obligation to purchase Putting
Shareholder's Shares if the Shareholders who are the
Purchasers fail to complete the transaction in accordance with
this Section;
(d) the purchase price shall be payable in full in cash or by
certified cheque or bank draft at the time of completion of
the transaction;
(e) upon the completion of the transaction, the Putting
Shareholder shall cause its nominee(s) to resign from all
offices and positions with the Corporation and release the
Corporation from any claims other than for contribution and
indemnity;
(f) the completion of the transaction shall take place at the
offices of the Putting Shareholder, before or on the date
being 120 days after the date on which the Putting Shareholder
delivered the Put Notice, or if a Dispute Notice is duly given
under Section 7.8, before or on the date being 45 days after
determination of the purchase price in accordance with Section
7.8;
(g) the Purchaser(s) shall use its best efforts to cause the
Putting Shareholder to be fully released from all obligations
under any guarantees or indemnities which may have been given
by the Putting Shareholder for or in respect of any debts,
liabilities or obligations of the Corporation, provided that
if the Purchaser(s) are unable to obtain any such release then
the Purchaser(s) shall indemnify the Putting Shareholder
against any loss it may suffer or incur as a result of having
given any said guarantee or indemnity; and
(h) in the event that the Putting Shareholder exercises the Put
Option and all of the Putting Shareholder's Shares are not
acquired by either the Corporation or the Shareholders in
accordance with this Section 7.7, without prejudice to any
other rights which the Putting Shareholder may have, the
provisions of Section 7.9 shall apply.
All of the Shareholders hereby agree that in the event that any of CIBC, MG
Fund, WV or DVI exercise the Put Option under this Section 7.7, the rights of
all Shareholders under the redemption provisions contained in section 6 of the
Series A and Series B Preferred Share provisions of the Company included in
Schedule A to the Articles of the Company as amended January 21, 2000 shall be
suspended until such time as all of the Company's obligations in connection with
the Put Option so exercised shall have been discharged.
7.8 PRICE RESOLUTION.
In the event that any of the Purchaser(s) disagree with the Fair Market Value
contained in the Put Notice given by the Putting Shareholder under Section 7.7,
such Purchaser(s) shall have 15 days from the date the Put Notice is received
within which to give written notice of such disagreement (in this Article called
the "Dispute Notice") to the Putting Shareholder and any other
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Purchaser(s). If no Dispute Notice is given by any of the Purchaser(s) within
the prescribed time, each of the Purchaser(s) shall be deemed to have accepted
the estimate of the Fair Market Value of its Shares set out in the Put Notice.
If the Putting Shareholder receives a Dispute Notice within the prescribed time,
the purchase price of its Shares shall be determined as follows: the Putting
Shareholder and the Purchaser(s) shall instruct the two Experts to make a
determination as to the Fair Market Value of its Shares as at the date of the
Put Notice. The purchase price, which shall be final and binding upon the
parties, shall be the simple average of the Fair Market Value arrived at by each
Expert. All costs and expenses relating to the valuation of the Shares by the
Experts shall be borne by the Corporation.
7.9 SUBSTITUTE PURCHASER.
If CIBC, MG Fund, WV or DVI has exercised the Put Option and the transaction
contemplated by the Put Option has not been completed in accordance with the
terms thereof, (i) the Shareholders other than CIBC, MG Fund, WV and DVI, shall
lose their right to nominate and have elected 3 Directors, (ii) their nominated
Directors shall immediately resign, (iii) CIBC, MG Fund, WV and DVI shall have
the further right to nominate and have elected an additional 3 Directors,
exercisable immediately, (iv) CIBC, MG Fund, WV and DVI shall not be bound by
the provisions of Section 7.2 and may at the particular time proceed to sell its
Shares, and (v) CIBC, MG Fund, WV and DVI may require the sale of the Shares of
the other Shareholders as follows:
(a) CIBC, MG Fund, WV and DVI shall, at the Corporation's expense,
retain an investment adviser and instruct such investment
adviser to solicit offers for all of the shares or assets of
the Corporation.
(b) All of the Shareholders shall (a) accept the first offer
recommended for acceptance by the investment adviser and
approved by not less than three of CIBC, MG Fund, WV and DVI
within such period; (b) execute and deliver the purchase and
sale agreement, in the form recommended by the investment
adviser and approved of by not less than three of CIBC, MG
Fund, WV and DVI, to such purchaser who makes such offer; and
(c) execute and deliver all other documents necessary to
transfer the shares or assets of the Corporation, as the case
may be, to such purchaser.
(c) The Corporation is hereby irrevocably appointed the agent and
attorney of all of the Shareholders and each of them for the
purposes of accepting such offer, executing and delivering the
sale agreement and executing and delivering all other
documents necessary to transfer the shares or assets of the
Corporation and effect registration of the purchaser as a
shareholder of the Corporation, if applicable, on the
condition that the Shareholder's portion of the purchase price
is deposited in an account in such Shareholder's name with the
Corporation's banker.
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7.10 RIGHTS OF PURCHASER.
Any purchaser of Shares from any Shareholder in accordance with the provisions
of this Agreement shall be entitled to all of the benefits accruing to such
Shareholder hereunder and shall be subject to the obligations of such
Shareholder hereunder.
ARTICLE 8
NON-COMPETITION
8.1 NON-COMPETITION.
For the period ending on the third anniversary of the date that any member of
the Senior Management Group ceases directly or indirectly to be a Shareholder,
such member of the Senior Management Group, shall not, on his own behalf or on
behalf of or in connection with any Person, directly or indirectly, in any
capacity whatsoever including as an employer, employee, mandatary, principal,
agent, joint venturer, partner, shareholder or other equity holder, independent
contractor, licensor, licensee, franchiser, franchisee, distributor, consultant,
supplier, trustee or by and through any corporation, company, cooperative,
partnership, trust, entity with juridical personality, unincorporated
association or otherwise carry on, be engaged in, have any financial or other
interest in or be otherwise commercially involved in any endeavour, activity or
business in all or part of the Territory which is substantially the same as or
in competition with the Corporation's Business.
8.2 NON-SOLICITATION OF CUSTOMERS.
For the period ending on the third anniversary of the date that any member of
the Senior Management Group ceases directly or indirectly to be a Shareholder,
such member of the Senior Management Group, shall not, on his own behalf or on
behalf of or in connection with any other Person, directly or indirectly, in any
capacity whatsoever including as an employer, employee, mandatary, principal,
agent, joint venturer, partner, shareholder or other equity holder, independent
contractor, licensor, licensee, franchiser, franchisee, distributor, consultant,
supplier, cooperative, partnership, trust, entity with juridical personality,
unincorporated association or otherwise in connection with the Corporation's
Business:
(a) canvass or solicit the custom of (or procure or assist the
canvassing or soliciting of the custom of) any customer;
(b) accept (or procure or assist the acceptance of) any business
from any customer;
(c) canvass or solicit the custom of (or procure or assist the
canvassing or soliciting of the custom of) any Prospective
Customer;
(d) accept (or procure or assist the acceptance of) any business
from any Prospective Customer;
27
23
(e) supply (or procure or assist the supply of) any goods or
services to any customer; or
(f) supply (or procure or assist the supply of) any goods or
services to any Prospective Customer.
8.3 NON-SOLICITATION OF EMPLOYEES.
For the period ending on the third anniversary of the date that any member of
the Senior Management Group ceases directly or indirectly to be a Shareholder,
such member of the Senior Management Group, shall not, on his own behalf or on
behalf of or in connection with any other Person, directly or indirectly, in any
capacity whatsoever including as an employer, employee, mandatary, principal,
agent, joint venturer, partner, shareholder or other equity holder, independent
contractor, licensor, licensee, franchiser, franchisee, distributor, consultant,
supplier, trustee, or by and through any corporation, company, cooperative,
partnership, trust, entity with juridical personality, unincorporated
association or otherwise:
(a) employ, offer employment to or solicit the employment or
engagement of or otherwise entice away from the employment of
the Corporation any individual who is employed by the
Corporation at the time that such person ceases to be a
Shareholder whether or not such individual would commit any
breach of his contract or terms of employment by leaving the
employ of the Corporation, or
(b) procure or assist any Person to employ, offer employment or
solicit the employment or engagement of or otherwise entice
away from the employment of the Corporation any individual who
is employed by the Corporation at the time that such person
ceases to be a Shareholder whether or not such individual
would commit any breach of his contract or terms of employment
by leaving the employ of the Corporation.
8.4 NON-INTERFERENCE.
Such Shareholder ceasing directly or indirectly to be a Shareholder shall not on
his own behalf or on behalf of or in connection with any other Person, directly
or indirectly, in any capacity whatsoever including as an employer, employee,
mandatary, principal, agent, joint venturer, partner, shareholder or other
equity holder, independent contractor, licensor, licensee, franchiser,
franchisee, distributor, consultant, supplier, trustee, or by and through any
corporation, company, cooperative, partnership, trust, entity with judicial
personality, unincorporated association or otherwise, interfere or attempt to
interfere with the Corporation's Business or persuade or attempt to persuade any
customer, Prospective Customer, employee or supplier of the Corporation to
discontinue or alter such Person's relationship with the Corporation.
8.5 PORTFOLIO EXCEPTION.
Such Person ceasing to be a Shareholder shall not be in default under this
Agreement by virtue of his holding as a passive investor not more than five
percent (5%) of the issued and outstanding
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24
shares of a corporation, the shares of which are listed on a recognized stock
exchange within the Territory and with which such Person has no other connection
whatsoever.
ARTICLE 9
REPRESENTATIONS AND WARRANTIES
9.1 GENERAL.
Each Shareholder hereby represents and warrants to each other Shareholder and to
the Corporation that such Shareholder:
(a) is neither a party to nor bound by any agreement regarding the
ownership of its Shares, other than this Agreement or an
agreement to effect a transfer of Shares in accordance with
the terms of this Agreement;
(b) is not a party to, bound by or subject to any indenture,
mortgage, lease, agreement, instrument, charter or bylaw
provision, statute, regulation, order, judgment, decree or law
which would be violated, contravened or breached by, or under
which any default would occur as a result of the execution and
delivery by such Shareholder of this Agreement or the
performance by such Shareholder of any of the terms hereof;
and
(c) owns its Shares beneficially and as of record with good and
marketable title thereto free and clear of all legal rights
and encumbrances.
9.2 THE CORPORATION.
The Corporation hereby represents and warrants to each Shareholder that, as at
the date of this Agreement:
(a) the Corporation is a taxable Canadian corporation within the
meaning of the Income Tax Act (Canada);
(b) the Corporation carries on no business other than the
Corporation's Business;
(c) not less than 90% of the fair market value of the property of
the Corporation is attributable to property used in the
Corporation's Business or to shares in the capital stock of or
debt obligations of one or more Subsidiaries;
(d) the Corporation and all corporations related to it (determined
in accordance with the Income Tax Act (Canada)) have 500 or
fewer employees;
(e) the carrying value of the total assets (determined in
accordance with generally accepted accounting principles on a
consolidated or combined basis, where applicable) of the
Corporation and all corporations related to it (determined in
accordance with the Income Tax Act (Canada)), together with
the amount of the
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25
investment made on the date hereof by CIBC, MG Fund and WV,
does not exceed $50,000,000;
(f) the Corporation has been in active business (as defined in the
Income Tax Act (Canada)) for not less than two years or, if
the Corporation has been carrying on business for less than
two years, throughout such shorter period of time;
(g) at least 50% of the Corporation's full-time employees are
employed in Ontario;
(h) at least 50% of the wages and salaries paid by the Corporation
are paid to employees whose ordinary place of employment is a
permanent establishment of the Corporation located in Ontario;
and
(i) the recitals to this Agreement are true and correct.
ARTICLE 10
ADDITIONAL CAPITAL
10.1 RELATED PARTY LOANS.
All loans from any Related Party shall be made on commercially reasonable terms
and conditions.
(a) Such loans are hereby expressly subordinated, to the extent
and in the manner provided in this Section 10.1, without any
further action or documentation whatsoever being necessary to
give effect to such subordination, in right of payment to the
prior payment in full of all other obligations of the
Corporation for borrowed money, all charges and security
interests created thereby and all indebtedness, liabilities
and obligations secured thereby (collectively, the "Other
Indebtedness").
(b) In the event of any insolvency or bankruptcy proceedings, or
any receivership, liquidation, reorganization or other similar
proceedings relative to the Corporation or to its property or
assets, or in the event of any proceedings for voluntary
liquidation, dissolution or other winding-up of the
Corporation, whether or not involving insolvency or
bankruptcy, or any marshalling of the assets and liabilities
of the Corporation (collectively referred to as a
"Proceeding"), the holders of Other Indebtedness shall be
entitled to receive payment in full of all the Other
Indebtedness before any lending Related Party shall be
entitled to receive any payment or distribution of any kind or
character, whether in cash, property or securities which may
be payable or deliverable in any such event in respect of his,
her or its Related Party loan.
(c) Upon any payment or distribution of assets of the Corporation
referred to in this Section 10.1, any lending Related Party
shall be entitled to call for and rely upon a certificate,
addressed to such lending Related Party, of the person making
any
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26
such payment or distribution for the purpose of ascertaining
the persons entitled to participate in such distribution, the
holders of Other Indebtedness and other indebtedness of the
Corporation, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Section 10.1.
(d) Subject to the payment in full of all Other Indebtedness, any
lending Related Party shall be subrogated to the rights of the
holders of Other Indebtedness to receive payments and
distribution of assets of the Corporation in respect of and on
account of Other Indebtedness, to the extent of the
application thereto of moneys or other assets which would have
been received by such lending Related Party but for the
provisions of Section 10.1, until the principal of and
interest on the Other Indebtedness shall be paid in full. No
payment or distribution of assets of the Corporation to the
lending Related Party which would be payable or distributable
to the holder of Other Indebtedness pursuant to this Section
10.1 shall (to the extent paid over to or held for the account
of holders of Other Indebtedness), as between the Corporation,
its creditors (other than the holders of Other Indebtedness)
and such lending Related Party, be deemed to be a payment by
the Corporation to or on account of such lending Related
Party, it being understood that the provisions of this Section
10.1 are, and are intended, solely for the purpose of defining
the relative rights of the lending Related Party, on the one
hand, and the holders of the Other Indebtedness on the other
hand. Nothing contained in this Section 10.1 is intended to or
shall impair, as between the Corporation and its creditors
(other than the holders of Other Indebtedness and the lending
Related Party), the obligation of the Corporation, which is
unconditional and absolute, to pay to the lending Related
Party the principal of and interest on his, her or its Related
Party loan and any other amounts payable under his, her or its
Related Party loan as and when the same shall become due and
payable in accordance with the terms hereof, or to affect the
relative rights of the lending Related Party and creditors of
the Corporation, other than the holders of the Other
Indebtedness, nor shall anything herein or therein prevent the
lending Related Party from exercising all remedies otherwise
permitted by applicable law upon default under his, her or its
Related Party loan subject to the right(s), if any under this
Section 10.1, of the holders of Other Indebtedness upon the
exercise of any such remedy.
(e) In the event that, notwithstanding the foregoing provisions of
this Section 10.1, the lending Related Party shall have
received any payment after a Proceeding has commenced before
all Other Indebtedness has been paid in full, the lending
Related Party shall hold such payment in trust for the benefit
of the holders of Other Indebtedness and shall forthwith upon
the completion of the Proceeding pay such payment over to such
holders of Other Indebtedness for application against unpaid
Other Indebtedness.
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27
(f) For greater certainty, this Section 10.1 shall not be
construed so as to prevent the lending Related Party from
receiving and retaining any payments on account of his, her or
its Related Party loan which are made (A) in a manner that is
consistent with the terms of his, her or its Related Party
loan and (B) at any time when no event of default, as defined
in any Other Indebtedness or the instrument creating the same,
has occurred and is continuing and in respect of which notice
has been given by or on behalf of the holders of Other
Indebtedness to the Corporation and the Related Party. Until
written notice shall be given to the Related Party by or on
behalf of any holder of any Other Indebtedness of the
occurrence of any default with respect to such Other
Indebtedness or the existence of any other facts which would
have the result that any payment with respect of any Related
Party loan would be in contravention of the provisions of this
Section 10.1, the lending Related Party shall be entitled to
assume that no such default has occurred, or that no such
facts exist.
(g) The holders of Other Indebtedness shall be entitled to rely
and shall be third party beneficiaries of the provisions of
this Section 10.1.
(h) The provisions of this Section 10.1 shall have no application
to loans made by WV to the Corporation.
10.2 FUTURE DEBT FINANCINGS.
If the Corporation requires additional capital by way of debt, it shall first
advise CIBC, MG Fund, WV and DVI of its requirements in writing. Upon receiving
such notice, CIBC, MG Fund, WV and DVI shall have 30 days within which to notify
the Corporation if they wish to provide the required financing on such terms and
conditions as may be negotiated between such parties. During that time, the
Corporation shall provide to CIBC, MG Fund, WV and DVI, at their request, all
such information as CIBC, MG Fund, WV and DVI may reasonably require to make its
determination. In the event that the parties are unable to agree upon the terms
of the financing within such 45 day period, the Corporation shall deliver,
within 5 days following the expiry of such 45 day period, a term sheet outlining
the terms and conditions upon which it would be prepared to proceed with the
financing. CIBC, MG Fund, WV and DVI shall have a further period of 10 days
within which to accept or reject the terms of financing. In the event that CIBC,
MG Fund, WV and DVI all reject the terms of financing or fail to give notice
within the prescribed time period as aforesaid, the Corporation shall be free to
pursue obtaining its debt financing with other Persons on terms no less
favourable to the Corporation or more favourable to such Persons than those set
forth in the term sheet provided to CIBC, MG Fund, WV and DVI. In the event that
any of CIBC, MG Fund, WV or DVI rejects the terms of financing or fails to give
notice within the prescribed time period, the remaining of CIBC, MG Fund, WV or
DVI, as the case may be, may alone or in connection with other Persons provide
the required financing to the Corporation.
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28
10.3 FUTURE EQUITY FINANCINGS.
If the Corporation requires additional capital by way of equity, the Corporation
shall provide written notice to the Shareholders specifying the terms and
conditions of the proposed equity issue including the amount of financing to be
raised, the type of security to be issued, the price per security to be issued
and the target completion date. Each Shareholder shall have the irrevocable
right, exercisable by written notice given to the Corporation within 30 days
after the giving of above notice by the Corporation, to participate in the
equity financing on a pro rata basis based on the number of Shares held by such
Shareholder on the terms and conditions set forth by the Corporation. In the
event that one or more Shareholders elects to subscribe for his or its pro rata
proportion of the proposed equity issue and one or more Shareholders declines to
so subscribe, the Shareholder(s) electing to so subscribe shall have the further
right and option, exercisable by notice in writing within 5 days of being
notified by the Corporation that one or more Shareholders has declined to so
subscribe, to subscribe for the remaining equity on the same terms and
conditions as set forth by the Corporation in proportion to their respective
holdings of Shares (or in such other proportions as they may agree among
themselves). The foregoing procedure shall be repeated as often as is necessary
until the equity issue is fully subscribed or until there remains equity which
no Shareholder has elected to subscribe for. If there remains equity which no
Shareholder has elected to subscribe for, the Corporation may elect to proceed
with the equity financing in an amount equal to the amount subscribed for under
this Section 10.3 or decline to proceed and to pursue its equity capital
requirements through other sources on terms and conditions no more favourable
than the terms and conditions specified to the Shareholders. Nothing contained
in this Section 10.3 shall affect the condition that any proposed equity
financing is subject to the written approval of not less than three of CIBC, MG
Fund, WV and DVI in accordance with Section 5.10 of this Agreement.
10.4 EXCEPTIONS TO PRE-EMPTIVE RIGHTS.
Notwithstanding Section 10.3 hereof, no Shareholder shall have any rights
thereunder in respect of:
(a) the issue of any options or shares of the Corporation pursuant
to a stock option plan for employees and other persons
approved by the Board of Directors and consented to in
accordance with Section 5.10 hereof; or
(b) shares issued as a stock dividend or pursuant to the exercise
of conversion privileges, options or rights previously granted
by the Corporation in accordance with Section 10.3.
ARTICLE 11
GENERAL MATTERS
11.1 NO AGENCY OR PARTNERSHIP.
Nothing contained in this Agreement shall make or constitute any party the
representative, agent, principal or partner of any other party and it is
understood that no party has the capacity to make
33
29
commitments of any kind whatsoever or incur obligations or liabilities binding
upon any other party.
11.2 NOTICE.
Any notice, direction or other communication to be given under this Agreement or
any Ancillary Agreement shall be in writing and given by delivering it or
sending it by telecopy or other similar form of recorded communication addressed
in accordance with the instructions set out in Schedule "D" hereto.
Any such communication shall be deemed to have been validly and effectively
given (i) if personally delivered, on the date of such delivery if such date is
a Business Day and such delivery was made prior to 4:00 p.m. (Toronto time) and
otherwise on the next Business Day, or (ii) if transmitted by telecopy or
similar means of recorded communication on the Business Day following the date
of transmission. Any Party may change its address for service from time to time
by notice given in accordance with the foregoing and any subsequent notice shall
be sent to such Party at its changed address.
11.3 ENDORSEMENT OF SHARE CERTIFICATES.
Any and all certificates representing Shares now or hereafter beneficially owned
by the Shareholders during the term of this Agreement shall have endorsed
thereon, in bold type, the following legend:
"The securities evidenced by this certificate are
subject to the terms of, and disposition and transfer
of such securities is restricted in accordance with,
the provisions of an agreement dated as of January
24, 2000 made between the Corporation and each and
all of the holders of shares. A copy of the said
agreement, together with all amendments and
supplements thereto, is available for inspection from
the Secretary of the Corporation on request and
without charge at its registered office."
11.4 ASSIGNMENT.
Neither this Agreement nor any rights or obligations hereunder are assignable by
the parties hereto without the prior written consent of the other parties
hereto, subject to the rights of Shareholders to sell their Shares pursuant to
the terms of this Agreement and provided that the purchaser of such Shares
agrees to be bound hereby. This Agreement shall enure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors, legal
personal representatives, successors and permitted assigns.
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30
11.5 COUNTERPARTS.
(a) This Agreement may be executed by the parties hereto in
separate counterparts each of which when so executed and
delivered shall be an original, but all such counterparts
shall together constitute one and the same instrument.
(b) This Agreement may also be executed by any of the parties
hereto by such party executing and delivering to the
Corporation a counterpart in the form set out as Schedule "E"
to this Agreement, whereupon such party shall become bound by,
and entitled to the benefits of this Agreement as fully and
effectively as though such party had executed this Agreement
together with the other parties to this Agreement.
(c) Any Person who acquires Shares on or subsequent to the date
hereof in accordance with the terms of this Agreement and who
executes a counterpart to this Agreement in the form set forth
in Schedule "E" hereto shall be deemed to be a party to this
Agreement and be entitled to the rights and subject to the
obligations set forth herein, with like effect as if such
Person had been an original party hereto, except that the
rights and obligations of such Person pursuant hereto shall
arise only as of and from the later of the date on which such
Person (i) acquired Shares in accordance with the terms of
this Agreement; and (ii) executed such counterpart.
11.6 PUBLICITY.
Notwithstanding Section 12.1, CIBC, MG Fund, WV and DVI shall have the right to
disclose to whomsoever in any manner its ownership of shares in the capital of
the Corporation.
11.7 POWER OF ATTORNEY.
Each of the Legacy Investors hereby irrevocably makes, constitutes and appoints
the Corporation as his true and lawful attorney and agent, with full power and
authority in his name, place and ▇▇▇▇▇ and for his use and benefit to execute
all documents and do all such things, including the approval of any additions,
changes or amendments to this Agreement, as in the Corporation's opinion may be
necessary or desirable to give effect to the terms of this Agreement.
ARTICLE 12
CONFIDENTIALITY
12.1 CONFIDENTIALITY.
The parties hereto agree to treat all information, data, reports and other
records ("information") relating to the Corporation's Business as confidential
and will not disclose such information to any other person other than their
legal advisors or auditors (and, in the case of CIBC, MG Fund and WV, the
auditors appointed under the Community Small Business Investment Funds Act
(Ontario), as amended) without the prior written consent of the other parties;
provided, however,
35
31
that no Shareholder shall be liable for any such disclosure of such information
of such Shareholder if such information:
(a) becomes generally available to the public other than as a
result of a disclosure by the Shareholder or its
representatives in violation of this Agreement;
(b) was available to the Shareholder on a non-confidential basis
without violation of this Agreement prior to its disclosure by
the Corporation or its representatives;
(c) becomes available to the Shareholder on a non-confidential
basis without violation of this Agreement from a source other
than the Corporation or its representatives provided that such
source is not bound by a confidentiality agreement with the
Corporation or a duty of confidentiality to or in respect of
the Corporation to the knowledge of the Shareholder; or
(d) is required by law to be disclosed by the Shareholder,
provided that the Shareholder first notifies the Corporation
that it believes it is required to disclose such information
and it allows the Corporation a reasonable period of time to
contest the disclosure of such information.
12.2 SURVIVAL.
The terms of this Article 12 and of Article 8 shall survive any termination of
this Agreement without limit as to time.
IN WITNESS WHEREOF the Parties have caused this Agreement to be executed by
their respective duly authorized officer.
HYDROGENICS CORPORATION
By: "▇▇▇▇▇▇ ▇▇▇▇▇▇"
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
By: "▇▇▇▇ ▇▇▇▇▇▇"
-----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President Sales and
Marketing
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WORKING VENTURES CANADIAN
FUND INC.
By: "▇▇▇ ▇▇▇▇▇▇▇▇" by counterpart
-----------------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
By:
-----------------------------------------
Name:
Title:
CIBC CAPITAL PARTNERS
By: "▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇" by counterpart
-----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Managing Director
By:
-----------------------------------------
Name:
Title:
MICRO-GENERATION TECHNOLOGY
FUND, L.L.C.
BY: ARETE CORPORATION, MANAGER
Per: "▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇." by counterpart
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Title: President
37
33
DEVELOPMENT VENTURES, INC.
By: "▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇" by counterpart
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
By:
-----------------------------------------
Name:
Title:
"▇▇▇▇▇▇ ▇▇▇▇▇▇" by counterpart
---------------------------------- ------------------------------------
Witness ▇▇▇▇▇▇ ▇▇▇▇▇▇
"▇▇▇▇ ▇▇▇▇▇▇" by counterpart
---------------------------------- ------------------------------------
Witness ▇▇▇▇ ▇▇▇▇▇▇
"▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇" by counterpart
---------------------------------- ------------------------------------
Witness ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
"▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇" by counterpart
---------------------------------- ------------------------------------
Witness ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
"▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇" by counterpart
---------------------------------- ------------------------------------
Witness ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
"▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇" by counterpart
---------------------------------- ------------------------------------
Witness ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
"▇▇▇▇▇ ▇▇▇" by counterpart
---------------------------------- ------------------------------------
Witness ▇▇▇▇▇ ▇▇▇
"▇▇▇▇ ▇▇▇▇▇▇▇" by counterpart
---------------------------------- ------------------------------------
Witness ▇▇▇▇ ▇▇▇▇▇▇▇
"▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇" by counterpart
---------------------------------- ------------------------------------
Witness ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
"▇▇▇▇▇▇▇ ▇▇▇" by counterpart
---------------------------------- ------------------------------------
Witness ▇▇▇▇▇▇▇ ▇▇▇
38
34
"▇▇▇▇▇▇▇▇ ▇▇▇" by counterpart
---------------------------------- ------------------------------------
Witness ▇▇▇▇▇▇▇▇ ▇▇▇
"▇▇▇▇▇▇▇▇▇ ▇▇▇" by counterpart
---------------------------------- ------------------------------------
Witness ▇▇▇▇▇▇▇▇▇ ▇▇▇
39
SCHEDULE "A"
LEGACY INVESTORS
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇
Wing's Food Products
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇▇▇▇ & Associates Ltd.
▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇
Wing's Food Products
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇. ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
40
SCHEDULE "B"
SHAREHOLDERS
NAME OF COMMON SHARES SERIES A SERIES B
SHAREHOLDER PREFERRED SHARES PREFERRED SHARES
-----------------------------------------------------------------------------------
CIBC 250,000 144,000
-----------------------------------------------------------------------------------
MG Fund 250,000 144,000
-----------------------------------------------------------------------------------
WV 250,000 119,000
-----------------------------------------------------------------------------------
▇▇▇▇▇▇ 937,500
-----------------------------------------------------------------------------------
Cargnelli 937,500
-----------------------------------------------------------------------------------
▇▇▇▇▇▇ 937,500
-----------------------------------------------------------------------------------
DVI 69,000
-----------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 600
-----------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 700
-----------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 700
-----------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇ 3,500
-----------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇ 7,000
-----------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 8,500
-----------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇ 8,500
-----------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇ 2,500
-----------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇ ▇▇▇ 2,500
-----------------------------------------------------------------------------------
41
SCHEDULE "C"
COMPLIANCE CERTIFICATE
TO: Working Ventures Canadian Fund Inc.
CIBC Capital Partners
Micro-Generation Technology Fund, L.L.C.
Development Ventures, Inc.
DATE: -
I, -, - of - (the "CORPORATION"), hereby certify for and on behalf of the
Corporation, intending that the same may be relied upon by you without further
enquiry, that, [SINCE THE DATE OF THE LAST COMPLIANCE CERTIFICATE PROVIDED TO
YOU] [SINCE - ]:
(a) [THE ATTACHED FINANCIAL STATEMENTS DELIVERED PURSUANT TO THE
AGREEMENT HAVE BEEN PREPARED IN ACCORDANCE WITH GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES IN EFFECT ON THE DATE OF SUCH
FINANCIAL STATEMENTS AND THE INFORMATION CONTAINED THEREIN IS
TRUE AND CORRECT IN ALL MATERIAL RESPECTS, SUBJECT ONLY TO
YEAR-END AUDIT ADJUSTMENTS, AND PRESENTS FAIRLY AND
CONSISTENTLY THE RESULTS OF OPERATIONS AND CHANGES IN THE
FINANCIAL POSITION OF THE CORPORATION AS OF AND TO THE DATE
HEREOF;]
(b) the Corporation is in compliance with all taxes and other
withholding obligations and has accrued unpaid vacation pay in
its financial statements;
(c) the Corporation has (i) made all deductions for taxes or other
obligations required to be deducted and has paid the same to
the proper tax or other receiving officers; (ii) remitted to
the appropriate tax authority, on a timely basis, all amounts
collected on account of goods and services taxes and
provincial sales taxes; and (iii) remitted to the appropriate
receiving officer, on a timely basis, all amounts required to
be paid by it in connection with ▇▇▇▇▇▇▇'▇ compensation
legislation;
(d) the Corporation is not aware of any breach or potential breach
by the Corporation of any Environmental Laws (as such term is
defined in the share subscription agreement entered into
between the parties as of -, 2000 (the "Share Subscription
Agreement")) and to the best of its knowledge is in compliance
with all applicable Environmental Laws; and
(e) the Corporation is not aware of any year 2000 issues of the
Corporation or its major customers or suppliers that would
have a material adverse effect on the Corporation or its
Business and the Corporation is in compliance with its year
2000 policy.
42
-2-
All capitalized terms not defined herein have the meaning specified thereto in
the Share Subscription Agreement.
WITNESS my hand and the corporate seal of the Corporation this ______ day of -,
2000.
--------------------------------------
Name
43
SCHEDULE "D"
Notices to be provided as follows:
If to the Corporation, to it at:
Hydrogenics Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇, Ext. 222
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to WV, to it at:
Working Ventures Canadian Fund Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to CIBC, to it at:
CIBC Capital Partners
BCE Place
▇.▇. ▇▇▇ ▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to MG Fund to it at:
Micro-Generation Technology Fund, L. L. C
c/o Arete Corporation, Manager
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇.▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
44
-2-
If to DVI to it at:
Development Ventures, Inc.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ to him at:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ to him at:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ to him at:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
45
-3-
If to ▇▇▇▇▇ ▇▇▇ to him at:
Wing's Food Products
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇▇▇ ▇▇▇▇▇▇▇ to him at:
▇▇▇▇ ▇▇▇▇▇▇▇
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇
▇▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ to him at:
▇.▇. ▇▇▇▇▇▇▇▇▇ & Associates Ltd.
▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇▇▇▇▇▇ ▇▇▇ to him at:
Wing's Food Products
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
46
-4-
If to ▇▇▇▇▇▇▇▇ ▇▇▇ to her at:
▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇. ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇▇▇▇▇▇▇▇ ▇▇▇ to her at:
▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: n/a
47
SCHEDULE "E"
COUNTERPART
TO: HYDROGENICS CORPORATION AND THE SHAREHOLDERS
RE: THE AMENDED AND RESTATED UNANIMOUS SHAREHOLDERS AGREEMENT (THE
"AGREEMENT") DATED JANUARY 24, 2000 BETWEEN HYDROGENICS CORPORATION AND
THE "SHAREHOLDERS " (AS DEFINED IN THE AGREEMENT)
The undersigned hereby agrees to be bound by the terms of the Agreement as a
party to the Agreement, and shall be entitled to all benefits of a Shareholder
pursuant to the Agreement, as fully and effectively as though the undersigned
had executed a counterpart of the Agreement together with the other parties to
the Agreement.
DATED this _________ day of January, 2000.
If undersigned is a Corporation:
_____________________________________
Name of Corporation
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
If undersigned is an individual:
SIGNED, SEALED & DELIVERED
in the presence of:
_____________________________________ ____________________________________
Witness Name
48
-2-
NOTICES. Unless otherwise provided for in the Shareholders Agreement, all
communications to the Shareholder named on this counterpart shall be addressed
as follows:
_____________________________
_____________________________
_____________________________
Attention: ____________________
Telephone: ____________________
E-mail: ____________________
Telecopier:____________________