EXCHANGE AGREEMENT
THIS AGREEMENT made as of September 26, 1996.
AMONG:
▇▇▇▇ ▇▇▇▇▇▇, an individual residing in the City of Calgary
in the Province of Alberta (hereinafter referred to as
"▇▇▇▇" and, together with ▇▇▇▇▇▇ and ▇▇▇▇▇, collectively
referred to as the "SHAREHOLDERS")
- and -
▇▇▇▇▇▇ ▇▇▇▇▇▇, an individual residing in the City of Calgary
in the Province of Alberta (hereinafter referred to as
"▇▇▇▇▇▇" and, together with ▇▇▇▇ and ▇▇▇▇▇ collectively
referred to as the "SHAREHOLDERS")
- and -
▇▇▇▇▇ ▇▇▇▇▇▇, an individual residing in the City of Calgary
in the Province of Alberta (hereinafter referred to as
"▇▇▇▇▇" and, together with ▇▇▇▇ and ▇▇▇▇▇▇, collectively
referred to as the "SHAREHOLDERS")
- and -
▇▇▇▇▇▇ INDUSTRIAL SOFTWARE INC., a corporation existing
under the laws of the Province of Alberta, (hereinafter
referred to as "TIS")
- and -
TOTAL CONTROL PRODUCTS, INC., a corporation existing under
the laws of the State of Illinois (hereinafter referred to
as "TCP")
WHEREAS Shareholders are the owners of 255,704 Class B Common Shares
(the "COMMON SHARES") in the capital of TIS;
AND WHEREAS pursuant to articles of amendment of TIS dated the date
hereof filed pursuant to the BUSINESS CORPORATIONS ACT (Alberta), TIS created a
new class of Exchangeable Non-Voting Shares of TIS (the "EXCHANGEABLE SHARES")
as part of the reorganization of the capital of TIS (the "REORGANIZATION");
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AND WHEREAS in the course of Reorganization, the Shareholders have
agreed to exchange with TIS all of their respective interests in the Common
Shares for Exchangeable Shares on the terms and conditions set forth in this
Agreement;
AND WHEREAS it is the intention of the parties hereto that Section 86
of the INCOME TAX ACT (Canada) shall apply with respect to the exchange of
shares provided for in this Agreement;
AND WHEREAS the parties hereto have agreed to provide certain exchange
privileges including exchange privileges in the event of an insolvency of TIS or
TCP;
NOW THEREFORE in consideration of the respective covenants and
agreements provided in this Agreement, the payment by the Shareholders of $10.00
to TCP and for other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), the parties hereto agree as
follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Agreement, the following terms shall have the following
meanings:
(a) "AUTOMATIC EXCHANGE RIGHTS" means the benefit of the obligation of the
Parent to effect the automatic exchange of shares of Parent Common
Stock for Exchangeable Shares pursuant to Section 4.9 hereof.
(b) "BUSINESS DAY" means a day other than a Saturday, Sunday or a
statutory holiday in the City of Edmonton, Alberta or the City of
Chicago, Illinois.
(c) "COMMON SHARES " has the meaning ascribed thereto in the recitals
hereto.
(d) "EXCHANGE RIGHT" has the meaning ascribed thereto in Section 4.1
hereof.
(e) "EXCHANGEABLE SHARE PROVISIONS" means the rights, privileges,
restrictions and conditions attaching to the Exchangeable Shares.
(f) "EXCHANGEABLE SHARES" has the meaning ascribed thereto in the recitals
hereto.
(g) "INITIAL PUBLIC OFFERING" means an initial underwritten offering of
TCP Common Stock pursuant to an effective registration statement under
the Securities Act of 1933, as amended, as a consequence of which
shares of TCP Common Stock are listed on a national securities
exchange or quoted on the national market system of the National
Association of Securities Dealers, Inc.
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(h) "INSOLVENCY EVENT" means the institution by TIS of any proceeding to
be adjudicated a bankrupt or insolvent or to be dissolved or wound up,
or the consent of TIS to the institution of bankruptcy, insolvency,
dissolution or winding up proceedings against it, or the filing of a
petition, answer or consent seeking dissolution or winding up under
any bankruptcy, insolvency or analogous laws, including without
limitation the COMPANIES CREDITORS' ARRANGEMENT ACT (Canada) and the
BANKRUPTCY AND INSOLVENCY ACT (Canada), and the failure by TIS to
contest in good faith any such proceedings commenced in respect of TIS
within 10 Business Days of becoming aware thereof, or the consent by
TIS to the filing of any such petition or to the appointment of a
receiver, or the making by TIS of a general assignment for the benefit
of creditors, or the admission in writing by TIS of its inability to
pay its debts generally as they become due, or TIS not being
permitted, pursuant to solvency requirements of applicable law, to
redeem any Retracted Shares pursuant to Section 4.6 or 5.6 of the
Exchangeable Share Provisions.
(i) "LIQUIDATION EVENT" has the meaning ascribed thereto in Section 4.9
hereof.
(j) "LIQUIDATION EVENT EFFECTIVE DATE" has the meaning ascribed thereto in
Section 4.9 hereof.
(k) "PURCHASE NOTE" means a promissory note issued by TCP and payable in
equal quarterly installments over a three year period, the first
quarterly payment to be paid on the last day of the calendar quarter
immediately following the Special Retraction Period, together with
interest on the unpaid principal balance at a rate equal to the prime
rate of interest as announced from time to time by the American
National Bank and Trust Company of Chicago, payable in arrears.
(l) "TCP COMMON STOCK" means the shares of common stock of TCP, with no
par value per share, having voting rights of one vote per share, and
any other securities into which such shares may be changed.
(m) "RETRACTED SHARES" has the meaning ascribed thereto in Section 4.6
hereof.
(n) "SHARE PURCHASE AGREEMENT" means the Stock Purchase Agreement made as
of September ___, 1996 among ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇,
Cindel Holdings Incorporated, ▇▇▇▇▇▇ Industrial Software Inc. and
Total Control Products, Inc.
(o) "SUPPORT AGREEMENT" means that certain support agreement made as of
even date hereof between TIS and TCP.
1.2 OTHER DEFINED TERMS
Each term denoted herein by initial capital letters and not otherwise
defined herein shall have the meaning ascribed thereto in the Exchangeable Share
Provisions, unless the context requires otherwise.
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1.3 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC.
The division of this agreement into articles, sections and paragraphs
and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation of this agreement.
1.4 NUMBER, GENDER, ETC.
Words importing the singular number only shall include the plural and
vice versa. Words importing the use of any gender shall include all genders.
1.5 DATE FOR ANY ACTION
If any date on which any action is required to be taken under this
agreement is not a Business Day, such action shall be required to be taken on
the next succeeding Business Day.
1.6 CURRENCY
All dollar figures contained herein shall be deemed to be references
to United States dollars.
ARTICLE 2
EXCHANGE OF SHARES
2.1 EXCHANGE OF SHARES
Shareholders hereby transfer, convey and set over unto TIS all of
their estate, rights, title and interests in and to the Common Shares for the
sole benefit of TIS absolutely in exchange for Exchangeable Shares on the basis
of one Exchangeable Share for each Common Share.
2.2 STATED CAPITAL OF EXCHANGEABLE SHARES
TIS covenants that the aggregate amount which it will add to the
stated capital of the Exchangeable Shares in respect of the Exchangeable Shares
issued pursuant to the terms of this Agreement shall equal the aggregate stated
capital of the Common Shares immediately prior to the acquisition and
cancellation of such Common Shares pursuant to the terms of this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF TCP
TCP represents and warrants to the Shareholders as follows:
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(a) ORGANIZATION
TCP is a corporation duly organized, validly existing and in good
standing, under the laws of the State of Illinois, U.S.A. TCP has
full corporate power and authority to carry on its business as such
business is now being conducted.
(b) POWER, AUTHORITY AND ENFORCEABILITY
TCP has full corporate power and authority to enter into and perform
this Agreement. The execution and delivery by TCP of this Agreement
and the performance by TCP of its obligations hereunder have been duly
authorized and approved by all requisite corporate action. This
Agreement is the binding obligation of TCP enforceable against TCP in
accordance with its terms. This Agreement has been duly executed and
delivered by a duly authorized officer of TCP.
(c) CONSENTS
No consent, authorization, order or approval of, or filing or
registration with, any government, any political subdivision, agency,
and any entity, exercising executive, legislative, judicial,
regulatory or administrative functions of government (each, a
"GOVERNMENT AUTHORITY") is required for or in connection with the
consummation by TCP of the transactions contemplated by this
Agreement.
(d) NO VIOLATION
Neither the execution and delivery of this Agreement by TCP, nor the
consummation by TCP of the transactions contemplated hereby, will
conflict with or result in a breach of any of the terms, conditions or
provisions of TCP's Articles of Incorporation or by-laws, or of any
statute or administrative regulation, or of any order, writ,
injunction, judgment or decree of any court or governmental authority
or of any arbitration award or agreement binding on TCP.
(e) NO DEFAULT
TCP is not a party to any unexpired, undischarged or unsatisfied
written or oral contract, agreement, indenture, mortgage, debenture,
note or other instrument under the terms of which performance by TCP
according to the terms of this Agreement will be a default or an event
of acceleration, or grounds for termination, or whereby timely
performance by TCP according to the terms of this Agreement may be
prohibited, prevented or delayed.
(f) CAPITAL STOCK OF TCP
The authorized capital stock of TCP consists of 7,500,000 shares of
Common Stock, of which 1,613,317 shares are issued and outstanding.
There are no shares of capital stock of TCP of any other class
authorized, issued or outstanding. All of the issued
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and outstanding shares of TCP have been validly issued, are fully
paid and non-assessable. Except for stock options issued to
certain employees of TCP, a convertible debenture held by ▇▇▇▇▇
▇▇▇▇▇▇ and the exchange rights issued pursuant to this Agreement,
there are no subscriptions, options or warrants outstanding to
subscribe or purchase shares of capital stock of TCP. Upon
exercise of the Exchange Rights and the Automatic Exchange Rights,
(i) the shares of TCP Common Stock held in connection therewith
shall have been duly and validly authorized by all necessary
corporate action on the part to TCP; and (ii) such TCP shares
issued will be validly issued, fully paid and non-assessable.
(g) FINANCIAL STATEMENTS
Complete and accurate copies of (a) the audited balance sheets,
statements of income, retained earnings, cash flows and notes to
financial statements (together with any supplementary information
thereto) of TCP as of and for the year ended March 31, 1996 (the
"Financial Statements") and (b) the unaudited interim balance sheets,
statements of income, retained earnings, cash flows and notes to
financial statements of TCP as of and for the period April 1, 1996 to
August 31, 1996 (the "Interim Statements") have been previously
delivered to the Stockholders or made available for each of their
review. The Financial Statements and Interim Statements present
accurately and completely, in all material respects, the financial
position of TCP as of the dates thereof and the results of operations
and cash flows of TCP for the periods covered by said statements, all
in accordance with United States generally accepted accounting
principles consistently applied ("GAAP"), except in the case of the
Interim Statements, (i) omission of footnotes, and (ii) normal year
end adjustments.
(h) LIABILITIES
TCP has no obligations or liabilities of any nature whatsoever (direct
or indirect, matured or unmatured, absolute, accrued, contingent or
otherwise) required by GAAP to be provided or reserved against on a
balance sheet (all the foregoing herein collectively being referred to
as the "LIABILITIES") except for (I) Liabilities provided for or
reserved against the Interim Statements; (ii) Liabilities which have
been incurred by TCP subsequent to August 31, 1996 in the ordinary
course of TCP's business and consistent with past practice;
(iii) Liabilities under the executory portion of any written purchase
order, sales order, lease, agreement or commitment of any kind by
which TCP is bound and which was entered into in the ordinary course
of TCP's business and consistent with past practices; and
(iv) Liabilities under the executory portion of permits, environmental
permits, licenses and governmental directives and agreements issued
to, or entered into by, TCP in the ordinary course of business.
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(i) MATERIAL ADVERSE CHANGE
Since August 31, 1996, TCP and its subsidiaries, taken as a whole,
have not suffered or been threatened with any material adverse change
in the business, operations, assets, liabilities, financial condition
or prospects of TCP and its subsidiaries, taken as a whole.
3.2 COVENANTS OF TCP
TCP hereby covenants and agrees to take all steps required by law,
regulation or stock exchange rule, including if necessary the filing of a
prospectus and any other steps necessary to qualify for distribution the TCP
Common Stock which is issued in connection with the obligations of TCP under
this Agreement.
3.3 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each Shareholder severally, and not jointly, and with respect to
himself or herself only, represents and warrants to TCP and TIS that:
(a) POWER, AUTHORITY AND ENFORCEABILITY
The Shareholder has full power and authority to enter into and perform
this Agreement. This Agreement is the binding obligation of the
Shareholder enforceable against the Shareholder in accordance with its
terms.
(b) NO CONSENT
No consent, authorization, order or approval of, or filing or
registration with, any Governmental Authority is required for or in
connection with the consummation by the Shareholder of the transaction
contemplated by this Agreement.
(c) NO VIOLATION
Neither the execution and delivery of this Agreement by the
Shareholder nor the consummation by the Shareholder of the transaction
contemplated hereby, will conflict with or result in a breach of any
of the terms, conditions or provisions of any statute or
administrative regulation, or of any order, writ, injunction, judgment
or decree of any court or governmental authority or of any arbitration
award to which the Shareholder is a party or by which the Shareholder
is bound.
(d) PURCHASE FOR OWN ACCOUNT
The Exchangeable Shares will be acquired for investment for the
Shareholder's own account, not as a nominee or agent, and not with a
view to the resale or distribution of any part thereof, and the
Shareholder has no present intention of selling, granting any
participation in, or otherwise distributing the Exchangeable Shares
(or the TCP
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Common Stock issuable upon exchange of the Exchangeable
Shares) (collectively, the "SECURITIES"). By executing this
Agreement, the Shareholder further represents that the Shareholder
does not have any contract, undertaking, agreement or arrangement with
any person to sell, transfer or grant participations to such person or
to any third person, with respect to any of the Securities.
(e) KNOWLEDGE AND FINANCIAL CONDITION
The Shareholder has sufficient knowledge and experience in financial
and business matters such that he or she is capable of evaluating the
economic risks of an investment in the Securities. The Shareholder's
financial condition is currently adequate to bear the economic risks
of an investment in the Shares. The Shareholder has received such
written information respecting the business and financial condition of
TCP as the Shareholder has requested and has read and understands such
information, and is not relying on any other information (whether
written or oral) with respect to his or her decision to invest in the
Securities.
(f) FINANCIAL PROJECTIONS
The Shareholder understands that any financial projections provided by
TCP should be considered speculative and qualified by the assumptions
stated therein. The Shareholder understands that such projections are
based on assumptions believed to be reasonable at the time of their
preparation, but they are subject to a high degree of uncertainty and
cannot be relied upon as a prediction of future results.
(g) TAX CONSEQUENCES
The Shareholder understands and acknowledges that none of TCP or any
of its officers, directors, affiliates, employees, agents or advisors,
has made any representation, warranty or assurance regarding the tax
consequences of an investment in the Securities, and that he or she is
relying upon the advice of his or her own tax advisor with respect to
the tax consequences of such investments.
(h) TAX CONSEQUENCES
The Shareholder understands and acknowledges that none of TCP or any
of its officers, directors, affiliates, employees, agents or advisors,
has made any representation, warranty or assurance regarding the tax
consequences of an investment in the Securities, and that he or she is
relying upon the advice of his or her own tax advisor with respect to
the tax consequences of such investments.
(i) RESTRICTED SECURITIES
The Shareholder understands that the Securities are characterized as
"restricted securities" under the U.S. federal securities laws
inasmuch as they are being acquired in a transaction not involving a
public offering and that under such laws and
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applicable regulations such securities may be resold without
registration under the Securities Act of 1933, as amended (the
"ACT"), only in certain limited circumstances. In addition, the
Shareholder represents that the Shareholder is familiar with Rule
144 promulgated under the Act, as presently in effect, and
understands the resale limitations imposed thereby and by the Act.
(j) FURTHER LIMITATIONS ON DISPOSITION
Without in any way limiting the representations set forth above, the
Shareholder further agrees not to make any disposition of all or any
portion of the TCP Common Stock issued upon exchange of the
Exchangeable Shares unless and until:
(i) there is then in effect a registration statement under the Act
governing such proposed disposition and such disposition is made
in accordance with such registration statement; or
(ii) the Shareholder shall have notified TCP of the proposed
disposition and shall have furnished TCP with a detailed
statement of the circumstances surrounding the proposed
disposition, and if reasonably requested by TCP, the Shareholder
shall have furnished TCP with an opinion of counsel, reasonably
satisfactory to TCP that such disposition will not require
registration of such shares under the Act.
ARTICLE 4
EXCHANGE RIGHT AND AUTOMATIC EXCHANGE
4.1 GRANT AND OWNERSHIP OF THE EXCHANGE RIGHT AND AUTOMATIC EXCHANGE
RIGHTS
TCP hereby grants to the Shareholders (a) the right (the "EXCHANGE
RIGHT"), upon the occurrence and during the continuance of an Insolvency Event,
to require TCP to purchase from each or any Shareholder all or any part of the
Exchangeable Shares held by the Shareholder and (b) the Automatic Exchange
Rights, all in accordance with the provisions of this Agreement. TCP hereby
acknowledges receipt from the Shareholders of good and valuable consideration
(and the adequacy thereof) for the grant of the Exchange Right and the Automatic
Exchange Rights by TCP to the Shareholders.
4.2 LEGENDED SHARE CERTIFICATES
TIS will cause each certificate representing Exchangeable Shares to
bear an appropriate legend notifying the Shareholders of their rights to
exercise the Exchange Right and the Automatic Exchange Rights.
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4.3 PURCHASE PRICE
The purchase price payable by TCP for each Exchangeable Share to be
purchased by the TCP under the Exchange Right shall be an amount per share equal
to the Current Market Price of a share of TCP Common Stock on the last Business
Day prior to the day of closing of the purchase and sale of such Exchangeable
Shares under the Exchange Right. The purchase price for each such Exchangeable
Share so purchased will be satisfied only by TCP issuing and delivering or
causing to be delivered to the relevant Shareholder, one share of TCP Common
Stock, and no shareholder shall be entitled to any other assets of TCP or TIS in
connection with such purchase.
4.4 EXERCISE INSTRUCTIONS
Subject to the terms and conditions herein set forth, a Shareholder
shall be entitled, upon the occurrence and during the continuance of an
Insolvency Event, to exercise the Exchange Right with respect to all or any part
of the Exchangeable Shares registered in the name of such Shareholder on the
books of the Company. To cause the exercise of the Exchange Right, the
Shareholder shall deliver to TCP the certificates representing the Exchangeable
Shares which such Shareholder desires TCP to purchase, duly endorsed in blank,
and accompanied by such other documents and instruments as may be required to
effect a transfer of Exchangeable Shares under the BUSINESS CORPORATIONS ACT
(Alberta) and the by-laws of TIS and such additional documents and instruments
as TCP may reasonably require together with a duly completed form of notice of
exercise of the Exchange Right, contained on the reverse of or attached to the
Exchangeable Share certificates, stating (i) that the Shareholder thereby
exercises the Exchange Right so as to require TCP to purchase from the
Shareholder the number of Exchangeable Shares specified therein, (ii) that such
Shareholder has good title to and owns all such Exchangeable Shares to be
acquired by TCP free and clear of all liens, claims and encumbrances, (iii) the
names in which the certificates representing the TCP Common Stock issuable in
connection with the exercise of the Exchange Right are to be issued and (iv) the
names and addresses of the person to whom such new certificates should be
delivered. If only a part of the Exchangeable Shares represented by any
certificate or certificates delivered to TCP are to be purchased by TCP under
the Exchange Right, a new certificate for the balance of such Exchangeable
Shares shall be issued to the Shareholder at the expense of TIS.
4.5 DELIVERY OF TCP COMMON STOCK; EFFECT OF EXERCISE
Promptly after receipt of the certificate representing the
Exchangeable Shares which the Shareholder desires TCP to purchase under the
Exchange Right (together with such documents and instruments of transfer and a
duly completed form of notice of exercise of the Exchange Right) (hereinafter
referred to as "RECEIPT OF THE EXCHANGEABLE SHARES"), duly endorsed for transfer
to TCP, which receipt by TCP shall constitute exercise of the Exchange Right by
the Shareholder of such Exchangeable Shares, TCP shall immediately thereafter
deliver or cause to be delivered to Shareholder of such Exchangeable Shares (or
to such other persons, if any, properly designated by the Shareholder), the
certificates for the number of shares of TCP Common Stock issuable in connection
with the exercise of the Exchange Right, which shares shall be duly issued as
fully paid and non-assessable and shall be free and clear of any lien, claim or
encumbrance. Immediately upon receipt of the Exchangeable Shares, the closing
of the transaction of purchase and sale contemplated by the Exchange Right shall
be deemed to have occurred, and the Shareholder of such Exchangeable
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Shares shall be deemed to have transferred to TCP all of its right, title and
interest in and to such Exchangeable Shares and shall cease to be a holder of
such Exchangeable Shares and shall not be entitled to exercise any of the
rights of a holder in respect thereof, other than the right to receive such
holder's proportionate part of the total purchase price therefor, unless the
requisite number of shares of TCP Common Stock is not allotted, issued and
delivered by TCP to the Shareholder (or to such other persons, if any,
properly designated by such Shareholder), within five Business Days of the
receipt of the Exchangeable Shares by TCP, in which case the rights of the
Shareholder shall remain unaffected until such shares of the TCP Common Stock
are so allotted, issued and delivered by TCP Concurrently with such
Shareholder ceasing to be a holder of Exchangeable Shares, the Shareholder
shall be considered and deemed for all purposes to be the holder of the
shares of TCP Common Stock delivered to it pursuant to the Exchange Right.
4.6 EXERCISE OF EXCHANGE RIGHT SUBSEQUENT TO RETRACTION
In the event that a Shareholder has exercised its right under
Article 4 of the Exchangeable Share Provisions to require TIS to redeem any or
all of the Exchangeable Shares held by the Shareholder (the "RETRACTED SHARES")
and is notified by TIS pursuant to Section 4.6 of the Exchangeable Share
Provisions that TIS will not be permitted as a result of solvency requirements
of applicable law to redeem all such Retracted Shares, provided that TCP shall
not have exercised the Retraction Call Right with respect to the Retracted
Shares and that the Shareholder has not revoked the retraction request delivered
by the Shareholder to TIS pursuant to Section 4.1 of the Exchangeable Share
Provisions, the retraction request will constitute and will be deemed to
constitute an exercise of the Exchange Right with respect to those Retracted
Shares which TIS is unable to redeem. In any such event, TIS hereby agrees with
the Shareholder immediately to notify the Shareholder of such prohibition
against TIS redeeming all of the Retracted Shares and immediately to forward or
cause to be forwarded to TCP all relevant materials delivered by the Shareholder
to TIS (including without limitation a copy of the retraction request delivered
pursuant to Section 4.1 of the Exchangeable Share Provisions) in connection with
such proposed redemption of the Retracted Shares and the Shareholder will
thereupon exercise the Exchange Right with respect to the Retracted Shares that
TIS is not permitted to redeem and will require TCP to purchase such shares in
accordance with the provisions of this Article 4.
4.7 NOTICE OF INSOLVENCY EVENT
Immediately upon the occurrence of an Insolvency Event or any event
which makes an Insolvency Event imminent, TIS and TCP shall give written notice
thereof to each of the Shareholders by mailing to each Shareholder, at the
expense of TCP, a notice of such Insolvency Event in the form provided by TCP,
which notice shall contain a brief statement of the right of the Shareholders
with respect to the Exchange Right.
4.8 RESERVATION OF SHARES OF TCP COMMON STOCK
TCP hereby represents, warrants and covenants that it has irrevocably
reserved for issuance and will at all times keep available, free from pre-
emptive and other rights, out of its authorized and unissued capital stock such
number of shares of TCP Common Stock (a) as is equal to the sum of (i) the
number of Exchangeable Shares issued and outstanding from time to time and
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(ii) the number of Exchangeable Shares issuable upon the exercise of all rights
to acquire Exchangeable Shares outstanding from time to time and (b) as are now
and may hereafter be required to enable and permit TIS to meet its obligations
hereunder, under the Support Agreement and under the Exchangeable Share
Provisions.
4.9 AUTOMATIC EXCHANGE ON LIQUIDATION OF TCP
(a) TCP will give each of the Shareholders written notice of each of the
following events (a "LIQUIDATION EVENT") at the time set forth below:
(i) in the event of any determination by the Board of Directors of
TCP to institute voluntary liquidation, dissolution or winding-up
proceedings with respect to TCP or to effect any other
distribution of assets of TCP among its Shareholders for the
purpose of winding up its affairs, at least 15 days prior to the
proposed effective date of such liquidation, dissolution,
winding-up or other distribution; and
(ii) immediately, upon the receipt by TCP of notice of any instituted
claim, suit, petition or other proceedings with respect to the
involuntary liquidation, dissolution or winding up of TCP or to
effect any other distribution of assets of TCP among its
Shareholders for the purpose of winding up its affairs.
Such notice shall include a brief description of the automatic
exchange of Exchangeable Shares for shares of TCP Common Stock
provided for in Section 4.9(b) hereof.
(b) In order that the Shareholders will be able to participate on a pro
rata basis with the Shareholders of TCP Common Stock in the
distribution of assets of TCP in connection with a Liquidation Event,
on the fifth Business Day prior to the effective date (the
"LIQUIDATION EVENT EFFECTIVE DATE") of a Liquidation Event all of the
then outstanding Exchangeable Shares shall be automatically exchanged
for shares of TCP Common Stock. To effect such automatic exchange,
TCP shall purchase each Exchangeable Share outstanding on the fifth
Business Day prior to the Liquidation Event Effective Date and held by
the Shareholders, and each Shareholder shall sell the Exchangeable
Shares held by it at such time, for a purchase price per share equal
to the Current Market Price of a share of TCP Common Stock on the
fifth Business Day prior to the Liquidation Effective Date, which
shall be satisfied in full by TCP issuing to the Shareholder one share
of TCP Common Stock. For greater certainty, the Shareholders shall
only be entitled to receive shares of TCP Common Stock in satisfaction
of their rights upon the occurrence of a Liquidation Event and shall
not be entitled to the other assets of TCP or TIS.
(c) On the fifth Business Day prior to the Liquidation Event Effective
Date, the closing of the transaction of purchase and sale contemplated
by the automatic exchange of Exchangeable Shares for TCP Common Stock
shall be deemed to have occurred, and each Shareholder of Exchangeable
Shares shall be deemed to have transferred to TCP
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all of the Shareholder's right, title and interest in and to such
Exchangeable Shares and shall cease to be a holder of such
Exchangeable Shares and TCP shall issue to the Shareholder the
shares of TCP Common Stock issuable upon the automatic exchange of
Exchangeable Shares for TCP Common Stock. Concurrently with such
Shareholder ceasing to be a holder of Exchangeable Shares, the
Shareholder shall be considered and deemed for all purposes to be
the holder of the shares of TCP Common Stock issued to it pursuant
to the automatic exchange of Exchangeable Shares for TCP Common
Stock and the certificates held by the Shareholder previously
representing the Exchangeable Shares exchanged by the Shareholder
with TCP pursuant to such automatic exchange shall thereafter be
deemed to represent the shares of TCP Common Stock issued to the
Shareholder by TCP pursuant to such automatic exchange. Upon the
request of a Shareholder and the surrender by the Shareholder of
Exchangeable Share certificates deemed to represent shares of TCP
Common Stock, duly endorsed in blank and accompanied by such
instruments of transfer as TCP may reasonably require, TCP shall
deliver or cause to be delivered to the Shareholder certificates
representing the shares of TCP Common Stock of which the
Shareholder is the holder.
ARTICLE 5
SALE RIGHT AND DIRECT PURCHASE OBLIGATION
5.1 SALE RIGHTS
If an Insolvency Event occurs at any time during the Special
Retraction Period, then each Shareholder shall be entitled (such entitlement
referred to herein as the "SALE RIGHT") for a period of ten Business Days
commencing upon the date of such Insolvency Event, to require TCP to purchase
all, but not less than all, of the Exchangeable Shares owned by such Shareholder
for a purchase price per share equal to $23.46463 (the "PER SHARE PRICE") and
payment of the Per Share Price shall be deferred in accordance with the terms of
the Purchase Note and evidenced by TCP issuing and delivering a Purchase Note to
such holder in the principal amount equal to the Per Share Price multiplied by
the number of Exchangeable Shares owned by such holder. To effect such Sale
Right, the holder shall provide written notice to TCP of his or her intention to
exercise the Sale Right and shall forthwith thereafter deliver to TCP the
certificate or certificates representing all of the Exchangeable Shares which
the holder owns, together with such other documents and instruments as may be
required to effect a transfer of Exchangeable Shares under the BUSINESS
CORPORATIONS ACT (Alberta) and the by-laws of TIS and such additional documents
and instruments as TCP may reasonably require. For greater certainty, TCP shall
not be required to purchase Exchangeable Shares and issue a Purchase Note to any
particular Shareholder if a Special Retraction Note or Special TCP Note has
already been issued to such Shareholder. In the event that the holder has
surrendered to TIS such certificate or certificates pursuant to the exercise of
such holder's Special Retraction Rights and due to an Insolvency Event is unable
to recover such certificate or certificates from TIS even though such holder has
withdrawn his or her Special Retraction Request, then such surrender to TIS
shall be deemed to be delivery to TCP for the purposes of exercise of the Sale
Right herein and TCP shall issue and deliver the Purchase Note to the holder
provided that the holder has
-14-
withdrawn his or her Special Retraction Request in accordance with Section
5.7 of the Exchangeable Share Provisions and has not received a Special
Retraction Note from TIS.
ARTICLE 6
MISCELLANEOUS
6.1 NOTICES
All notices required or permitted to be given hereunder shall be in
writing and may be delivered by hand, by facsimile, by nationally recognized
private courier, or by Canadian mail. Notices delivered by mail shall be deemed
given three (3) business days after being deposited in the Canadian mail,
postage prepaid, registered or certified mail. Notices delivered by hand, by
facsimile, or by nationally recognized private courier shall be deemed given on
the first business day following receipt; provided, however, that a notice
delivered by facsimile shall only be effective if such notice is also delivered
by hand, or deposited in the Canadian mail, postage prepaid, registered or
certified mail, on or before two (2) business days after its delivery by
facsimile. All notices shall be addressed as follows:
If to ▇▇▇▇ or ▇▇▇▇▇:
▇▇▇▇ - ▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇
3700 - ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇▇▇▇▇:
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
-15-
If to TCP:
c/o Total Control Products, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇, President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇'▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and/or to such other respective addresses and/or addressees as may be designated
by notice given in accordance with the provisions of this Section 6.1.
6.2 ENTIRE AGREEMENT
This Agreement and the instruments to be delivered by the parties
pursuant to the provisions hereof constitute the entire agreement between the
parties with respect to the subject matter hereof.
6.3 SURVIVAL; NON-WAIVER; LIMITATION OF LIABILITY
All representations and warranties shall survive the date hereof
regardless of any investigation or lack of investigation by any of the parties
hereto and shall expire after a period of two years from the date hereof, except
for the representations and warranties in Section 3.1(a), (b), (f) and 3.2(a)
which shall not expire. The covenants or conditions of this Agreement, to
exercise any right or privilege in this Agreement conferred, or the waiver by
said party of any breach of any of the terms, covenants or conditions of this
Agreement, shall not be construed as a subsequent waiver of any such terms,
covenants, conditions, rights or privileges, but the same shall continue and
remain in full force and effect as if no such forbearance or waiver had
occurred. No waiver shall be effective unless it is in writing and signed by an
authorized representative of the waiving party. A breach of any representation,
warranty or covenant shall not be affected by the fact that a more general or
more specific representation, warranty or covenant was not also breached. TCP's
liability for damages suffered by the Shareholders as a result of a breach of a
representation or warranty contained in Section 3.1 (together with all damages
suffered by TCP and TIS under the Share Purchase Agreement) shall be limited to
$6,000,000. The Shareholders' liability for damages suffered by TCP as a result
of a breach of a representation or warranty contained in Section 3.2 (together
with all damages suffered by TCP and TIS under the Share Purchase Agreement)
shall be limited to the following amounts respectively: ▇▇▇▇ - $5,000,000;
▇▇▇▇▇ - $585,000; ▇▇▇▇▇▇ -
-16-
$1,732,000. Each party's right to claim damages for a breach of
representations and warranties shall also be limited as set forth in Section
4.6(e) in the Share Purchase Agreement.
6.4 COUNTERPARTS
This Agreement may be executed in multiple counterparts, each of which
shall be deemed to be an original, and all such counterparts shall constitute
but one instrument.
6.5 SEVERABILITY
The invalidity of any provision of this Agreement or a portion of a
provision shall not affect the validity of any other provision of this Agreement
or the remaining portion of the applicable provision.
6.6 APPLICABLE LAW
This Agreement shall be governed and controlled as to validity,
enforcement, interpretation, construction, effect and in all other respects by
the internal laws of Alberta, Canada applicable to contracts made in that
region.
6.7 BINDING EFFECT; BENEFIT
This Agreement shall inure to the benefit of and be binding upon the
parties hereto, and their executors, legal representatives, heirs, successors
and permitted assigns. Nothing in this Agreement, express or implied, is
intended to confer on any person other than the parties hereto, and their
respective executors, legal representatives, heirs, successors and permitted
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
6.8 ASSIGNABILITY
This Agreement shall not be assignable by either party without the
prior written consent of the other party, such consent not to be unreasonably
withheld.
6.9 FURTHER ASSURANCES
The parties hereto each covenant with the other to do such things,
execute such documents and carry out such steps as may be required to implement
the terms of this Agreement.
6.10 ENFORCEABILITY
If any court of competent jurisdiction determines that any provision
of this Agreement is invalid or unenforceable, it shall not affect the validity
or enforceability of any other provision hereof and any such invalid or
unenforceable provision shall be deemed to be severable.
-17-
6.11 HEADINGS
The headings contained in this Agreement are for convenience of
reference only and shall not affect the meaning or interpretation of this
Agreement.
IN WITNESS WHEREOF the parties hereto have executed and delivered this
Agreement effective as of the time and date first written above.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------- -------------------------------------
WITNESS ▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------- -------------------------------------
WITNESS ▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------- -------------------------------------
WITNESS ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ INDUSTRIAL SOFTWARE INC.
Per: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇
--------------------------------
TOTAL CONTROL PRODUCTS, INC.
Per: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇
--------------------------------
AMENDMENT NO. 1 TO
EXCHANGE AGREEMENT
THIS AMENDING AGREEMENT made as of December __, 1996.
AMONG:
▇▇▇▇ ▇▇▇▇▇▇, an individual residing in the City of Calgary
in the Province of Alberta (hereinafter referred to as
"▇▇▇▇" and, together with ▇▇▇▇▇▇ and ▇▇▇▇▇, collectively
referred to as the "SHAREHOLDERS")
- and -
▇▇▇▇▇▇ ▇▇▇▇▇▇, an individual residing in the City of Calgary
in the Province of Alberta (hereinafter referred to as
"▇▇▇▇▇▇" and, together with ▇▇▇▇ and ▇▇▇▇▇ collectively
referred to as the "SHAREHOLDERS")
- and -
▇▇▇▇▇ ▇▇▇▇▇▇, an individual residing in the City of Calgary
in the Province of Alberta (hereinafter referred to as
"▇▇▇▇▇" and, together with ▇▇▇▇ and ▇▇▇▇▇▇, collectively
referred to as the "SHAREHOLDERS")
- and -
▇▇▇▇▇▇ INDUSTRIAL SOFTWARE INC., a corporation existing
under the laws of the Province of Alberta, (hereinafter
referred to as "TIS")
- and -
TOTAL CONTROL PRODUCTS, INC., a corporation existing under
the laws of the State of Illinois (hereinafter referred to
as "TCP")
WHEREAS the parties entered into an agreement dated September 26, 1996
(the "AGREEMENT");
AND WHEREAS pursuant to articles of amendment of TIS filed pursuant to
the BUSINESS CORPORATIONS ACT (Alberta), TIS created a new class of Exchangeable
Non-Voting Shares of TIS (the "EXCHANGEABLE SHARES") as part of the
reorganization of the capital of TIS (the "REORGANIZATION");
-2-
AND WHEREAS the Agreement provides, INTER ALIA, for the exchange of
Exchangeable Shares of TIS granted to the Shareholders into Common Shares of TCP
upon the occurrence of certain events, on the terms and conditions set forth in
the Agreement and the share provisions of the Exchangeable Shares;
AND WHEREAS TIS is in the process of filing articles of amendment (the
"Articles of Amendment") which will change each of the issued and outstanding
Exchangeable Shares into three issued and outstanding Exchangeable Shares and
will amend the Exchangeable Share provisions by adjusting the Special Retraction
Price and Special Purchase Price proportionately;
AND WHEREAS it is necessary to amend the Agreement to proportionately
adjust the Per Share Price to adjust for the stock split effected by the
Articles of Amendment;
AND WHEREAS the parties to the Agreement now wish to clarify and amend
certain provisions of the Agreement as set out in this Amending Agreement;
NOW THEREFORE in consideration of the respective covenants and
agreements provided in this Amending Agreement, the payment by the Shareholders
of $10.00 to TCP and for other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), the parties hereto agree as
follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Amending Agreement, each term denoted herein by initial
capital letters and not otherwise defined herein shall have the meaning ascribed
thereto in the Agreement, unless the context requires otherwise.
1.2 OTHER DEFINED TERMS
Each term denoted herein by initial capital letters and not otherwise
defined herein shall have the meaning ascribed thereto in the Exchangeable Share
Provisions, unless the context requires otherwise.
1.3 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC.
The division of this agreement into articles, sections and paragraphs
and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation of this agreement.
References to "Section" followed by a number refer to the
corresponding section of the Agreement.
-3-
1.4 NUMBER, GENDER, ETC.
Words importing the singular number only shall include the plural and
vice versa. Words importing the use of any gender shall include all genders.
1.5 DATE FOR ANY ACTION
If any date on which any action is required to be taken under this
agreement is not a Business Day, such action shall be required to be taken on
the next succeeding Business Day.
1.6 CURRENCY
All dollar figures contained herein shall be deemed to be references
to United States dollars.
ARTICLE 2
AMENDMENT OF THE AGREEMENT
The Agreement is amended as follows:
2.1 The following paragraph is substituted for Section 1.1(n):
"SHARE PURCHASE AGREEMENT" means the Stock Purchase Agreement made as
of September 19, 1996 among ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇,
Cindel Holdings Incorporated, ▇▇▇▇▇▇ Industrial Software Inc. and
Total Control Products, Inc.
2.2 The following paragraph is substituted for Section 5.1:
If an Insolvency Event occurs at any time during the Special
Retraction Period, then each Shareholder shall be entitled (such entitlement
referred to herein as the "SALE RIGHT") for a period of ten Business Days
commencing upon the date of such Insolvency Event, to require TCP to purchase
all, but not less than all, of the Exchangeable Shares owned by such Shareholder
for a purchase price per share equal to $7.8215433 (the "PER SHARE PRICE") and
payment of the Per Share Price shall be deferred in accordance with the terms of
the Purchase Note and evidenced by TCP issuing and delivering a Purchase Note to
such holder in the principal amount equal to the Per Share Price multiplied by
the number of Exchangeable Shares owned by such holder. To effect such Sale
Right, the holder shall provide written notice to TCP of his or her intention to
exercise the Sale Right and shall forthwith thereafter deliver to TCP the
certificate or certificates representing all of the Exchangeable Shares which
the holder owns, together with such other documents and instruments as may be
required to effect a transfer of Exchangeable Shares under the BUSINESS
CORPORATIONS ACT (Alberta) and the by-laws of TIS and such additional documents
and instruments as TCP may reasonably require. For greater certainty, TCP shall
not be required to purchase Exchangeable Shares and issue a Purchase Note to any
particular Shareholder if a Special Retraction Note or Special TCP Note has
already been issued to such Shareholder. In the event that the holder has
-4-
surrendered to TIS such certificate or certificates pursuant to the exercise of
such holder's Special Retraction Rights and due to an Insolvency Event is unable
to recover such certificate or certificates from TIS even though such holder has
withdrawn his or her Special Retraction Request, then such surrender to TIS
shall be deemed to be delivery to TCP for the purposes of exercise of the Sale
Right herein and TCP shall issue and deliver the Purchase Note to the holder
provided that the holder has withdrawn his or her Special Retraction Request in
accordance with Section 5.7 of the Exchangeable Share Provisions and has not
received a Special Retraction Note from TIS.
ARTICLE 3
MISCELLANEOUS
3.1 ENTIRE AGREEMENT
This Amending Agreement and the instruments to be delivered by the
parties pursuant to the provisions hereof constitute the entire agreement
between the parties with respect to the subject matter hereof.
3.2 COUNTERPARTS
This Amending Agreement may be executed in multiple counterparts, each
of which shall be deemed to be an original, and all such counterparts shall
constitute but one instrument. The Parties shall be entitled to rely upon
execution of this Amending Agreement and any documents contemplated by this
Amending Agreement by facsimile.
3.3 SEVERABILITY
The invalidity of any provision of this Amending Agreement or a
portion of a provision shall not affect the validity of any other provision of
this Agreement or the remaining portion of the applicable provision.
3.4 APPLICABLE LAW
This Amending Agreement shall be governed and controlled as to
validity, enforcement, interpretation, construction, effect and in all other
respects by the internal laws of Alberta, Canada applicable to contracts made in
that region.
3.5 BINDING EFFECT; BENEFIT
This Amending Agreement shall inure to the benefit of and be binding
upon the parties hereto, and their executors, legal representatives, heirs,
successors and permitted assigns. Nothing in this Amending Agreement, express
or implied, is intended to confer on any person other than the parties hereto,
and their respective executors, legal representatives, heirs, successors and
permitted assigns any rights, remedies, obligations or liabilities under or by
reason of this Amending Agreement.
-5-
3.6 FURTHER ASSURANCES
The parties hereto each covenant with the other to do such things,
execute such documents and carry out such steps as may be required to implement
the terms of this Amending Agreement.
3.7 ENFORCEABILITY
If any court of competent jurisdiction determines that any provision
of this Amending Agreement is invalid or unenforceable, it shall not affect the
validity or enforceability of any other provision hereof and any such invalid or
unenforceable provision shall be deemed to be severable.
3.8 HEADINGS
The headings contained in this Amending Agreement are for convenience
of reference only and shall not affect the meaning or interpretation of this
Amending Agreement.
3.9 EFFECTIVE DATE
This Agreement shall become effective at the time and date on which a
Certificate of Amendment is issued by the Alberta Registrar of Corporations
pursuant to the Articles of Amendment as defined in paragraph 4 of the recitals
to this Amending Agreement.
IN WITNESS WHEREOF the parties hereto have executed and delivered this
Amending Agreement as of the time and date first written above.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------- -------------------------------------
WITNESS ▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------- -------------------------------------
WITNESS ▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------- -------------------------------------
WITNESS ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ INDUSTRIAL SOFTWARE INC.
Per: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇
--------------------------------
TOTAL CONTROL PRODUCTS, INC.
Per: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇
--------------------------------