<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported) December 10, 1997
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EduTrek International, Inc.
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(Exact name of registrant as specified in its charter)
Georgia 0-23021 58-2255472
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
3340 Peachtree Road, Suite 2000, Atlanta, Georgia 30326
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (404) 812-8200
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N/A
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On December 10, 1997, EduTrek International, Inc., a Georgia
corporation ("EduTrek") and ITI Education Corporation, Inc., a corporation
incorporated under the Canada Business Corporations Act ("ITI"), entered into a
Combination Agreement (the "Combination Agreement") pursuant to which EduTrek
will acquire all of the issued and outstanding capital stock of ITI (the
"Arrangement") and ITI will operate as a wholly-owned subsidiary of EduTrek.
The Boards of Directors of both EduTrek and ITI have approved the Combination
Agreement and the transactions contemplated thereby.
Under the terms of the Combination Agreement, ITI will undergo a
reorganization of capital whereby, in summary: (i) ITI will amend its articles
of incorporation to authorize an unlimited number of Exchangeable Shares (the
"Exchangeable Shares") and one Class A Preferred Share; (ii) ITI will issue one
Class A Preferred Share to EduTrek in exchange for one share of EduTrek Class A
Common Stock; (iii) each existing ITI Common Share (other than ITI Common
Shares held by holders who have properly exercised their rights of dissent and
are ultimately entitled to be paid fair value for their shares) will be
exchanged for .3021 Exchangeable Shares (the "Exchange Ratio"); (iv) ITI will
amend its articles of incorporation to reduce the number of authorized ITI
Common Shares to one; (v) the one Class A Preferred Share held by EduTrek will
be exchanged for one ITI Common Share; and (vi) ITI will amend its articles of
incorporation to delete the Class A Preferred Share from its authorized share
capital. As a result, immediately following the Effective Time, ITI's
outstanding share capital will consist of one ITI Common Share held by EduTrek
and the Exchangeable Shares held by the former holders of ITI Common Shares.
Each Exchangeable Share will be exchangeable by the holder for up to five years
from the date of closing for one share of EduTrek's Class A Common Stock and
shall automatically be exchanged after five years if not previously exchanged.
EduTrek may require earlier exchange of Exchangeable Shares if less than 2% of
the Exchangeable Shares remain outstanding or in the event of certain
fundamental changes. Until exchanged, each Exchangeable Share will have the
same rights as a share of EduTrek's Class A Common Stock including, among
others, equivalent dividend and voting rights.
Upon completion of the transaction, which is expected to be accounted
for as a pooling of interests, shareholders of ITI will hold Exchangeable
Shares which are exchangeable for shares of Class A Common Stock representing
approximately 22.5% of the Common Stock of EduTrek.
The Combination Agreement contemplates that each stock option or other
right to purchase shares of ITI Common Shares ("ITI Options") under ITI's stock
option, stock purchase and other stock plans or agreements (each a "Plan"),
will be converted into and become a right to purchase shares of EduTrek Class A
Common Stock in accordance with the terms of the Plan and the option or other
right agreement by which it is evidenced, except that from and after the
Effective Time (i) the number of shares of EduTrek Common Stock subject to each
ITI Option or right shall be equal to the number of ITI Common Shares subject
to such option or right immediately prior to the Effective Time multiplied by
the Exchange Ratio, and (ii) the per share exercise price of EduTrek Class A
Common Stock purchasable thereunder or upon which the amount of a cash payment
is determined shall be that specified in the option or right divided by the
Exchange Ratio.
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Each holder of ITI's Common Shares or of an ITI Option who would
otherwise be entitled to receive a fractional Exchangeable Share or a
fractional share of EduTrek Class A Common Stock, as the case may be (after
taking into account all of a shareholder's certificates), will receive, in lieu
thereof, the equivalent cash value of such fractional share, without interest.
Consummation of the Arrangement is subject to various conditions,
including, among others: (i) receipt of approval by the shareholders of ITI and
EduTrek of the Combination Agreement and the transactions contemplated thereby,
(ii) fewer than a specified number of ITI shareholders exercising dissenters'
rights; (iii) receipt of certain court and regulatory approvals; (iv) receipt
of an opinion of counsel as to the treatment of the Arrangement under Canadian
federal income tax law as a reorganization of capital for the ITI shareholders
who hold their ITI Common Shares as capital property; (v) receipt of a letter
from EduTrek's independent public accountants relating to the pooling of
interests accounting treatment of the Arrangement; and (vi) satisfaction of
certain other customary closing conditions.
The Combination Agreement and the Arrangement will be submitted for
approval at a meeting of the shareholders of EduTrek and at a meeting of the
shareholders of ITI. Prior to such meetings, EduTrek will file a registration
statement with the Securities and Exchange Commission registering under the
Securities Act of 1933, as amended, the EduTrek Class A Common Stock to be
issued (i) in exchange for outstanding Exchangeable Shares of ITI following
consummation of the Arrangement and (ii) upon exercise of converted ITI
Options.
The preceding description of the Combination Agreement is qualified in
its entirety by reference to the copy of the Combination Agreement included as
an Exhibit to this Current Report on Form 8-K dated December 10, 1997 and filed
on December 18, 1997 and which is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits:
*2.2 - Combination Agreement, dated as of December 10, 1997, by and
between EduTrek International, Inc. and ITI Education
Corporation, Inc.
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* Certain Disclosure Schedules related to the Combination Agreement are omitted
from this filing. EduTrek agrees to supplementally furnish to the Commission
upon request a copy of any omitted Disclosure Schedule. The omitted Disclosure
Schedules relate to the following sections of the Combination Agreement:
Article II - Representations and Warranties of ITI; Article III Representations
and Warranties of EduTrek; Section 4.1 - Conduct of Business of ITI; and
Section 4.3 - Conduct of Business of EduTrek.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
EDUTREK INTERNATIONAL, INC.
By: /s/ Steve Bostic
---------------------------------
Steve Bostic, Chairman and Chief
Executive Officer
Dated: December 18, 1997
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequential
Number Description of Exhibit Page No.
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<S> <C> <C>
2.2 Combination Agreement, dated as of December 10, 1997, by and
between EduTrek International, Inc. and ITI Education Corporation,
Inc.
</TABLE>
<PAGE> 1
EXHIBIT NUMBER 2.2
<PAGE> 2
EXECUTION COPY
COMBINATION AGREEMENT
THIS COMBINATION AGREEMENT (this "Agreement") is entered into
as of December 10, 1997, by and between EduTrek International, Inc., a Georgia
corporation ("EduTrek"), and ITI Education Corporation, a corporation
incorporated under the Canada Business Corporations Act ("ITI").
RECITALS
WHEREAS, the board of directors of each of EduTrek and ITI
has determined that it is advisable and in the best interests of their
respective shareholders to combine their respective businesses by EduTrek
acquiring shares in the capital stock of ITI pursuant to this Agreement and the
Plan of Arrangement (as hereinafter defined).
WHEREAS, in furtherance of such acquisition, the board of
directors of each of EduTrek and ITI has approved the execution and delivery of
this Agreement and the transactions contemplated by this Agreement, the board
of directors of ITI has agreed to submit the Plan of Arrangement and the other
transactions contemplated hereby to its shareholders and the Supreme Court of
Nova Scotia (the "Court") for approval, and the board of directors of EduTrek
has agreed to submit the transactions contemplated hereby to its shareholders
for approval.
WHEREAS, the board of directors of each of EduTrek and ITI
has approved and adopted this Agreement and the Plan of Arrangement as a plan
of reorganization under Section 368(a)(1) of the Internal Revenue Code of 1986,
as amended, and as a reorganization of capital of ITI under Section 86 of the
Income Tax Act (Canada) for those ITI shareholders who hold ITI Common Shares
(as hereinafter defined) on capital account.
WHEREAS, it is intended that the transactions contemplated
hereby will be treated as a "pooling of interests" for accounting purposes.
WHEREAS, in connection with the Plan of Arrangement and after
giving effect thereto, shareholders of ITI will receive 0.3021 (the "Exchange
Ratio") Exchangeable Shares of ITI (the "Exchangeable Shares") in respect of
each ITI Common Share held by them immediately prior to the implementation of
the Plan of Arrangement (subject to adjustment in certain circumstances).
WHEREAS, to induce EduTrek to enter into this Agreement,
contemporaneously herewith, owners of approximately 44.3% of the issued and
outstanding ITI Common Shares, have entered into an agreement (each, an "ITI
Shareholder Agreement") pursuant to which they have agreed to support the Plan
of Arrangement and the other transactions contemplated hereby.
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, agree as follows:
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ARTICLE I
GENERAL
1.1 Plan of Arrangement. As promptly as practicable, ITI will
apply to the Court pursuant to Part XV of the Canada Business Corporations Act
(the "CBCA") for an interim order in form and substance reasonably satisfactory
to EduTrek (the "Interim Order") providing for, among other things, the calling
and holding of the ITI Shareholders Meeting (as hereinafter defined) for the
purpose of considering and, if deemed advisable, approving the arrangement (the
"Arrangement") under Part XV of the CBCA and pursuant to this Agreement and the
Plan of Arrangement substantially in the form of Exhibit A (the "Plan of
Arrangement"). If the ITI shareholders approve the Arrangement, thereafter ITI
will take the necessary steps to submit the Arrangement to the Court and apply
for a final order of the Court approving the Arrangement in such fashion as the
Court may direct (the "Final Order"). Upon obtaining the Final Order, ITI will
promptly file articles of arrangement as contemplated by Section 192(6) of the
CBCA, together with any other required documentation, with the Director under
the CBCA. At 12:01 a.m. (Nova Scotia time) (the "Effective Time") on the date
(the "Effective Date") shown on the certificate of arrangement issued by the
Director under the CBCA giving effect to the Arrangement, the reorganization of
capital and other transactions set out in clauses (a) through (j), inclusive,
of Section 2.1 of the Plan of Arrangement shall occur and shall be deemed to
occur in the order set out therein without any further act or formality.
1.2 Adjustments to Exchange Ratio. The Exchange Ratio shall be
adjusted to reflect fully the effect of any stock split, reverse split, stock
dividend (including any dividend or distribution of securities convertible into
shares of EduTrek Common Stock or ITI Common Shares), reorganization,
recapitalization or other like change with respect to EduTrek Common Stock or
ITI Common Shares occurring after the date hereof and prior to the Effective
Time.
1.3 Dissenting Shares. Holders of ITI Common Shares may exercise
rights of dissent with respect to such shares in connection with the
Arrangement pursuant to and in the manner set forth in Section 190 of the CBCA
and Section 3.1 of the Plan of Arrangement (such holders referred to as
"Dissenters" or as "Dissenting Shareholders" when referring exclusively to ITI
Shareholders). ITI shall give EduTrek (a) prompt notice of any written demands
of a right of dissent, withdrawals of such demands, and any other instruments
served pursuant to the CBCA and received by ITI and (b) the opportunity to
participate in all negotiations and proceedings with respect to such rights.
Without the prior written consent of EduTrek, except as required by applicable
law, ITI shall not make any payment with respect to any such rights or offer to
settle or settle any such rights. EduTrek agrees that it will fund the
requirement to make any payment to Dissenting Shareholders.
1.4 Accounting Consequences. It is intended by the parties
hereto that the Arrangement will qualify for accounting treatment as a pooling
of interests under United States generally accepted accounting principles.
1.5 Amended and Restated Articles of EduTrek. Before the Closing,
EduTrek shall have filed its Amended and Restated Articles of Incorporation
substantially in the form of Exhibit D.
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1.6 Joint Proxy Statement, Registration Statement.
(a) As promptly as practicable after execution of this Agreement,
EduTrek and ITI shall prepare and file with the United States Securities and
Exchange Commission (the "SEC") a preliminary joint management information
circular and proxy statement (as it may be amended or supplemented from time to
time, the "Joint Proxy Statement"), together with any other documents required
by the United States Securities Act of 1933, as amended (the "Securities Act"),
or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), in
connection with the Arrangement and the other transactions contemplated hereby.
The Joint Proxy Statement shall constitute (i) the management information
circular of ITI with respect to the annual general and special meeting of
shareholders of ITI relating to the Arrangement and the approval of certain
matters in connection therewith (the "ITI Shareholders Meeting") and (ii) the
proxy statement of EduTrek with respect to the meeting of shareholders of
EduTrek with respect to the issuance of EduTrek Common Stock from time to time
upon exchange of the Exchangeable Shares and certain other matters relating to
the agreements of EduTrek contained herein (the "EduTrek Shareholders
Meeting"). As promptly as practicable after the preliminary Joint Proxy
Statement is cleared by the SEC, EduTrek and ITI shall cause the Joint Proxy
Statement to be mailed to each company's shareholders entitled to vote. EduTrek
shall also file a registration statement on Form S-4 (or on such other form as
shall be appropriate) (the "Registration Statement") in order to register the
EduTrek Common Stock to be issued from time to time after the Effective Time
upon exchange of the Exchangeable Shares or upon the exercise of options
obtained upon the conversion of ITI Options pursuant to the Arrangement, with
the SEC and, if necessary, maintain the effectiveness of such registration for
the period that such Exchangeable Shares remain outstanding and EduTrek and ITI
shall use their best efforts to cause the Registration Statement to become
effective prior to the mailing of the Joint Proxy Statement to shareholders.
(b) Each party shall promptly furnish to the other party all
information concerning such party and its shareholders as may be reasonably
required in connection with any action contemplated by this Section 1.6. The
Joint Proxy Statement and the Registration Statement, shall comply in all
material respects with all applicable requirements of law. Each of EduTrek and
ITI will notify the other promptly of the receipt of any comments from the SEC
and of any request by the SEC for amendments or supplements to the Joint Proxy
Statement or the Registration Statement or for additional information, and will
supply the other with copies of all correspondence with the SEC with respect to
the Joint Proxy Statement or the Registration Statement. Whenever any event
occurs which should be set forth in an amendment or supplement to the Joint
Proxy Statement or the Registration Statement, EduTrek or ITI, as the case may
be, shall promptly inform the other of such occurrence and cooperate in filing
with the SEC, and/or mailing to shareholders of EduTrek and ITI entitled to
vote, as may be applicable, such amendment or supplement.
(c) EduTrek and ITI shall take any action required to be taken
under any applicable provincial or state securities laws (including "blue sky"
laws) in connection with the issuance of the EduTrek Common Stock and the
Arrangement; provided, however, that with respect to the blue sky and Canadian
provincial qualifications, neither EduTrek nor ITI shall be required to
register or qualify as a foreign corporation or reporting issuer where any such
entity is not now so registered or qualified except as to matters and
transactions arising solely from the offer and sale of the EduTrek Common Stock
or the issuance of the Exchangeable Shares.
(d) ITI shall use its reasonable best efforts to obtain the ITI
Fairness Opinion (as hereinafter defined) in written form prior to the date the
Joint Proxy Statement is first mailed to the shareholders of ITI and EduTrek,
and shall provide a copy of such written opinion to EduTrek forthwith upon
receipt.
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EduTrek shall use its reasonable best efforts to obtain the EduTrek Pooling
Opinion and the EduTrek Fairness Opinion (each as hereinafter defined) in
written form prior to the date the Joint Proxy Statement is first mailed to the
shareholders of ITI and EduTrek, and shall provide a copy of such written
opinions to ITI forthwith upon receipt. Neither party shall be obliged to mail
the Joint Proxy Statement to shareholders unless the written opinions referred
to in this Section 1.6(d) have been obtained.
1.7 Material Adverse Effect. In this Agreement, the term
"Material Adverse Effect" used with respect to ITI or any of the ITI
Subsidiaries or EduTrek or any of the EduTrek Subsidiaries means any event,
change or effect that, individually or taken together with all other such
events, changes or effects that have occurred prior to the date of
determination of the occurrence of a Material Adverse Effect is materially
adverse to the business, financial condition, properties or assets of ITI and
the ITI Subsidiaries or EduTrek and the EduTrek Subsidiaries, as the case may
be, in each case taken as a whole; provided, that a Material Adverse Effect
shall not include any adverse effect resulting from changes in general economic
conditions or conditions generally affecting the industries in which EduTrek or
ITI operate.
1.8 Currency. Unless otherwise specified, all references in this
Agreement to "dollars" or "$" shall mean United States dollars.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF ITI
Except as set forth in a letter dated the date of this
Agreement and delivered by ITI to EduTrek concurrently herewith (the "ITI
Disclosure Letter"), ITI hereby represents and warrants to EduTrek that:
2.1 Organization and Standing. ITI and each body corporate,
partnership, joint venture, association or other business entity of which more
than 50% of the total voting power of shares of stock or units of ownership or
beneficial interest entitled to vote in the election of directors (or members
of a comparable governing body) is owned or controlled, directly or indirectly,
by ITI (the "ITI Subsidiaries"), is an entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or
organization, has all requisite corporate power and authority to carry on its
business as it is currently conducted, and to own, lease and operate the
properties currently owned, leased and operated by it, and is duly qualified or
licensed to do business and is in good standing as a foreign corporation or
organization authorized to do business in all jurisdictions in which the
character of the properties owned, leased or operated or the nature of the
business conducted by it would make such qualification or licensing necessary,
except where the failure to be so qualified or licensed would not have a
Material Adverse Effect on ITI. The ITI Disclosure Letter sets forth a complete
list of the ITI Subsidiaries, their respective jurisdictions of incorporation
or organization, the percentage of each subsidiary's outstanding capital stock
or other ownership interest owned by ITI or another ITI Subsidiary (and a
description of any lien, charge, mortgage, security interest, option,
preferential purchase right or other right or interest of any other person
(collectively, an "Encumbrance") on such stock or other ownership interest) and
a complete list of each jurisdiction in which each of ITI and the ITI
Subsidiaries is duly qualified or licensed and in good standing to do business.
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2.2 Agreement Authorized and its Effect on Other Obligations. (a)
ITI has all requisite corporate power and authority to enter into this Agreement
and to perform its obligations hereunder and, subject to approval of ITI's
shareholders and the Court as provided in this Agreement, to consummate the
Arrangement and the other transactions contemplated by this Agreement. The
execution and delivery of this Agreement by ITI and, subject to approval of
ITI's shareholders and the Court as provided in this Agreement, the consummation
by ITI of the Arrangement and the other transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of ITI. The
board of directors of ITI has determined, based on, among other things, a
preliminary oral fairness view from Nesbitt Burns Inc., that it is advisable and
in the best interest of ITI's shareholders for ITI to enter into a business
combination with EduTrek upon the terms and subject to the conditions of this
Agreement. This Agreement has been duly executed and delivered by ITI and is the
valid and binding obligation of ITI, enforceable in accordance with its terms,
except that such enforceability may be subject to (i) bankruptcy, insolvency,
reorganization or other similar laws affecting or relating to enforcement of
creditors' rights generally and (ii) general equitable principles, and that the
consummation of the Arrangement is subject to approval of ITI's shareholders and
the Court as provided in this Agreement.
(b) None of the execution, delivery or performance of this
Agreement or the Arrangement by ITI, nor the consummation of the transactions
contemplated hereby or thereby by ITI nor compliance with the provisions hereof
or thereof by ITI will: (i) conflict with, or result in any violations of, the
articles of incorporation or bylaws of ITI or any equivalent document of any of
the ITI Subsidiaries, (ii) conflict with, or result in any violation of any law,
rule, regulation, ordinance, order, judgment or decree applicable to ITI or any
of the ITI Subsidiaries or by which its or any of their respective properties or
assets are bound or affected, or (iii) require any third party consent under, or
result in any breach of or cause a default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, amendment,
cancellation or acceleration of any obligation contained in, or the loss of any
material benefit under, or result in the creation of any Encumbrance upon any of
the material properties or assets of ITI or any of the ITI Subsidiaries under,
any term, condition or provision of any loan or credit agreement, note, bond,
mortgage, indenture, lease, contract, agreement, license, permit or other
instrument or obligation to which ITI or any of the ITI Subsidiaries is a party
or by which ITI or any of the ITI Subsidiaries or their respective properties or
assets is bound or affected, other than any such breaches, defaults, losses, or
encumbrances which, individually or in the aggregate, would not have a Material
Adverse Effect on ITI.
2.3 Governmental Consents. No consent, approval, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (each a "Governmental Entity"), is
required to be obtained by ITI or any of the ITI Subsidiaries in connection
with the execution and delivery of this Agreement or the Plan of Arrangement or
the consummation of the transactions contemplated hereby or thereby, except as
set forth in the ITI Disclosure Letter and except for: (i) the filing with the
applicable Canadian provincial securities commissions or regulatory authorities
(the "Commissions") and the Court and the mailing to shareholders of ITI of the
Joint Proxy Statement relating to the ITI Shareholders Meeting; (ii) approval
by the Court of the Arrangement and the filing of the articles of arrangement
and other documents as required by the CBCA; (iii) such filings,
authorizations, orders and approvals as may be required under any other
applicable federal, provincial or state securities laws and the rules of The
Montreal Exchange ("ME") and such other stock exchange on which the
Exchangeable Shares are listed; (iv) such notices and filings as may be
necessary under the Investment Canada Act and under the Competition Act
(Canada); and (v) where the failure to obtain such consents, approvals, etc.,
would not prevent or delay the
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consummation of the Arrangement or otherwise prevent or delay ITI from
performing its obligations under this Agreement and would not reasonably be
expected to have a Material Adverse Effect on ITI.
2.4 Capitalization. (a) The authorized capital stock of ITI
consists of an unlimited number of ITI common shares, without par value ("ITI
Common Shares"). As of December 1, 1997, 9,400,930 ITI Common Shares were issued
and outstanding and no ITI Common Shares were held by ITI in its treasury. As of
December 1, 1997, an aggregate of 694,500 ITI Common Shares were reserved for
issuance pursuant to outstanding options (the "ITI Options") granted under the
ITI employee stock option plan or pursuant to private stock option arrangements.
Prior to the date hereof, 125,000 of the ITI Options have vested in accordance
with their terms and 569,500 remain unvested, and 280,000 ITI Options are
subject to ratification by the shareholders of ITI at the next meeting of
shareholders of ITI. As of December 1, 1997 there were outstanding 500,000 share
purchase warrants of ITI (the "ITI Warrants"). 200,000 of the ITI Warrants each
entitle the holder to purchase one ITI Common Share for a purchase price of
Cdn.$2.25 per share on or before December 27, 1998, and 300,000 of the ITI
Warrants each entitle the holder to purchase one ITI Common Share for a purchase
price of Cdn.$2.50 per share on or before January 31, 1999. The consummation of
the transactions contemplated by this Agreement will not accelerate the vesting
of any unvested ITI Options. All of the issued and outstanding ITI Common Shares
have been duly authorized and validly issued, are fully paid and non-assessable,
were not issued in violation of the terms of any agreement or other
understanding binding upon ITI and were issued in compliance with all applicable
charter documents of ITI and all applicable federal, provincial and foreign
securities laws, rules and regulations. There are, and have been, no preemptive
rights with respect to the issuance of the ITI Common Shares or any other
capital stock of ITI.
(b) All of the issued and outstanding shares of capital stock of
the ITI Subsidiaries have been duly authorized and validly issued, are fully
paid and non-assessable, were not issued in violation of the terms of any
agreement or other understanding binding upon any ITI Subsidiary and were issued
in compliance with all applicable charter documents of the relevant ITI
Subsidiary and all applicable federal, provincial and foreign securities laws,
rules and regulations. All shares in the capital stock of the ITI Subsidiaries
are owned by ITI free and clear of all Encumbrances and without any limitations
on ITI's voting rights.
(c) There are no obligations, contingent or otherwise, of ITI or
any of the ITI Subsidiaries to repurchase, redeem or otherwise acquire any
shares in the capital stock of ITI or any of the ITI Subsidiaries or to provide
funds to or make any investment in any of the ITI Subsidiaries or any other
entity.
(d) Except as disclosed herein or in the ITI Disclosure Letter,
there are no outstanding subscriptions, options, warrants, convertible
securities, calls, commitments, agreements or rights (contingent or otherwise)
of any character to purchase or otherwise acquire from ITI or any of the ITI
Subsidiaries any shares of, or any securities convertible into, the capital
stock of ITI or any of the ITI Subsidiaries.
2.5 Securities Reports and Financial Statements, Books and
Records. (a) ITI has filed all forms, reports and documents with the Commissions
required to be filed by it pursuant to applicable Canadian securities statutes,
regulations, policies and rules (collectively, the "ITI Canadian Securities
Reports"), all of which have complied in all material respects with all
applicable requirements of such statutes, regulations, policies and rules. None
of the ITI Canadian Securities Reports, at the time filed or as subsequently
amended, contained any untrue statement of a material fact or omitted to state a
material
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fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading. The financial statements of ITI contained in the ITI Canadian
Securities Reports complied in all material respects with the then applicable
accounting requirements and the published rules and regulations of the relevant
Canadian securities legislation with respect thereto, were prepared in
accordance with Canadian generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may have been indicated
in the notes thereto or, in the case of unaudited statements, as permitted by
applicable laws, rules or regulations) and fairly present (subject, in the case
of the unaudited statements, to normal, year-end audit adjustments) the
consolidated financial position of ITI and its consolidated ITI Subsidiaries as
at the respective dates thereof and the consolidated results of their
operations and cash flows for the respective periods then ended. ITI has
provided to EduTrek all of the ITI Canadian Securities Reports filed by ITI
since June 1, 1995.
(b) ITI has not been and is not required to file any forms,
reports or documents with the SEC.
(c) There has been no change in ITI's accounting policies or the
methods of making accounting estimates or changes in estimates that are
material to such financial statements, except as described in the notes
thereto.
(d) The books, records and accounts of ITI and the ITI
Subsidiaries (i) have been maintained in accordance with good business practices
on a basis consistent with prior years, (ii) are stated in reasonable detail and
accurately and fairly reflect in all material respects the transactions and
dispositions of the assets of ITI and the ITI Subsidiaries and (iii) accurately
and fairly reflect in all material respects the basis for the ITI financial
statements. ITI has devised and maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization; and
(ii) transactions are recorded as necessary (A) to permit preparation of
financial statements in conformity with Canadian generally accepted accounting
principles or any other criteria applicable to such statements and (B) to
maintain accountability for assets.
2.6 Liabilities. Neither ITI nor any ITI Subsidiary has any
liabilities or obligations, either accrued, absolute, contingent or otherwise,
or has any knowledge of any potential liabilities or obligations which are
material to the business, operations or financial condition of ITI, other than
those disclosed in the ITI Canadian Securities Reports, the consolidated
financial statements of ITI for the fiscal year ended October 31, 1997 which
have been provided by ITI to EduTrek, or incurred in the ordinary course of
business since October 31, 1997.
2.7 Information Supplied. None of the information supplied or to
be supplied by ITI for inclusion or incorporation by reference in the Joint
Proxy Statement (and, if filed, the Registration Statement) will, at the time
the Joint Proxy Statement and any amendment or supplement thereto is mailed to
the shareholders of ITI and at the time of the ITI Shareholders Meeting (and, if
filed, at the time the Registration Statement becomes effective), contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they are made, not misleading.
2.8 No Defaults; Permits. (a) Neither ITI nor any ITI Subsidiary
is, or has received notice alleging that it is or would be with the passage of
time, in default or violation of any term, condition or provision of (a) its
charter documents or bylaws; (b) any law, rule, regulation, judgment, decree or
order applicable to it; or (c) any loan or credit agreement, note, bond,
mortgage, indenture, contract,
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agreement, lease, license or other instrument to which ITI or any ITI
Subsidiary is a party or by which it or any of its properties or assets is
bound or affected, except for defaults and violations which, individually or in
the aggregate, would not have a Material Adverse Effect on ITI.
(b) ITI and the ITI Subsidiaries hold all permits, licenses,
easements, variances, exemptions, consents, certificates, orders,
authorizations and approvals from governmental authorities that are material to
the operation of the business of ITI and the ITI Subsidiaries (collectively,
the "ITI Permits"). ITI and the ITI Subsidiaries are in compliance with the
terms of the ITI Permits except where the failure to so comply would not have a
Material Adverse Effect. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required
in order for the ITI Permits to continue in full force and effect following the
execution of this Agreement and the consummation of the Arrangement.
2.9 Litigation; Investigations. There is no claim, action, suit
or proceeding pending, or to the knowledge of ITI threatened against ITI or any
of the ITI Subsidiaries, which would, if adversely determined, individually or
in the aggregate, have a Material Adverse Effect on ITI, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against ITI or any of the ITI Subsidiaries having, or
which, insofar as reasonably can be foreseen, in the future could have, any such
effect. There is no investigation pending, or to the knowledge of ITI
threatened, against ITI or any of the ITI Subsidiaries before any Governmental
Entity.
2.10 Absence of Certain Changes and Events. Other than as a result
of the transactions contemplated by this Agreement, since October 31, 1997,
there has not been:
(a) Any material adverse change in the financial
condition, operations, assets, liabilities or business of ITI and the
ITI Subsidiaries, taken as a whole;
(b) Any material damage, destruction, or loss to the
business or properties of ITI and the ITI Subsidiaries, taken as a
whole, whether or not covered by insurance;
(c) Any declaration, setting aside or payment of any
dividend or other distribution in respect of the capital stock of ITI,
or any direct or indirect redemption, purchase or any other acquisition
by ITI of any such stock;
(d) Any amendments or changes to ITI's articles of
incorporation or by-laws or any change in the capital stock or in the
number of shares or classes of ITI's authorized or outstanding capital
stock as described in Section 2.4 (other than as a result of exercises
of ITI Options outstanding as of October 31, 1997);
(e) Any material labour dispute or charge of unfair
labour practice (other than routine individual grievances), any
activity or proceeding by a labour union or, to the knowledge of ITI,
by a representative thereof to organize any employees of ITI or any ITI
Subsidiary or any campaign being conducted to solicit authorization
from employees to be represented by such labour union; or
(f) Any other event or condition known to ITI
particularly pertaining to and adversely affecting the operations,
assets or business of ITI or any of the ITI Subsidiaries (other
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<PAGE> 10
than events or conditions which are of a general or industry-wide
nature and of general public knowledge) which would constitute a
Material Adverse Effect on ITI.
2.11 Additional ITI Information. The ITI Disclosure Letter
contains true, complete and correct lists of the following items with respect to
ITI and each of the ITI Subsidiaries, and ITI has furnished or made available to
EduTrek true, complete and correct copies of all documents referred to in such
lists:
(a) Each parcel of real property leased, or subject to a
lease commitment, with annual rental payments in excess of $50,000;
(b) All material insurance policies or bonds currently
maintained, including those covering properties, buildings, machinery,
equipment, fixtures, employees and operations, as well as a listing of
any premiums, audit adjustments or retroactive adjustments due or
pending on such policies or any predecessor policies;
(c) All contracts which involve, or may involve,
aggregate payments by any party thereto of $50,000 or more, which are
to be performed in whole or in part after the Effective Time;
(d) All material bonus, incentive compensation, deferred
compensation, profit-sharing, retirement, pension, welfare, group
insurance, death benefit, or other fringe benefit plans, arrangements
or trust agreements;
(e) All material employment and consulting agreements;
(f) All material patents, trademarks, copyrights and
other intellectual property rights owned, licensed or used and all
applications therefor;
(g) All material trade names and business names used or
held, whether and where such names are registered and where used;
(h) All material long-term and short-term promissory
notes, instalment contracts, loan agreements, credit agreements,
operating and finance leases, and any other agreements relating thereto
or with respect to collateral securing the same; and
(i) All material indebtedness, liabilities and
commitments of third parties (other than ITI Subsidiaries) and as to
which it is a guarantor, endorser, co-maker, surety or accommodation
maker, or is contingently liable therefor (excluding liabilities as an
endorser of checks and the like in the ordinary course of business) or
has otherwise provided any form of financial assistance and all letters
of credit, whether stand-by or documentary, issued by any third party.
2.12 Certain Agreements. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby will
(a) result in any payment (including severance, unemployment compensation,
parachute payment, bonus or otherwise) becoming due to any director, officer,
employee or independent contractor of ITI or any of the ITI Subsidiaries under
any ITI Employee Plan (as hereinafter defined) or otherwise, (b) materially
increase any benefits otherwise payable under any ITI Employee Plan or otherwise
or (c) result in the acceleration of the time of payment or vesting of any such
benefits.
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2.13 Employee Benefit Plans. (a) The ITI Disclosure Letter lists
all employee benefit plans, all bonus, stock option, stock purchase, incentive,
deferred compensation, supplemental retirement, severance or termination pay,
medical, life or other insurance, supplemental unemployment benefits,
profit-sharing, pension or retirement plans, agreements or arrangements, and
other similar fringe or employee benefit plans, programs or arrangements
(including those sponsored by the United States or Canadian federal government
or any state or provincial government) and any current or former employment or
executive compensation or severance agreements, for the benefit of or relating
to any employee of ITI or any of the ITI Subsidiaries or any trade or business
(collectively, the "ITI Employee Plans"). A copy of each of the ITI Employee
Plans has been made available to EduTrek.
(b) (i) There has been no transaction or failure to act with
respect to any ITI Employee Plan which could result in a material liability to
ITI or any of the ITI Subsidiaries; (ii) all ITI Employee Plans are in
compliance in all material respects with the requirements prescribed by any and
all laws, regulations, rules and orders currently in effect with respect
thereto, and ITI and each of the ITI Subsidiaries have performed all obligations
required to be performed by them under, are not in any material respect in
default under or in violation of, and have no knowledge of any default or
violation of any other party to, any of the ITI Employee Plans; and (iii) all
contributions (including premiums) required to be made to any ITI Employee Plan,
under the terms of the Employee Plan or by applicable law or contract, have been
made on or before their due dates and a reasonable amount has been accrued for
contributions to each ITI Employee Plan for the current plan years, and there
are no material unfunded liabilities under any ITI Employee Plan;
(c) Each ITI Employee Plan that is required or intended to be
qualified under applicable law or registered or approved by a governmental
agency or authority has been so qualified, registered or approved by the
appropriate governmental agency or authority and nothing has occurred since the
date of the last qualification, registration or approval to adversely affect,
or cause the appropriate governmental agency or authority to revoke, any such
qualification, registration or approval;
(d) There are no pending or threatened investigations, litigation
or other enforcement actions or proceedings against ITI or any of the ITI
Subsidiaries with respect to any ITI Employee Plan, and there are no actions,
suits or claims pending or threatened by former or present employees of ITI or
any of the ITI Subsidiaries, or their beneficiaries, with respect to the ITI
Employee Plans or the assets of fiduciaries thereof (other than routine claims
for benefits); and
(e) Neither ITI nor any of the ITI Subsidiaries maintains any
401(k) or other type of pension plan subject to Section 401(a) of the Internal
Revenue Code of 1986, as amended, in the United States.
2.14 Labour Matters. There are no actions or proceedings pending
or, to the knowledge of ITI, threatened, between ITI or any of the ITI
Subsidiaries and any of their respective employees, which have or may have a
Material Adverse Effect; (ii) neither ITI nor any of the ITI Subsidiaries is a
party to any collective bargaining agreement or other labour union contract
applicable to persons employed by ITI or any of the ITI Subsidiaries nor does
ITI know of any activities or proceedings of any labour union to organize any
such employees; and (iii) ITI has no knowledge of any strikes, slowdowns, work
stoppages, lockouts or threats thereof, by or with respect to employees of ITI
or any of the ITI Subsidiaries.
2.15 Intellectual Property. ITI or the ITI Subsidiaries own or
possess licenses to use all patents, trademarks and service marks, trade names,
copyrights (including registrations and applications therefor) and written
know-how, technology, computer software programs and applications, trade secrets
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and all other similar proprietary data and the goodwill associated therewith
(collectively, the "ITI Intellectual Property") that are either material to the
business of ITI or any ITI Subsidiary or that are necessary for the use,
license, sale or provision of any services or products, used, licensed, sold or
provided by ITI and the ITI Subsidiaries. The ITI Intellectual Property is
owned or licensed by ITI or the ITI Subsidiaries free and clear of any
Encumbrance other than such Encumbrances as are listed in the ITI Disclosure
Letter. Except in the ordinary course of business, neither ITI nor any of the
ITI Subsidiaries has granted to any other person any license to use any ITI
Intellectual Property. Neither ITI nor any of the ITI Subsidiaries has received
any notice of infringement, misappropriation or conflict with, the intellectual
property rights of others in connection with the use by ITI and the ITI
Subsidiaries of the ITI Intellectual Property.
2.16 Title to Properties. None of ITI nor any of the ITI
Subsidiaries owns any real property. ITI has good and marketable title to all
its properties and assets, free and clear of any Encumbrance, except (a)
Encumbrances reflected in the balance sheet of ITI as of October 31, 1997
provided by ITI to EduTrek, (b) liens for current taxes not yet due and payable
and (c) such imperfections of title and Encumbrances, if any, as are not
substantial in character, amount or extent and do not and will not materially
detract from the value, or interfere with the present use, of the property
subject thereto or affected thereby, or otherwise have a Material Adverse
Effect. All leases pursuant to which ITI or any ITI Subsidiary leases (whether
as lessee or lessor) any real or personal property are in good standing, valid,
and effective; and there is not, under any such leases, any existing or
prospective default or event of default or event which with notice or lapse of
time, or both, would constitute a default by ITI or any ITI Subsidiary and in
respect of which ITI or an ITI Subsidiary has not taken adequate steps to
prevent a default from occurring. The buildings and premises of ITI and each of
the ITI Subsidiaries that are used in its business are in good operating
condition and repair, subject only to ordinary wear and tear.
2.17 Environmental Matters. (a) There are no environmental
conditions or circumstances, such as the presence or release of any hazardous
substance, on any property presently or, to the knowledge of ITI, previously
owned or leased by ITI or any of the ITI Subsidiaries that could reasonably be
expected to result in a Material Adverse Effect on ITI;
(b) ITI's and the ITI Subsidiaries' operations and the use of
their assets do not violate any requirement under applicable United States or
Canadian or other national, federal, provincial, state or local law, statute,
ordinance, rule, regulation, order or notice ("Applicable Environmental Laws")
pertaining to (i) the condition or protection of air, groundwater, surface
water, soil, or other environmental media, (ii) the environment, including
natural resources or any activity which affects the environment or (iii) the
regulation of any pollutants, contaminants, waste or other substances (whether
or not hazardous or toxic), except for violations which, either singly or in
the aggregate, would not result in a Material Adverse Effect on ITI;
(c) To the knowledge of ITI, none of the operations or assets of
ITI or any ITI Subsidiary has ever been conducted or used by ITI or any ITI
Subsidiary in such a manner as to constitute a violation of any of the
Applicable Environmental Laws, except for violations which, either singly or in
the aggregate, would not result in a Material Adverse Effect on ITI;
(d) No written notice has been served on ITI or any ITI
Subsidiary from any entity, governmental agency or individual regarding any
existing, pending or threatened investigation or inquiry related to alleged
violations under any Applicable Environmental Laws, or regarding any claims for
remedial obligations or contribution or damages under any Applicable
Environmental Laws or otherwise
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<PAGE> 13
related to environmental matters or any pollutant, contaminant or hazardous or
toxic material or waste, other than any of the foregoing which, either singly
or in the aggregate, would not result in a Material Adverse Effect on ITI; and
(e) ITI does not know of any reason that would preclude it or
EduTrek from renewing or obtaining a reissuance of any material permits,
licenses or other authorizations required pursuant to any Applicable
Environmental Laws to operate and use any of ITI's or the ITI Subsidiaries'
assets for their current purposes and uses.
2.18 Taxes. (a) Except with respect to failures which, in the
aggregate, would not result in a Material Adverse Effect on ITI, proper and
accurate returns, reports and estimates with respect to federal, provincial,
state and local income, capital, withholding, value added, sales, goods and
services, use, franchise, gross revenue, turnover, excise, payroll, property,
transfer, employment, customs duties and any and all other taxes, charges,
levies, fees, imposts and other assessments or similar charges in the nature of
taxes (all such amounts and any installments in respect thereof and any
interest, fines and penalties in respect thereof being referred to as "Taxes")
have been filed within the time required with appropriate governmental
agencies, domestic and foreign, by ITI and each of the ITI Subsidiaries for
each period for which any returns, reports, or estimates were due. All Taxes
shown by such returns to be payable and any other Taxes due and payable have
been paid other than those being contested in good faith by ITI or an ITI
Subsidiary. The tax provision reflected in ITI's financial statements is
adequate, in accordance with Canadian generally accepted accounting principles,
to cover liabilities of ITI and the ITI Subsidiaries for all Taxes of any
character whatsoever applicable to ITI and the ITI Subsidiaries or their assets
or businesses. No waiver of any statute of limitations or any agreement
extending the period for assessment, reassessment or collection of any Taxes
executed by ITI or an ITI Subsidiary with respect to any Tax is in effect for
any period. ITI has not received any notice of reassessment from Revenue Canada
or any other taxing authority or agency and none of such taxing authorities or
agencies has asserted or, to the best of ITI's knowledge, is threatening to
assert against ITI or any of the ITI Subsidiaries any deficiency or claim for
additional Taxes and there are no requests for information outstanding that
could affect the Taxes of ITI or any of the ITI Subsidiaries. None of ITI or
any of the ITI Subsidiaries is currently being audited by any taxing authority
or agency. There are no liens for Taxes on any assets of ITI or the ITI
Subsidiaries except for Taxes not yet currently due and those which could not
reasonably be expected to result in a Material Adverse Effect on ITI;
(b) ITI and each of the ITI Subsidiaries have withheld all
amounts from each payment made to any of their respective past or present
employees, officers or directors and from each payment made to any non-resident
person within the meaning of the Income Tax Act (Canada) the amount of all Taxes
and other material deductions required to be withheld therefrom and have paid
the same to the proper tax or other receiving authorities within the time
required under any applicable legislation;
(c) ITI and each ITI Subsidiary has remitted to the appropriate
tax authority when required by law to do so all amounts collected by it on
account of all Goods and Services Tax, Harmonized Sales Tax and retail sales
tax;
(d) Neither ITI nor any ITI Subsidiary will at any time be deemed
to have a capital gain pursuant to subsection 80.03(2) of the Income Tax Act
(Canada) as a result of any transaction or event taking place in any taxation
year ending on or before the Effective Date;
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(e) Neither ITI nor any ITI Subsidiary has entered into an
agreement contemplated in Section 80.04 of the Income Tax Act (Canada) or any
equivalent provincial provision; and
(f) Neither ITI nor any ITI Subsidiary has acquired an asset from
a person with whom it did not deal at arm's length for the purposes of the
Income Tax Act (Canada) or for purposes of any relevant provincial income tax
legislation for consideration greater than the fair market value of such asset
at the time of its acquisition by ITI or an ITI Subsidiary, nor disposed of an
asset to such a person for consideration less than its fair market value at the
time of its disposition by ITI or an ITI Subsidiary.
2.19 Vote Required. Subject to the approval of the Court in
accordance with the CBCA, at the ITI Shareholders Meeting the affirmative vote
of two-thirds of the votes actually cast by all ITI shareholders present is
required to approve this Agreement, the Arrangement and the consummation of the
transactions contemplated hereby. For these purposes, each ITI Common Share
carries one vote.
2.20 Brokers and Finders. None of ITI or any of the ITI
Subsidiaries nor any of their respective directors, officers, employees or
agents has employed any broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions or similar payments in
connection with the transactions contemplated by this Agreement.
2.21 Disclosure. No representation or warranty made by ITI in this
Agreement or the ITI Disclosure Letter, nor any document, written information,
statement, financial statement, certificate or Exhibit prepared and furnished
or to be prepared and finished to EduTrek by ITI or its representatives
pursuant hereto or in connection with the transactions contemplated hereby,
when taken together, contains or contained (as of the date made) any untrue
statement of a material fact when made, or omits or omitted (as of the date
made) to state a material fact necessary to make the statements contained
herein or therein not misleading in light or the circumstances under which they
were made.
2.22 Fairness Opinion. ITI's board of directors has received a
preliminary view from Nesbitt Burns Inc. that the Arrangement is fair to ITI's
shareholders from a financial point of view (the "ITI Fairness Opinion").
2.23 Restrictions on Business Activities. There is no material
agreement, judgment, injunction, order or court decree binding upon ITI or any
ITI Subsidiary that has or could reasonably be expected to have the effect of
prohibiting or materially impairing any business practice of ITI or any ITI
Subsidiary, any acquisition of property by ITI or any ITI Subsidiary or the
conduct of any business by ITI or any ITI Subsidiary.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EDUTREK
Except as set forth in a letter dated the date of this Agreement and
delivered by EduTrek to ITI concurrently herewith (the "EduTrek Disclosure
Letter"), EduTrek hereby represents and warrants to ITI that:
3.1 Organization and Standing. EduTrek and each body corporate,
partnership, joint venture, association or other business entity of which more
than 50% of the total voting power of shares of stock
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or units of ownership or beneficial interest entitled to vote in the election
of directors (or members of a comparable governing body) is owned or
controlled, directly or indirectly, by EduTrek (the "EduTrek Subsidiaries"), is
an entity duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization, has all requisite
corporate power and authority to carry on its business as it is currently
conducted, and to own, lease and operate the properties currently owned, leased
and operated by it, and is duly qualified or licensed to do business and is in
good standing as a foreign corporation or organization authorized to do
business in all jurisdictions in which the character of the properties owned,
leased or operated or the nature of the business conducted by it would make
such qualification or licensing necessary, except where the failure to be so
qualified or licensed would not have a Material Adverse Effect on EduTrek. The
EduTrek Disclosure Letter sets forth a complete list of the EduTrek
Subsidiaries, their respective jurisdictions of incorporation or organization
the percentage of each subsidiary's outstanding capital stock or other
ownership interest owned by EduTrek or another EduTrek Subsidiary (and a
description of any Encumbrance on such stock or other ownership interest) and a
complete list of each jurisdiction in which each of EduTrek and the EduTrek
Subsidiaries is duly qualified or licensed and in good standing to do business.
3.2 Agreement Authorized and its Effect on Other Obligations. (a)
EduTrek has all requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder and, subject to approval of
EduTrek's shareholders as provided in this Agreement, to consummate the
Arrangement and the other transactions contemplated by this Agreement. The
execution and delivery of this Agreement by EduTrek and, subject to approval of
EduTrek's shareholders as provided in this Agreement, the consummation by
EduTrek of the Arrangement and the other transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of EduTrek.
The board of directors of EduTrek has determined that it is advisable and in
the best interest of EduTrek's shareholders for EduTrek to enter into a
business combination with ITI upon the terms and subject to the conditions of
this Agreement. This Agreement has been duly executed and delivered by EduTrek
and is the valid and binding obligation of EduTrek enforceable in accordance
with its terms, except that such enforceability may be subject to (i)
bankruptcy, insolvency, reorganization or other similar laws affecting or
relating to enforcement of creditors' rights generally and (ii) general
equitable principles, and that the consummation of the Arrangement is subject
to approval of EduTrek's shareholders as provided in this Agreement.
(b) None of the execution, delivery or performance of this
Agreement or the Arrangement by EduTrek, nor the consummation of the
transactions contemplated hereby or thereby by EduTrek nor compliance with the
provisions hereof or thereof by EduTrek will: (i) conflict with, or result in
any violations of, the Certificate of Incorporation or bylaws of EduTrek or any
equivalent document of any of the EduTrek Subsidiaries, (ii) conflict with or
result in any violation of any law, rule, regulation, ordinance, order, judgment
or decree applicable to EduTrek or any of the EduTrek Subsidiaries or by which
its or any of their respective properties or assets are bound or affected or
(iii) require any third party consent under, result in any breach of or cause a
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, amendment, cancellation or acceleration of any
obligation contained in, or the loss of any material benefit under, or result in
the creation of any Encumbrance upon any of the material properties or assets of
EduTrek or any of the EduTrek Subsidiaries under, any term, condition or
provision of any loan or credit agreement, note, bond, mortgage, indenture,
lease, contract, agreement, license, permit or other instrument or obligation to
which EduTrek or any of the EduTrek Subsidiaries is a party or by which EduTrek
or any of the EduTrek Subsidiaries or their respective properties or assets is
bound or affected, other than any such breaches, defaults, losses, or
encumbrances which, individually or in the aggregate, would not have a Material
Adverse Effect on EduTrek.
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<PAGE> 16
3.3 Governmental Consents. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity, is required to be obtained by EduTrek or any of the EduTrek
Subsidiaries in connection with the execution and delivery of this Agreement or
the Plan of Arrangement or the consummation of the transactions contemplated
hereby or thereby, except as set forth in the EduTrek Disclosure Letter and
except for: (i) the mailing to shareholders of EduTrek of the Joint Proxy
Statement relating to the EduTrek Shareholders Meeting, (ii) the furnishing to
the SEC of such reports and information under the Exchange Act and the rules
and regulations promulgated by the SEC thereunder, as may be required in
connection with this Agreement and the transactions contemplated hereby and
obtaining the consent of the SEC with respect thereto; (iii) such filings,
authorizations, orders and approvals as may be required under any other
applicable federal, provincial or state securities laws and the rules of the
Nasdaq National Market (the "Nasdaq"); (iv) such notices and filings as may be
necessary under the Investment Canada Act and under the Competition Act
(Canada); and (v) where the failure to obtain such consents, approvals, etc.,
would not prevent or delay the consummation of the Arrangement or otherwise
prevent or delay EduTrek from performing its obligations under this Agreement
and would not reasonably be expected to have a Material Adverse Effect on
EduTrek.
3.4 Capitalization. (a) The authorized capital stock of EduTrek
consists of 40,000,000 shares of Class A Common Stock, without par value
("EduTrek Common Stock"), 10,000,000 shares of Class B Common Stock, without
par value ("EduTrek Class B Stock") and 5,000,000 shares of preferred stock,
without par value ("EduTrek Preferred Stock"). As of December 5, 1997,
4,277,041 shares of EduTrek Common Stock were issued and outstanding and
6,335,000 shares of EduTrek Class B Stock were issued and outstanding and no
shares of EduTrek Common Stock or Class B Stock were held by EduTrek in its
treasury. As of December 5, 1997, 547,659 shares of EduTrek Common Stock were
reserved for issuance upon the exercise of stock options then outstanding under
EduTrek's stock option plans, 829,388 shares of EduTrek Common Stock were
reserved for issuance of options under EduTrek's stock option plans. No shares
of EduTrek Preferred Stock are issued or outstanding. All of the issued and
outstanding shares of EduTrek Common Stock and Class B Stock have been duly
authorized and validly issued, are fully paid and nonassessable, were not
issued in violation of the terms of any agreement or other understanding
binding upon EduTrek and were issued in compliance with all applicable charter
documents of EduTrek and all applicable federal, state and foreign securities
laws, rules and regulations. There are, and have been, no preemptive rights
with respect to the issuance of the EduTrek Common Stock or Class B Stock or
any other capital stock of EduTrek.
(b) All of the issued and outstanding shares of capital stock of
the EduTrek Subsidiaries have been duly authorized and validly issued, are fully
paid and non-assessable, were not issued in violation of the terms of any
agreement or other understanding binding upon any EduTrek Subsidiary and were
issued in compliance with all applicable charter documents of the relevant
EduTrek Subsidiary and all applicable federal, state and foreign securities
laws, rules and regulations. All shares in the capital stock of the EduTrek
Subsidiaries are owned by EduTrek free and clear of all Encumbrances and without
any limitations on EduTrek's voting rights.
(c) There are no obligations, contingent or otherwise, of EduTrek
or any of the EduTrek Subsidiaries to repurchase, redeem or otherwise acquire
any shares in the capital stock of EduTrek or any of the EduTrek Subsidiaries or
to provide funds to or make any investment in any of the EduTrek Subsidiaries or
any other entity other than as contemplated hereunder.
(d) Except as disclosed herein or in the EduTrek Disclosure
Letter, there are no outstanding subscriptions, options, warrants, convertible
securities, calls, commitments, agreements or rights
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(contingent or otherwise) of any character to purchase or otherwise acquire
from EduTrek any shares of, or any securities convertible into, the capital
stock of EduTrek.
3.5 Securities Reports and Financial Statements. (a) EduTrek has
filed all forms, reports and documents required to be filed by it by the SEC or
pursuant to applicable United States securities statutes, regulations, policies
and rules (collectively, the "EduTrek Securities Reports"), all of which have
complied in all material respects with all applicable requirements of such
statutes, regulations, policies and rules. None of the EduTrek Securities
Reports, at the time filed or as subsequently amended, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of EduTrek contained in the EduTrek Securities Reports
complied in all material respects with the then applicable accounting
requirements and the published rules and regulations of the relevant United
States securities statutes with respect thereto, were prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may have been indicated
in the notes thereto or, in the case of unaudited statements, as permitted by
applicable laws, rules or regulations) and fairly present (subject, in the case
of the unaudited statements, to normal, year-end audit adjustments) the
consolidated financial position of EduTrek and its consolidated EduTrek
Subsidiaries as at the respective dates thereof and the consolidated results of
their operations and cash flows for the respective periods then ended. EduTrek
has provided to ITI all of the EduTrek Securities Reports.
(b) There has been no change in EduTrek's accounting policies or
the methods of making accounting estimates or changes in estimates that are
material to such financial statements, except as described in the notes thereto.
(c) The books, records and accounts of EduTrek and the EduTrek
Subsidiaries (i) have been maintained in accordance with good business
practices on a basis consistent with prior years, (ii) are stated in reasonable
detail and accurately and fairly reflect in all material respects the
transactions and dispositions of the assets of EduTrek and the EduTrek
Subsidiaries and (iii) accurately and fairly reflect in all material respects
the basis for the EduTrek financial statements. EduTrek has devised and
maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (iv) transactions are executed in accordance with
management's general or specific authorization; and (v) transactions are
recorded as necessary (A) to permit preparation of financial statements in
conformity with United States generally accepted accounting principles or any
other criteria applicable to such statements and (B) to maintain accountability
for assets.
3.6 Liabilities. Neither EduTrek nor any EduTrek Subsidiary has
any liabilities or obligations, either accrued, absolute, contingent or
otherwise, or has any knowledge of any potential liabilities or obligations
which are material to the business operations or financial condition of EduTrek
other than those disclosed in the EduTrek Securities Reports or incurred in the
ordinary course of business since May 31, 1997.
3.7 Information Supplied. None of the information supplied or to
be supplied by EduTrek for inclusion in the Joint Proxy Statement (and, if
filed, the Registration Statement) will, at the time the Joint Proxy Statement
and any amendment or supplement thereto is mailed to the shareholders of EduTrek
and at the time of the EduTrek Shareholders Meeting (and, if filed, at the time
the Registration Statement becomes effective), contain any untrue statement of a
material fact or omit to state any material fact
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required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they are made, not misleading.
3.8 No Defaults; Permits. (a) Neither EduTrek nor any EduTrek
Subsidiary is, or has received notice alleging that it is or would be with the
passage of time, in default or violation of any term, condition or provision of
(a) its charter documents or bylaws; (b) any law, rule, regulation, judgment,
decree or order applicable to it; or (c) any loan or credit agreement, note,
bond, mortgage, indenture, contract, agreement, lease, license or other
instrument to which EduTrek or any EduTrek Subsidiary is a party or by which it
or any of its properties or assets is bound or affected, except for defaults
and violations which, individually or in the aggregate, would not have a
Material Adverse Effect on EduTrek.
(b) EduTrek and the EduTrek Subsidiaries hold all permits,
licenses, easements, variances, exemptions, consents, certificates, orders,
authorizations and approvals from governmental authorities that are material to
the operation of the business of EduTrek and the EduTrek Subsidiaries
(collectively, the "EduTrek Permits"). EduTrek and the EduTrek Subsidiaries are
in compliance with the terms of the EduTrek Permits except where the failure to
so comply would not have a Material Adverse Effect.
3.9 Litigation; Investigations. There is no claim, action, suit
or proceeding pending, or to the knowledge of EduTrek threatened against EduTrek
or any of the EduTrek Subsidiaries, which would, if adversely determined,
individually or in the aggregate, have a Material Adverse Effect on EduTrek, nor
is there any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against EduTrek or any of the EduTrek
Subsidiaries having, or which, insofar as reasonably can be foreseen, in the
future could have, any such effect. There is no investigation pending, or to the
knowledge of EduTrek threatened, against EduTrek or any of the EduTrek
Subsidiaries before any Governmental Entity.
3.10 Absence of Certain Changes and Events. Other than as a result
of the transactions contemplated by this Agreement, since May 31, 1997, there
has not been:
(a) Any material adverse change in the financial condition,
operations, assets, liabilities or business of EduTrek and the EduTrek
Subsidiaries, taken as a whole;
(b) Any material damage, destruction, or loss to the business or
properties of EduTrek and the EduTrek Subsidiaries, taken as a whole, whether or
not covered by insurance;
(c) Any declaration, setting aside or payment of any dividend or
other distribution in respect of the capital stock of EduTrek, or any direct or
indirect redemption, purchase or any other acquisition by EduTrek of any such
stock;
(d) Any amendments or changes to EduTrek's Certificate of
Incorporation or by-laws or any change in the capital stock or in the number of
shares or classes of EduTrek's authorized or outstanding capital stock as
described in Section 3.4 (other than as a result of exercises of options to
purchase EduTrek Common Stock outstanding as of May 31, 1997);
(e) Any material labour dispute or charge of unfair labour
practice (other than routine individual grievances), any activity or proceeding
by a labour union or, to the knowledge of EduTrek, by any representative thereof
to organize any employees of EduTrek or any EduTrek Subsidiary or any
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campaign being conducted to solicit authorization from employees to be
represented by such labour union; or
(f) Any other event or condition known to EduTrek particularly
pertaining to and adversely affecting the operations, assets or business of
EduTrek or any of the EduTrek Subsidiaries (other than events or conditions
which are of a general or industry-wide nature and of general public knowledge)
which would constitute a Material Adverse Effect on EduTrek.
3.11 Additional EduTrek Information. The EduTrek Disclosure Letter
contains true, complete and correct lists of the following items with respect
to EduTrek and each of the EduTrek Subsidiaries, and EduTrek has furnished or
made available to ITI true, complete and correct copies of all documents
referred to in such lists:
(a) Each parcel of real property leased, or subject to a lease
commitment, with annual rental payments in excess of $50,000;
(b) All material insurance policies or bonds currently
maintained, including those covering properties, buildings, machinery,
equipment, fixtures, employees and operations, as well as a listing of any
premiums, audit adjustments or retroactive adjustments due or pending on such
policies or any predecessor policies;
(c) All contracts which involve, or may involve, aggregate
payments by any party thereto of $50,000 or more, which are to be performed in
whole or in part after the Effective Time;
(d) All bonus, incentive compensation, deferred compensation,
profit-sharing, retirement, pension, welfare, group insurance, death benefit,
or other fringe benefit plans, arrangements or trust agreements;
(e) Any collective bargaining agreements with any labour union or
other representative of employees, including all amendments and supplements, and
all employment and consulting agreements;
(f) All material patents, trademarks, copyrights and other
intellectual property rights owned, licensed or used and all applications
therefor;
(g) All material trade names and business names used or held,
whether and where such names are registered and where used;
(h) All material long-term and short-term promissory notes,
instalment contracts, loan agreements, credit agreements, operating and finance
leases, and any other agreements relating thereto or with respect to collateral
securing the same; and
(i) All material indebtedness, liabilities and commitments of
third parties (other than EduTrek Subsidiaries) and as to which it is a
guarantor, endorser, co-maker, surety or accommodation maker, or is contingently
liable therefor (excluding liabilities as an endorser of checks and the like in
the ordinary course of business) or has otherwise provided any form of financial
assistance and all letters of credit, whether stand-by or documentary, issued by
any third party.
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<PAGE> 20
3.12 Certain Agreements. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby will
(a) result in any payment (including severance, unemployment compensation,
parachute payment, bonus or otherwise) becoming due to any director, officer,
employee or independent contractor of EduTrek or any of the EduTrek Subsidiaries
under any EduTrek Employee Plan (as hereinafter defined) or otherwise, (b)
materially increase any benefits otherwise payable under any EduTrek Employee
Plan or otherwise or (c) result in the acceleration of the time of payment or
vesting of any such benefits.
3.13 Employee Benefit Plans. (a) The EduTrek Disclosure Letter
lists all employee benefit plans, all bonus, stock option, stock purchase,
incentive, deferred compensation, supplemental retirement, severance or
termination pay, medical, life or other insurance, supplemental unemployment
benefits, profit-sharing, pension or retirement plans, agreements or
arrangements, and other similar fringe or employee benefit plans, programs or
arrangements (including those sponsored by the United States or Canadian federal
government or any state or provincial government) and any current or former
employment or executive compensation or severance agreements, for the benefit of
or relating to any employee of EduTrek or any of the EduTrek Subsidiaries or any
trade or business (collectively, the "EduTrek Employee Plans"). A copy of each
of the EduTrek Employee Plans has been made available to ITI.
(b) (i) There has been no transaction or failure to act with
respect to any EduTrek Employee Plan which could result in a material liability
to EduTrek or any of the EduTrek Subsidiaries; (ii) all EduTrek Employee Plans
are in compliance in all material respects with the requirements prescribed by
any and all laws, regulations, rules and orders currently in effect with respect
thereto, and EduTrek and each of the EduTrek Subsidiaries have performed all
obligations required to be performed by them under, are not in any material
respect in default under or in violation of, and have no knowledge of any
default or violation of any other party to, any of the EduTrek Employee Plans;
and (iii) all contributions (including premiums) required to be made to any
EduTrek Employee Plan, under the terms of the Employee Plan or by applicable law
or contract, have been made on or before their due dates and a reasonable amount
has been accrued for contributions to each EduTrek Employee Plan for the current
plan years, and there are no material unfunded liabilities under any EduTrek
Employee Plan;
(c) Each EduTrek Employee Plan that is required or intended to be
qualified under applicable law or registered or approved by a governmental
agency or authority has been so qualified, registered or approved by the
appropriate governmental agency or authority and nothing has occurred since the
date of the last qualification, registration or approval to adversely affect,
or cause the appropriate governmental agency or authority to revoke, any such
qualification, registration or approval; and
(d) There are no pending or threatened investigations, litigation
or other enforcement actions or proceedings against EduTrek or any of the
EduTrek Subsidiaries with respect to any EduTrek Employee Plan, and there are no
actions, suits or claims pending or threatened by former or present employees of
EduTrek or any of the EduTrek Subsidiaries, or their beneficiaries, with respect
to the EduTrek Employee Plans or the assets of fiduciaries thereof (other than
routine claims for benefits).
3.14 Labour Matters. There are no actions or proceedings pending
or, to the knowledge of EduTrek, threatened, between EduTrek or any of the
EduTrek Subsidiaries and any of their respective employees, which have or may
have a Material Adverse Effect; (ii) neither EduTrek nor any of the EduTrek
Subsidiaries is a party to any collective bargaining agreement or other labour
union contract applicable to persons employed by EduTrek or any of the EduTrek
Subsidiaries nor does EduTrek know
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<PAGE> 21
of any activities or proceedings of any labour union to organize any such
employees; and (iii) EduTrek has no knowledge of any strikes, slowdowns, work
stoppages, lockouts or threats thereof, by or with respect to employees of
EduTrek or any of the EduTrek Subsidiaries.
3.15 Intellectual Property. EduTrek or the EduTrek Subsidiaries
own or possess licenses to use all patents, trademarks and service marks, trade
names, copyrights (including registrations and applications therefor) and
written know-how, technology, computer software programs and applications, trade
secrets and all other similar proprietary data and the goodwill associated
therewith (collectively, the "EduTrek Intellectual Property") that are either
material to the business of EduTrek or any EduTrek Subsidiary or that are
necessary for the use, license, sale or provision of any services or products
used, licensed, sold or provided by EduTrek and the EduTrek Subsidiaries. The
EduTrek Intellectual Property is owned or licensed by EduTrek or the EduTrek
Subsidiaries free and clear of any Encumbrance other than such Encumbrances as
are listed in the EduTrek Disclosure Letter. Except in the ordinary course of
business, neither EduTrek nor any of the EduTrek Subsidiaries has granted to any
other person any license to use any EduTrek Intellectual Property. Neither
EduTrek nor any of the EduTrek Subsidiaries has received any notice of
infringement, misappropriation or conflict with, the intellectual property
rights of others in connection with the use by EduTrek and the EduTrek
Subsidiaries of the EduTrek Intellectual Property.
3.16 Title to Properties. None of EduTrek nor any of the EduTrek
Subsidiaries owns any real property. EduTrek has good and marketable title to
all its properties and assets, free and clear of any Encumbrance, except (a)
Encumbrances reflected in the balance sheet of EduTrek as of May 31, 1997, (b)
liens for current Taxes not yet due and payable and (c) such imperfections of
title and Encumbrances, if any, as are not substantial in character, amount or
extent and do not and will not materially detract from the value, or interfere
with the present use, of the property subject thereto or affected thereby, or
otherwise have a Material Adverse Effect. All leases pursuant to which EduTrek
or any EduTrek Subsidiary leases (whether as lessee or lessor) any real or
personal property are in good standing, valid, and effective: and there is not,
under any such leases, any existing or prospective default or event of default
or event which with notice or lapse of time, or both, would constitute a
default by EduTrek or any EduTrek Subsidiary and in respect of which EduTrek or
a EduTrek Subsidiary has not taken adequate steps to prevent a default from
occurring. The buildings and premises of EduTrek and each of the EduTrek
Subsidiaries that are used in its business are in good operating condition and
repair, subject only to ordinary wear and tear.
3.17 Environmental Matters. (a) There are no environmental
conditions or circumstances, such as the presence or release of any hazardous
substance, on any property presently or, to the knowledge of EduTrek, previously
owned or leased by EduTrek or any of the EduTrek Subsidiaries that could
reasonably be expected to result in a Material Adverse Effect on EduTrek;
(b) EduTrek's and the EduTrek Subsidiaries' operations and the
use of their assets do not violate any requirement under Applicable
Environmental Laws pertaining to (i) the condition or protection of air,
groundwater, surface water, soil, or other environmental media, (ii) the
environment, including natural resources or any activity which affects the
environment or (iii) the regulation of any pollutants, contaminants, waste or
other substances (whether or not hazardous or toxic), except for violations
which, either singly or in the aggregate, would not result in a Material Adverse
Effect on EduTrek;
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(c) To the knowledge of EduTrek, none of the operations or assets
of EduTrek or any EduTrek Subsidiary has ever been conducted or used by EduTrek
or any EduTrek Subsidiary in such a manner as to constitute a violation of any
of the Applicable Environmental Laws, except for violations which, either singly
or in the aggregate, would not result in a Material Adverse Effect on EduTrek;
(d) No written notice has been served on EduTrek or any EduTrek
Subsidiary from any entity, governmental agency or individual regarding any
existing, pending or threatened investigation or inquiry related to alleged
violations under any Applicable Environmental Laws, or regarding any claims for
remedial obligations or contribution or damages under any Applicable
Environmental Laws or otherwise related to any environmental matters or any
pollutant, contaminant or hazardous or toxic material or waste, other than any
of the foregoing which, either singly or in the aggregate, would not result in
a Material Adverse Effect on EduTrek; and
(e) EduTrek does not know of any reason that would preclude it
from renewing or obtaining a reissuance of any material permits, licenses, or
other authorizations required pursuant to any Applicable Environmental Laws to
operate and use any of EduTrek's or the EduTrek Subsidiaries' assets for their
current purposes and uses.
3.18 Taxes. Except with respect to failures which, in the
aggregate, would not result in a Material Adverse Effect on EduTrek, proper and
accurate returns, reports and estimates with respect to federal, provincial,
state and local Taxes have been filed with appropriate governmental agencies,
domestic and foreign, by EduTrek and each of the EduTrek Subsidiaries for each
period for which any returns, reports, or estimates were due within the time
required. All Taxes shown by such returns to be payable and any other Taxes due
and payable have been paid other than those being contested in good faith by
EduTrek or an EduTrek Subsidiary. The tax provision reflected in EduTrek's
financial statements is adequate, in accordance with United States generally
accepted accounting principles, to cover liabilities of EduTrek and the EduTrek
Subsidiaries for all Taxes of any character whatsoever applicable to EduTrek and
the EduTrek Subsidiaries or their assets or businesses. No waiver of any statute
of limitations or any agreement extending the period for assessment,
reassessment or collection of any Taxes executed by EduTrek or an EduTrek
Subsidiary with respect to any Tax is in effect for any period. EduTrek has not
received any notice of reassessment from the Internal Revenue Service or any
other taxing authority or agency and none of such taxing authorities or agencies
has asserted or, to the best of EduTrek's knowledge, is threatening to assert
against EduTrek or any of the EduTrek Subsidiaries any deficiency or claim for
additional Taxes and there are no requests for information outstanding that
could affect the Taxes of EduTrek or any of the EduTrek Subsidiaries. None of
EduTrek or any of the EduTrek Subsidiaries is currently being audited by any
taxing authority or agency. There are no liens for Taxes on any assets of
EduTrek or the EduTrek Subsidiaries except for Taxes not yet currently due and
those which could not reasonably be expected to result in a Material Adverse
Effect on EduTrek.
3.19 Vote Required. At a shareholders meeting at which a quorum is
present, the affirmative vote of the holders of a majority of the outstanding
shares of EduTrek Common Stock and EduTrek Class B Stock, voting together, cast
at the meeting is required to approve the issuance of the shares of EduTrek
Common Stock pursuant to this Agreement upon exchange of the Exchangeable
Shares.
3.20 Pooling Matters. Neither EduTrek nor any of its affiliates
has taken or agreed to take any action that, without giving effect to any action
taken or agreed to be taken by ITI or any of its affiliates, would prevent
EduTrek from accounting for the business combination to be effected by the
Arrangement as a pooling of interests.
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3.21 Brokers and Finders. Other than Salomon Smith Barney Inc. and
The Robinson Humphrey Company, Inc., none of EduTrek or any of the EduTrek
Subsidiaries nor any of their respective directors, officers or employees has
employed any broker or finder or incurred any liability for any financial
advisory fees, brokerage fees, commissions or similar payments in connection
with the transactions contemplated by this Agreement.
3.22 Disclosure. No representation or warranty made by EduTrek in
this Agreement or the EduTrek Disclosure Letter, nor any document, written
information, statement, financial statement, certificate or Exhibit prepared and
furnished or to be prepared and furnished to ITI by EduTrek or its
representatives pursuant hereto or in connection with the transactions
contemplated hereby, when taken together, contains or contained (as of the date
made) any untrue statement of a material fact when made, or omits or omitted (as
the case may be) to state a material fact necessary to make the statements
contained herein or therein not misleading in light of the circumstances under
which they were made.
3.23 Fairness Opinion and Pooling Opinion. EduTrek's board of
directors has (a) been advised by The Robinson-Humphrey Company, Inc., based on
its preliminary investigation, that the Exchange Ratio is fair to EduTrek from
a financial point of view (the "EduTrek Fairness Opinion") and (b) been advised
by Deloitte & Touche LLP, based on its preliminary investigation, that in
accordance with United States generally accepted accounting principles and
applicable rules and regulations of the SEC, EduTrek should be a poolable
entity and the Arrangement should be treated as a "pooling of interests" for
accounting purposes. However, further investigation will be required by
Deloitte & Touche LLP before issuance of an opinion pursuant to Section 5.3(i)
stating that the Arrangement will be treated as a "pooling of interests" for
accounting purposes (the "EduTrek Pooling Opinion").
3.24 Restrictions on Business Activities. There is no material
agreement, judgment, injunction, order or court decree binding upon EduTrek or
any EduTrek Subsidiary that has or could reasonably be expected to have the
effect of prohibiting or materially impairing any business practice of EduTrek
or any EduTrek Subsidiary, any acquisition of property by EduTrek or any
EduTrek Subsidiary or the conduct of any business by EduTrek or any EduTrek
Subsidiary.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE ARRANGEMENT
4.1 Conduct of Business by ITI. ITI agrees that, except as
expressly contemplated by this Agreement or as otherwise agreed to in writing by
EduTrek or as set forth in the ITI Disclosure Letter, from the date hereof to
the Effective Date it will, and will cause each of the ITI Subsidiaries to:
(a) Other than as contemplated by this Agreement, operate its
business and incur liabilities (including any liability with respect to Taxes)
only in the usual and ordinary course and in a manner consistent with past
practice so as to maintain the goodwill it now enjoys and, to the extent
consistent with such operation, use all commercially reasonable efforts to
preserve intact its present business organization, keep available the services
of its present officers, employees and consultants, and preserve its
relationships with customers, suppliers and others having business dealings with
it;
(b) Maintain all of its property and assets in customary repair,
order, and condition, reasonable wear and use and damage by fire or unavoidable
casualty excepted;
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(c) Maintain its books of account and records in the usual,
regular and ordinary manner, in accordance with generally accepted accounting
principles applied on a consistent basis;
(d) Duly comply in all material respects with all laws applicable
to it and to the conduct of its business;
(e) Not (i) enter into any contracts of employment which (A)
cannot be terminated on notice of 90 days or less or (B) provide for any
severance payments or benefits covering a period beyond the termination date of
such employment contract, except as may be required by law or (ii) establish,
adopt or amend any employee benefit plan or stock option plan, except for the
ratification by shareholders of ITI of the ITI stock option plan amendment
approved by the board of directors on October 27, 1997, a copy of which has been
provided to EduTrek, and except as may be required for compliance with this
Agreement or applicable law;
(f) Not incur any borrowings except (i) the refinancing of
indebtedness now outstanding or additional borrowings under its existing
revolving credit facilities, (ii) the prepayment by customers of amounts due or
to become due for goods sold or services rendered or to be rendered in the
future, or (iii) trade payables incurred in the ordinary course of business,
other than in the ordinary course of business consistent with past practice
with respect to borrowings which, individually or in the aggregate, are not
material to ITI and the ITI Subsidiaries taken as a whole;
(g) Not enter into commitments of a capital expenditure nature or
incur any contingent liability which would exceed $500,000, in the aggregate,
except (i) as may be necessary for the maintenance of existing facilities,
machinery and equipment in good operating condition and repair or construction
of new facilities and purchase of new equipment in the ordinary course of
business or (ii) as may be required by law;
(h) Not sell, dispose of or encumber any property or assets,
except (i) in the ordinary course of business or (ii) as may be reasonably
required in connection with borrowings;
(i) Not pay, discharge or satisfy any material claims,
liabilities or obligations, other than payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice of liabilities
reflected or reserved against in ITI's financial statements or incurred in the
ordinary course of business and consistent with past practice;
(j) Not modify, amend or terminate any contracts, waive, release,
relinquish or assign any contract or any other rights or claims or cancel or
forgive any indebtedness owed to it, other than in the ordinary course of
business consistent with past practice with respect to contracts where such
modifications, amendments, terminations or other actions are not material to
ITI and the ITI Subsidiaries taken as a whole;
(k) Maintain insurance upon all its properties and with respect
to the conduct of its business of such kinds and in such amounts as is customary
in the type of business in which it is engaged, but not less than that presently
carried by it;
(l) Not amend its charter documents or bylaws or other
organizational documents or merge or consolidate with or into any other
corporation or change in any manner the rights of its capital stock or the
character of its business, other than as contemplated hereunder;
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(m) Not issue or sell (except upon the exercise of outstanding
options or warrants), or issue options or rights to subscribe to, or enter into
any contract or commitment to issue or sell, any shares of its capital stock or
subdivide, split, consolidate or in any way reclassify any shares of its capital
stock, or redeem, repurchase or acquire, or agree to redeem, repurchase or
otherwise acquire, any shares of its capital stock, other than as contemplated
hereunder;
(n) Not declare or pay any dividend on shares of its capital
stock or make any other distribution of assets to the holders thereof;
(o) Use its reasonable best efforts to cause, with the
cooperation and assistance of EduTrek, the Exchangeable Shares to be listed on
a mutually acceptable Canadian stock exchange;
(p) Deliver to EduTrek, within 75 days after the end of ITI's
fiscal year ended October 31, 1997, audited consolidated balance sheets and
related audited statements of income, retained earnings and cash flows as of the
end of such fiscal year and as of the end of the previous fiscal year, and,
within 45 days after the end of each fiscal quarter of ITI beginning January 31,
1997, and through the Effective Date, unaudited consolidated balance sheets and
related unaudited statements of income, retained earnings and cash flows as of
the end of each fiscal quarter of ITI, and as of the corresponding fiscal
quarter of the previous fiscal year. ITI hereby represents and warrants that
such consolidated financial statements shall (i) be complete in all material
respects except, in the case of unaudited financial statements, for the omission
of notes and schedules contained in audited financial statements, (ii) present
fairly in all material respects the financial condition of ITI as at the dates
indicated and the results of operations for the respective periods indicated,
(iii) shall have been prepared in accordance with Canadian generally accepted
accounting principles applied on a consistent basis, except as noted therein and
(iv) shall contain all adjustments which ITI considers necessary for a fair
presentation of its results for each respective fiscal period; and
(q) Not take, or agree in writing or otherwise to take, any action
that would make any of the representations and warranties of ITI herein untrue
or incorrect in any material respect or prevent ITI from performing or cause
ITI not to perform its obligations hereunder or result in any of the conditions
to the Arrangement set forth herein not being satisfied.
4.2 Non-Solicit.
(a) As used herein, "Acquisition Proposal" shall mean a proposal
or offer (other than by EduTrek) to acquire beneficial ownership (as defined
under Rule 13(d) of the Exchange Act) of all or a material portion of the assets
of, or any material equity interest in, ITI or any of the ITI Subsidiaries
pursuant to a merger, amalgamation, consolidation or other business combination,
by means of a sale of shares of capital stock, sale of assets, take-over bid,
tender offer or exchange offer or similar transaction involving ITI or any of
the ITI Subsidiaries including without limitation any single or multi-step
transaction or series of related transactions which is structured to permit such
third party to acquire beneficial ownership or any material portion of the
assets of, or any material portion of the equity interest in, ITI or any of the
ITI Subsidiaries (other than the transactions contemplated by this Agreement).
(b) Without the prior written consent of EduTrek, from and after
the date hereof, ITI and the ITI Subsidiaries will not, and will not authorize
or permit any of their officers, directors, employees, financial advisors,
representatives and agents ("Representatives") to, directly or indirectly,
solicit, initiate or encourage (including by way of furnishing information) or
take any other action to facilitate any
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inquiries or the making of any proposal which constitutes or may reasonably be
expected to lead to an Acquisition Proposal from any person, or engage in any
discussion or negotiations relating thereto or accept any Acquisition Proposal;
provided, however, that nothing contained in this Section 4.2(b) or any other
provision hereof shall prevent the board of directors of ITI, at any time prior
to the time ITI's shareholders shall have voted to approve the Plan of
Arrangement and the other transactions contemplated thereby and subject to
compliance with this Section 4.2, from considering, negotiating, approving and
recommending to the shareholders of ITI an unsolicited bona fide written
Acquisition Proposal which the board of directors of ITI determines in good
faith (after consultation with its financial advisors and after considering
applicable law and receiving advice of outside counsel to the effect that the
board of directors is required to do so in order to discharge properly its
fiduciary duties) would, if consummated in accordance with its terms, result in
a transaction more favourable to ITI's shareholders than the transaction
contemplated by this Agreement (any such Acquisition Proposal being referred to
herein as a "Superior Proposal").
(c) ITI shall immediately notify EduTrek after receipt of any
Acquisition Proposal or any request for nonpublic information relating to ITI
or any of the ITI Subsidiaries in connection with an Acquisition Proposal or
for access to the properties, books or records of ITI or any of the ITI
Subsidiaries by any person or entity that informs the board of directors of ITI
or such subsidiary that it is considering making, or has made, an Acquisition
Proposal. Such notice to EduTrek shall be made both orally and in writing and
shall indicate in reasonable detail the terms and conditions of such proposal,
inquiry or contact. ITI shall keep EduTrek informed of the status and details
of any such proposal, inquiry or contact and answer EduTrek's questions with
respect thereto, and shall give EduTrek five days' advance notice of any
agreement to be entered into with, or any information to be supplied to, any
person making such proposal, inquiry or contact.
(d) If the board of directors of ITI receives a request for
material nonpublic information by a party who makes an unsolicited bona fide
Acquisition Proposal and the board of directors determines that such proposal is
a Superior Proposal in accordance with Section 4.2(b), then, and only in such
case, ITI may provide such party with access to information regarding ITI.
(e) ITI shall immediately cease and terminate any existing
solicitation, initiation, encouragement, activity, discussion or negotiation
with any parties (other than EduTrek) conducted heretofore by ITI, any ITI
Subsidiary or their Representatives with respect to an Acquisition Proposal.
4.3 Conduct of Business by EduTrek. EduTrek agrees that, except
as expressly contemplated by this Agreement or otherwise agreed to in writing
by ITI or as set forth in the EduTrek Disclosure Letter, from the date hereof to
the Effective Date it will, and will cause each of the EduTrek Subsidiaries to:
(a) Other than as contemplated by this Agreement, operate its
business and incur liabilities (including any liability with respect to Taxes)
only in the usual and ordinary course and in a manner consistent with past
practice so as to maintain the goodwill it now enjoys and, to the extent
consistent with such operation, use all commercially reasonable efforts to
preserve intact its present business organization, keep available the services
of its present officers, employees and consultants, and preserve its
relationships with customers, suppliers and others having business dealings with
it;
(b) Maintain all of its property and assets in customary repair,
order, and condition, reasonable wear and use and damage by fire or unavoidable
casualty excepted;
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(c) Maintain its books of account and records in the usual,
regular, and ordinary manner, in accordance with generally accepted accounting
principles applied on a consistent basis;
(d) Duly comply in all material respects with all laws applicable
to it and to the conduct of its business;
(e) Not sell, dispose of or encumber any property or assets,
except (i) in the ordinary course of business or (ii) as may be reasonably
required in connection with borrowings;
(f) Not amend its charter documents or bylaws or other
organizational documents or merge or consolidate with or into any other
corporation or change in any manner the rights of its capital stock or the
character of its business, other than as contemplated hereunder;
(g) Not issue or sell (except upon the exercise of outstanding
options or warrants), or issue options or rights to subscribe to, or enter into
any contract or commitment to issue or sell, any shares of its capital stock or
subdivide, split, consolidate or in any way reclassify any shares of its capital
stock, or redeem, repurchase or acquire, or agree to redeem, repurchase or
otherwise acquire, any shares of its capital stock, other than as contemplated
hereunder;
(h) Not declare or pay any dividend on shares of its capital
stock or make any other distribution of assets to the holders thereof;
(i) Use its reasonable best efforts to cause (i) the shares of
EduTrek Common Stock to be issued from time to time after the Effective Time
upon exchange of the Exchangeable Shares to be quoted upon the Closing on Nasdaq
and (ii) with the cooperation and assistance of ITI, the Exchangeable Shares to
be listed on a mutually acceptable Canadian stock exchange; and
(j) Not take, or agree in writing or otherwise to take, any
action that would make any of the representations and warranties of EduTrek
herein untrue or incorrect in any material respect or prevent EduTrek from
performing or cause EduTrek not to perform its obligations hereunder or result
in any of the conditions to the Arrangement set forth herein not being
satisfied.
4.4 Public Announcements. Neither EduTrek nor ITI, nor any of
their respective affiliates, shall issue or cause the publication of any press
release or other public announcement with respect to this Agreement, the
Arrangement or the other transactions contemplated hereby without the prior
consent of the other party, which shall not be unreasonably withheld, except as
may be required by law or by any listing agreement with a stock exchange or
Nasdaq; provided, however, that the party so required by law or any listing
agreement shall use all reasonable efforts to consult the other party as to the
timing and content of any such publication, release or announcement.
4.5 Comfort Letters. (a) ITI shall use its reasonable best
efforts to cause to be delivered to EduTrek a letter (the "ITI Comfort Letter")
of Doane, Raymond addressed to EduTrek and dated as of a date within five days
before the earlier of (i) the date the Joint Proxy Statement is first mailed to
each company's respective shareholders, and (ii) if a Registration Statement is
required, the date on which the Registration Statement shall become effective,
in form and substance reasonably satisfactory to EduTrek and customary in scope
and substance for "comfort" letters delivered by independent public accountants
in connection with proxy statements and registration statements similar to the
Joint Proxy Statement and, if required, the Registration Statement.
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<PAGE> 28
(b) EduTrek shall use its reasonable best efforts to cause to be
delivered to ITI a letter (the "EduTrek Comfort Letter") of Deloitte & Touche
LLP addressed to ITI and dated as of a date within five days before the earlier
of (i) the date the Joint Proxy Statement is first mailed to each company's
respective shareholders, and (ii) if a Registration Statement is required, the
date on which the Registration Statement shall become effective, in form and
substance reasonably satisfactory to ITI and customary in scope and substance
for "comfort" letters delivered by independent public accountants in connection
with proxy statements and registration statements similar to the Joint Proxy
Statement and, if required, the Registration Statement.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS
5.1 Conditions Precedent to Obligations of Each Party. The
obligations of each party to consummate and effect the transactions contemplated
hereunder shall be subject to the satisfaction or waiver before the Effective
Date of the following conditions:
(a) Shareholder Approval and Dissenting Shareholders. This
Agreement, the Arrangement and the other transactions contemplated hereby shall
have been approved and adopted by the ITI shareholders in accordance with
applicable law and ITI's articles of incorporation and bylaws, and the sum of
(i) the number of ITI Common Shares held by ITI shareholders who have notified
ITI prior to the Effective Time of their intention to exercise their rights of
dissent under Section 190 of the CBCA times the Exchange Ratio, (ii) the number
of ITI Common Shares repurchased or redeemed or otherwise acquired by ITI or any
of the ITI Subsidiaries during the two years immediately preceding the Effective
Time times the Exchange Ratio, (iii) the number of shares of EduTrek Common
Stock repurchased or redeemed or otherwise acquired by EduTrek or any of the
EduTrek Subsidiaries during the two years immediately preceding the Effective
Time (to the best of EduTrek's knowledge, there being none), and (iv) the number
of fractional Exchangeable Shares for which holders of ITI Common Shares receive
cash pursuant to Section 4.3 of the Plan of Arrangement shall not exceed 9.9% of
the number of issued and outstanding Exchangeable Shares at the Effective Time;
(b) No Legal Action. No preliminary or permanent injunction or
other order or judgment shall have been entered and remain in effect in any
action or proceeding before any Governmental Entity that would prevent or make
illegal the consummation of the Arrangement nor shall any proceeding brought by
or before any Governmental Entity seeking any such injunction or order or
judgment be pending;
(c) Court Approval. The Court shall have issued its final order
approving the Arrangement in form and substance reasonably satisfactory to
EduTrek and ITI and reflecting the terms hereof;
(d) Commissions, etc. All necessary orders, consents or rulings
shall have been obtained from the Commissions and other relevant United States
and Canadian securities regulatory authorities in connection with the
Arrangement, including orders, consents or rulings of the Commissions to permit
the exchange of ITI Common Shares for Exchangeable Shares, the issuance and
delivery of shares of EduTrek Common Stock by EduTrek to holders of Exchangeable
Shares upon the exchange of Exchangeable Shares after the Effective Date or in
order that such Exchangeable Shares or shares of EduTrek Common Stock may be
freely traded thereafter pursuant to applicable securities laws (other than any
restrictions on transfer by reason of a holder being a "control person" of ITI
or EduTrek for purposes of Canadian
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<PAGE> 29
federal or provincial securities law or an "affiliate" of ITI or EduTrek for
purposes of United States federal or state securities law). The Arrangement
shall have received the allowance or approval or deemed allowance or approval
by the responsible Minister under the Investment Canada Act in respect of the
Arrangement, to the extent such allowance or approval is required, on terms and
conditions satisfactory to the parties;
(e) SEC Matters. The Registration Statement shall have been
declared effective under the Securities Act on or before the mailing to
shareholders entitled to vote of EduTrek and ITI of the Joint Proxy Statement
and, if a shelf Registration Statement is required by the SEC, the shelf
Registration Statement shall have been declared effective under the Securities
Act on or before the Effective Date, and in both cases at their effective dates
and on the Closing Date the Registration Statements shall not be the subject of
any stop-order or proceedings seeking a stop-order, and the Joint Proxy
Statement shall on the Closing Date not be subject to any similar proceedings
commenced or threatened by the SEC or the Commissions; and
(f) Listings. The EduTrek Common Stock to be issued from time to
time after the Effective Time upon exchange of the Exchangeable Shares shall
have been approved for quotation on Nasdaq, subject only to notice of issuance,
and the Exchangeable Shares shall have been conditionally approved for listing
on a Canadian stock exchange mutually acceptable to ITI and EduTrek.
5.2 Conditions Precedent to Obligations of ITI. The obligations
of ITI to consummate and effect the transactions contemplated hereunder shall be
subject to the satisfaction or waiver on or before the Effective Date of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of EduTrek contained in this Agreement shall be true and correct on
the date hereof and on the Effective Date, except for (i) representations and
warranties which speak as of a particular date which shall remain true and
correct on and as of such date and (ii) where the failure or failures of such
representations and warranties to be true and correct, individually or in the
aggregate, would not have a Material Adverse Effect on EduTrek or a material
adverse effect on the shareholders of ITI, with the same force and effect as if
made on and as of the Effective Date;
(b) Covenants. EduTrek shall have performed and complied in all
material respects with all covenants required by this Agreement to be performed
or complied with by EduTrek on or before the Effective Date;
(c) Certificate. EduTrek shall have delivered to ITI a
certificate, dated the Effective Date and signed by its chief executive officer
and its chief financial officer, to the effect set forth in Sections 5.2(a) and
(b);
(d) Consents Obtained. All material consents, waivers,
approvals, authorizations or orders required to be obtained, and all filings
required to be made, by EduTrek for the authorization, execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
shall have been obtained and made by EduTrek;
(e) Due Diligence. As a result of its due diligence
investigation of EduTrek and the EduTrek Subsidiaries referred to in Section
7.3, ITI shall not have discovered any fact, event or circumstance which, acting
as a reasonable and prudent business person, has caused it to notify EduTrek in
writing on
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<PAGE> 30
or before January 15, 1998 that it does not want to go forward and consummate
the transactions contemplated by this Agreement;
(f) Material Adverse Change. Since the date of this Agreement
there shall have been no change, event, occurrence or circumstance in the
business, results of operations or financial condition of EduTrek or any EduTrek
Subsidiary having or reasonably likely to have a Material Adverse Effect;
(g) Opinion of EduTrek Counsel. ITI shall have received opinions,
dated as of the Effective Date, from Smith, Gambrell & Russell, LLP, United
States counsel for EduTrek, and from Blake, Cassels & Graydon, Canadian counsel
for EduTrek, each in form and substance reasonably satisfactory to ITI;
(h) Tax Opinion. ITI shall have received an opinion in form and
substance reasonably satisfactory to ITI of Stewart McKelvey Stirling Scales,
Canadian counsel for ITI, to the effect that the Arrangement will be generally
treated for Canadian federal income tax purposes as a reorganization of capital
for those ITI shareholders who hold their ITI Common Shares as capital property
for purposes of the ITA;
(i) Fairness Opinion. The ITI Fairness Opinion shall have been
prepared by Nesbitt Burns Inc. in written form, effective as of the date of
this Agreement and delivered to ITI's board of directors prior to the date the
Joint Proxy Statement was first mailed to shareholders of ITI and EduTrek and
shall not have subsequently been withdrawn;
(j) Comfort Letter. ITI shall have received the EduTrek Comfort
Letter and an additional letter from Deloitte & Touche LLP, dated the Effective
Date, in form and substance reasonably satisfactory to ITI, stating that nothing
has come to their attention, as of a date no earlier than five days prior to the
Effective Date, which would require any change in the EduTrek Comfort Letter if
it were required to be dated and delivered on the Effective Date;
(k) Affiliates Agreements. EduTrek shall have furnished copies to
ITI of the EduTrek affiliates agreements referred to Section 7.12(b); and
(l) Certificates and Resolutions. ITI shall have received such
other certificates and resolutions of EduTrek as may be reasonably required in
connection with the consummation of this Agreement.
5.3 Conditions Precedent to Obligations of EduTrek. The
obligations of EduTrek to consummate and effect the transactions contemplated
hereunder shall be subject to the satisfaction or waiver on or before the
Effective Date of the following conditions:
(a) Representations and Warranties. The representations and
warranties of ITI contained in this Agreement shall be true and correct on the
date hereof and on the Effective Date, except for (i) representations and
warranties which speak as of a particular date which shall remain true and
correct on and as of such date and (ii) where the failure or failures of such
representations and warranties to be true and correct, individually or in the
aggregate, would not have a Material Adverse Effect on ITI or a material adverse
effect on the shareholders of EduTrek, with the same force and effect as if made
on and as of the Effective Date;
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<PAGE> 31
(b) Covenants. ITI shall have performed and complied in all
material respects with all covenants required by this Agreement to be performed
or complied with by ITI on or before the Effective Date;
(c) Certificate. ITI shall have delivered to EduTrek a
certificate, dated the Effective Date and signed by its chief executive officer
and its chief financial officer, to the effect set forth in Sections 5.3 (a) and
(b);
(d) Consents Obtained. All material consents, waivers,
approvals, authorizations or orders required to be obtained, and all filings
required to be made, by ITI for the authorization, execution and delivery of
this Agreement and the consummation by it of the transactions contemplated
hereby shall have been obtained and made by ITI;
(e) Due Diligence. As a result of its due diligence investigation
of ITI and the ITI Subsidiaries referred to in Section 7.2, EduTrek shall not
have discovered any fact, event or circumstance which, acting as a reasonable
and prudent business person, has caused it to notify ITI in writing on or before
January 15, 1998 that it does not want to go forward and consummate the
transactions contemplated by this Agreement;
(f) Material Adverse Change. Since the date of this Agreement
there shall have been no change, event, occurrence or circumstance in the
business, results of operations or financial condition of ITI or any ITI
Subsidiary having or reasonably likely to have a Material Adverse Effect;
(g) Opinion of ITI Counsel. EduTrek shall have received opinions,
dated as of the Effective Date, from Nelson Mullins Riley & Scarborough, LLP,
United States counsel for ITI, and from Stewart McKelvey Stirling Scales,
Canadian counsel for ITI, each in form and substance reasonably satisfactory to
EduTrek;
(h) Fairness Opinion. The EduTrek Fairness Opinion shall have
been prepared by The Robinson-Humphrey Company, Inc. in written form, effective
as of the date of this Agreement and delivered to EduTrek's board of directors
prior to the date the Joint Proxy Statement was first mailed to shareholders of
ITI and EduTrek and shall not have subsequently been withdrawn;
(i) Pooling Matters. EduTrek's board of directors shall have
received the EduTrek Pooling Opinion from Deloitte & Touche LLP as of the date
the Joint Proxy Statement was first mailed to shareholders of EduTrek and a
confirmation of such opinion on the Effective Date. In addition, no event shall
have occurred which would establish with reasonable certainty that the
Arrangement would not be treated as a "pooling of interests" for accounting
purposes;
(j) Comfort Letter. EduTrek shall have received the ITI Comfort
Letter and an additional letter from Doane, Raymond, dated the Effective Date,
in form and substance reasonably satisfactory to EduTrek, stating that nothing
has come to their attention, as of a date no earlier than five days prior to the
Effective Date, which would require any change in the ITI Comfort Letter if it
were required to be dated and delivered on the Effective Date;
(k) Affiliates Agreements. ITI shall have furnished copies to
EduTrek of the ITI affiliates agreements referred to in Section 7.12(a); and
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<PAGE> 32
(l) Certificates and Resolutions. EduTrek shall have received
such other certificates and resolutions of ITI as may be reasonably required in
connection with the consummation of this Agreement.
ARTICLE VI
TERMINATION
6.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of the
transactions contemplated hereby by the shareholders entitled to vote of EduTrek
or ITI, as follows:
(a) by mutual agreement of ITI and EduTrek;
(b) by ITI, if there has been a breach by EduTrek of any
representation, warranty, covenant or agreement set forth in this Agreement on
the part of EduTrek, or if any representation or warranty of EduTrek shall have
become untrue, in either case which has or can reasonably be expected to have a
Material Adverse Effect on EduTrek, and which EduTrek fails to cure within 15
business days after written notice thereof from ITI (except that no cure period
shall be provided for a breach by EduTrek which by its nature cannot be cured),
(c) by EduTrek, if there has been a breach by ITI of any
representation, warranty, covenant or agreement set forth in this Agreement on
the part of ITI, or if any representation or warranty of ITI shall have become
untrue, in either case which has or can reasonably be expected to have a
Material Adverse Effect on ITI, and which ITI fails to cure within 15 business
days after written notice thereof from EduTrek (except that no cure period
shall be provided for a breach by ITI which by its nature cannot be cured).
(d) by either party, if all the conditions for Closing the
Arrangement shall not have been satisfied or waived on or before 5:00 p.m. (Nova
Scotia time) on June 30, 1998, other than as a result of a breach of this
Agreement by the terminating party;
(e) by either party (i) if the shareholders of ITI do not approve
the Arrangement (and the other matters to be approved at such meeting as
provided in Section 7.5 hereof) at the ITI Shareholders Meeting, or (ii) if the
shareholders of EduTrek do not approve at the EduTrek Shareholders Meeting the
issuance of EduTrek Common Stock issuable upon the exchange of the Exchangeable
Shares (and the other matters to be approved at such meeting as provided in
Section 7.5 hereof);
(f) by either party if a final and non-appealable order, decree
or ruling shall have been entered in any action or proceeding before any
Governmental Entity that restrains, prohibits, prevents or makes illegal the
consummation of the Arrangement;
(g) by EduTrek if the ITI board of directors or any committee of
the ITI board of directors (i) shall withdraw or modify in any adverse manner
its approval or recommendation of this Agreement, the Arrangement and the other
transactions contemplated hereby, (ii) within ten days after EduTrek's request,
shall fail to reaffirm such approval or recommendation, (iii) shall approve or
recommend any Acquisition Proposal, other than with EduTrek or an affiliate
thereof, or (iv) shall resolve to take any of the actions specified in this
Section 6.1(g);
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(h) by ITI if the EduTrek board of directors or any committee of
the EduTrek board of directors (i) shall withdraw or modify in any adverse
manner its approval or recommendation of this Agreement, the Arrangement and the
other transactions contemplated hereby, (ii) within ten days after ITI's
request, shall fail to reaffirm such approval or recommendation or (iii) shall
resolve to take any of the actions specified in this Section 6.1(h); or
(i) by either party, prior to the approval of this Agreement, the
Arrangement and the other transactions contemplated hereby by the shareholders
of ITI, upon five days' prior notice to EduTrek, if, as a result of a Superior
Proposal by a party other than EduTrek or any of its affiliates, ITI's board of
directors determines in good faith that their fiduciary obligations under
applicable law require that such Superior Proposal be accepted; provided,
however, that (i) ITI's board of directors shall have concluded in good faith,
after considering provisions of applicable law and after giving effect to all
concessions which may be altered by EduTrek pursuant to clause (ii) below,
after receiving the written advice of outside counsel, that such action is
necessary for ITI's board of directors to act in a manner consistent with its
fiduciary duties under applicable law and (ii) prior to any such termination
and prior to accepting, or entering into any agreement regarding, the Superior
Proposal ITI shall provide EduTrek (for at least five days) an opportunity to
amend this Agreement to provide for terms substantially similar to those
included in the Superior Proposal, and in addition ITI shall, and shall cause
its respective financial and legal advisors to, negotiate in good faith with
EduTrek to make, such adjustments in the terms and conditions of this Agreement
as would enable ITI to proceed with the transactions contemplated hereby. In
the event this Agreement is amended as provided above (including without
limitation if EduTrek and ITI agree to mutually acceptable adjustments as
provided above), then ITI shall not enter into any agreement regarding the
Superior Proposal.
6.2 Notice of Termination. Any termination of this Agreement
under Section 6.1 above will be effected by the delivery of written notice by
the terminating party to the other party hereto.
6.3 Effect of Termination. Subject to Section 6.4, in the event
of termination of this Agreement by either ITI or EduTrek pursuant to Section
6.1, this Agreement shall forthwith become void and have no effect, and there
shall be no liability or obligation on the part of EduTrek or ITI or their
respective officers or directors, except (i) as set forth in Section 6.4, and
(ii) no party shall be released or relieved from any liability arising from the
wilful breach by such party of any of its representations, warranties, covenants
or agreements as set forth in this Agreement.
6.4 Termination Fee. (a) If this Agreement is terminated by
EduTrek pursuant to Section 6.1(c), then ITI shall pay to EduTrek upon such
termination a cash termination fee of $2,000,000 at the time of such
termination.
(b) If this Agreement is terminated by EduTrek pursuant to
Section 6.1(g), or by either party pursuant to Section 6.1(i), then ITI shall
pay to EduTrek upon such termination a cash termination fee of $5,000,000 at the
time of such termination.
(c) If this Agreement is terminated by EduTrek pursuant to
Section 6.1(e)(i), then ITI shall reimburse EduTrek for its reasonable
out-of-pocket costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby, to a maximum of $500,000.
(d) If this Agreement is terminated by ITI pursuant to Section
6.1(b), then EduTrek shall pay to ITI upon such termination a cash termination
fee of $2,000,000 at the time of such termination.
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<PAGE> 34
(e) If this Agreement is terminated by ITI pursuant to Section
6.1(e)(ii), then EduTrek shall reimburse ITI for its reasonable out-of-pocket
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby, to a maximum of $500,000.
(f) EduTrek and ITI each agree that the agreements contained in
Sections 6.4(a), (b), (c), (d) and (e) are an integral part of the transactions
contemplated by this Agreement. If either party fails to promptly pay the other
party any fee or amount due under such Sections 6.4(a) (b), (c), (d) or (e), it
shall pay the other party's costs and expenses (including legal fees and
expenses) in connection with any action, including the filing of any lawsuit or
other legal action, taken to collect payment, together with interest on the
amount of any unpaid fee at the publicly announced prime rate of NationsBank,
N.A. from the date such fee was first due.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Additional Agreements of EduTrek and ITI. EduTrek and ITI
agree to take the following actions after the date hereof:
(a) Each party will promptly execute and file or join in the
execution and filing of any application or other document that may be necessary
in order to obtain the authorization, approval, order or consent of any
Governmental Entity which may be reasonably required, or which the other party
may reasonably request, in connection with the consummation of the transactions
contemplated by this Agreement. Each party will use its reasonable best efforts
to promptly obtain such authorizations, approvals, orders and consents. Without
limiting the generality of the foregoing, as promptly as practicable after the
execution of this Agreement, each party shall make all required filings under
the Investment Canada Act and the Competition Act (Canada);
(b) Each party will allow the other and its officers, employees
and agents reasonable access to the files, books, records and offices of itself
and its subsidiaries, including any and all information relating to such party's
tax matters, contracts, leases, licenses and real, personal and intangible
property and financial condition. Each party will cause its accountants to
cooperate with the other in making available to the other party all financial
information reasonably requested, including the right to examine all working
papers pertaining to tax matters and financial statements prepared or audited by
such accountants;
(c) EduTrek and ITI shall cooperate in the preparation and prompt
filing of the Joint Proxy Statement and the Registration Statement with the SEC
as contemplated in Section 1.6;
(d) Each of EduTrek and ITI will promptly notify the other in
writing (i) of any event occurring subsequent to the date of this Agreement
which would render any representation and warranty of such party contained in
this Agreement untrue or inaccurate in any material respect, (ii) of any
Material Adverse Effect on such party and (iii) of any material breach by such
party of any covenant or agreement contained in this Agreement; and
(e) During the term of this Agreement, each of EduTrek and ITI
will use its reasonable best efforts to satisfy or cause to be satisfied all the
conditions precedent that are set forth in Article V hereof,
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and each of EduTrek and ITI will use its reasonable best efforts to cause the
Arrangement and the other transactions contemplated by this Agreement to be
consummated.
7.2 Due Diligence Investigation by EduTrek. (a) Until the
Closing, EduTrek and its agents, employees, representatives and advisers shall
be permitted, during regular business hours and at such other times as may be
agreed by the parties, to make such investigations, inspections, inquiries or
tests of the business, financial condition, properties and assets of ITI, the
ITI Subsidiaries and any of their predecessor companies or entities and of their
respective financial and legal condition as EduTrek deems necessary or desirable
to familiarize itself with such business, financial and legal condition,
properties, assets and other matters. Without limiting the generality of the
foregoing, EduTrek and its agents, employees, representatives and advisers shall
be permitted complete access to all documents and information relating to ITI
and the ITI Subsidiaries and their respective business, financial and legal
condition, property and assets, including the constating or organizational
documents and bylaws of ITI and the ITI Subsidiaries and all records of meetings
of the board of directors (including committees thereof) and shareholders of ITI
and equivalent records of the ITI Subsidiaries and any predecessor company or
entity of any of them, the ITI Intellectual Property and records relating
thereto, books and records, contracts, agreements, data, information and records
regarding suppliers, customers, employees and consultants of ITI (including the
ITI Employee Plans) and the ITI Subsidiaries, information and records regarding
any litigation, claims, investigations or other proceedings involving ITI or any
ITI Subsidiary, records in connection with all regulatory filings and other
contacts with governmental authorities or agencies (including the ITI Canadian
Securities Reports), any other reports prepared by advisers and all other
records of ITI, the ITI Subsidiaries and any of their predecessor companies or
entities, including without limitation information and records regarding any
matter referred to in Article 2 hereof.
(b) ITI shall make available to EduTrek its employees, auditors,
counsel and other representatives and advisers as reasonably required by
EduTrek for consultation and verification of any information. ITI shall execute
and deliver any authorizations required to permit the investigations,
inspections, inquiries or tests described in Section 7.2(a).
(c) Any investigations, inspections, inquiries or tests performed
or conducted by EduTrek shall not in any way affect or mitigate or estop EduTrek
from relying upon the representations and warranties of ITI under this Agreement
which shall continue in full force and effect as provided under this Agreement.
7.3 Due Diligence Investigation by ITI. (a) Until the Closing,
ITI and its agents, employees, representatives and advisers shall be permitted,
during regular business hours and at such other times as may be agreed by the
parties, to make such investigations, inspections, inquiries or tests of the
business, financial condition, properties and assets of EduTrek, the EduTrek
Subsidiaries and any of their predecessor companies or entities and of their
respective financial and legal condition as ITI deems necessary or desirable to
familiarize itself with such business, financial and legal condition,
properties, assets and other matters. Without limiting the generality of the
foregoing, ITI and its agents, employees, representatives and advisers shall be
permitted complete access to all documents and information relating to EduTrek
and the EduTrek Subsidiaries and their respective business, financial and legal
condition, property and assets, including the constating or organizational
documents and bylaws of EduTrek and the EduTrek Subsidiaries and all records of
meetings of the board of directors (including committees thereof) and
shareholders of EduTrek and equivalent records of the EduTrek Subsidiaries and
any predecessor company or entity of any of them, the EduTrek Intellectual
Property and records relating thereto, books and records, contracts, agreements,
data, information and records regarding suppliers, customers,
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employees and consultants of EduTrek (including the EduTrek Employee Plans) and
the EduTrek Subsidiaries, information and records regarding any litigation,
claims, investigations or other proceedings involving EduTrek or any EduTrek
Subsidiary, records in connection with all regulatory filings and other
contacts with governmental authorities or agencies (including the EduTrek
Securities Reports), any other reports prepared by advisers and all other
records of EduTrek, the EduTrek Subsidiaries and any of their predecessor
companies or entities, including without limitation information and records
regarding any matter referred to in Article 3 hereof.
(b) EduTrek shall make available to ITI its employees, auditors,
counsel and other representatives and advisers as reasonably required by
EduTrek for consultation and verification of any information. EduTrek shall
execute and deliver any authorizations required to permit the investigations,
inspections, inquiries or tests described in Section 7.3(a).
(c) Any investigations, inspections, inquiries or tests performed
or conducted by ITI shall not in any way affect or mitigate or estop ITI from
relying upon the representations and warranties of EduTrek under this Agreement
which shall continue in full force and effect as provided under this Agreement.
7.4 Confidentiality.
(a) For the purposes of this Section 7.4, "Confidential
Information" of a party shall mean:
(i) in relation to ITI, all information, documents or data,
whether written, recorded electronically or otherwise or
oral, in relation to ITI and the ITI Subsidiaries or their
respective businesses; and
(ii) in relation to EduTrek, all information, documents or data,
whether written, recorded electronically or otherwise or
oral, in relation to EduTrek and the EduTrek Subsidiaries or
their respective businesses;
other than, in each case, information that:
(iii) was independently developed by the party to whom disclosure
was made (the "Disclosee");
(iv) prior to the date hereof was already in possession of the
Disclosee, provided that such information is not known by the
Disclosee to be subject to another confidentiality agreement
with or obligation of secrecy to another person;
(v) is generally available to the public other than as a result
of disclosure by the Disclosee or any of its directors,
officers, employees, agents or representatives; or
(vi) becomes available to the Disclosee on a non-confidential
basis from a source other than the party to which such
information relates.
(b) Each party shall maintain, and cause its directors, officers,
employees, agents, representatives and subsidiaries to maintain, in confidence
all Confidential Information of the other party,
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and shall not use such Confidential Information in any manner whatsoever unless
(i) required by Law, or (ii) the prior consent of the other party has been
obtained.
(c) Subject to subsection (b), above, each party hereto shall use
at least the same level of diligence as it uses to protect its own proprietary
information and trade secrets to protect and maintain the confidence of any
Confidential Information in such party's possession or known to such party
relating to the other parties hereto, which shall not, in any event, be less
than a reasonable level of diligence in the circumstances.
(d) Upon the termination of this Agreement, any party may by
notice to any other party request the return or destruction of Confidential
Information held by such other party and the parties agree to return or destroy
such Confidential Information within 10 days following receipt of such notice
(or, in the case of Confidential Information which cannot with due diligence be
returned or destroyed within such 10 day period, such longer period as may be
reasonably necessary to return or destroy such Confidential Information).
(e) The covenants contained in this Section 7.4 shall survive the
termination of this Agreement.
7.5 Meetings. ITI and EduTrek shall each duly call a meeting of
its shareholders entitled to vote to be held as promptly as practicable after
the later of the date on which the SEC has indicated that it has no further
comments on the Joint Proxy Statement and the date on which the Interim Order is
obtained, for the purpose of (a) in the case of ITI, voting upon the Plan of
Arrangement and the transactions contemplated hereby and thereby, and (b) in the
case of EduTrek, voting upon (i) a proposal to approve the issuance of such
number of shares of EduTrek Common Stock as are necessary to consummate the
Arrangement, (ii) a proposal to adopt the EduTrek Restated Charter and (iii)
such other matters relating to the Arrangement, if any, as shall be legally
required in the reasonable opinion of EduTrek. Each party shall, subject to
Section 4.2 in the case of ITI, through its board of directors, recommend to its
shareholders approval of such matters, shall coordinate and cooperate with
respect to the timing of such meetings and shall use its reasonable best efforts
to solicit proxies from its shareholders in favour of the approval of the
Arrangement and such other matters to be approved at the meetings and take all
other action as may be reasonably necessary or advisable to secure the consent
or approval of shareholders required by applicable law.
7.6 The Closing. Subject to the termination of this Agreement as
provided in Article VI and to the satisfaction or waiver of the conditions set
forth in Article V, the Closing of the transactions contemplated by this
Agreement (the "Closing") will take place at the offices of Smith, Gambrell &
Russell, LLP, Suite 3100, Promenade II, 1230 Peachtree Street, N.E., Atlanta,
Georgia 30309-3592 on a date (the "Closing Date") and at a time to be mutually
agreed upon by the parties, which date shall be no later than the fifth
business day after all conditions to Closing set forth herein shall have been
satisfied or waived, unless another place, time and date is mutually selected
by ITI and EduTrek. Concurrently with the Closing, the Plan of Arrangement will
be filed with the Director under the CBCA.
7.7 Management of ITI. At the Closing all of the directors of ITI
other than Daniel Potter and Gary Blandford shall resign from office and
EduTrek, as sole holder of ITI Common Shares, shall establish the size of ITI's
board of directors at 5 for the time being and shall appoint 3 individuals,
each qualified to act as a director under the CBCA, as a director of ITI.
Officers of ITI who serve in such capacity on a full-time basis will be
retained in their positions (at the pleasure of the board of directors),
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and officers who serve in such capacity on a part-time basis will not be
retained in their positions by ITI unless otherwise decided by the board of
directors after the Closing.
7.8 Ancillary Documents/Reservation of Shares.
(a) Provided all other conditions of this Agreement have been
satisfied or waived, ITI shall, on the Closing Date, file Articles of
Arrangement pursuant to Part XV of the CBCA to give effect to the Plan of
Arrangement, such Articles of Arrangement to contain share conditions for
Exchangeable Shares substantially in the form of those contained in Exhibit A.
(b) On the Effective Date:
(i) EduTrek and ITI shall execute and deliver a Support
Agreement substantially in the form of Exhibit B, and containing such
other terms and conditions as may be agreed to by the parties hereto
acting reasonably;
(ii) EduTrek, ITI and a Canadian trust company to be
mutually agreeable to EduTrek and ITI, acting reasonably, shall execute
and deliver a Voting and Exchange Trust Agreement substantially in the
form of Exhibit C, and containing such other terms and conditions as
may be agreed to by the parties hereto acting reasonably; and
(iii) EduTrek shall file with the corporate authorities of
the State of Georgia its Amended and Restated Articles of
Incorporation referred to in Section 1.5.
(c) On or before the Effective Date, EduTrek will reserve for
issuance such number of shares of EduTrek Common Stock as shall be necessary to
give effect to the exchanges and assumptions or exchanges of options
contemplated hereby.
7.9 ITI Stock Purchase Plan. ITI shall take such actions as are
necessary to ensure that no ITI Common Shares or Exchangeable Shares are issued
by ITI pursuant to ITI's stock purchase plan (the "ITI Stock Purchase Plan")
during the period beginning on the date of this Agreement and ending on the
first day following such time as results covering at least 30 days of combined
operations of EduTrek and ITI have been published by EduTrek, in the form of a
quarterly earnings report, an effective registration statement filed with the
SEC, a report to the SEC on form 10-K, 10-Q or 8-K, or any other public filing
or announcement which includes the results of at least 30 days of combined
operations.
7.10 Conversion of Options. Promptly after the Effective Time,
EduTrek will notify in writing each holder of an ITI Option of the conversion of
such ITI Option for an option to purchase shares of EduTrek Common Stock in
accordance with Section 2.1(j) of the Plan of Arrangement.
7.11 Indemnification and Related Matters.
(a) From and after the Effective Time, EduTrek and ITI, jointly
and severally, shall and shall cause ITI to indemnify and hold harmless to the
fullest extent permitted under the CBCA, each director or officer or former
director or officer of ITI or any of the ITI Subsidiaries (each such person, an
"Indemnified Party") against any costs and expenses (including reasonable
attorney's fees), judgments, fines, losses, claims, damages and liabilities,
and amounts paid in settlement thereof with the consent of the indemnifying
party, in connection with any actual or threatened claim, action, suit,
proceeding or
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investigation that is based on, or arises out of, the fact that such person is
or was a director or officer of ITI or any ITI Subsidiary (including without
limitation with respect to any of the transactions contemplated hereby or the
Arrangement) or who is serving or who served at ITI's or any of the ITI
Subsidiaries' request as a director, officer, employee, agent or representative
of another corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise, except for any claim, action, suit, proceeding or
investigation arising or resulting from such person's gross negligence, bad
faith or willful misconduct. In the event of any such claim, action, suit,
proceeding or investigation, EduTrek shall cause ITI to pay the reasonable fees
and expenses of counsel in advance of the final disposition of any such claim,
action, suit, proceeding or investigation to the fullest extent permitted by
law subject to the limitations imposed by the CBCA. Without limiting the
foregoing, in the event any such claim, action, suit, proceeding or
investigation is brought against any Indemnified Parties, (i) the Indemnified
Parties may retain counsel reasonably satisfactory to EduTrek and, subject to
limitations imposed by the CBCA, ITI shall (or EduTrek shall cause ITI to) pay
all reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; and (ii) EduTrek will use all
reasonable efforts to assist in the defense of such matter; provided, however,
that neither ITI nor EduTrek shall be liable for any settlement effected
without its prior written consent which shall not be unreasonably withheld. Any
Indemnified Party wishing to claim indemnification under this Section 7.11(a),
upon learning of any such claim, action, suit, proceeding or investigation,
shall notify EduTrek (but the failure to so notify shall not relieve a party
from any liability which it may have under this Section 7.11(a) except to the
extent such failure prejudices such party). The Indemnified Parties as a group
may retain only one law firm in any jurisdiction to represent them with respect
to each such matter unless such counsel determines that there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Indemnified Parties, in which
event such additional counsel may be required to be retained by the Indemnified
Parties.
(b) Subject to limitations imposed by the CBCA, ITI shall (or
EduTrek shall cause ITI to) pay all expenses, including reasonable attorney's
fees, as the same may be incurred by any Indemnified Parties in any action by
any Indemnified Party or parties seeking to enforce the indemnity or other
obligations provided for in this Section 7.11, provided, however, that ITI will
be entitled to reimbursement for any advances made under this Section 7.11 to
any Indemnified Party who ultimately proves unsuccessful in enforcing the
indemnity as finally determined by a non-appealable judgment in a court of
competent jurisdiction, and payment of such expenses in advance of the final
disposition of the action shall be made only upon receipt of any undertaking by
the Indemnified Party to reimburse all amounts advanced if such action
ultimately proves unsuccessful.
(c) For a period of three years after the Effective Date, EduTrek
shall continue in effect director and officer liability insurance for the
benefit of the Indemnified Parties in such amounts, and with such deductibles,
retained amounts, coverages and exclusions as EduTrek shall provide for its own
directors and officers during such period.
(d) This Section 7.11, which shall survive the consummation of
this Agreement and the Arrangement, is intended to benefit each person or entity
indemnified hereunder.
7.12 Affiliate Agreements.
(a) To ensure that the Arrangement will be accounted for as a
"pooling of interests" and to ensure compliance with Rule 145 of the rules and
regulations promulgated by the SEC and the Securities Act, on or before the date
the Joint Proxy Statement is first mailed to each company's respective
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shareholders entitled to vote ITI will use its reasonable best efforts to have
its Affiliates sign and deliver to EduTrek the ITI affiliate agreements in the
form of Exhibit E. For purposes of this Agreement, an "Affiliate" shall have
the meaning referred to in Rule 145 under the Securities Act.
(b) To ensure that the Arrangement will be accounted for as a
"pooling of interests" on or before the date the Joint Proxy Statement is first
mailed to each company's respective shareholders entitled to vote EduTrek will
use its reasonable best efforts to have each of its Affiliates as it deems
necessary sign and deliver to EduTrek the EduTrek affiliate agreements in the
form of Exhibit F.
7.13 Pooling of Interests. Each of EduTrek and ITI agrees not to
take any action that would adversely affect the ability of EduTrek to treat the
Arrangement as a pooling of interests under United States generally accepted
accounting principles.
7.14 Delivery of EduTrek Common Stock. All shares of EduTrek
Common Stock issued upon the exchange of Exchangeable Shares and the exercise
of options obtained upon conversion of the ITI Options pursuant to the
Arrangement will be duly issued as fully paid and non-assessable, will not be
issued in violation of the terms of any agreement or other understanding binding
upon EduTrek and will be issued in compliance with all applicable charter
documents of EduTrek and all applicable federal, state and foreign laws, rules
and regulations and shall be free and clear of any lien, claim, encumbrance,
security interest or adverse claim or interest.
ARTICLE VIII
MISCELLANEOUS
8.1 No Survival of Representations and Warranties. All
representations and warranties of the parties contained in this Agreement will
remain operative and in full force and effect, regardless of any investigation
made by or on behalf of the parties to this Agreement, until the earlier of the
valid termination of this Agreement or the Closing Date, whereupon such
representations and warranties will expire and be of no further force or effect.
All agreements and covenants of the parties shall survive the Closing Date,
except as otherwise set forth in this Agreement.
8.2 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or by recognized
overnight courier, by facsimile (receipt confirmed) or mailed by certified mail
(return receipt requested) to the parties at the following addresses (or at such
other address for a part) as shall be specified by like notice):
(a) if to EduTrek to: EduTrek International, Inc., 3340
Peachtree Road, Suite 2000, Atlanta, Georgia, USA 30326, Attention: Mr.
R. Steven Bostic, Chairman and Chief Executive Officer, Facsimile No.
(404) 812-8204, with required copies to Smith, Gambrell & Russell, LLP,
Suite 3100, Promenade II, 1230 Peachtree Street, N.E., Atlanta,
Georgia, USA 30309-3592, Attention: A. Jay Schwartz, Esq., Facsimile
No. (404) 685-6932, and to Blake, Cassels & Graydon, Suite 2800, Box
25, Commerce Court West, Toronto, Ontario, Canada M5L 1A9, Attention:
Ms Pamela S. Hughes, Facsimile No. (416) 863-2653.
(b) if to ITI to: ITI Education Corporation, 1791
Barrington Street, Suite 1400, Halifax, Nova Scotia, Canada B3J 3K9,
Attention: Mr. Daniel F. Potter, Chairman and Chief Executive Officer,
Facsimile No. (902) 492-2288, with required copies to Stewart McKelvey
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Stirling Scales, Purdy's Wharf, Tower One, 1959 Upper Water Street,
Halifax, Nova Scotia, Canada B3J 2X2, Attention: Mr. R. Blois Colpitts,
Facsimile No. (902) 496-6183.
8.3 Interpretation. When a reference is made in this Agreement to
Sections or Exhibits, such reference shall be to a Section or Exhibit to this
Agreement unless otherwise indicated. The words "include," "includes" and
"including" when used therein shall be deemed in each case to be followed by
the words "without limitation." The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
8.4 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance is held invalid or
unenforceable in any jurisdiction, the remainder hereof, and the application of
such provision to such person or circumstance in any other jurisdiction or to
other persons or circumstances in any jurisdiction, shall not be affected
thereby, and to this end the provisions of this Agreement shall be severable.
8.5 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to each of the other parties, it being understood
that all parties need not sign the same counterpart.
8.6 Miscellaneous. This Agreement, which includes the ITI
Disclosure Letter, the EduTrek Disclosure Letter and the Exhibits hereto and the
ITI Shareholder Agreements and any other documents referred to herein or
contemplated hereby (a) constitute the entire agreement between the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, (b) are not intended to confer upon any other person any
rights or remedies hereunder (except that Section 7.11 is for the benefit of
ITI's directors and officers and is intended to confer rights on such persons);
and (c) shall not be assigned by operation of law or otherwise except as
otherwise specifically provided herein.
8.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia (regardless of the
laws that might otherwise govern under applicable principles of conflicts of
law) as to all matters, including without limitation validity, construction,
effect, performance and remedies.
8.8 Amendment and Waivers. Any term or provision of this
Agreement may be amended, and the observance of any term of this Agreement may
be waived (either generally or in a particular instance and either retroactively
or prospectively) only by a writing signed by the party to be bound thereby. The
waiver by a party of any breach hereof or default in the performance hereof will
not be deemed to constitute a waiver of any other default or any succeeding
breach or default. This Agreement may be amended by the parties hereto at any
time before or after approval of the ITI shareholders or the EduTrek
shareholders, but, after such approval, no amendment will be made which by
applicable law requires the further approval of the ITI shareholders or the
EduTrek shareholders without obtaining such further approval.
8.9 Expenses. Except as otherwise provided herein, each party will
bear its respective expenses and legal fees incurred with respect to this
Agreement and the transactions contemplated hereby.
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IN WITNESS WHEREOF, EduTrek and ITI have caused this Agreement to be
signed by their respective officers duly authorized, all as of the date first
written above.
EDUTREK INTERNATIONAL, INC.
By: /s/ R. Steven Bostic
----------------------------------------
R. Steven Bostic
Chairman and Chief Executive Officer
ITI EDUCATION CORPORATION
By: /s/ Daniel F. Potter
-----------------------------------------
Name: Daniel F. Potter
Title: Chairman and Chief Executive Officer
By: /s/ Gary S. Blanford
-----------------------------------------
Name: Gary S. Blanford
Title: President and Chief Operating Officer
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EXHIBIT A
PLAN OF ARRANGEMENT
UNDER SECTION 192
OF THE CANADA BUSINESS CORPORATIONS ACT
INVOLVING AND AFFECTING ITI EDUCATION CORPORATION
AND THE HOLDERS OF ITS COMMON SHARES AND OPTIONS
ARTICLE 1
INTERPRETATION
SECTION 1.1 DEFINITIONS. In this Plan of Arrangement unless there is
something in the subject matter or context inconsistent therewith, the
following terms shall have the respective meanings set out below and
grammatical variations of such terms shall have corresponding meanings:
"ARRANGEMENT" means the arrangement under section 192 of the CBCA on
the terms and subject to the conditions set out in this Plan of Arrangement,
subject to any amendments thereto made (i) in accordance with Section 8.8 of
the Combination Agreement, (ii) in accordance with Section 6.1 hereof or (iii)
at the direction of the Court in the Final Order,
"ARRANGEMENT RESOLUTION" means the special resolution passed by the
holders of the ITI Common Shares at the Meeting;
"AUTOMATIC REDEMPTION DATE" has the meaning provided in the
Exchangeable Share Provisions;
"AVERAGE CLOSING PRICE" means the average closing price (computed and
rounded to the third decimal point) of shares of EduTrek Common Stock on Nasdaq
during the 10 trading days ending on the last trading day prior to the
Effective Date;
"BUSINESS DAY" has the meaning provided in the Exchangeable Share
Provisions,
"CBCA" means the Canada Business Corporations Act;
"CLASS A PREFERRED SHARE" means the one authorized Class A Preferred
Share of ITI having the rights, privileges, restrictions and conditions set out
in Appendix A annexed hereto;
"COMBINATION AGREEMENT" means the agreement by and among EduTrek and
ITI, dated as of December 10, 1997, as amended and restated from time to time,
providing for, among other things, this Plan of Arrangement and the
Arrangement;
"COURT" means the Supreme Court of Nova Scotia;
"DEPOSITARY" means [ TRUST COMPANY] at its principal transfer
office in Halifax, Nova Scotia;
"DISSENT PROCEDURES" has the meaning set out in Section 3.1;
"EDUTREK" means EduTrek International, Inc., a corporation
incorporated under the laws of Georgia;
"EDUTREK COMMON STOCK" has the meaning provided in the Exchangeable
Share Provisions;
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"EFFECTIVE DATE" means the date shown on the certificate of
arrangement issued by the Director under the CBCA giving effect to the
Arrangement;
"EFFECTIVE TIME" means 12:01 a.m. (Nova Scotia time) on the Effective
Date;
"EXCHANGE PUT RIGHT" has the meaning provided in the Exchangeable
Share Provisions;
"EXCHANGE RATIO" means the ratio of exchange of Exchangeable Shares
for ITI Common Shares, as specified in the Combination Agreement and subject to
adjustment as provided therein;
"EXCHANGEABLE SHARE CONSIDERATION" has the meaning provided in the
Exchangeable Share Provisions;
"EXCHANGEABLE SHARE PRICE" has the meaning provided in the
Exchangeable Share Provisions;
"EXCHANGEABLE SHARE PROVISIONS" means the rights, privileges,
restrictions and conditions attaching to the Exchangeable Shares, which are set
forth in Appendix A hereto;
"EXCHANGEABLE SHARES" means the Exchangeable Shares in the capital of
ITI provided for in this Plan of Arrangement;
"FINAL ORDER" means the final order of the Court approving the
Arrangement;
"ITI" means ITI Education Corporation, a corporation existing under
the CBCA;
"ITI COMMON SHARES" means the common shares in the capital of ITI;
"ITI STOCK OPTION PLAN" means the stock option plan of ITI approved by
The Montreal Exchange, as amended by the Board of Directors of ITI on October
27, 1997 (subject to the approval of the shareholders of ITI);
"LIQUIDATION AMOUNT" has the meaning provided in the Exchangeable
Share Provisions;
"LIQUIDATION CALL PURCHASE PRICE" has the meaning provided in Section
5.1;
"LIQUIDATION CALL RIGHT" has the meaning provided in Section 5.1;
"LIQUIDATION DATE" has the meaning provided in the Exchangeable Share
Provisions;
"MEETING" means the annual and special general meeting of the
shareholders of ITI to be held to consider this Plan of Arrangement;
"NASDAQ" means the Nasdaq National Market;
"OPTIONS" means all options to purchase ITI Common Shares outstanding
as at the Effective Date under the ITI Stock Option Plan;
"OPTIONHOLDERS" means holders of Options;
"PROXY STATEMENT" means the Joint Management Information Circular and
Proxy Statement of EduTrek and ITI prepared in connection with the Arrangement;
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<PAGE> 45
"PURCHASE PRICE" has the meaning provided in the Exchangeable Share
Provisions;
"REDEMPTION CALL PURCHASE PRICE" has the meaning provided in Section
5.2;
"REDEMPTION CALL RIGHT" has the meaning provided in Section 5.2;
"REDEMPTION PRICE" has the meaning provided in the Exchangeable Share
Provisions;
"RETRACTED SHARES" has the meaning provided in the Exchangeable Share
Provisions;
"RETRACTION CALL RIGHT" has the meaning provided in the Exchangeable
Share Provisions;
"RETRACTION REQUEST" has the meaning provided in the Exchangeable
Share Provisions;
"SUBSIDIARY" has the meaning provided in the Exchangeable Share
Provisions;
"TRANSFER AGENT" means the duly appointed transfer agent for the time
being of the Exchangeable Shares, and if there is more than one such agent then
the principal Canadian agent; and
"VOTING AND EXCHANGE TRUST AGREEMENT" means the agreement so entitled
between EduTrek, ITI and the Trustee named therein to be dated as of the
Effective Date and provided for in the Combination Agreement, as amended from
time to time.
SECTION 1.2 SECTIONS, HEADINGS AND APPENDIXES. The division of this Plan of
Arrangement into sections and the insertion of headings are for reference
purposes only and shall not affect the interpretation of this Plan of
Arrangement. Unless otherwise indicated, any reference in this Plan of
Arrangement to a section or an Appendix refers to the specified section of or
Appendix to this Plan of Arrangement. The Appendices are incorporated herein
and are part hereof.
SECTION 1.3 NUMBER, GENDER AND PERSONS. In this Plan of Arrangement, unless
the context otherwise requires, words importing the singular number include the
plural and vice versa, words importing any gender include all genders and words
importing persons include individuals, bodies corporate, partnerships,
associations, trusts, unincorporated organizations, governmental bodies and
other legal or business entities of any kind.
SECTION 1.4 DATE FOR ANY ACTION. In the event that any date on or by which
any action is required or permitted to be taken hereunder is not a Business
Day, such action shall be required or permitted to be taken on or by the next
succeeding day which is a Business Day.
SECTION 1.5 CURRENCY. Unless otherwise expressly stated herein, all
references to currency and payments in cash or money in this Plan of
Arrangement are to United States dollars.
SECTION 1.6 STATUTORY REFERENCES. Any reference in this Plan of Arrangement
to a statute includes such statute as amended, consolidated or re-enacted from
time to time, all regulations made thereunder, all amendments to such
regulations from time to time, and any statute or regulation which supersedes
such statute or regulations.
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ARTICLE 2
ARRANGEMENT
SECTION 2.1 ARRANGEMENT. At the Effective Time on the Effective Date, the
following reorganization of capital and other transactions shall occur and
shall be deemed to occur in the following order without any further act or
formality:
(a) The Articles of Incorporation of ITI shall be amended to create
and authorize an unlimited number of Exchangeable Shares and one Class A
Preferred Share.
(b) ITI shall issue to EduTrek one Class A Preferred Share in
consideration of the issuance to ITI of one share of EduTrek Common Stock. The
stated capital of the Class A Preferred Share shall be equal to the fair market
value, as determined by the board of directors of ITI, of a share of EduTrek
Common Stock. No certificate shall be issued in respect of the Class A
Preferred Share.
(c) Each ITI Common Share (other than ITI Common Shares held by
holders who have exercised their rights of dissent in accordance with Section
3.1 hereof and who are ultimately entitled to be paid the fair value for such
shares and other than ITI Common Shares held by EduTrek or any Subsidiary
thereof) will be exchanged at the Exchange Ratio for a number of Exchangeable
Shares, and each such holder thereof will receive a whole number of
Exchangeable Shares resulting therefrom and the rights under the Voting and
Exchange Trust Agreement granted upon such exchange. In lieu of fractional
Exchangeable Shares, each such holder who otherwise would be entitled to
receive a fraction of an Exchangeable Share on the exchange shall be paid by
ITI an amount determined as set forth in Section 4.3.
(d) Upon the exchange referred to in subsection (c) above, each such
holder of an ITI Common Share shall cease to be such a holder, shall have his
name removed from the register of holders of ITI Common Shares and shall become
a holder of the number of fully paid Exchangeable Shares to which he is
entitled as a result of the exchange referred to in subsection (c), and such
holder's name shall be added to the register of holders of Exchangeable Shares
accordingly.
(e) The aggregate stated capital of the Exchangeable Shares will be
equal to the aggregate stated capital immediately prior to the Effective Date
of the ITI Common Shares which are exchanged pursuant to subsection (c) above,
thereby excluding the stated capital attributable to the fractional shares for
which payment is made as contemplated in subsection (c) above.
(f) The Articles of Incorporation of ITI shall be amended to reduce
the number of authorized ITI Common Shares to one and the rights, privileges,
restrictions and conditions attaching to the ITI Common Shares shall be changed
and restated as set forth in Appendix A.
(g) The one outstanding Class A Preferred Share will be exchanged
for one fully paid and non-assessable ITI Common Share and the holder thereof
shall cease to be a holder of the Class A Preferred Share, shall have its name
removed from the register of holders of Class A Preferred Shares and shall
become a holder of the ITI Common Share to which it is entitled as a result of
the exchange referred to in this subsection (g), and such holder's name shall
be added to the register as holder of the ITI Common Share accordingly.
(h) The stated capital of the one ITI Common Share shall be equal to
the stated capital of the one Class A Preferred Share immediately prior to the
exchange contemplated in subsection (g).
(i) The Articles of Incorporation of ITI shall be amended to delete
the Class A Preferred Share from the authorized share capital so that, after
giving effect to the foregoing provisions of this Section 2.1, the authorized
capital of ITI shall consist of an unlimited number of Exchangeable Shares
having the rights,
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privileges, restrictions and conditions set forth in Appendix A hereto and one
Common Share having the rights, privileges, restrictions and conditions set
forth in Appendix A hereto.
(j) Each of the then outstanding Options will, without any further
action on the part of any Optionholder, be converted into an option to purchase
the number of shares of EduTrek Common Stock equal to the number determined by
multiplying the number of ITI Common Shares subject to such Option at the
Effective Time by the Exchange Ratio, at an exercise price per share of EduTrek
Common Stock equal to the exercise price per ITI Common Share of such Option
immediately prior to the Effective Time divided by the Exchange Ratio. If the
foregoing calculation results in a converted Option being exercisable for a
fraction of a share of EduTrek Common Stock, then the number of shares of
EduTrek Common Stock subject to such Option will be rounded down to the nearest
whole number of shares, and the exercise price per whole share of EduTrek
Common Stock will be as determined above. The ITI Options as so converted will
(without further action on the part of the Optionholders) be further modified
as necessary to effect such conversion; provided, however, the term,
exercisability, vesting schedule, and all other terms and conditions of the
Options will otherwise be unchanged by the provisions of this paragraph (j) and
shall operate in accordance with their terms. The obligations of ITI under the
ITI Options as so converted shall be assumed by EduTrek.
ARTICLE 3
RIGHTS OF DISSENT
SECTION 3.1 RIGHTS OF DISSENT. Holders of ITI Common Shares may exercise
rights of dissent with respect to such shares pursuant to and in the manner set
forth in section 190 of the CBCA and this Section 3.1 (the "Dissent
Procedures") in connection with the Arrangement, and holders who duly exercise
such rights of dissent and who:
(a) are ultimately entitled to be paid fair value for the ITI Common
Shares shall be deemed to have transferred such ITI Common Shares to
ITI for cancellation on the Effective Date; or
(b) are ultimately not entitled, for any reason, to be paid the fair
value for their ITI Common Shares shall be deemed to have participated
in the Arrangement on the same basis as any nondissenting holder of
ITI Common Shares,
but in no case shall ITI be required to recognize such holders as holders of
ITI Common Shares on and after the Effective Date, and the names of such
persons shall be deleted from the register of holders of ITI Common Shares on
the Effective Date.
ARTICLE 4
CERTIFICATES AND FRACTIONAL SHARES
SECTION 4.1 ISSUANCE OF CERTIFICATES REPRESENTING EXCHANGEABLE SHARES. At or
promptly after the Effective Time, ITI shall deposit with the Depositary, for
the benefit of the holders of ITI Common Shares exchanged pursuant to
subsection 2.1(c), certificates representing the Exchangeable Shares exchanged
for ITI Common Shares pursuant to subsection 2.1(c). Upon surrender to the
Depositary of a certificate which immediately prior to the Effective Time
represented outstanding ITI Common Shares together with such other documents
and instruments as would have been required to effect the transfer of the
shares formerly represented by such certificate under the CBCA and the by-laws
of ITI and such additional documents and instruments as the Depositary may
reasonably require, the holder of such surrendered certificate shall be
entitled to receive in exchange therefor, and the Depositary shall deliver to
such holder, a certificate representing that number (rounded down to the
nearest whole number) of Exchangeable Shares which such holder has the right to
receive (together with any dividends or distributions with respect thereto
pursuant to Section 4.2 and any cash in lieu of
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fractional Exchangeable Shares pursuant to Section 4.3), and the certificate so
surrendered shall forthwith be cancelled. In the event of a transfer of
ownership of ITI Common Shares which is not registered in the transfer records
of ITI, a certificate representing the proper number of Exchangeable Shares may
be issued to a transferee if the certificate representing such ITI Common
Shares is presented to the Depositary, accompanied by all documents required to
evidence and effect such transfer. Until surrendered as contemplated by this
Section 4.1, each certificate which immediately prior to the Effective Time
represented outstanding ITI Common Shares, shall be deemed at any time after
the Effective Time, but subject to Section 4.5, to represent only the right to
receive upon such surrender (a) the certificate representing Exchangeable
Shares as contemplated by this Section 4.1, (b) a cash payment in lieu of any
fractional Exchangeable Shares as contemplated by Section 4.3 and (c) any
dividends or distributions with a record date after the Effective Time
theretofore paid or payable with respect to Exchangeable Shares as contemplated
by Section 4.2.
SECTION 4.2 DISTRIBUTIONS WITH RESPECT TO UNSURRENDERED CERTIFICATES. No
dividends or other distributions declared or made after the Effective Time with
respect to Exchangeable Shares with a record date after the Effective Time
shall be paid to the holder of any formerly outstanding ITI Common Shares which
were exchanged pursuant to Section 2.1, and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section 4.3,
unless and until the certificate representing such shares shall be surrendered
in accordance with Section 4.1. Subject to applicable law and to Section 4.5,
at the time of such surrender of any such certificate (or, in the case of
clause (c) below, at the appropriate payment date), there shall be paid to the
holder of the Exchangeable Shares resulting from exchange, in all cases without
interest, (a) the amount of any cash payable in lieu of a fractional
Exchangeable Share to which such holder is entitled pursuant to Section 4.3,
(b) the amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such Exchangeable Shares, and
(c) the amount of dividends or other distributions with a record date after the
Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such Exchangeable Shares.
SECTION 4.3 NO FRACTIONAL SHARES. No certificates or scrip representing
fractional Exchangeable Shares shall be issued upon the surrender for exchange
of certificates pursuant to Section 4.1, and such fractional interests shall
not entitle the owner thereof to vote or to possess or exercise any rights as a
security holder of ITI or EduTrek. In lieu of any such fractional interests,
each person entitled thereto will receive an amount of cash (rounded to the
nearest whole cent), without interest, equal to the product of (a) such
fractional interest, multiplied by (b) the Average Closing Price, such amount
to be provided to the Depositary by ITI upon request.
SECTION 4.4 LOST CERTIFICATES. If any certificate which immediately prior to
the Effective Time represented outstanding ITI Common Shares which were
exchanged pursuant to Section 2.1 has been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming such certificate to
be lost, stolen or destroyed, the Depositary will issue in exchange for such
lost, stolen or destroyed certificate, certificates representing Exchangeable
Shares (and any dividends or distributions with respect thereto and any cash
pursuant to Section 4.3) deliverable in respect thereof as determined in
accordance with Section 2.1. When authorizing such payment in exchange for any
lost, stolen or destroyed certificate, the person to whom certificates
representing Exchangeable Shares are to be issued shall, as a condition
precedent to the issuance thereof, give a bond satisfactory to ITI, EduTrek and
the Transfer Agent, as the case may be, in such sum as ITI may direct or
otherwise indemnify ITI and EduTrek in a manner satisfactory to ITI and EduTrek
and the Transfer Agent against any claim that may be made against ITI, EduTrek
or the Transfer Agent with respect to the certificate alleged to have been
lost, stolen or destroyed.
SECTION 4.5 EXTINGUISHMENT OF RIGHTS. Any certificate which immediately
prior to the Effective Time represented outstanding ITI Common Shares which
were exchanged pursuant to Section 2.1 and which has not been surrendered, with
all other instruments required by Section 4.1, on or prior to the tenth
anniversary of the Effective Date shall cease to represent a claim or interest
of any kind or nature as a shareholder of ITI. On such date, the Exchangeable
Shares to which the former registered holder of the certificate referred to in
the
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preceding sentence was ultimately entitled shall be deemed to have been
surrendered to ITI, together with all entitlements to dividends, distributions
and any cash pursuant to Section 4.3 and interest thereon held for such former
registered holder, for no consideration and shall thereupon be cancelled and
the name of the former registered holder shall be removed from the register of
holders of such shares.
ARTICLE 5
CERTAIN RIGHTS AND OBLIGATIONS OF
EDUTREK TO ACQUIRE EXCHANGEABLE SHARES
SECTION 5.1 EDUTREK LIQUIDATION CALL RIGHT.
(a) EduTrek shall have the overriding right (the "LIQUIDATION
CALL RIGHT"), in the event of and notwithstanding the proposed
liquidation, dissolution or winding-up of ITI as referred to in
Article 5 of the Exchangeable Share Provisions, to purchase from all
but not less than all of the holders (other than EduTrek and any
Subsidiary thereof) of Exchangeable Shares on the Liquidation Date all
but not less than all of the Exchangeable Shares held by such holders
on payment by EduTrek to each holder of the Exchangeable Share Price
applicable on the last Business Day prior to the Liquidation Date (the
"LIQUIDATION CALL PURCHASE PRICE"). In the event of the exercise of
the Liquidation Call Right by EduTrek, each holder shall be obligated
to sell all the Exchangeable Shares held by the holder to EduTrek on
the Liquidation Date on payment by EduTrek to the holder of the
Liquidation Call Purchase Price for each such share.
(b) To exercise the Liquidation Call Right, EduTrek must
notify the Transfer Agent, as agent for the holders of Exchangeable
Shares, and ITI in writing of EduTrek's intention to exercise such
right at least 55 days before the Liquidation Date in the case of a
voluntary liquidation, dissolution or winding-up of ITI and at least
five Business Days before the Liquidation Date in the case of an
involuntary liquidation, dissolution or winding-up of ITI. The
Transfer Agent will notify the holders of Exchangeable Shares as to
whether or not EduTrek has exercised the Liquidation Call Right
forthwith after the expiry of the date by which the same may be
exercised by EduTrek. If EduTrek exercises the Liquidation Call Right,
on the Liquidation Date EduTrek will purchase and the holders will
sell all of the Exchangeable Shares then outstanding for a price per
share equal to the Liquidation Call Purchase Price.
(c) For the purposes of completing the purchase of the
Exchangeable Shares pursuant to the Liquidation Call Right, EduTrek
shall deposit with the Transfer Agent, on or before the Liquidation
Date, the Exchangeable Share Consideration representing the total
Liquidation Call Purchase Price for all Exchangeable Shares. Provided
that such Exchangeable Share Consideration has been so deposited with
the Transfer Agent, on and after the Liquidation Date the right of
each holder of Exchangeable Shares will be limited to receiving such
holder's proportionate part of the total Liquidation Call Purchase
Price for all Exchangeable Shares payable by EduTrek without interest
upon presentation and surrender by the holder of certificates
representing the Exchangeable Shares held by such holder and the
holder shall on and after the Liquidation Date be considered and
deemed for all purposes to be the holder of the shares of EduTrek
Common Stock delivered or deliverable to it. Upon surrender to the
Transfer Agent of a certificate or certificates representing
Exchangeable Shares, together with such other documents and
instruments as may be required to effect a transfer of Exchangeable
Shares under the CBCA and the by-laws of ITI and such additional
documents and instruments as the Transfer Agent may reasonably
require, the holder of such surrendered certificate or certificates
shall be entitled to receive in exchange therefor, and the Transfer
Agent on behalf of EduTrek shall deliver to such holder, the
Exchangeable Share Consideration to which the holder is entitled. If
EduTrek does not exercise the Liquidation Call Right in the manner
described above, on the Liquidation Date the holders of the
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Exchangeable Shares will be entitled to receive in exchange therefor
the Liquidation Amount otherwise payable by ITI in connection with the
liquidation, dissolution or winding-up of ITI pursuant to Article 5 of
the Exchangeable Share Provisions. Notwithstanding the foregoing,
until such Liquidation Amount is paid to the holder, the holder shall
be deemed to still be a holder of Exchangeable Shares for purposes of
all voting rights with respect thereto under the Voting and Exchange
Trust Agreement.
SECTION 5.2 EDUTREK REDEMPTION CALL RIGHT.
(a) EduTrek shall have the overriding right (the "REDEMPTION
CALL RIGHT"), notwithstanding the proposed redemption of the
Exchangeable Shares by ITI pursuant to Article 7 of the Exchangeable
Share Provisions, to purchase from all but not less than all of the
holders (other than EduTrek or any Subsidiary thereof) of Exchangeable
Shares on the Automatic Redemption Date all but not less than all of
the Exchangeable Shares held by each such holder on payment by EduTrek
to the holder of the Exchangeable Share Price applicable on the last
Business Day prior to the Automatic Redemption Date (the "REDEMPTION
CALL PURCHASE PRICE"). In the event of the exercise of the Redemption
Call Right by EduTrek, each holder shall be obligated to sell all the
Exchangeable Shares held by the holder to EduTrek on the Automatic
Redemption Date on payment by EduTrek to the holder of the Redemption
Call Purchase Price for each such share.
(b) To exercise the Redemption Call Right, EduTrek must
notify the Transfer Agent as agent for the holders of Exchangeable
Shares, and ITI in writing of EduTrek's intention to exercise such
right not more than five Business Days after the date by which ITI is
required to give notice of the Automatic Redemption Date. If EduTrek
exercises the Redemption Call Right, on the Automatic Redemption Date
EduTrek will purchase and the holders will sell all of the
Exchangeable Shares then Outstanding for a price per share equal to
the Redemption Call Purchase Price.
(c) For the purposes of completing the purchase of the
Exchangeable Shares pursuant to the Redemption Call Right, EduTrek
shall deposit with the Transfer Agent, on or before the Automatic
Redemption Date, the Exchangeable Share Consideration representing the
total Redemption Call Purchase Price for all Exchangeable Shares.
Provided that such Exchangeable Share Consideration has been so
deposited with the Transfer Agent, on and after the Automatic
Redemption Date the rights of each holder of Exchangeable Shares will
be limited to receiving such holder's proportionate part of the total
Redemption Call Purchase Price for all Exchangeable Shares without
interest payable by EduTrek upon presentation and surrender by the
holder of certificates representing the Exchangeable Shares held by
such holder and the holder shall on and after the Automatic Redemption
Date be considered and deemed for all purposes to be the holder of the
EduTrek Common Stock delivered or deliverable to such holder. Upon
surrender to the Transfer Agent of a certificate or certificates
representing Exchangeable Shares, together with such other documents
and instruments as may be required to effect a transfer of
Exchangeable Shares under the CBCA and the bylaws of ITI and such
additional documents and instruments as the Transfer Agent may
reasonably require, the holder of such surrendered certificate or
certificates shall be entitled to receive in exchange therefor, and
the Transfer Agent on behalf of EduTrek shall deliver to such holder,
the Exchangeable Share Consideration to which the holder is entitled.
If EduTrek does not exercise the Redemption Call Right in the manner
described above, on the Automatic Redemption Date the holders of the
Exchangeable Shares will be entitled to receive in exchange therefor
the Redemption Price otherwise payable by ITI in connection with the
redemption of the Exchangeable Shares pursuant to Article 7 of the
Exchangeable Share Provisions. Notwithstanding the foregoing, until
such Redemption Price is paid to the holder, the holder shall be
deemed to still be a holder of Exchangeable Shares for purposes of all
voting rights with respect thereto under the Voting and Exchange Trust
Agreement.
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SECTION 5.3 EDUTREK RETRACTION CALL RIGHT. Upon and subject to the terms and
conditions contained in the Exchangeable Share Provisions and the Voting and
Exchange Trust Agreement:
(a) EduTrek shall have the overriding right (the "RETRACTION
CALL RIGHT"), notwithstanding the proposed redemption of the
Exchangeable Shares by ITI pursuant to Article 6 of the Exchangeable
Share Provisions, to purchase from holders (other than EduTrek or any
Subsidiary thereof) of Exchangeable Shares all but not less than all
of the Retracted Shares held by such holder. The Retraction Request
shall be deemed to be a revocable offer by the holder to sell the
Retracted Shares to EduTrek in accordance with the Retraction Call
Right and the terms and conditions set out in Section 6.3 of the
Exchangeable Share Provisions, and
(b) upon the exercise by EduTrek of the Retraction Call Right
and provided that the Retraction Request has not been revoked by the
holder pursuant to Section 6.7 of the Exchangeable Share Provisions,
the holder shall be required to sell to EduTrek, and EduTrek shall be
required to purchase from the holder, no later than the time or times
prescribed therefor in the Exchangeable Share Provisions or the Voting
and Exchange Trust Agreement, the Retracted Shares, in consideration
of the payment by EduTrek of the Purchase Price applicable thereto by
delivery by or on behalf of EduTrek of the Exchangeable Share
Consideration representing the total applicable Purchase Price.
SECTION 5.4 EXCHANGE PUT RIGHT. Upon and subject to the terms and
conditions contained in the Exchangeable Share Provisions and the Voting and
Exchange Trust Agreement:
(a) a holder of Exchangeable Shares shall have the right (the
"EXCHANGE PUT RIGHT") at any time to require EduTrek to purchase all
or any part of the Exchangeable Shares of the holder, and
(b) upon the exercise by a holder of the Exchange Put Right
and provided that if the holder is a non-resident of Canada at that
time, the Exchangeable Shares are listed on a recognized Canadian
stock exchange or the holder provides to EduTrek a certificate
pursuant to Section 116 of the Income Tax Act (Canada) in form and
substance satisfactory to EduTrek, the holder shall be required to
sell to EduTrek, and EduTrek shall be required to purchase from the
holder, no later than the time or times prescribed therefor herein or
in the Exchangeable Share Provisions or the Voting and Exchange Trust
Agreement, that number of Exchangeable Shares in respect of which the
Exchange Put Right is exercised, in consideration of the payment by
EduTrek of the Exchangeable Share Price applicable thereto by delivery
by or on behalf of EduTrek of the Exchangeable Share Consideration
representing the total applicable Exchangeable Share Price.
ARTICLE 6
AMENDMENT
SECTION 6.1 PLAN OF ARRANGEMENT AMENDMENT. ITI reserves the right to amend,
modify and/or supplement this Plan of Arrangement at any time and from time to
time provided that any such amendment, modification, or supplement must be
contained in a written document that is (a) agreed to by EduTrek, (b) filed
with the Court and, if made following the Meeting, approved by the Court and
(c) communicated to holders of the ITI Common Share, Exchangeable Shares and
Options in the manner required by the Court (if so required).
Any amendment, modification or supplement to this Plan of Arrangement
may be proposed by ITI at any time prior to or at the Meeting (provided that
EduTrek shall have consented thereto) with or without any other prior notice or
communication, and if so proposed and accepted by the persons voting at the
Meeting (other than as may be required under the Court's interim order), shall
become part of this Plan of Arrangement for all purposes.
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Any amendment, modification or supplement to this Plan of Arrangement
which is approved by the Court following the Meeting shall be effective only
(a) if it is consented to by ITI, (b) if it is consented to by EduTrek and (c)
if required by the Court or applicable law, it is consented to by the holders
of the ITI Common Shares and the Exchangeable Shares as the case may be.
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APPENDIX A TO THE PLAN
OF ARRANGEMENT OF
ITI EDUCATION CORPORATION (THE "CORPORATION")
PROVISIONS ATTACHING TO THE CLASS A PREFERRED SHARE
The Class A Preferred Share in the capital of the Corporation shall
have the following rights, privileges, restrictions and conditions:
DIVIDENDS
Subject to the prior rights of the holders of any shares ranking
senior to the Class A Preferred Share with respect to priority in the payment
of dividends, the holder of the Class A Preferred Share shall be entitled to
receive dividends and the Corporation shall pay dividends thereon, as and when
declared by the board of directors of the Corporation as cumulative dividends
in the amount of $1.00 per share per annum payable annually on December 31 in
each year in arrears. Such dividends shall accrue from the date of issue of the
Class A Preferred Share to and including the date to which the computation of
dividends is to be made. A cheque for the amount of the dividend less any
required deduction shall be mailed by first class mail to the address of the
registered holder of the Class A Preferred Share.
DISSOLUTION
In the event of the liquidation, dissolution or winding-up of the
Corporation, whether voluntary or involuntary, or any other distribution of
assets of the Corporation among its shareholders for the purpose of winding-up
its affairs, subject to the prior rights of the holders of any shares ranking
senior to the Class A Preferred Share with respect to priority in the
distribution of assets upon liquidation, dissolution or winding-up, the holder
of the Class A Preferred Share shall be entitled to receive an amount equal to
the stated capital in respect of the Class A Preferred Share and dividends
remaining unpaid, including all cumulative dividends, whether or not declared.
After payment to the holder of the Class A Preferred Share of such amounts,
such holder shall not be entitled to share in any further distribution of the
assets of the Corporation.
VOTING RIGHTS
Except where specifically provided by the Canada Business Corporations
Act, the holder of the Class A Preferred Share shall not be entitled to receive
notice of or to attend meetings of the shareholders of the Corporation and
shall not be entitled to vote at any meeting of shareholders of the
Corporation.
PROVISIONS ATTACHING TO EXCHANGEABLE SHARES
The Exchangeable Shares in the capital of the Corporation shall have
the following rights, privileges, restrictions and conditions:
ARTICLE 1
INTERPRETATION
1.1 For the purposes of these rights, privileges, restrictions and
conditions:
"AGGREGATE EQUIVALENT VOTE AMOUNT" means, with respect to any matter,
proposition or question on which holders of shares of EduTrek Common Stock are
entitled to vote, consent or otherwise act, the product of
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(i) the number of Exchangeable Shares then issued and outstanding and
held by holders other than EduTrek and its Subsidiaries multiplied by (ii) the
number of votes to which a holder of one share of EduTrek Common Stock is
entitled with respect to such matter, proposition or question.
"AUTOMATIC REDEMPTION DATE" means the date for the automatic
redemption by the Corporation of Exchangeable Shares pursuant to Article 7 of
these share provisions, which date shall be the first to occur of (a) the fifth
anniversary of the Effective Date, (b) the date selected by the Board of
Directors at a time when less than 2% of the Exchangeable Shares exchanged or
exchangeable for the former common shares in the capital of the Corporation on
the Effective Date (other than Exchangeable Shares held by EduTrek and its
Subsidiaries and as such number of shares may be adjusted as deemed appropriate
by the Board of Directors to give effect to any subdivision or consolidation of
or stock dividend on the Exchangeable Shares, any issuance or distribution of
rights to acquire Exchangeable Shares or securities exchangeable for or
convertible into or carrying rights to acquire Exchangeable Shares, any issue
or distribution of other securities or rights or evidences of indebtedness or
assets, or any other capital reorganization or other transaction involving or
affecting the Exchangeable Shares) are outstanding, (c) the Business Day prior
to the record date for any meeting or vote of the shareholders of the
Corporation to consider any matter on which the holders of Exchangeable Shares
would be entitled to vote as shareholders of the Corporation, but excluding any
meeting or vote as described in clause (d) below or (d) the Business Day
following the day on which the holders of Exchangeable Shares fail to take the
necessary action at a meeting or other vote of holders of Exchangeable Shares,
if and to the extent such action is required, to approve or disapprove, as
applicable, any change to, or in the rights of the holders of, Exchangeable
Shares, if the approval or disapproval, as applicable, of such change would be
required to maintain the economic equivalence of the Exchangeable Shares and
the EduTrek Common Stock.
"BOARD OF DIRECTORS" means the Board of Directors of the Corporation
and any committee thereof acting within its authority.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day
when banks are not open for business in one or more of Atlanta, Georgia,
Toronto, Ontario and Halifax, Nova Scotia.
"CBCA" means the Canada Business Corporations Act, as amended,
consolidated or reenacted from time to time.
"CLASS A PREFERRED SHARE" means the Class A Preferred Share in the
capital of the Corporation.
"COMMON SHARE" means the Common Share in the capital of the
Corporation.
"CORPORATION" means ITI Education Corporation, a corporation under the
laws of Canada and includes any successor corporation.
"CURRENT MARKET PRICE" means, in respect of a share of EduTrek Common
Stock on any date, the average of the closing bid and ask prices per share of
EduTrek Common Stock during the period of 20 consecutive trading days ending
not more than five trading days before such date on Nasdaq, or, if EduTrek
Common Stock is not then quoted on Nasdaq, on such other principal U.S. stock
exchange or automated quotation system on which the EduTrek Common Stock is
listed or quoted, as the case may be, as may be selected by the Board of
Directors for the purpose of determining the Current Market Price; provided,
however, that if in the opinion of the Board of Directors the public
distribution or trading activity of EduTrek Common Stock during such period
does not create a market which reflects the fair market value of a share of
EduTrek Common Stock, then the Current Market Price in respect of a share of
EduTrek Common Stock shall be determined by the Board of Directors based upon
the advice of such qualified independent financial advisors as the Board of
Directors may deem to be appropriate, and provided further than any such
selection, opinion or determination by the Board of Directors shall be
conclusive and binding.
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"EDUTREK" means EduTrek International, Inc., a corporation organized
and existing under the laws of the State of Georgia and includes any successor
corporation.
"EDUTREK CALL NOTICE" has the meaning provided in Section 6.3.
"EDUTREK COMMON STOCK" means the shares of Class A Common Stock of
EduTrek, without par value, having voting rights of one vote per share, and any
other securities resulting from an event referred to in Section 2.7 of the
Support Agreement.
"EDUTREK DIVIDEND DECLARATION DATE" means the date on which the board
of directors of EduTrek declares any dividend on the EduTrek Common Stock.
"EFFECTIVE DATE" means the date shown on the certificate of
arrangement issued by the Director under the CBCA giving effect to the Plan of
Arrangement;
"EXCHANGE PUT RIGHT" has the meaning provided in Article 8.
"EXCHANGEABLE SHARE CONSIDERATION" means, with respect to payment of the
Exchangeable Share Price for any acquisition of or redemption of or distribution
of assets of the Corporation in respect of or purchase pursuant to the Exchange
Put Right of Exchangeable Shares pursuant to these share provisions, the Plan of
Arrangement, the Support Agreement or the Voting and Exchange Trust Agreement:
(a) certificates representing the aggregate number of shares of
EduTrek Common Stock deliverable in connection with such action;
(b) a cheque or cheques payable at par at any branch of the
bankers of the payor in the amount of all declared and unpaid, and
undeclared but payable, cash dividends deliverable in connection with
such action; and
(c) such stock or property constituting any declared and unpaid
non-cash dividends deliverable in connection with such action;
provided that (i) that part of the Exchangeable Share Price which is the
Current Market Price of a share of EduTrek Common Stock shall be fully paid and
satisfied by the delivery of one share of EduTrek Common Stock, (ii) that part
of the Exchangeable Share Price which represents non-cash dividends remaining
unpaid shall be fully paid and satisfied by delivery of such non-cash items,
(iii) any such shares shall be duly issued as fully paid and non-assessable and
any such property shall be delivered free and clear of any lien, claim,
encumbrance, security interest or adverse claim or interest and (iv) such
consideration shall be paid less any tax required to be deducted and withheld
therefrom and without interest.
"EXCHANGEABLE SHARE PRICE" means, for each Exchangeable Share, an
amount equal to the aggregate of:
(a) the Current Market Price of a share of EduTrek Common Stock;
plus
(b) an additional amount equal to the full amount of all cash
dividends declared and unpaid on such Exchangeable Share; plus
(c) an additional amount equal to all dividends declared on
EduTrek Common Stock which have not been declared on Exchangeable Shares in
accordance herewith; plus
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(d) an additional amount representing non-cash dividends declared
and unpaid on such Exchangeable Share.
"EXCHANGEABLE SHARES" means the Exchangeable Shares of the Corporation
having the rights, privileges, restrictions and conditions set forth herein.
"LIQUIDATION AMOUNT" has the meaning provided in Section 5.1.
"LIQUIDATION CALL RIGHT" has the meaning provided in the Plan of
Arrangement.
"LIQUIDATION DATE" has the meaning provided in Section 5.1.
"NASDAQ" means Nasdaq National Market;
"PLAN OF ARRANGEMENT" means the plan of arrangement involving and
affecting the Corporation and the holders of its common shares and options
under section 192 of the CBCA, to which plan of arrangement these share
provisions are an appendix.
"PURCHASE PRICE" has the meaning provided in Section 6.3.
"REDEMPTION CALL PURCHASE PRICE" has the meaning provided in the Plan
of Arrangement.
"REDEMPTION CALL RIGHT" has the meaning provided in the Plan of
Arrangement.
"REDEMPTION PRICE" has the meaning provided in Section 7.1.
"RETRACTED SHARES" has the meaning provided in subsection 6.1(i).
"RETRACTION CALL RIGHT" has the meaning provided in subsection
6.1(iii).
"RETRACTION DATE" has the meaning provided in subsection 6.1(ii).
"RETRACTION PRICE" has the meaning provided in Section 6.1.
"RETRACTION REQUEST" has the meaning provided in Section 6.1.
"SUBSIDIARY", in relation to any person, means any body corporate,
partnership, joint venture, association or other entity of which more than 50%
of the total voting power of shares of stock or units of ownership or
beneficial interest entitled to vote in the election of directors (or members
of a comparable governing body) is owned or controlled, directly or indirectly,
by such person.
"SUPPORT AGREEMENT" means the Support Agreement between EduTrek and
the Corporation made as of , 1998.
"TRANSFER AGENT" means the duly appointed transfer agent for the time
being of the Exchangeable Shares, and if there is more than one such agent then
the principal Canadian agent.
"TRUSTEE" means the Trustee appointed under the Voting and Exchange
Trust Agreement, and any successor trustee.
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"VOTING AND EXCHANGE TRUST AGREEMENT" means the Voting and Exchange
Trust Agreement between the Corporation, EduTrek and the Trustee made as of ,
1998.
ARTICLE 2
RANKING OF EXCHANGEABLE SHARES
2.1 The Exchangeable Shares shall rank junior to the Class A Preferred
Share, and shall be entitled to a preference over the Common Share and any
other shares ranking junior to the Exchangeable Shares, with respect to the
payment of dividends and the distribution of assets in the event of the
liquidation, dissolution or winding-up of the Corporation, whether voluntary or
involuntary, or any other distribution of the assets of the Corporation among
its shareholders for the purpose of winding-up its affairs.
ARTICLE 3
DIVIDENDS
3.1 A holder of an Exchangeable Share shall be entitled to receive and the
Board of Directors shall, subject to applicable law, on each EduTrek Dividend
Declaration Date, declare a dividend on each Exchangeable Share (a) in the case
of a cash dividend declared on the EduTrek Common Stock, in an amount in cash
for each Exchangeable Share equal to the cash dividend declared on each share
of EduTrek Common Stock or (b) in the case of a stock dividend declared on the
EduTrek Common Stock to be paid in EduTrek Common Stock, in such number of
Exchangeable Shares for each Exchangeable Share as is equal to the number of
shares of EduTrek Common Stock to be paid on each share of EduTrek Common Stock
or (c) in the case of a dividend declared on the EduTrek Common Stock in
property other than cash or EduTrek Common Stock, in such type and amount of
property for each Exchangeable Share as is the same as the type and amount of
property declared as a dividend on each share of EduTrek Common Stock. Such
dividends shall be paid out of money, assets or property of the Corporation
properly applicable to the payment of dividends, or out of authorized but
unissued shares of the Corporation.
3.2 Cheques of the Corporation payable at par at any branch of the bankers
of the Corporation shall be issued in respect of any cash dividends
contemplated by subsection 3.1(a) hereof less any tax required to be deducted
and withheld from such dividends by the Corporation and the sending of such a
cheque to each holder of an Exchangeable Share shall constitute full payment
and satisfaction of the cash dividends represented thereby unless the cheque is
not paid on presentation. Certificates registered in the name of the registered
holder of Exchangeable Shares shall be issued or transferred in respect of any
stock dividends contemplated by subsection 3.1(b) hereof and the sending of
such a certificate to each holder of an Exchangeable Share shall constitute
full payment and satisfaction of the stock dividend represented thereby. Such
other type and amount of property in respect of any dividends contemplated by
subsection 3.1(c) hereof shall be issued, distributed or transferred by the
Corporation in such manner as it shall determine and the issuance, distribution
or transfer thereof by the Corporation to each holder of an Exchangeable Share
shall constitute full payment and satisfaction of the dividend represented
thereby. In all cases any such dividends shall be subject to any reduction or
adjustment for tax required to be deducted and withheld from such dividends by
the Corporation. No holder of an Exchangeable Share shall be entitled to
recover by action or other legal process against the Corporation any dividend
which is represented by a cheque that has not been duly presented to the
Corporation's bankers for payment or which otherwise remains unclaimed for a
period of six years from the date on which such dividend was payable.
3.3 The record date for the determination of the holders of Exchangeable
Shares entitled to receive payment of, and the payment date for, any dividend
declared on the Exchangeable Shares under Section 3.1 hereof shall
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be the same dates as the record date and payment date, respectively, for the
corresponding dividend declared on the EduTrek Common Stock.
3.4 If on any payment date for any dividends declared on the Exchangeable
Shares under Section 3.1 hereof the dividends are not paid in full on all of
the Exchangeable Shares then outstanding, any such dividends which remain
unpaid shall be paid on a subsequent date or dates determined by the Board of
Directors on which the Corporation shall have sufficient moneys, assets or
property properly applicable to the payment of such dividends.
3.5 Except as provided in this Article 3, the holders of Exchangeable
Shares shall not be entitled to receive dividends in respect thereof.
ARTICLE 4
CERTAIN RESTRICTIONS
4.1 As long as any of the Exchangeable Shares are outstanding, the
Corporation shall not at any time without, but may at any time with, the
approval of the holders of the Exchangeable Shares given as specified in
Section 10.1 of these share provisions;
(a) pay any dividends on the Common Share, or any other
shares ranking junior to the Exchangeable Shares, other than stock
dividends payable in any such other shares ranking junior to the
Exchangeable Shares;
(b) redeem or purchase or make any capital distribution
in respect of the Common Share or any other shares ranking junior to
the Exchangeable Shares with respect to the payment of dividends or on
any liquidation distribution;
(c) redeem or purchase any other shares of the
Corporation ranking equally with the Exchangeable Shares with respect
of the payment of dividends or on any liquidation distribution; or
(d) amend the articles or by-laws of the Corporation, in
either case in any manner that would affect the rights of the holders
of the Exchangeable Shares.
The restrictions in subsections 4.1(a), 4.1(b), and 4.1(c) above shall not
apply if all dividends on the outstanding Exchangeable Shares corresponding to
dividends declared with a record date on or following the Effective Date on the
EduTrek Common Stock shall have been declared on the Exchangeable Shares and
paid in full.
ARTICLE 5
DISTRIBUTION ON LIQUIDATION
5.1 In the event of the liquidation, dissolution or winding-up of the
Corporation or any other distribution of the assets of the Corporation among
its shareholders for the purpose of winding-up its affairs, a holder of
Exchangeable Shares shall be entitled, subject to applicable law, to receive
from the assets of the Corporation in respect of each Exchangeable Share held
by such holder on the effective date of such liquidation, dissolution,
winding-up or other distribution of assets (the "LIQUIDATION DATE"), before any
distribution of any part of the assets of the Corporation to the holders of the
Common Share or any other shares ranking junior to the Exchangeable Shares, a
payment equal to the Exchangeable Share Price applicable on the last Business
Day prior to the Liquidation Date (the "LIQUIDATION AMOUNT"). In connection
with payment of the Liquidation Amount, the Corporation shall be entitled to
liquidate some of the EduTrek Common Stock which would
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otherwise be deliverable to the particular holder of Exchangeable Shares in
order to fund any statutory withholding tax obligation.
5.2 On or promptly after the Liquidation Date, and subject to the exercise
by EduTrek of the Liquidation Call Right, the Corporation shall cause to be
delivered to the holders of the Exchangeable Shares the Liquidation Amount for
each such Exchangeable Share upon presentation and surrender of the
certificates representing such Exchangeable Shares, together with such other
documents and instruments as may be required to effect a transfer of
Exchangeable Shares under the CBCA and the by-laws of the Corporation and such
additional documents and instruments as the Transfer Agent may reasonably
require, at the registered office of the Corporation or at any office of the
Transfer Agent as may be specified by the Corporation by notice to the holders
of the Exchangeable Shares. Payment of the total Liquidation Amount for such
Exchangeable Shares shall be made by delivery to each holder, at the address of
the holder recorded in the securities register of the Corporation for the
Exchangeable Shares or by holding for pick up by the holder at the registered
office of the Corporation or at any office of the Transfer Agent as may be
specified by the Corporation by notice to the holders of Exchangeable Shares,
on behalf of the Corporation, of the Exchangeable Share Consideration
representing the total Liquidation Amount. On and after the Liquidation Date,
the holders of the Exchangeable Shares shall cease to be holders of such
Exchangeable Shares and shall not be entitled to exercise any of the rights of
holders in respect thereof, other than the right to receive their proportionate
part of the total Liquidation Amount for all Exchangeable Shares, unless
payment of the Liquidation Amount for such Exchangeable Shares shall not be
made upon presentation and surrender of share certificates in accordance with
the foregoing provisions, in which case the rights of the holders shall remain
unaffected until the Liquidation Amount has been paid in the manner
hereinbefore provided. The Corporation shall have the right at any time on or
after the Liquidation Date to deposit or cause to be deposited the Exchangeable
Share Consideration in respect of the Exchangeable Shares represented by
certificates that have not at the Liquidation Date been surrendered by the
holders thereof in a custodial account or for safe keeping, in the case of
non-cash items, with any chartered bank or trust company in Canada. Upon such
deposit being made, the rights of the holders of Exchangeable Shares after such
deposit shall be limited to receiving their proportionate part of the total
Liquidation Amount for such Exchangeable Shares so deposited, against
presentation and surrender of the said certificates held by them, respectively,
in accordance with the foregoing provisions. Upon such payment or deposit of
such Exchangeable Share Consideration, the holders of the Exchangeable Shares
shall thereafter be considered and deemed for all purposes to be the holders of
the shares of EduTrek Common Stock delivered or deliverable to them.
Notwithstanding the foregoing, until such payment or deposit of such
Exchangeable Share Consideration, the holder shall be deemed to still be a
holder of Exchangeable Shares for purposes of all voting rights with respect
thereto under the Voting and Exchange Trust Agreement.
5.3 After the Corporation has satisfied its obligations to pay the holders
of the Exchangeable Shares the Liquidation Amount per Exchangeable Share, such
holders shall not be entitled to share in any further distribution of the
assets of the Corporation.
ARTICLE 6
RETRACTION OF EXCHANGEABLE SHARES BY HOLDER
6.1 A holder of Exchangeable Shares shall be entitled at any time, subject
to the exercise by EduTrek of the Retraction Call Right, and otherwise upon
compliance with the provisions of this Article 6, to require the Corporation to
redeem any or all of the Exchangeable Shares registered in the name of such
holder for a payment equal to the Exchangeable Share Price applicable on the
last Business Day prior to the Retraction Date (the "RETRACTION PRICE"). In
connection with payment of the Retraction Price, the Corporation shall be
entitled to liquidate some of the EduTrek Common Stock that would otherwise be
deliverable to the particular holder of Exchangeable Shares in order to fund
any statutory withholding tax obligation. To effect such redemption, the holder
shall present and surrender at the registered office of the Corporation or at
any office of the Transfer
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Agent as may be specified by the Corporation in Schedule "A" hereto or by
notice to the holders of Exchangeable Shares the certificate or certificates
representing the Exchangeable Shares which the holder desires to have the
Corporation redeem, together with such other documents and instruments as may
be required to effect a transfer of Exchangeable Shares under the CBCA and the
by-laws of the Corporation and such additional documents and instruments as the
Transfer Agent may reasonably require, and together with a duly executed
statement (the "RETRACTION REQUEST") in the form of Schedule "A" hereto or in
such other form as may be acceptable to the Corporation:
(i) specifying that the holder desires to have all or
any number specified therein of the Exchangeable Shares represented by
such certificate or certificates (the "RETRACTED SHARES") redeemed by
the Corporation;
(ii) stating the Business Day on which the holder desires
to have the Corporation redeem the Retracted Shares (the "RETRACTION
DATE"), provided that the Retraction Date shall be not less than five
Business Days nor more than 10 Business Days after the date on which
the Retraction Request is received by the Corporation or the Transfer
Agent and further provided that, in the event that no such Business
Day is specified by the holder in the Retraction Request, the
Retraction Date shall be deemed to be the tenth Business Day after the
date on which the Retraction Request is received by the Corporation or
the Transfer Agent; and
(iii) acknowledging the overriding right (the "RETRACTION
CALL RIGHT") of EduTrek to purchase all but not less than all the
Retracted Shares directly from the holder and that the Retraction
Request shall be deemed to be a revocable offer by the holder to sell
the Retracted Shares to EduTrek in accordance with the Retraction Call
Right on the terms and conditions set out in Section 6.3.
6.2 Subject to the exercise by EduTrek of the Retraction Call Right, upon
receipt by the Corporation or the Transfer Agent in the manner specified in
Section 6.1 hereof of a certificate or certificates representing the number of
Exchangeable Shares which the holder desires to have the Corporation redeem,
together with such other documents or instruments referred to therein and a
duly completed Retraction Request, and provided that the Retraction Request is
not revoked by the holder in the manner specified in Section 6.7, the
Corporation shall redeem the Retracted Shares effective at the close of
business on the Retraction Date and shall cause to be delivered to such holder
the total Retraction Price with respect to such shares in accordance with
Section 6.4 hereof. If only a part of the Exchangeable Shares represented by
any certificate are redeemed by the Corporation or purchased by EduTrek
pursuant to the Retraction Call Right, a new certificate for the balance of
such Exchangeable Shares shall be issued to the holder at the expense of the
Corporation.
6.3 Upon receipt by the Corporation of a Retraction Request, the
Corporation shall immediately notify EduTrek thereof. In order to exercise the
Retraction Call Right, EduTrek must notify the Corporation in writing of its
determination to do so (the "EDUTREK CALL NOTICE") within two Business Days of
such notification. If EduTrek does not so notify the Corporation within two
Business Days, the Corporation will notify the holder as soon as possible
thereafter that EduTrek will not exercise the Retraction Call Right. If EduTrek
delivers the EduTrek Call Notice within such two Business Days, and provided
that the Retraction Request is not revoked by the holder in the manner
specified in Section 6.7, the EduTrek Call Notice shall constitute acceptance
by EduTrek of the offer by the holder to sell the Retracted Shares to EduTrek
in accordance with the Retraction Call Right. In such event, the Corporation
shall not redeem the Retracted Shares and EduTrek shall purchase from such
holder and such holder shall sell to EduTrek on the Retraction Date the
Retracted Shares for a purchase price (the "PURCHASE PRICE") per share equal to
the Retraction Price per share. For the purposes of completing a purchase
pursuant to the Retraction Call Right, EduTrek shall deposit with the Transfer
Agent, on or before the Retraction Date the Exchangeable Share Consideration
representing the total Purchase Price. Provided that such Exchangeable Share
Consideration has been so deposited with the Transfer Agent, the closing of the
purchase and sale of the Retracted Shares pursuant to the
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Retraction Call Right shall be deemed to have occurred as at the close of
business on the Retraction Date and, for greater certainty, no redemption by
the Corporation of such Retracted Shares shall take place on the Retraction
Date. In the event that EduTrek does not deliver a EduTrek Call Notice within
two Business Days or otherwise comply with these Exchangeable Share provisions
in respect thereto, and provided that Retraction Request is not revoked by the
holder in the manner specified in Section 6.7, the Corporation shall redeem the
Retracted Shares on the Retraction Date and in the manner otherwise
contemplated in this Article 6.
6.4 The Corporation or EduTrek, as the case may be, shall deliver or cause
the Transfer Agent to deliver to the relevant holder, at the address of the
holder recorded in the securities register of the Corporation for the
Exchangeable Shares or at the address specified in the holder's Retraction
Request or by holding for pick up by the holder at the registered office of the
Corporation or at any office of the Transfer Agent as may be specified by the
Corporation in Schedule "A" hereto or by notice to the holders of Exchangeable
Shares, the Exchangeable Share Consideration representing the total Retraction
Price or the total Purchase Price, as the case may be, and such delivery of
such Exchangeable Share Consideration to the holder or the Transfer Agent shall
be deemed to be payment of and shall satisfy and discharge all liability for
the total Retraction Price or total Purchase Price, as the case may be, except
as to any cheque included therein which is not paid on due presentation.
6.5 On and after the close of business on the Retraction Date, the holder
of the Retracted Shares shall not be entitled to exercise any of the rights of
a holder in respect thereof, other than the right to receive the Retraction
Price or Purchase Price, as the case may be, for the Retracted Shares unless
upon presentation and surrender of certificates in accordance with the
foregoing provisions, payment of the total Retraction Price or the total
Purchase Price, as the case may be, shall not be made, in which case the rights
of such holder shall remain unaffected until the Exchangeable Share
Consideration representing the Retraction Price or the Purchase Price, as the
case may be, for the Retracted Shares has been paid in the manner hereinbefore
provided. On and after the close of business on the Retraction Date, provided
that presentation and surrender of certificates and payment of the Exchangeable
Share Consideration representing the Retraction Price or the Purchase Price, as
the case may be, for the Retracted Shares has been made in accordance with the
foregoing provisions, the holder of the Retracted Shares so redeemed by the
Corporation or purchased by EduTrek shall thereafter be considered and deemed
for all purposes to be a holder of the shares of EduTrek Common Stock delivered
to or deliverable to it. Notwithstanding the foregoing, until such payment of
the Exchangeable Share Consideration, the holder shall be deemed to still be a
holder of Exchangeable Shares for purposes of all voting rights with respect
thereto under the Voting and Exchange Trust Agreement.
6.6 Notwithstanding any other provision of this Article 6, the Corporation
shall not be obligated to redeem Retracted Shares specified by a holder in a
Retraction Request to the extent that such redemption of Retracted Shares would
be contrary to liquidity or solvency requirements or other provisions of
applicable law. If the Corporation believes that on any Retraction Date it
would not be permitted by any of such provisions to redeem the Retracted Shares
tendered for redemption on such date, and provided that EduTrek shall not have
exercised the Retraction Call Right with respect to the Retracted Shares, the
Corporation shall only be obligated to redeem Retracted Shares specified by a
holder in a Retraction Request to the extent of the maximum number that may be
so redeemed (rounded down to a whole number of shares) as would not be contrary
to such provisions of applicable law and shall notify the holder at least two
Business Days prior to the Retraction Date as to the number of Retracted Shares
which will not be redeemed by the Corporation. In any case in which the
redemption by the Corporation of Retracted Shares would be contrary to
liquidity or solvency requirements or other provisions of applicable law, the
Corporation shall redeem Retracted Shares in accordance with Section 6.2 on a
pro rata basis and shall issue to each holder of Retracted Shares a new
certificate, at the expense of the Corporation, representing the Retracted
Shares not redeemed by the Corporation pursuant to Section 6.2. Provided that
the Retraction Request is not revoked by the holder in the manner specified in
Section 6.7, the holder of any such Retracted Shares not redeemed by the
Corporation pursuant to Section 6.2 as a result of liquidity or solvency
requirements or other provisions of applicable law shall be deemed, by giving
the Retraction Request, to require EduTrek to purchase such Retracted Shares
from such holder on the Retraction
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Date or as soon as practicable thereafter on payment by EduTrek to such holder
of the Purchase Price for each such Retracted Share, all as more specifically
provided in the Voting and Exchange Trust Agreement, and EduTrek shall make
such purchase.
6.7 A holder of Retracted Shares may, by notice in writing given by the
holder to the Corporation before the close of business on the Business Day
immediately preceding the Retraction Date, withdraw its Retraction Request in
which event such Retraction Request shall be null and void and, for greater
certainty, the revocable offer constituted by the Retraction Request to sell
the Retracted Shares to EduTrek shall be deemed to have been revoked.
6.8 The surrender by the holder of Exchangeable Shares under Section 6.2
shall constitute the representation, warranty and covenant of the holder that
the Exchangeable Shares so purchased are sold free and clear of any lien,
encumbrance, security interest or adverse claim or interest.
ARTICLE 7
REDEMPTION OF EXCHANGEABLE SHARES BY
THE CORPORATION
7.1 Subject to applicable law, and if EduTrek does not exercise the
Redemption Call Right, the Corporation shall on the Automatic Redemption Date
redeem the whole of the then outstanding Exchangeable Shares for a payment
equal to the Exchangeable Share Price applicable on the last Business Day prior
to the Automatic Redemption Date (the "REDEMPTION PRICE"). In connection with
payment of the Redemption Price, the Corporation shall be entitled to liquidate
some of the EduTrek Common Stock which would otherwise be deliverable to the
particular holder of Exchangeable Shares in order to fund any statutory
withholding tax obligation.
7.2 In any case of a possible redemption of Exchangeable Shares under this
Article 7, the Corporation shall give notice of such possible redemption to
EduTrek at least 45 days before an Automatic Redemption Date or before a
possible Automatic Redemption Date which may result from a failure of the
holders of Exchangeable Shares to take necessary action as described in clause
(d) of the definition of Automatic Redemption Date. The Corporation, or the
Transfer Agent on behalf of the Corporation, shall, at least 30 days before an
Automatic Redemption Date or before a possible Automatic Redemption Date which
may result from a failure of the holders of Exchangeable Shares to take
necessary action as described in clause (d) of the definition of Automatic
Redemption Date, send or cause to be sent to each holder of Exchangeable Shares
a notice in writing of the redemption or possible redemption by the Corporation
or the purchase by EduTrek under the Redemption Call Right, as the case may be,
of the Exchangeable Shares. Such notice shall set out the formula for
determining the Redemption Price or the Redemption Call Purchase Price, as the
case may be, the Automatic Redemption Date and, if applicable, particulars of
the Redemption Call Right. In the case of any notice given in connection with a
possible Automatic Redemption Date, such notice will be given contingently and
will be withdrawn if the contingency does not occur.
7.3 On or after the Automatic Redemption Date and subject to the exercise
by EduTrek of the Redemption Call Right, the Corporation shall cause to be
delivered to the holders of the Exchangeable Shares to be redeemed the
Redemption Price for each such Exchangeable Share upon presentation and
surrender at the registered office of the Corporation or at any office of the
Transfer Agent as may be specified by the Corporation in the notice to holders
of Exchangeable Shares of the certificates representing such Exchangeable
Shares, together with such other documents and instruments as may be required
to effect a transfer of Exchangeable Shares under the CBCA and the by-laws of
the Corporation and such additional documents and instruments as the Transfer
Agent may reasonably require. Payment of the total Redemption Price for such
Exchangeable Shares shall be made by delivery to each holder, at the address of
the holder recorded in the
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securities register, or by holding for pickup at the registered office of the
Corporation or at any office of the Transfer Agent as may be specified by the
Corporation in such notice, on behalf of the Corporation of the Exchangeable
Share Consideration representing the total Redemption Price. On and after the
Automatic Redemption Date, the holders of the Exchangeable Shares called for
redemption shall cease to be holders of such Exchangeable Shares and shall not
be entitled to exercise any of the rights of holders in respect thereof, other
than the right to receive their proportionate part of the total Redemption
Price, unless payment of the Redemption Price for their Exchangeable Shares
shall not be made upon presentation and surrender of certificates in accordance
with the foregoing provisions, in which case the rights of the holders shall
remain unaffected until the Redemption Price has been paid in the manner
hereinbefore provided. The Corporation shall have the right at any time on and
after the Automatic Redemption Date to deposit or cause to be deposited the
Exchangeable Share Consideration with respect to the Exchangeable Shares so
called for redemption, or of such of the said Exchangeable Shares represented
by certificates that have not at the date of such deposit been surrendered by
the holders thereof in connection with such redemption, in a custodial account
or for safe keeping, in the case of non-cash items, with any chartered bank or
trust company in Canada. Upon such deposit being made, the Exchangeable Shares
in respect whereof such deposit shall have been made shall be redeemed and the
rights of the holders thereof after such deposit shall be limited to receiving
their proportionate part of the total Redemption Price for such Exchangeable
Shares so deposited, against presentation and surrender of the said
certificates held by them, respectively, in accordance with the foregoing
provisions. Upon such payment or deposit of such Exchangeable Share
Consideration, the holders of the Exchangeable Shares shall thereafter be
considered and deemed for all purposes to be holders of the shares of EduTrek
Common Stock delivered or deliverable to them. Notwithstanding the foregoing,
until such payment or deposit of such Exchangeable Share Consideration is made,
the holder shall be deemed to still be a holder of Exchangeable Shares for
purposes of all voting rights with respect thereto under the Voting and
Exchange Trust Agreement.
7.4 The surrender by the holder of Exchangeable Shares under Section 7.3
shall constitute the representation, warranty and covenant of the holder that
the Exchangeable Shares so purchased are sold free and clear of any lien,
encumbrance, security interest or adverse claim or interest.
ARTICLE 8
EXCHANGE PUT RIGHT
8.1 Upon and subject to the terms and conditions contained in these share
provisions and the Voting and Exchange Trust Agreement:
(a) a holder of Exchangeable Shares shall have the right
(the "EXCHANGE PUT RIGHT") at any time to require EduTrek to purchase
all or any part of the Exchangeable Shares of the holder; and
(b) upon the exercise by the holder of the Exchange Put
Right and provided that, at the time of purchase, the Exchangeable
Shares are listed on a recognized Canadian stock exchange, the holder
shall be required to sell to EduTrek, and EduTrek shall be required to
purchase from the holder, that number of Exchangeable Shares in
respect of which the Exchange Put Right is exercised, in consideration
of the payment by EduTrek of the Exchangeable Share Price applicable
thereto (which shall be the Exchangeable Share Price applicable on the
last Business Day prior to receipt of notice required under Section
8.2) by delivery by or on behalf of EduTrek of the Exchangeable Share
Consideration representing the total applicable Exchangeable Share
Price.
8.2 The Exchange Put Right provided in Section 8.1 hereof and in Article V
of the Voting and Exchange Trust Agreement may be exercised at any time by
notice in writing given by the holder to and received by the Trustee (the date
of such receipt, the "EXCHANGE PUT DATE") accompanied by presentation and
surrender of the certificates representing such Exchangeable Shares, together
with such documents and instruments as may be
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required to effect a transfer of Exchangeable Shares under the CBCA and the
by-laws of the Corporation and such additional documents and instruments as the
Trustee may reasonably require, at the principal transfer offices in Halifax,
Nova Scotia and Toronto, Ontario of the Trustee, or at such other office or
offices of the Trustee or of other persons designated by the Trustee for that
purpose as may from time to time be maintained by the Trustee for that purpose.
Such notice may be (i) in the form of the panel, if any, on the certificates
representing Exchangeable Shares, (ii) in the form of the notice and election
contained in any letter of transmittal distributed or made available by the
Corporation for that purpose, or (iii) in other form satisfactory to the
Trustee (or such other persons aforesaid), shall stipulate the number of
Exchangeable Shares in respect of which the Exchange Put Right is exercised
(which may not exceed the number of shares represented by certificates
surrendered to the Trustee), shall be irrevocable unless the exchange is not
completed in accordance herewith and with the Voting and Exchange Trust
Agreement and shall constitute the holder's authorization to the Trustee (and
such other persons aforesaid) to effect the exchange on behalf of the holder.
8.3 The completion of the sale and purchase referred to in Section 8.1
shall be required to occur, and EduTrek shall be required to take all actions
on its part necessary to permit it to occur, not later than the close of
business on the third Business Day following the Exchange Put Date.
8.4 The surrender by the holder of Exchangeable Shares under Section 8.2
shall constitute the representation, warranty and covenant of the holder that
the Exchangeable Shares so purchased are sold free and clear of any lien,
encumbrance, security interest or adverse claim or interest.
8.5 If a part only of the Exchangeable Shares represented by any
certificate are to be sold and purchased pursuant to the exercise of the
Exchange Put Right, a new certificate for the balance of such Exchangeable
Shares shall be issued to the holder at the expense of the Corporation.
8.6 Upon receipt by the Trustee of the notice, certificates and other
documents or instruments required by Section 8.2, the Trustee shall deliver or
cause to be delivered, on behalf of EduTrek and subject to receipt by the
Trustee from EduTrek of the applicable Exchangeable Share Consideration, to the
relevant holder at the address of the holder specified in the notice or by
holding for pick-up by the holder at the registered office of the Corporation
or at any office of the Trustee (or other persons aforesaid) maintained for
that purpose, the Exchangeable Share Consideration representing the total
applicable Exchangeable Share Price, within the time stipulated in Section 8.3.
Delivery by EduTrek to the Trustee of such Exchangeable Share Consideration
shall be deemed to be payment of and shall satisfy and discharge all liability
for the total applicable Exchangeable Share Price, except as to any cheque
included therein which is not paid on due presentation.
8.7 On and after the close of business on the Exchange Put Date, the
holder of the Exchangeable Shares in respect of which the Exchange Put Right is
exercised shall not be entitled to exercise any of the rights of a holder in
respect thereof, other than the right to receive the total applicable
Exchangeable Share Consideration, unless upon presentation and surrender of
certificates in accordance with the foregoing provisions, payment of the
Exchangeable Share Consideration shall not be made, in which case the rights of
such holder shall remain unaffected until such payment has been made. On and
after the close of business on the Exchange Put Date provided that presentation
and surrender of certificates and payment of the Exchangeable Share
Consideration has been made in accordance with the foregoing provisions, the
holder of the Exchangeable Shares so purchased by EduTrek shall thereafter be
considered and deemed for all purposes to be a holder of the shares of EduTrek
Common Stock delivered or deliverable to it. Notwithstanding the foregoing,
until payment of the Exchangeable Share Consideration to the holder, the holder
shall be deemed to still be a holder of Exchangeable Shares for purposes of all
voting rights with respect thereto under the Voting and Exchange Trust
Agreement.
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ARTICLE 9
VOTING RIGHTS
9.1 Except as required by applicable law and the provisions hereof, the
holders of the Exchangeable Shares shall not be entitled as such to receive
notice of or to attend any meeting of the shareholders of the Corporation or to
vote at any such meeting.
ARTICLE 10
AMENDMENT AND APPROVAL
10.1 The rights, privileges, restrictions and conditions attaching to the
Exchangeable Shares may be added to, changed or removed but, except as
hereinafter provided, only with the approval of the holders of the Exchangeable
Shares given as hereinafter specified.
10.2 Any approval given by the holders of the Exchangeable Shares to add,
change or remove any right, privilege, restriction or condition attaching to
the Exchangeable Shares or any other matter requiring the approval or consent
ofthe holders of the Exchangeable Shares shall be deemed to have been
sufficiently given if it shall have been given in accordance with applicable
law subject to a minimum requirement that such approval be evidenced by
resolution passed by not less than 662/3% of the votes cast on such resolution
by persons represented in person or by proxy at a meeting of holders of
Exchangeable Shares duly called and held at which the holders of at least 20%
of the outstanding Exchangeable Shares at that time are present or represented
by proxy (excluding Exchangeable Shares beneficially owned by EduTrek or its
Subsidiaries). If at any such meeting the holders of at least 20% of the
outstanding Exchangeable Shares at that time are not present or represented by
proxy within one-half hour after the time appointed for such meeting then the
meeting shall be adjourned to such date not less than 10 days thereafter and to
such time and place as may be designated by the Chairman of such meeting. At
such adjourned meeting the holders of Exchangeable Shares present or
represented by proxy thereat may transact the business for which the meeting
was originally called and a resolution passed thereat by the affirmative vote
of not less than 662/3% of the votes cast on such resolution by persons
represented in person or by proxy at such meeting shall constitute the approval
or consent of the holders of the Exchangeable Shares. For the purposes of this
section, any spoiled votes, illegible votes, defective votes and abstinences
shall be deemed to be votes not cast.
ARTICLE 11
RECIPROCAL CHANGES, ETC. IN RESPECT OF
EDUTREK COMMON STOCK
11.1 (a) Each holder of an Exchangeable Share acknowledges that the Support
Agreement provides, in part, that EduTrek will not:
(i) issue or distribute EduTrek Common Stock (or
securities exchangeable for or convertible into or carrying rights to
acquire shares of EduTrek Common Stock) to the holders of all or
substantially all of the then outstanding shares of EduTrek Common
Stock by way of stock dividend or other distribution; or
(ii) issue or distribute rights, options or warrants to
the holders of all or substantially all of the then outstanding shares
of EduTrek Common Stock entitling them to subscribe for or to purchase
shares of EduTrek Common Stock (or securities exchangeable for or
convertible into or carrying rights to acquire shares of EduTrek
Common Stock); or
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(iii) issue or distribute to the holders of all or
substantially all of the then outstanding shares of EduTrek Common
Stock (A) shares or securities of EduTrek of any class other than
EduTrek Common Stock (other than securities convertible into or
exchangeable for or carrying rights to acquire shares of EduTrek
Common Stock), (B) any other rights, options or warrants not referred
to in subsection 11.1(a)(ii) above, (C) evidences of indebtedness of
EduTrek or (D) assets of EduTrek;
unless one or both of the Corporation and EduTrek is permitted under applicable
law to issue or distribute the economic equivalent on a per share basis of such
rights, options, warrants, securities, shares, evidences of indebtedness or
assets and such items, as applicable, are issued or distributed simultaneously
to holders of Exchangeable Shares.
(b) Each holder of an Exchangeable Share acknowledges that the
Support Agreement further provides, in part, that EduTrek will not:
(i) subdivide, redivide or change the then outstanding
shares of EduTrek Common Stock into a greater number of shares of
EduTrek Common Stock; or
(ii) reduce, combine or consolidate or change the then
outstanding shares of EduTrek Common Stock into a lesser number of
shares of EduTrek Common Stock; or
(iii) reclassify or otherwise change the shares of EduTrek
Common Stock or effect an amalgamation, merger, reorganization or
other transaction affecting the shares of EduTrek Common Stock;
unless the Corporation is permitted under applicable law to simultaneously make
the same or an economically equivalent change to, or in the rights of the
holders of, the Exchangeable Shares and the same or an economically equivalent
change is simultaneously made to, or in the rights of the holders of, the
Exchangeable Shares.
The Support Agreement further provides, in part, that, with the exception of
certain ministerial amendments, the aforesaid provisions of the Support
Agreement shall not be changed without the approval of the holders of the
Exchangeable Shares given in accordance with Section 10.1 of these share
provisions.
ARTICLE 12
ACTIONS BY THE CORPORATION UNDER
SUPPORT AGREEMENT
12.1 The Corporation will take all such actions and do all such things as
shall be necessary or advisable to perform and comply with and to ensure
performance and compliance by EduTrek with all provisions of the Support
Agreement, the Voting and Exchange Trust Agreement and EduTrek's certificate of
incorporation applicable to the Corporation and EduTrek, respectively, in
accordance with the terms thereof including, without limitation, taking all
such actions and doing all such things as shall be necessary or advisable to
enforce to the fullest extent possible for the direct benefit of the
Corporation all rights and benefits in favour of the Corporation under or
pursuant thereto.
12.2 The Corporation shall not propose, agree to or otherwise give effect
to any amendment to, or waiver or forgiveness of its rights or obligations
under, the Support Agreement, the Voting and Exchange Trust Agreement or
EduTrek's Certificate of Incorporation without the approval of the holders of
the Exchangeable Shares given in accordance with Section 10.1 other than such
amendments, waivers and/or forgiveness as may be necessary or advisable for the
purpose of:
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(a) adding to the covenants of the other party or
parties to such agreement for the protection of the Corporation or the
holders of Exchangeable Shares; or
(b) making such provisions or modifications not
inconsistent with such agreement or certificate as may be necessary or
desirable with respect to matters or questions arising thereunder
which, in the opinion of the Board of Directors, it may be expedient
to make, provided that the Board of Directors shall be of the opinion,
after consultation with counsel, that such provisions and
modifications will not be prejudicial to the interests of the holders
of the Exchangeable Shares; or
(c) making such changes in or corrections to such
agreement or certificate which, on the advice of counsel to the
Corporation, are required for the purpose of curing or correcting any
ambiguity or defect or inconsistent provision or clerical omission or
mistake or manifest error contained therein, provided that the Board
of Directors shall be of the opinion, after consultation with counsel,
that such changes or corrections will not be prejudicial to the
interests of the holders of the Exchangeable Shares.
ARTICLE 13
LEGEND
13.1 The certificates evidencing the Exchangeable Shares may contain or have
affixed thereto a legend with respect to or referring to any or all of the
Support Agreement, the provisions of the Plan of Arrangement relating to the
Liquidation Call Right, the Retraction Call Right and the Redemption Call
Right, and the Voting and Exchange Trust Agreement (including the provisions
with respect to the voting rights and exchange provisions thereunder).
ARTICLE 14
MISCELLANEOUS
14.1 Any notice, request or other communication to be given to the
Corporation by a holder of Exchangeable Shares shall be in writing and shall be
valid and effective if given by mail (postage prepaid) or by telecopy or by
delivery to the registered office of the Corporation and addressed to the
attention of the Chairman and Chief Executive Officer. Any such notice, request
or other communication, if given by mail, telecopy or delivery, shall only be
deemed to have been given and received upon actual receipt thereof by the
Corporation.
14.2 Any presentation and surrender by a holder of Exchangeable Shares to
the Corporation or the Transfer Agent of certificates representing Exchangeable
Shares in connection with the liquidation, dissolution or winding-up of the
Corporation or the retraction, redemption or exchange of Exchangeable Shares
shall be made by registered mail (postage prepaid) or by delivery to the
registered office of the Corporation or to such office of the Transfer Agent as
may be specified in these share provisions or otherwise by the Corporation, in
each case addressed to the attention of the Chairman and Chief Executive
Officer of the Corporation. Any such presentation and surrender of certificates
shall only be deemed to have been made and to be effective upon actual receipt
thereof by the Corporation or the Transfer Agent, as the case may be, and the
method of any such presentation and surrender of certificates shall be at the
sole risk of the holder.
14.3 Any notice, request or other communication to be given to a holder of
Exchangeable Shares by or on behalf of the Corporation shall be in writing and
shall be valid and effective if given by mail (postage prepaid) or by delivery
to the address of the holder recorded in the securities register of the
Corporation or, in the event of the address of any such holder not being so
recorded, then at the last known address of such holder. Any such notice,
request or other communication, if given by mail, shall be deemed to have been
given and received
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on the fifth Business Day following the date of mailing and, if given by
delivery, shall be deemed to have been given and received on the date of
delivery. Accidental failure or omission to give any notice, request or other
communication to one or more holders of Exchangeable Shares shall not
invalidate or otherwise alter or affect any action or proceeding to be or
intended to be taken by the Corporation.
14.4 For greater certainty, the, Corporation shall not be required for any
purpose under these share provisions to recognize or take account of persons
who are not so recorded in such securities register.
14.5 All Exchangeable Shares acquired by the Corporation upon the
redemption or retraction thereof shall be cancelled.
PROVISIONS ATTACHING TO THE COMMON SHARE
The Common Share in the capital of the Corporation shall have attached
thereto the following rights, privileges, restrictions and conditions:
DIVIDENDS
Subject to the prior rights of the Exchangeable Shares and any other
shares ranking prior to the Common Share, the holder of the Common Share shall
be entitled to receive such dividends as may be declared by the Board of
Directors out of property of the Corporation legally available therefor.
LIQUIDATION
Subject to the prior rights of the Exchangeable Shares and any other
shares ranking prior to the Common Share, the holder of the Common Share shall,
upon any liquidation, dissolution or winding-up of the Corporation, whether
voluntary or involuntary, or other distribution of the assets of the
Corporation for the purpose of winding-up its affairs, be entitled to receive
the remaining property and assets of the Corporation.
VOTING
The holder of the Common Share shall be entitled to receive notice of
and to attend all meetings of shareholders (other than separate meetings of
other classes or series of shares), and the Common Share shall be entitled to
one vote.
RESTRICTIONS
As long as any of the Exchangeable Shares of the Corporation are
outstanding, the Corporation shall not at any time without, but may at any time
with, the approval of the board of directors and of the holder of the Common
Share issue any further Exchangeable Shares of the Corporation, except as
specifically required in accordance with the rights, privileges, restrictions
and conditions attaching to the Exchangeable Shares of the Corporation.
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SCHEDULE "A"
NOTICE OF RETRACTION
To: ITI Education Corporation (the "Corporation") and EduTrek
International, Inc. ("EduTrek")
This notice is given pursuant to Article 6 of the provisions (the
"SHARE PROVISIONS") attaching to the Exchangeable Shares of the Corporation and
all capitalized words and expressions used in this notice which are defined in
the Share Provisions have the meaning attributed to such words and expressions
in such Share Provisions.
The undersigned hereby notifies the Corporation that, subject to the
Retraction Call Right referred to below, the undersigned desires to have the
Corporation redeem in accordance with Article 6 of the Share Provisions:
[ ] all share(s) represented by the accompanying certificate; or
[ ] ___________ share(s) only.
The undersigned hereby notifies the Corporation that the Retraction
Date shall be ________________
NOTE: The Retraction Date must be a Business Day and must not be
less than five Business Days nor more than ten Business Days
after the date upon which this notice and the accompanying
shares are received by the Corporation. In the event that no
such business day is correctly specified above, the
Retraction Date shall be deemed to be the tenth Business Day
after the date on which this notice is received by the
Corporation.
The undersigned acknowledges the Retraction Call Right of EduTrek to
purchase all but not less than all the Retracted Shares from the undersigned
and that this notice shall be deemed to be a revocable offer by the undersigned
to sell the Retracted Shares to EduTrek in accordance with the Retraction Call
Right on the Retraction Date for the Retraction Price and on the other terms
and conditions set out in Section 6.3 of the Share Provisions. If EduTrek
determines not to exercise the Retraction Call Right, the Corporation will
notify the undersigned of such fact as soon as possible. This notice of
retraction, and offer to sell the Retracted Shares to EduTrek, may be revoked
and withdrawn by the undersigned by notice in writing given to the Corporation
at any time before the close of business on the Business Day immediately
preceding the Retraction Date.
The undersigned acknowledges that if, as a result of liquidity or
solvency provisions of applicable law, the Corporation is unable to redeem all
Retracted Shares, the undersigned will be deemed to have exercised the Exchange
Right (as defined in the Voting and Exchange Trust Agreement) so as to require
EduTrek to purchase the unredeemed Retracted Shares.
The undersigned hereby represents and warrants to the Corporation and
EduTrek that the undersigned has good title to, and owns, the share(s)
represented by the accompanying certificate free and clear of all liens,
claims, encumbrances, security interests and adverse claims or interests.
- ----------------------- -------------------------- ------------------------
(Date) (Signature of Shareholder) (Guarantee of Signature)
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[ ] Please check box ifthe legal or beneficial owner of the Retracted
Shares is a non-resident of Canada.
[ ] Please check box if the securities and any cheque(s) or other non-cash
assets resulting from the retraction or purchase of the Retracted
Shares are to be held for pick-up by the shareholder at the principal
transfer office of [Trust Company] (the "TRANSFER AGENT") in Halifax,
Nova Scotia, failing which the securities and any cheque(s) or other
non-cash assets will be delivered to the shareholder in accordance
with the Share Provisions.
NOTE: This panel must be completed and the accompanying share
certificate, together with such additional documents as the
Transfer Agent may require, must be deposited with the
Transfer Agent at its principal transfer office in Halifax,
Nova Scotia. The securities and any cheque(s) or other
non-cash assets resulting from the retraction or purchase of
the Retracted Shares will be issued and registered in, and
made payable to, or transferred into, respectively, the name
of the shareholder as it appears on the register of the
Corporation and the securities, cheque(s) and other non-cash
assets resulting from such retraction or purchase will be
delivered to the shareholder in accordance with the Share
Provisions.
- --------------------------------------------- -----------------------------
Name of Person in Whose Name Securities or Date
Cheque(s) or Other Non-cash Assets Are To
Be Registered, Issued or Delivered (please
print)
- --------------------------------------------- -----------------------------
Street Address or P.O. Box Signature of Shareholder
- --------------------------------------------- -----------------------------
City, Province/State, Postal/Zip Code Signature Guaranteed by
NOTE: If the notice of retraction is for less than all of the share(s)
represented by the accompanying certificate, a certificate
representing the remaining shares of the Corporation will be issued
and registered in the name of the shareholder as it appears on the
register of the Corporation or its lawful transferee.
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EXHIBIT B
SUPPORT AGREEMENT
THIS SUPPORT AGREEMENT is entered into as of o o , 1998, between
EduTrek International, Inc., a Georgia corporation ("EduTrek"), and ITI
Education Corporation, a corporation incorporated under the Canada Business
Corporations Act ("ITI").
RECITALS
WHEREAS, pursuant to a Combination Agreement dated as of December 10,
1997, by and between EduTrek and ITI (such agreement as it may be amended or
restated is hereinafter referred to as the "Combination Agreement") the parties
agreed that on the Effective Date (as defined in the Combination Agreement),
EduTrek and ITI would execute and deliver a Support Agreement substantially in
the form of Exhibit B to the Combination Agreement and containing such other
terms and conditions as may be agreed to by the parties to the Combination
Agreement acting reasonably.
WHEREAS, pursuant to an arrangement (the "Arrangement") effected by
Articles of Arrangement dated o, 1998 filed pursuant to the Canada Business
Corporations Act (or any successor or other corporate statute by which ITI may
in the future be governed) (the "Act") each issued and outstanding common share
of ITI (each, an "ITI Common Share") was exchanged for one issued and
outstanding Exchangeable Share of ITI (each, an "Exchangeable Share") and
thereafter, ITI's sole issued and outstanding Class A Preferred Share was
exchanged by the holder thereof for one issued and outstanding ITI Common Share.
WHEREAS, the above-mentioned Articles of Arrangement set forth, among
other things, the rights, privileges, restrictions and conditions (collectively
the "Exchangeable Share Provisions") attaching to the Exchangeable Shares.
WHEREAS, the parties hereto desire to make appropriate provision and to
establish a procedure whereby EduTrek will take certain actions and make certain
payments and deliveries necessary to ensure that ITI will be able to make
certain payments and to deliver or cause to be delivered shares of EduTrek Class
A Common Stock ("EduTrek Common Stock") in satisfaction of the obligations of
ITI under the Exchangeable Share Provisions with respect to the payment and
satisfaction of dividends, Liquidation Amounts, Retraction Prices and Redemption
Prices, all in accordance with the Exchangeable Share Provisions.
NOW THEREFORE, in consideration of the respective covenants and
agreements provided in this agreement and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 Defined Terms. Each term denoted herein by initial capital letters
and not otherwise defined herein shall have the meaning attributed thereto in
the Exchangeable Share Provisions, unless the context requires otherwise.
1.2 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.
<PAGE> 72
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1.3 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.
1.4 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.
ARTICLE II
COVENANTS OF EDUTREK AND ITI
2.1 Covenants of EduTrek Regarding Exchangeable Shares. So long as any
Exchangeable Shares are outstanding, EduTrek will:
(a) not declare or pay any dividend on EduTrek Common Stock unless
(i) ITI will have sufficient assets, funds and other property
available to enable the due declaration and the due and
punctual payment in accordance with applicable law of an
equivalent dividend on the Exchangeable Shares and (ii)
subsection 2.1(b) shall be complied with in connection with
such dividend;
(b) cause ITI to declare simultaneously with the declaration of
any dividend on EduTrek Common Stock an equivalent dividend on
the Exchangeable Shares and, when such dividend is paid on
EduTrek Common Stock, cause ITI to pay simultaneously
therewith such equivalent dividend on the Exchangeable Shares,
in each case in accordance with the Exchangeable Share
Provisions;
(c) advise ITI sufficiently in advance of the declaration by
EduTrek of any dividend on EduTrek Common Stock and take all
such other actions as are necessary, in cooperation with ITI,
to ensure that the respective declaration date, record date
and payment date for a dividend on the Exchangeable Shares
shall be the same as the declaration date, record date and
payment date for the corresponding dividend on EduTrek Common
Stock and that such dividend on the Exchangeable Shares will
correspond with any requirement of the principal stock
exchange on which the Exchangeable Shares are listed;
(d) ensure that the record date for any dividend declared on
EduTrek Common Stock is not less than ten Business Days after
the declaration date for such dividend;
(e) take all such actions and do all such things as are necessary
or desirable to enable and permit ITI, in accordance with
applicable law, to pay and otherwise perform its obligations
with respect to the satisfaction of the Liquidation Amount in
respect of each issued and outstanding Exchangeable Share upon
the liquidation, dissolution or winding-up of ITI or any other
distribution of the assets of ITI for the purpose of winding
up its affairs, including without limitation all such actions
and all such things as are necessary or desirable to enable
and permit ITI to cause to be delivered shares of EduTrek
Common Stock to the holders of Exchangeable Shares in
accordance with the provisions of Article 5 of the
Exchangeable Share Provisions; and
(f) take all such actions and do all such things as are necessary
or desirable to enable and permit ITI, in accordance with
applicable law, to pay and otherwise perform its obligations
with
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respect to the satisfaction of the Retraction Price and the
Redemption Price, including without limitation all such
actions and all such things as are necessary or desirable to
enable and permit ITI to cause to be delivered shares of
EduTrek Common Stock to the holders of Exchangeable Shares,
upon the retraction or redemption of the Exchangeable Shares
in accordance with the provisions of Article 6 or Article 7 of
the Exchangeable Share Provisions, as the case may be.
2.2 Segregation of Funds. EduTrek will cause ITI to deposit a
sufficient amount of funds in a separate account and segregate a sufficient
amount of such assets and other property as is necessary to enable ITI to pay or
otherwise satisfy the applicable dividends, Liquidation Amount, Retraction Price
or Redemption Price, in each case for the benefit of holders from time to time
of the Exchangeable Shares, and ITI will use such funds, assets and other
property so segregated exclusively for the payment of dividends and the payment
or other satisfaction of the Liquidation Amount, the Retraction Price or the
Redemption Price, as applicable, net of any corresponding withholding tax
obligations and for the remittance of such withholding tax obligations.
2.3 Covenants of EduTrek Regarding Options. EduTrek will issue the
shares of EduTrek Common Stock which holders of options to purchase shares of
EduTrek Common Stock (the "Converted EduTrek Options") obtained upon conversion
of Options (as defined in the Plan of Arrangement) pursuant to the Plan of
Arrangement are entitled to purchase, upon the due exercise of such Converted
EduTrek Options by the holder and payment of the purchase price for such shares
of EduTrek Common Stock.
2.4 Reservation of Shares of EduTrek Common Stock. EduTrek 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
EduTrek Common Stock (or other shares or securities into which EduTrek Common
Stock may be reclassified or changed as contemplated by Section 2.8 hereof),
(a) as is equal to the sum of (i) the number of Exchangeable
Shares issued and outstanding from time to time and (ii) the
number of Exchangeable Shares issuable upon the exercise of
all rights to acquire Exchangeable Shares outstanding from
time to time, and (iii) the number of outstanding Converted
EduTrek Options, and
(b) as are now and may hereafter be required to enable and permit
ITI to meet its obligations hereunder, under the Voting and
Exchange Trust Agreement, under the Exchangeable Share
Provisions and under any other security or commitment pursuant
to the Arrangement with respect to which EduTrek may now or
hereafter be required to issue shares of EduTrek Common Stock.
2.5 Notification of Certain Events. In order to assist EduTrek to
comply with its obligations hereunder, ITI will give EduTrek notice of each of
the following events at the time set forth below:
(a) immediately, in the event of any determination by the Board of
Directors of ITI to take any action which would require a vote
of the holders of Exchangeable Shares for approval;
(b) immediately, upon the earlier of (i) receipt by ITI of notice
of, and (ii) ITI otherwise becoming aware of, any threatened
or instituted claim, suit, petition or other proceedings with
respect to the involuntary liquidation, dissolution or
winding-up of ITI or to effect any other distribution of the
assets of ITI among its shareholders for the purpose of
winding-up its affairs;
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(c) immediately, upon receipt by ITI of a Retraction Request (as
defined in the Exchangeable Share Provisions);
(d) at least 130 days prior to any Automatic Redemption Date
determined by the Board of Directors of ITI in accordance with
clause (b) of the definition of Automatic Redemption Date in
the Exchangeable Share Provisions; and
(e) as soon as practicable upon the issuance by ITI of any
Exchangeable Shares or rights to acquire Exchangeable Shares.
2.6 Delivery of Shares of EduTrek Common Stock. In furtherance of its
obligations hereunder, upon notice of any event which requires ITI to cause to
be delivered shares of EduTrek Common Stock to any holder of Exchangeable Shares
or Converted EduTrek Options, EduTrek shall forthwith issue and deliver the
requisite shares of EduTrek Common Stock to or to the order of the former holder
of the surrendered Exchangeable Shares, as ITI shall direct, or, upon payment
therefor, the former holder of duly exercised Converted EduTrek Options, as the
case may be. All such shares of EduTrek Common Stock shall be duly issued as
fully paid and non-assessable, will not be issued in violation of the terms of
any agreement or other understanding binding upon EduTrek and will be issued in
compliance with all applicable charter documents of EduTrek and all applicable
federal, state and foreign laws, rules and regulations and shall be free and
clear of any lien, claim, encumbrance, security interest or adverse claim or
interest.
2.7 Qualification of Shares of EduTrek Common Stock. EduTrek covenants
that if any shares of EduTrek Common Stock to be issued and delivered hereunder
(including for greater certainty, pursuant to the Plan of Arrangement, the
Exchangeable Share Provisions, or pursuant to the Exchange Put Right, the
Exchange Right or the Automatic Exchange Rights (all as defined in the Voting
and Exchange Trust Agreement) and the exercise of Converted EduTrek Options)
require registration or qualification with or approval of or the filing of any
document including any prospectus or similar document with, the taking of any
proceeding with or the obtaining of any order, ruling or consent from, any
governmental or regulatory authority under any Canadian or United States
federal, provincial or state law or regulation or pursuant to the rules and
regulations of any regulatory authority, or the fulfilment of any other legal
requirement (collectively, the "Applicable Laws") before such shares may be
issued and delivered by EduTrek to the initial holder thereof (other than ITI)
or in order that such shares may be freely traded thereafter pursuant to
applicable securities laws (other than any restrictions on transfer by reason of
a holder being a "control person" of EduTrek for purposes of Canadian federal or
provincial securities law or an "affiliate" of EduTrek for purposes of United
States federal or state securities law), EduTrek will in good faith
expeditiously take all such actions and do all such things as are necessary to
cause such shares of EduTrek Common Stock to be and remain duly registered,
qualified or approved. EduTrek represents and warrants that it has in good faith
taken all actions and done all things as are necessary under Applicable Laws as
they exist on the date hereof to cause the shares of EduTrek Common Stock to be
issued and delivered hereunder (including, for greater certainty, pursuant to
the Exchangeable Share Provisions or pursuant to the Exchange Put Right, the
Exchange Right and the Automatic Exchange Rights) to be freely tradeable
thereafter pursuant to applicable securities laws (other than restrictions on
transfer by reason of a holder being a "control person" of EduTrek for the
purposes of Canadian federal and provincial securities law or an "affiliate" of
EduTrek for purposes of United States federal or state securities law). EduTrek
will in good faith expeditiously take all such actions and do all such things as
are necessary to cause all shares of EduTrek Common Stock to be delivered
hereunder (including, for greater certainty, pursuant to Exchangeable Share
Provisions or pursuant to the Exchange Put Right, the Exchange Right or the
Automatic Exchange Rights) to be listed, quoted or posted for trading on all
stock exchanges and quotation systems on which the EduTrek Common Stock is
listed, quoted or posted for trading at such time. EduTrek will in good faith
expeditiously take all such action and do all such things as are necessary to
cause all Exchangeable Shares to be and to continue to be listed and posted for
trading on a stock exchange in Canada.
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2.8 Equivalence.
(a) EduTrek will not:
(i) issue or distribute shares of EduTrek Common Stock
(or securities exchangeable for or convertible into
or carrying rights to acquire shares of EduTrek
Common Stock) to the holders of all or substantially
all of the then outstanding shares of EduTrek Common
Stock by way of stock dividend or other distribution;
or
(ii) issue or distribute rights, options or warrants to
the holders of all or substantially all of the then
outstanding shares of EduTrek Common Stock entitling
them to subscribe for or to purchase shares of
EduTrek Common Stock (or securities exchangeable for
or convertible into or carrying rights to acquire
shares of EduTrek Common Stock); or
(iii) issue or distribute to the holders of all or
substantially all of the then outstanding shares of
EduTrek Common Stock (A) shares or securities of
EduTrek of any class other than EduTrek Common Stock
(other than securities convertible into or
exchangeable for or carrying rights to acquire shares
of EduTrek Common Stock), (B) any other rights,
options or warrants not referred to in subsection
2.8(a)(ii) above, (C) evidences of indebtedness of
EduTrek or (D) assets of EduTrek;
unless
(iv) one or both of EduTrek and ITI is permitted under
Applicable Law to issue or distribute the economic
equivalent on a per share basis of such rights,
options, warrants, securities, shares, evidences of
indebtedness or other assets to holders of the
Exchangeable Shares; and
(v) one or both of EduTrek and ITI shall issue or
distribute such rights, options, warrants,
securities, shares, evidences of indebtedness or
other assets simultaneously to holders of the
Exchangeable Shares.
(b) EduTrek will not:
(i) subdivide, redivide or change the then outstanding
shares of EduTrek Common Stock into a greater number
of shares of EduTrek Common Stock; or
(ii) reduce, combine or consolidate or change the then
outstanding shares of EduTrek Common Stock into a
lesser number of shares of EduTrek Common Stock; or
(iii) reclassify or otherwise change the shares of EduTrek
Common Stock or effect an amalgamation, merger,
reorganization or other transaction affecting the
shares of EduTrek Common Stock;
unless
(iv) ITI is permitted under Applicable Law to
simultaneously make the same or an economically
equivalent change to, or in the rights of holders of,
the Exchangeable Shares and
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(v) the same or an economically equivalent change is
simultaneously made to, or in the rights of the
holders of, the Exchangeable Shares.
(c) EduTrek will ensure that the record date for any event
referred to in section 2.8(a) or 2.8(b) above, or, if no
record date is applicable for such event, the effective date
for any such event, is not less than 20 Business Days after
the date on which such event is declared or announced by
EduTrek (with simultaneous notice thereof to be given by
EduTrek to ITI).
2.9 Tender Offers, Etc. In the event that a tender offer, share
exchange offer, issuer bid, take-over bid or similar transaction with respect to
EduTrek Common Stock (an "Offer") is proposed by EduTrek or is proposed to
EduTrek or its shareholders and is recommended by the Board of Directors of
EduTrek, or is otherwise effected or to be effected with the consent or approval
of the Board of Directors of EduTrek, EduTrek shall, in good faith, take all
such actions and do all such things as are necessary or desirable to enable and
permit holders of Exchangeable Shares to participate in such Offer to the same
extent and on an equivalent basis as the holders of shares of EduTrek Common
Stock, without discrimination, and, without limiting the generality of the
foregoing, EduTrek will use its good faith efforts expeditiously to (and shall,
in the case of a transaction proposed by EduTrek or where EduTrek is a
participant in the negotiation thereof) ensure that holders of Exchangeable
Shares may participate in all such Offers without being required to retract
Exchangeable Shares as against ITI (or, if so required, to ensure that any such
retraction shall be effective only upon, and shall be conditional upon, the
closing of the Offer and only to the extent necessary to tender or deposit to
the Offer).
2.10 Ownership of Outstanding Shares. Without the prior approval of ITI
and the prior approval of the holders of the Exchangeable Shares given in
accordance with Section 10.1 of the Exchangeable Share Provisions, EduTrek
covenants and agrees in favour of ITI that, as long as any outstanding
Exchangeable Shares are owned by any person or entity other than EduTrek or any
of its Subsidiaries, EduTrek will be and remain the direct or indirect
beneficial owner of all issued and outstanding ITI Common Shares and of at least
50.1% of all other securities of ITI carrying or entitled to voting rights in
any circumstances generally for the election of directors, in each case other
than the Exchangeable Shares.
2.11 EduTrek Not to Vote Exchangeable Shares. EduTrek covenants and
agrees that it will appoint and cause to be appointed proxy holders with respect
to all Exchangeable Shares held by EduTrek and its Subsidiaries for the sole
purpose of attending each meeting of holders of Exchangeable Shares in order to
be counted as part of the quorum for each such meeting. EduTrek further
covenants and agrees that it will not, and will cause its Subsidiaries not to,
exercise any voting rights which may be exercisable by holders of Exchangeable
Shares from time to time pursuant to the Exchangeable Share Provisions or
pursuant to the provisions of the Act with respect to any Exchangeable Shares
held by it or by its Subsidiaries in respect of any matter considered at any
meeting of holders of Exchangeable Shares.
2.12 Due Performance. On and after the Effective Date, EduTrek shall
duly and timely perform all of its obligations provided for in the Plan of
Arrangement, including any obligations that may arise upon the exercise of
EduTrek's rights under the Exchangeable Share Provisions.
ARTICLE III
GENERAL
3.1 Term. This agreement shall come into force and be effective as of
the date hereof and shall terminate and be of no further force and effect at
such time as no Exchangeable Shares (or securities or rights
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convertible into or exchangeable for or carrying rights to acquire Exchangeable
Shares) and no outstanding Converted EduTrek Options are held by any party other
than EduTrek and any of its Subsidiaries.
3.2 Changes in Capital of EduTrek and ITI. Notwithstanding the
provisions of Section 3.4 hereof, at all times after the occurrence of any event
effected pursuant to Section 2.8 or 2.9 hereof, as a result of which either
EduTrek Common Stock or the Exchangeable Shares or both are in any way changed,
this Agreement shall forthwith be amended and modified as necessary in order
that it shall apply with full force and effect, mutatis mutandis, to all new
securities into which shares of EduTrek Common Stock or the Exchangeable Shares
or both are so changed, and the parties hereto shall execute and deliver an
agreement in writing giving effect to and evidencing such necessary amendments
and modifications.
3.3 Severability. If any provision of this Agreement is held to be
invalid, illegal or unenforceable, the validity, legality or enforceability of
the remainder of this Agreement shall not in any way be affected or impaired
thereby and this Agreement shall be carried out as nearly as possible in
accordance with its original terms and conditions.
3.4 Amendments, Modifications, Etc. Subject to Sections 3.2 and 3.5,
this Agreement may not be amended, modified or waived except by an agreement in
writing executed by ITI and EduTrek and approved by the holders of the
Exchangeable Shares in accordance with Section 10.1 of the Exchangeable Share
Provisions.
3.5 Ministerial Amendments. Notwithstanding the provisions of Section
3.4, the parties to this Agreement may in writing, at any time and from time to
time, without the approval of the holders of the Exchangeable Shares, amend or
modify this Agreement for the purposes of:
(a) adding to the covenants of either or both parties for the
protection of the holders of the Exchangeable Shares;
(b) making such amendments or modifications not inconsistent with
this agreement as may be necessary or desirable with respect
to matters or questions which, in the opinion of the board of
directors of each of ITI and EduTrek, it may be expedient to
make, provided that each such board of directors shall be of
the opinion that such amendments or modifications will not be
prejudicial to the interests of the holders of the
Exchangeable Shares; or
(c) making such changes or corrections which, on the advice of
counsel to ITI and EduTrek, are required for the purpose of
curing or correcting any ambiguity or defect or inconsistent
provision or clerical omission or mistake or manifest error,
provided that the boards of directors of each of ITI and
EduTrek shall be of the opinion that such changes or
corrections will not be prejudicial to the interests of the
holders of the Exchangeable Shares.
3.6 Meeting to Consider Amendments. ITI, at the request of EduTrek,
shall call a meeting or meetings of the holders of the Exchangeable Shares for
the purpose of considering any proposed amendment or modification requiring
approval of such shareholders. Any such meeting or meetings shall be called and
held in accordance with the by-laws of ITI, the Exchangeable Share Provisions
and Applicable Laws.
3.7 Amendments Only in Writing. No amendment to or modification or
waiver of any of the provisions of this Agreement otherwise permitted hereunder
shall be effective unless made in writing and signed by both of the parties
hereto.
<PAGE> 78
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3.8 Enurement. This Agreement shall be binding upon and enure to the
benefit of the parties hereto and the holders, from time to time, of
Exchangeable Shares and each of their respective heirs, successors and assigns.
3.9 Notices to Parties. All notices and other communications between
the parties shall be in writing and shall be deemed to have been given if
delivered personally or by confirmed telecopy to the parties at the following
addresses (or at such other address for either such party as shall be specified
in like notice):
(a) if to EduTrek to: EduTrek International, Inc., 3340 Peachtree
Road, Suite 2000, Atlanta, Georgia, USA 30326, Attention: Mr.
R. Steven Bostic, Chairman and Chief Executive Officer,
Facsimile No. (404) 812-8204, with required copies to Smith,
Gambrell & Russell, LLP, Suite 3100, Promenade II, 1230
Peachtree Street, N.E., Atlanta, Georgia, USA 30309- 3592,
Attention: A. Jay Schwartz, Esq., Facsimile No. (404)
685-6932, and to Blake, Cassels & Graydon, Suite 2800, Box 25,
Commerce Court West, Toronto, Ontario, Canada M5L 1A9,
Attention: Ms Pamela S. Hughes, Facsimile No. (416) 863-2653.
(b) if to ITI to: ITI Education Corporation, 1791 Barrington
Street, Suite 1400, Halifax, Nova Scotia, Canada B3J 3K9,
Attention: Mr. Daniel F. Potter, Chairman and Chief Executive
Officer, Facsimile No. (902) 492-2288, with required copies to
Stewart McKelvey Stirling Scales, Purdy's Wharf, Tower One,
1959 Upper Water Street, Halifax, Nova Scotia, Canada B3J 2X2,
Attention: Mr. R. Blois Colpitts, Facsimile No. (902)
496-6183.
Any notice or other communication given personally shall be deemed to
have been given and received upon delivery thereof and if given by telecopy
shall be deemed to have been given and received on the date of confirmed receipt
thereof, unless such day is not a Business Day, in which case it shall be deemed
to have been given and received upon the immediately following Business Day.
3.10 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, and all of which taken together shall
constitute one and the same instrument.
3.11 Jurisdiction. This Agreement shall be construed and enforced in
accordance with the laws of the State of Georgia and the laws of the United
States applicable therein.
3.12 Attornment. The parties agree that any action or proceeding
arising out of or relating to this agreement may be instituted in the courts of
the State of Georgia, waives any objection which it may have now or hereafter to
the venue of any such action or proceeding, irrevocably submits to the
jurisdiction of such courts in any such action or proceeding, agrees to be bound
by any judgment of such courts and not to seek, and hereby waives, any review of
the merits of any such judgment by the courts of any other jurisdiction.
IN WITNESS WHEREOF, EduTrek and ITI have caused this agreement to be
signed by their respective officers duly authorized, all as of the date first
written above.
EDUTREK INTERNATIONAL, INC.
By:
------------------------------------
R. Steven Bostic
Chairman and Chief Executive Officer
<PAGE> 79
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ITI EDUCATION CORPORATION
By:
------------------------------------
By:
------------------------------------
<PAGE> 80
EXHIBIT C
VOTING AND EXCHANGE TRUST AGREEMENT
THIS VOTING AND EXCHANGE TRUST AGREEMENT is entered into as of , 1998,
by and between EduTrek International, Inc., a Georgia corporation ("EduTrek"),
ITI Education Corporation, a corporation incorporated under the Canada Business
Corporations Act ("ITI"), and Trust Company, a Canadian trust company
("Trustee").
WHEREAS, pursuant to a Combination Agreement dated as of December 10,
1997, by and between EduTrek and ITI (such agreement as it may be amended or
restated is hereinafter referred to as the "Combination Agreement") the parties
agreed that on the Effective Date (as defined in the Combination Agreement),
EduTrek and ITI would execute and deliver a Voting and Exchange Trust Agreement
substantially in the form of Exhibit C to the Combination Agreement and
containing such other terms and conditions as may be agreed to by the parties to
the Combination Agreement acting reasonably.
WHEREAS, pursuant to an arrangement (the "Arrangement") effected by
Articles of Arrangement dated , 1998 filed pursuant to the Canada
Business Corporations Act (or any successor or other corporate statute by which
ITI may in the future be governed) (the "Act"), each issued and outstanding
common share of ITI (an "ITI Common Share") was exchanged for issued
and outstanding Exchangeable Shares of ITI (the "Exchangeable Shares"), and
thereafter, ITI's sole issued and outstanding Class A Preferred Share was
exchanged by the holder thereof for one issued and outstanding ITI Common Share.
WHEREAS, the above-mentioned Articles of Arrangement set forth the
rights, privileges, restrictions and conditions attaching to the Exchangeable
Shares (collectively, the "Exchangeable Share Provisions").
WHEREAS, EduTrek is to provide voting rights in EduTrek to each holder
(other than EduTrek and its Subsidiaries) from time to time of Exchangeable
Shares, such voting rights per Exchangeable Share to be equivalent to the voting
rights per share of EduTrek Common Stock.
WHEREAS, EduTrek is to grant to and in favor of the holders (other than
EduTrek and its Subsidiaries) from time to time of Exchangeable Shares the
right, in the circumstances set forth herein, to require EduTrek to purchase
from each such holder all or any part of the Exchangeable Shares held by the
holder.
WHEREAS, the parties desire to make appropriate provision and to
establish a procedure whereby voting rights in EduTrek shall be exercisable by
holders (other than EduTrek and its Subsidiaries) from time to time of
Exchangeable Shares by and through the Trustee, which will hold legal title to
one share of EduTrek Special Voting Stock (the "EduTrek Special Voting Stock")
to which voting rights attach for the benefit of such holders and whereby the
rights to require EduTrek to purchase Exchangeable Shares from the holders
thereof (other than EduTrek and its Subsidiaries) shall be exercisable by such
holders from time to time of Exchangeable Shares by and through the Trustee,
which will hold legal title to such rights for the benefit of such holders.
WHEREAS, these recitals and any statements of fact in this agreement
are made by EduTrek and ITI and not by the Trustee.
NOW, THEREFORE, in consideration of the respective covenants and
agreements provided in this agreement and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties agree as follows:
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ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS. In this agreement, the following terms shall have the
following meanings:
"AGGREGATE EQUIVALENT VOTE AMOUNT" means, with respect to any matter,
proposition or question on which holders of shares of EduTrek Common Stock are
entitled to vote, consent or otherwise act, the product of (i) the number of
Exchangeable Shares issued and outstanding and held by Holders multiplied by
(ii) the Equivalent Vote Amount.
"ARRANGEMENT" has the meaning provided in the recitals hereto.
"AUTOMATIC EXCHANGE RIGHTS" means the benefit of the obligation of
EduTrek to effect the automatic exchange of shares of EduTrek Common Stock for
Exchangeable Shares pursuant to Section 5.12 hereof.
"BOARD OF DIRECTORS" means the Board of Directors of ITI.
"BUSINESS DAY" has the meaning provided in the Exchangeable Share
Provisions;
"EDUTREK COMMON STOCK" has the meaning provided in the Exchangeable
Share Provisions.
"EDUTREK CONSENT" has the meaning provided in Section 4.2 hereof.
"EDUTREK MEETING" has the meaning provided in Section 4.2 hereof.
"EDUTREK SPECIAL VOTING STOCK" has the meaning provided in the recitals
hereto.
"EDUTREK SUCCESSOR" has the meaning provided in subsection 11.1(a)
hereof.
"EQUIVALENT VOTE AMOUNT" means, with respect any matter, proposition or
question on which holders of shares of EduTrek Common Stock are entitled to
vote, consent or otherwise act, the number of votes to which a holder of one
share of EduTrek Common Stock is entitled with respect to such matter,
proposition or question.
"EXCHANGE PUT RIGHT" has the meaning provided in the Exchangeable Share
Provisions.
"EXCHANGE RIGHT" has the meaning provided in Article V hereof.
"EXCHANGEABLE SHARE CONSIDERATION" has the meaning provided in the
Exchangeable Share Provisions.
"EXCHANGEABLE SHARE PRICE" has the meaning provided in the Exchangeable
Share Provisions.
"EXCHANGEABLE SHARE PROVISIONS" has the meaning provided in the
recitals hereto.
"EXCHANGEABLE SHARES" has the meaning provided in the recitals hereto.
"HOLDER VOTES" has the meaning provided in Section 4.2 hereof.
"HOLDERS" means the registered holders from time to time of
Exchangeable Shares, other than EduTrek and its Subsidiaries.
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<PAGE> 82
"INSOLVENCY EVENT" means the institution by ITI of any proceeding to be
adjudicated a bankrupt or insolvent or to be dissolved or wound-up, or the
consent of ITI 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 ITI to contest in good faith any such proceedings commenced in
respect of ITI within 15 days of becoming aware thereof, or the consent by ITI
to the filing of any such petition, answer or consent or to the appointment of a
receiver, or the making by ITI of a general assignment for the benefit of
creditors, or the admission in writing by ITI of its inability to pay its debts
generally as they become due, or ITI's not being permitted, pursuant to
liquidity or solvency requirements of applicable law, to redeem any Retracted
Shares pursuant to Section 6.6 of the Exchangeable Share Provisions.
"ITI COMMON SHARES" has the meaning provided in the recitals hereto.
"LIQUIDATION CALL RIGHT" has the meaning provided in the Exchangeable
Share Provisions.
"LIQUIDATION EVENT" has the meaning provided in subsection 5.12(b)
hereof.
"LIQUIDATION EVENT EFFECTIVE TIME" has the meaning provided in
subsection 5.12(c) hereof.
"LIST" has the meaning provided in Section 4.6 hereof.
"OFFICER'S CERTIFICATE" means, with respect to EduTrek or ITI, as the
case may be, a certificate signed by any one of the Chairman of the Board, the
Vice-Chairman of the Board (if there is one), the Chief Executive Officer, the
President or any Vice-President of EduTrek or ITI, as the case may be.
"PERSON" includes an individual, body corporate, partnership, company,
unincorporated syndicate or organization, trust, trustee, executor,
administrator and other legal representative.
"PLAN OF ARRANGEMENT" has the meaning provided in the Exchangeable
Share Provisions.
"REDEMPTION CALL RIGHT" has the meaning provided in the Exchangeable
Share Provisions.
"RETRACTED SHARES" has the meaning provided in Section 5.7 hereof.
"RETRACTION CALL RIGHT" has the meaning provided in the Exchangeable
Share Provisions.
"SUBSIDIARY" has the meaning provided in the Exchangeable Share
Provisions.
"SUPPORT AGREEMENT" means that certain support agreement made as of
even date hereof by and between EduTrek and ITI.
"TRUST" means the trust created by this agreement.
"TRUST ESTATE" means the Voting Share, any other securities, the
Exchange Put Right, the Exchange Right, the Automatic Exchange Rights and any
money or other property which may be held by the Trustee from time to time
pursuant to this agreement.
"Trustee" means Trust Company and, subject to the
provisions of Article X hereof, includes any successor trustee or permitted
assigns.
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"VOTING RIGHTS" means the voting rights attached to the Voting Share.
"VOTING SHARE" means the one share of EduTrek Special Voting Stock,
without par value, issued by EduTrek to and deposited with the Trustee, which
entitles the holder of record to a number of votes at meetings of holders of
shares of EduTrek Common Stock equal to the Aggregate Equivalent Vote Amount.
1.2 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.
1.3 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.
1.4 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.
ARTICLE II
PURPOSE OF AGREEMENT AND ESTABLISHMENT OF TRUST
The purpose of this agreement is to create the Trust for the benefit of
the Holders, as herein provided. The Trustee will hold the Voting Share in order
to enable the Trustee to exercise the Voting Rights, and will hold the Exchange
Put Right, the Exchange Right and the Automatic Exchange Rights in order to
enable the Trustee to exercise such rights, in each case as trustee for and on
behalf of the Holders as provided in this agreement.
ARTICLE III
VOTING SHARE
3.1 ISSUANCE AND OWNERSHIP OF THE VOTING SHARE. EduTrek hereby issues
to and deposits with the Trustee the Voting Share to be hereafter held of record
by the Trustee as trustee for and on behalf of, and for the use and benefit of,
the Holders and in accordance with the provisions of this agreement. EduTrek
hereby acknowledges receipt from the Trustee as trustee for and on behalf of the
Holders of good and valuable consideration (and the adequacy thereof) for the
issuance of the Voting Share by EduTrek to the Trustee. During the term of the
Trust and subject to the terms and conditions of this agreement, the Trustee
shall possess and be vested with full legal ownership of the Voting Share and
shall be entitled to exercise all of the rights and powers of an owner with
respect to the Voting Share, provided that the Trustee shall:
(a) hold the Voting Share and the legal title thereto as
trustee solely for the use and benefit of the Holders in accordance
with the provisions of this agreement; and
(b) except as specifically authorized by this agreement, have
no power or authority to sell, transfer, vote or otherwise deal in or
with the Voting Share, and the Voting Share shall not be used or
disposed of by the Trustee for any purpose other than the purposes for
which this Trust is created pursuant to this agreement.
3.2 LEGENDED SHARE CERTIFICATES. ITI will cause each certificate
representing Exchangeable Shares to bear an appropriate legend notifying the
Holders of their right to instruct the Trustee with respect to the exercise of
the Voting Rights with respect to the Exchangeable Shares held by a Holder.
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3.3 SAFE KEEPING OF CERTIFICATE. The certificate representing the
Voting Share shall at all times be held in safe keeping by the Trustee or its
agent.
ARTICLE IV
EXERCISE OF VOTING RIGHTS
4.1 VOTING RIGHTS. The Trustee, as the holder of record of the Voting
Share, shall be entitled to all of the Voting Rights, including the right to
consent to or to vote in person or by proxy the Voting Share, on any matter,
question or proposition whatsoever that may properly come before the
shareholders of EduTrek at an EduTrek Meeting or in connection with an EduTrek
Consent (in each case, as hereinafter defined). The Voting Rights shall be and
remain vested in and exercised by the Trustee. Subject to Section 7.15 hereof,
the Trustee shall exercise the Voting Rights only on the basis of instructions
received pursuant to this Article IV from Holders entitled to instruct the
Trustee as to the voting thereof at the time at which an EduTrek Consent is
sought or an EduTrek Meeting is held. To the extent that no instructions are
received from a Holder with respect to the Holder Votes (as hereinafter defined)
to which such Holder is entitled, the Trustee shall not exercise or permit the
exercise of the Voting Rights in respect of such Holder Votes.
4.2 NUMBER OF VOTES. With respect to all meetings of shareholders of
EduTrek at which holders of shares of EduTrek Common Stock are entitled to vote
(an "EduTrek Meeting") and with respect to all written consents sought by
EduTrek from its shareholders including the holders of shares of EduTrek Common
Stock (an "EduTrek Consent"), each Holder shall be entitled to instruct the
Trustee to cast and exercise, in the manner instructed, a number of votes equal
to the Equivalent Vote Amount for each Exchangeable Share owned of record by
such Holder on the record date established by EduTrek or by applicable law for
such EduTrek Meeting or EduTrek Consent, as the case may be (the "Holder Votes")
in respect of each matter, question or proposition to be voted on at such
EduTrek Meeting or to be consented to in connection with such EduTrek Consent.
4.3 MAILINGS TO SHAREHOLDERS. With respect to each EduTrek Meeting and
EduTrek Consent, the Trustee will mail or cause to be mailed (or otherwise
communicate in the same manner as EduTrek utilizes in communications to holders
of shares of EduTrek Common Stock, subject to the Trustee's ability to provide
this method of communication and upon being advised in writing of such method)
to each of the Holders named in the List on the same day as the initial mailing
or notice (or other communication) with respect thereto is given by EduTrek to
its shareholders:
(a) a copy of such notice or other communication, together
with any proxy or information statement and related materials, to be
provided to shareholders of EduTrek;
(b) a statement that such Holder is entitled to instruct the
Trustee as to the exercise of its Holder Votes with respect to such
EduTrek Meeting or EduTrek Consent, as the case may be, or, pursuant to
Section 4.7 hereof, to attend such EduTrek Meeting and to exercise
personally its Holder Votes thereat;
(c) a statement as to the manner in which such instructions
may be given to the Trustee, including an express indication that
instructions may be given to the Trustee to give:
(i) a proxy to such Holder or his designee to
exercise personally the Holder Votes; or
(ii) a proxy to a designated agent or other
representative of the management of EduTrek to exercise such
Holder Votes;
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<PAGE> 85
(d) a statement that if no such instructions are received from
the Holder, the Holder Votes to which such Holder is entitled will not
be exercised;
(e) a form of direction whereby the Holder may so direct and
instruct the Trustee as contemplated herein; and
(f) a statement of (i) the time and date by which such
instructions must be received by the Trustee in order to be binding
upon it, which in the case of an EduTrek Meeting shall not be earlier
than the close of business on the Business Day prior to such meeting,
and (ii) the method for revoking or amending such instructions.
The materials referred to above are to be provided by EduTrek to the
Trustee.
For the purpose of determining Holder Votes to which a Holder is
entitled in respect of any such EduTrek Meeting or EduTrek Consent, the number
of Exchangeable Shares owned of record by the Holder shall be determined at the
close of business on the record date established by EduTrek or by applicable law
for purposes of determining shareholders entitled to vote at such EduTrek
Meeting or to give written consent in connection with such EduTrek Consent.
EduTrek will notify the Trustee in writing of any decision of the board of
directors of EduTrek with respect to the calling of any such EduTrek Meeting or
the seeking of any such EduTrek Consent and shall provide all necessary
information and materials to the Trustee in each case promptly and in any event
in sufficient time to enable the Trustee to perform its obligations contemplated
by this Section 4.3.
4.4 COPIES OF SHAREHOLDER INFORMATION. EduTrek will deliver to the
Trustee copies of all proxy materials (including notices of EduTrek Meetings,
but excluding proxies to vote shares of EduTrek Common Stock), information
statements, reports (including without limitation all interim and annual
financial statements) and other written communications that are to be
distributed from time to time to holders of shares of EduTrek Common Stock in
sufficient quantities and in sufficient time so as to enable the Trustee to send
those materials to each Holder at the same time as such materials are first sent
to holders of shares of EduTrek Common Stock. The Trustee will mail or otherwise
send to each Holder, at the expense of EduTrek, copies of all such materials
(and all materials specifically directed to the Holders or to the Trustee for
the benefit of the Holders by EduTrek) received by the Trustee from EduTrek at
the same time as such materials are first sent to holders of shares of EduTrek
Common Stock. The Trustee will make copies of all such materials available for
inspection by any Holder at the Trustee's principal transfer office in the
cities of Halifax, Nova Scotia and Toronto, Ontario.
4.5 OTHER MATERIALS. Immediately after receipt by EduTrek or any
shareholder of EduTrek of any material sent or given generally to the holders of
shares of EduTrek Common Stock by or on behalf of a third party, including
without limitation dissident proxy and information circulars (and related
information and material) and tender and exchange offer circulars (and related
information and material), EduTrek shall use its best efforts to obtain and
deliver to the Trustee copies thereof in sufficient quantities so as to enable
the Trustee to forward such material (unless the same has been provided directly
to Holders by such third party) to each Holder as soon as possible thereafter.
As soon as practicable after receipt thereof, the Trustee will mail or otherwise
send to each Holder, at the expense of EduTrek, copies of all such materials
received by the Trustee from EduTrek. The Trustee will also make copies of all
such materials available for inspection by any Holder at the Trustee's principal
transfer office in the cities of Halifax, Nova Scotia and Toronto, Ontario.
4.6 LIST OF PERSONS ENTITLED TO VOTE. ITI shall, (i) prior to each
annual, general and special EduTrek Meeting or the seeking of any EduTrek
Consent and (ii) forthwith upon each request made at any time by the Trustee in
writing, prepare or cause to be prepared a list (a "List") of the names and
addresses of the Holders arranged in alphabetical order and showing the number
of Exchangeable Shares held of record by each such Holder, in each case at the
close of business on the date specified by the Trustee in such request or, in
the case of a List prepared in connection with an EduTrek Meeting or an EduTrek
Consent, at the close of business on the record date
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established by EduTrek or pursuant to applicable law for determining the holders
of shares of EduTrek Common Stock entitled to receive notice of and/or to vote
at such EduTrek Meeting or to give consent in connection with such EduTrek
Consent. Each such List shall be delivered to the Trustee promptly after receipt
by ITI of such request or the record date for such meeting or seeking of
consent, as the case may be, and in any event within sufficient time as to
enable the Trustee to perform its obligations under this agreement. EduTrek
agrees to give ITI written notice (with a copy to the Trustee) of the calling of
any EduTrek Meeting or the seeking of any EduTrek Consent, together with the
record dates therefor, sufficiently prior to the date of the calling of such
meeting or seeking of such consent so as to enable ITI to perform its
obligations under this Section 4.6.
4.7 ENTITLEMENT TO DIRECT VOTES. Any Holder named in a List prepared in
connection with any EduTrek Meeting or any EduTrek Consent will be entitled (i)
to instruct the Trustee in the manner described in Section 4.3 hereof with
respect to the exercise of the Holder Votes to which such Holder is entitled or
(ii) to attend such meeting and personally to exercise thereat (or to exercise
with respect to any written consent), as the proxy of the Trustee, the Holder
Votes to which such Holder is entitled.
4.8 VOTING BY TRUSTEE, AND ATTENDANCE OF TRUSTEE REPRESENTATIVE, AT
MEETING.
(a) In connection with each EduTrek Meeting and EduTrek Consent, the
Trustee shall exercise, either in person or by proxy, in accordance with the
instructions received from a Holder pursuant to Section 4.3 hereof, the Holder
Votes as to which such Holder is entitled to direct the vote (or any lesser
number thereof as may be set forth in the instructions); provided, however, that
such written instructions are received by the Trustee from the Holder prior to
the time and date fixed by it for receipt of such instructions in the notice
given by the Trustee to the Holder pursuant to Section 4.3 hereof.
(b) The Trustee shall cause such representatives as are empowered by it
to sign and deliver, on behalf of the Trustee, proxies for Voting Rights to
attend each EduTrek Meeting. Upon submission by a Holder (or its designee) of
identification satisfactory to the Trustee's representatives, and at the
Holder's request, such representatives shall sign and deliver to such Holder (or
its designee) a proxy to exercise personally the Holder Votes as to which such
Holder is otherwise entitled hereunder to direct the vote, if such Holder
either:
(i) has not previously given the Trustee instructions
pursuant to Section 4.3 hereof in respect of such meeting, or
(ii) submits to the Trustee's representatives written
revocation of any such previous instructions.
At such meeting, the Holder exercising such Holder Votes shall have the
same rights as the Trustee to speak at the meeting in respect of any matter,
question or proposition, to vote by way of ballot at the meeting in respect of
any matter, question or proposition and to vote at such meeting by way of a show
of hands in respect of any matter, question or proposition.
4.9 DISTRIBUTION OF WRITTEN MATERIALS. Any written materials to be
distributed by the Trustee to the Holders pursuant to this agreement shall be
delivered or sent by mail (or otherwise communicated in the same manner as
EduTrek utilizes in communications to holders of shares of EduTrek Common Stock)
to each Holder at its address as shown on the books of ITI. ITI shall provide or
cause to be provided to the Trustee for this purpose, on a timely basis and
without charge or other expense:
(a) current lists of the Holders; and
(b) on the request of the Trustee, mailing labels to enable
the Trustee to carry out its duties under this agreement.
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The materials referred to above are to be provided by ITI to the
Trustee.
4.10 TERMINATION OF VOTING RIGHTS. Except as otherwise provided herein
or in the Exchangeable Share Provisions, all of the rights of a Holder with
respect to the Holder Votes to which such Holder is entitled in respect of the
Exchangeable Shares held by such Holder, including the right to instruct the
Trustee as to the voting of or to vote personally such Holder Votes, shall be
deemed to be surrendered by the Holder to EduTrek, and such Holder Votes and the
Voting Rights representing such Holder Votes shall cease immediately, upon the
delivery by such Holder to ITI or the transfer agent for the Exchangeable Shares
or the Trustee, as applicable, of the certificates representing such
Exchangeable Shares in connection with the exercise by the Holder of the
Exchange Put Right or the Exchange Right or the occurrence of the automatic
exchange of Exchangeable Shares for shares of EduTrek Common Stock, as specified
in Article V hereof, or upon the redemption of Exchangeable Shares pursuant to
Article 6 or Article 7 of the Exchangeable Share Provisions, or upon the
effective date of the liquidation, dissolution or winding-up of ITI or any other
distribution of the assets of ITI among its shareholders for the purpose of
winding up its affairs pursuant to Article 5 of the Exchangeable Share
Provisions, or upon the purchase of Exchangeable Shares from the holder thereof
by EduTrek pursuant to the exercise by EduTrek of the Retraction Call Right, the
Redemption Call Right or the Liquidation Call Right (unless in any case EduTrek
shall not have delivered the Exchangeable Share Consideration deliverable in
exchange therefor to ITI or the transfer agent for the Exchangeable Shares or
the Trustee for delivery to the Holders).
ARTICLE V
EXCHANGE RIGHT AND AUTOMATIC EXCHANGE
5.1 GRANT AND OWNERSHIP OF THE EXCHANGE RIGHT. EduTrek hereby grants
to the Trustee as trustee for and on behalf of, and for the use and benefit of,
the Holders:
(a) the Exchange Put Right,
(b) the right (the "Exchange Right"), upon the occurrence and
during the continuance of an Insolvency Event, to require EduTrek to
purchase from each or any Holder all or any part of the Exchangeable
Shares held by the Holders, and
(c) the Automatic Exchange Rights,
all in accordance with the provisions of this agreement and the
Exchangeable Share Provisions, as the case may be. EduTrek hereby
acknowledges receipt from the Trustee as trustee for and on behalf of
the Holders of good and valuable consideration (and the adequacy
thereof) for the grant of the Exchange Put Right, the Exchange Right
and the Automatic Exchange Rights by EduTrek to the Trustee. During the
term of the Trust and subject to the terms and conditions of this
agreement, the Trustee shall possess and be vested with full legal
ownership of the Exchange Put Right, the Exchange Right and the
Automatic Exchange Rights and shall be entitled to exercise all of the
rights and powers of an owner with respect to the Exchange Put Right,
the Exchange Right and the Automatic Exchange Rights, provided that the
Trustee shall:
(d) hold the Exchange Put Right, the Exchange Right and the
Automatic Exchange Rights and the legal title thereto as trustee solely
for the use and benefit of the Holders in accordance with the
provisions of this agreement, and
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(e) except as specifically authorized by this agreement, have
no power or authority to exercise or otherwise deal in or with the
Exchange Put Right, the Exchange Right or the Automatic Exchange
Rights,
and the Trustee shall not exercise any such rights for any purpose
other than the purposes for which this Trust is created pursuant to
this agreement.
5.2 LEGENDED SHARE CERTIFICATES. ITI will cause each certificate
representing Exchangeable Shares to bear an appropriate legend notifying the
Holders of:
(a) their right to instruct the Trustee with respect to the
exercise of the Exchange Put Right and the Exchange Right in respect of
the Exchangeable Shares held by a Holder; and
(b) the Automatic Exchange Rights.
5.3 GENERAL EXERCISE OF EXCHANGE PUT RIGHT AND EXCHANGE RIGHT. The
Exchange Put Right and the Exchange Right shall be and remain vested in and
exercised by the Trustee. Subject to Section 7.15 hereof, the Trustee shall
exercise the Exchange Put Right and the Exchange Right only on the basis of
instructions received pursuant to this Article V from Holders entitled to
instruct the Trustee as to the exercise thereof to the extent that no
instructions are received from a Holder with respect to the Exchange Put Right
and the Exchange Right, the Trustee shall not exercise or permit the exercise of
the Exchange Put Right and the Exchange Right.
5.4 PURCHASE PRICE. The purchase price payable by EduTrek for each
Exchangeable Share to be purchased by EduTrek (a) under the Exchange Put Right
shall be the amount determined under the Exchangeable Share Provisions, and (b)
under the Exchange Right shall be an amount equal to the Exchangeable Share
Price on the last Business Day prior to the day of closing of the purchase and
sale of such Exchangeable Share under the Exchange Right. In connection with
each exercise of the Exchange Right, EduTrek will provide to the Trustee an
Officer's Certificate setting forth the calculation of the applicable
Exchangeable Share Price for each Exchangeable Share. The applicable
Exchangeable Share Price for each such Exchangeable Share so purchased may be
satisfied only by EduTrek's issuing and delivering or causing to be delivered to
the Trustee, on behalf of the relevant Holder, the applicable Exchangeable Share
Consideration representing the total applicable Exchangeable Share Price.
5.5 EXERCISE INSTRUCTIONS. Subject to the terms and conditions herein
set forth, a Holder shall be entitled, upon the occurrence and during the
continuance of an Insolvency Event, to instruct the Trustee to exercise the
Exchange Right with respect to all or any part of the Exchangeable Shares
registered in the name of such Holder on the books of ITI. To cause the exercise
of the Exchange Right by the Trustee, the Holder shall deliver to the Trustee,
in person or by certified or registered mail, at its principal transfer offices
in Halifax, Nova Scotia, and Toronto, Ontario or at such other places in Canada
as the Trustee may from time to time designate by written notice to the Holders,
the certificates representing the Exchangeable Shares which such Holder desires
EduTrek 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 Act and the by-laws of ITI and such additional
documents and instruments as the Trustee may reasonably require, together with:
(a) 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 Holder thereby instructs the Trustee to
exercise the Exchange Right so as to require EduTrek to
purchase from the Holder the number of Exchangeable Shares
specified therein,
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(ii) that such Holder has good title to and owns all
such Exchangeable Shares to be acquired by EduTrek free and
clear of all liens, claims, encumbrances, security interests
and adverse claims or interests,
(iii) the names in which the certificates
representing shares of EduTrek Common Stock issuable in
connection with the exercise of the Exchange Right are to be
issued, and
(iv) the names and addresses of the persons to whom
the Exchangeable Share Consideration should be delivered; and
(b) payment (or evidence satisfactory to the Trustee, ITI and
EduTrek of payment) of the taxes (if any) payable as contemplated by
Section 5.8 of this agreement.
If only a part of the Exchangeable Shares represented by any
certificate or certificates delivered to the Trustee are to be purchased by
EduTrek under the Exchange Right, a new certificate for the balance of such
Exchangeable Shares shall be issued to the Holder at the expense of ITI.
5.6 DELIVERY OF EXCHANGEABLE SHARE CONSIDERATION; EFFECT OF EXERCISE.
Promptly after receipt of the certificates representing the Exchangeable Shares
which the Holder desires EduTrek to purchase under the Exchange Put Right or the
Exchange Right (together with such documents and instruments of transfer and a
duly completed form of notice of exercise of the Exchange Put Right or the
Exchange Right), duly endorsed for transfer to EduTrek, the Trustee shall notify
EduTrek and ITI of its receipt of the same, which notice to EduTrek and ITI
shall constitute exercise of the Exchange Put Right or the Exchange Right by the
Trustee on behalf of the Holder of such Exchangeable Shares, and EduTrek shall
immediately thereafter deliver or cause to be delivered to the Trustee, for
delivery to the Holder of such Exchangeable Shares (or to such other persons, if
any, properly designated by such Holder), the Exchangeable Share Consideration
deliverable in connection with the exercise of the Exchange Put Right or the
Exchange Right; provided, however, that no such delivery shall be made unless
and until the Holder requesting the same shall have paid (or provided evidence
satisfactory to the Trustee, ITI and EduTrek of the payment of) the taxes (if
any) payable as contemplated by Section 5.8 of this agreement. Immediately upon
the giving of notice by the Trustee to EduTrek and ITI of the exercise of the
Exchange Put Right or the Exchange Right and the delivery of the Exchangeable
Share Consideration to the Trustee, as provided in this Section 5.6, (a) the
closing of the transaction of purchase and sale contemplated by the Exchange Put
Right or the Exchange Right shall be deemed to have occurred, (b) EduTrek shall
be required to take all action necessary to permit it to occur no later than the
close of business on the third Business Day following the receipt by the Trustee
of notice, certificates and other documents as aforesaid and (c) the Holder of
such Exchangeable Shares shall be deemed to have transferred to EduTrek all of
its right, title and interest in and to such Exchangeable Shares and its related
interest in the Trust Estate shall immediately cease, and the Holder 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 his proportionate part of the total purchase price therefor.
Concurrently with such Holder ceasing to be a holder of Exchangeable Shares, the
Holder shall be considered and deemed for all purposes to be the holder of the
shares of EduTrek Common Stock delivered or deliverable to it pursuant to the
Exchange Put Right or the Exchange Right. Notwithstanding the foregoing until
the Exchangeable Share Consideration is delivered to the Holder, the Holder
shall be deemed to still be a holder of the sold Exchangeable Shares for
purposes of voting rights with respect thereto under this agreement.
5.7 EXERCISE OF EXCHANGE RIGHT SUBSEQUENT TO RETRACTION. In the event
that a Holder has exercised its right under Article 6 of the Exchangeable Share
Provisions to require ITI to redeem any or all of the Exchangeable Shares held
by the Holder (the "Retracted Shares") and is notified by ITI pursuant to
Section 6.6 of the Exchangeable Share Provisions that ITI will not be permitted
as a result of liquidity or solvency requirements of applicable law to redeem
all such Retracted Shares, subject to receipt by the Trustee of written notice
to that effect from ITI and provided that EduTrek shall not have exercised the
Retraction Call Right with respect to the
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Retracted Shares and that the Holder has not revoked the retraction request
delivered by the Holder to ITI pursuant to Section 6.1 of the Exchangeable Share
Provisions, the retraction request will constitute and will be deemed to
constitute notice from the Holder to the Trustee, instructing the Trustee to
exercise the Exchange Right with respect to those Retracted Shares which ITI is
unable to redeem. In any such event, ITI hereby agrees with the Trustee and in
favor of the Holder immediately to notify the Trustee of such prohibition
against ITI's redeeming all of the Retracted Shares and immediately to forward
or cause to be forwarded to the Trustee all relevant materials delivered by the
Holder to ITI or to the transfer agent of the Exchangeable Shares (including
without limitation a copy of the retraction request delivered pursuant to
Section 6.1 of the Exchangeable Share Provisions) in connection with such
proposed redemption of the Retracted Shares, and the Trustee will thereupon
exercise the Exchange Right with respect to the Retracted Shares which ITI is
not permitted to redeem and will require EduTrek to purchase such shares in
accordance with the provisions of this Article V.
5.8 STAMP OR OTHER TRANSFER TAXES. Upon any sale of Exchangeable
Shares to EduTrek pursuant to the Exchange Put Right, the Exchange Right or the
Automatic Exchange Rights, the share certificate or certificates representing
shares of EduTrek Common Stock to be delivered in connection with the payment of
the total purchase price therefor shall be issued in the name of the Holder of
the Exchangeable Shares so sold or in such names as such Holder may otherwise
direct in writing without charge to the Holder of the Exchangeable Shares so
sold, provided, however, that such Holder:
(a) shall pay (and neither EduTrek, ITI nor the Trustee shall
be required to pay) any documentary, stamp, transfer or other similar
taxes that may be payable in respect of any transfer involved in the
issuance or delivery of such shares to a person other than such Holder;
or
(b) shall have established to the satisfaction of the Trustee,
EduTrek and ITI that such taxes, if any, have been paid.
5.9 NOTICE OF INSOLVENCY EVENT. Immediately upon the occurrence of an
Insolvency Event or any event which with the giving of notice or the passage of
time or both would be an Insolvency Event, ITI shall give written notice thereof
to the Trustee and EduTrek and, upon receipt of such notice or otherwise upon
obtaining knowledge of such an event, shall give written notice thereof to the
Trustee. As soon as practicable after receiving notice from ITI or EduTrek of
the occurrence of an Insolvency Event, the Trustee will mail to each Holder, at
the expense of EduTrek, a notice of such Insolvency Event in the form provided
by EduTrek, which notice shall contain a brief statement of the right of the
Holders with respect to the Exchange Right.
5.10 QUALIFICATION OF EDUTREK COMMON STOCK. EduTrek covenants that if
any shares of EduTrek Common Stock to be issued and delivered pursuant to the
Exchange Put Right, the Exchange Right or the Automatic Exchange Rights require
registration or qualification with or approval of or the filing of any document
including any prospectus or similar document, the taking of any proceeding with
or the obtaining of any order, ruling or consent from any governmental or
regulatory authority under any Canadian or United States federal, provincial or
state law or regulation or pursuant to the rules and regulations of any
regulatory authority, or the fulfilment of any other legal requirement
(collectively, the "Applicable Laws") before such shares may be issued and
delivered by EduTrek to the initial holder thereof (other than ITI) or in order
that such shares may be freely traded thereafter (aside from any restrictions on
transfer by reason of a holder being a "control person" of EduTrek for purposes
of Canadian provincial securities law or an "affiliate" of EduTrek for purposes
of United States federal or state securities law), EduTrek will in good faith
expeditiously take all such actions and do all such things as are necessary to
cause such shares of EduTrek Common Stock to be and remain duly registered,
qualified or approved. EduTrek represents and warrants that it has in good faith
taken all actions and done all things as are necessary under Applicable Laws as
they exist on the date hereof to cause the shares of EduTrek Common Stock to be
issued and delivered pursuant to the Exchange Put Right, the Exchange Right and
the Automatic Exchange Rights to be freely tradeable thereafter (aside from
restrictions on transfer by reason of a holder being a "control person" of
EduTrek for the purposes of Canadian provincial securities law or an "affiliate"
of EduTrek for the purposes of United States
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federal or state securities law). EduTrek will in good faith expeditiously take
all such actions and do all such things as are necessary to cause all shares of
EduTrek Common Stock to be delivered pursuant to the Exchange Put Right, the
Exchange Right or the Automatic Exchange Rights to be listed, quoted or posted
for trading on all stock exchanges and quotation systems on which such EduTrek
Common Stock is listed, quoted or posted for trading at such time.
5.11 RESERVATION OF SHARES OF EDUTREK COMMON STOCK. EduTrek 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
EduTrek Common Stock:
(a) as is equal to the sum of
(i) the number of Exchangeable Shares issued and
outstanding from time to time and
(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 ITI to meet its obligations hereunder, under the Articles of
Arrangement, under the Support Agreement, under the Exchangeable Share
Provisions and under any other security or commitment pursuant to the
Arrangement with respect to which EduTrek may now or hereafter be
required to issue shares of EduTrek Common Stock.
5.12 AUTOMATIC EXCHANGE ON LIQUIDATION OF EDUTREK.
(a) EduTrek will give the Trustee written notice of each of the
following events at the time set forth below:
(i) in the event of any determination by the board of
directors of EduTrek to institute voluntary liquidation, dissolution or
winding-up proceedings with respect to EduTrek or to effect any other
distribution of assets of EduTrek among its shareholders for the
purpose of winding up its affairs, at least 60 days prior to the
proposed effective date of such liquidation, dissolution, winding-up or
other distribution; and
(ii) immediately, upon the earlier of
(A) receipt by EduTrek of notice of, and
(B) EduTrek's otherwise becoming aware of
any threatened or instituted claim, suit, petition or other proceedings
with respect to the involuntary liquidation, dissolution or winding-up of
EduTrek or to effect any other distribution of assets of EduTrek among its
shareholders for the purpose of winding up its affairs.
(b) Immediately following receipt by the Trustee from EduTrek of notice
of any event (a "Liquidation Event") contemplated by Section 5.12(a) above, the
Trustee will give notice thereof to the Holders. Such notice will be provided by
EduTrek to the Trustee and shall include a brief description of the automatic
exchange of Exchangeable Shares for shares of EduTrek Common Stock provided for
in Section 5.12(c) below.
(c) In order that the Holders will be able to participate on a pro rata
basis with the holders of shares of EduTrek Common Stock in the distribution of
assets of EduTrek in connection with a Liquidation Event, immediately prior to
the effective time (the "Liquidation Event Effective Time") of a Liquidation
Event, all of the
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then outstanding Exchangeable Shares shall be automatically exchanged for shares
of EduTrek Common Stock. To effect such automatic exchange, EduTrek shall be
deemed to have purchased each Exchangeable Share outstanding immediately prior
to the Liquidation Event Effective Time and held by Holders, and each Holder
shall be deemed to have sold the Exchangeable Shares held by it at such time,
for a purchase price per share equal to the Exchangeable Share Price applicable
at such time. In connection with such automatic exchange, EduTrek will provide
to the Trustee an Officer's Certificate setting forth the calculation of the
purchase price for each Exchangeable Share
(d) The closing of the transaction of purchase and sale contemplated by
Section 5.12(c) above shall be deemed to have occurred immediately prior to the
Liquidation Event Effective Time, and each Holder of Exchangeable Shares shall
be deemed to have transferred to EduTrek all of the Holder's right, title and
interest in and to such Exchangeable Shares and its related interest in the
Trust Estate shall immediately cease and the Holder shall cease to be a Holder
of such Exchangeable Shares, and EduTrek shall deliver to the Holder the
Exchangeable Share Consideration deliverable upon the automatic exchange of
Exchangeable Shares. Concurrently with such Holder's ceasing to be a Holder of
Exchangeable Shares, the Holder shall be considered and deemed for all purposes
to be the holder of the shares of EduTrek Common Stock issued to it pursuant to
the automatic exchange of Exchangeable Shares for shares of EduTrek Common
Stock, and the certificates held by the holder previously representing the
Exchangeable Shares exchanged by the holder with EduTrek pursuant to such
automatic exchange shall thereafter be deemed to represent the shares of EduTrek
Common Stock issued to the holder by EduTrek pursuant to such automatic
exchange. Upon the request of a former Holder and the surrender by the former
Holder of Exchangeable Share certificates deemed to represent shares of EduTrek
Common Stock, duly endorsed in blank and accompanied by such instruments of
transfer as EduTrek may reasonably require, EduTrek shall deliver or cause to be
delivered to the former Holder certificates representing the shares of EduTrek
Common Stock of which the former Holder is the holder. Notwithstanding the
foregoing, until each former Holder is actually entered on the register of
holders of shares of EduTrek Common Stock, such former Holder shall be deemed to
still be a Holder of the transferred Exchangeable Shares for purposes of all
voting rights with respect thereto under this agreement.
ARTICLE VI
RESTRICTIONS ON ISSUANCE OF EDUTREK SPECIAL VOTING STOCK
During the term of this agreement, EduTrek will not issue any shares of
EduTrek Special Voting Stock in addition to the Voting Share.
ARTICLE VII
CONCERNING THE TRUSTEE
7.1 POWERS AND DUTIES OF THE TRUSTEE. The rights, powers and
authorities of the Trustee under this agreement, in its capacity as trustee of
the Trust, shall include:
(a) receipt and deposit of the Voting Share from EduTrek as
trustee for and on behalf of the Holders in accordance with the
provisions of this agreement;
(b) granting proxies and distributing materials to Holders as
provided in this agreement;
(c) voting the Voting Rights representing Holder Votes in
accordance with the provisions of this agreement;
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(d) receiving the grant of the Exchange Put Right, the
Exchange Right and the Automatic Exchange Rights from EduTrek as
trustee for and on behalf of the Holders in accordance with the
provisions of this agreement;
(e) exercising the Exchange Put Right and the Exchange Right
and enforcing the benefit of the Automatic Exchange Rights, in each
case in accordance with the provisions of this agreement, and in
connection therewith receiving from Holders Exchangeable Shares and
other requisite documents and distributing to such Holders the shares
of EduTrek Common Stock and cheques and other property and assets, if
any, to which such Holders are entitled upon the exercise of the
Exchange Put Right and the Exchange Right or pursuant to the Automatic
Exchange Rights, as the case may be;
(f) holding title to the Trust Estate;
(g) investing any moneys forming, from time to time, a part of
the Trust Estate as provided in this agreement;
(h) taking action at the direction of a Holder or Holders to
enforce the obligations of EduTrek under this agreement; and
(i) taking such other actions and doing such other things as
are specifically provided in this agreement.
In the exercise of such rights, powers and authorities the Trustee
shall have (and is granted) such incidental and additional rights, powers and
authority not in conflict with any of the provisions of this agreement as the
Trustee, acting in good faith and in the reasonable exercise of its discretion,
may deem necessary, appropriate or desirable to effect the purpose of the Trust.
Any exercise of such discretionary rights, power and authorities by the Trustee
shall be final, conclusive and binding upon all persons. For greater certainty,
the Trustee shall have only those duties as are set out specifically in this
agreement. The Trustee in exercising its rights, powers, duties and authorities
hereunder shall act honestly and in good faith with a view to the best interests
of the Holders and shall exercise the care, diligence and skill that a
reasonably prudent trustee would exercise in comparable circumstances. The
Trustee shall not be bound to give any notice or do or take any act, action or
proceeding by virtue of the powers conferred on it hereby unless and until it
shall be specifically required to do so under the terms hereof; nor shall the
Trustee be required to take any notice of, or to do or to take any act, action
or proceeding as a result of any default or breach of any provision hereunder
unless and until notified in writing of such default or breach, which notices
shall distinctly specify the default or breach desired to be brought to the
attention of the Trustee and in the absence of such notice the Trustee may for
all purposes of this agreement conclusively assume that no default or breach has
been made in the observance or performance of any of the representations,
warranties, covenants, agreements or conditions contained herein.
7.2 NO CONFLICT OF INTEREST. The Trustee represents to ITI and EduTrek
that at the date of execution and delivery of this agreement there exists no
material conflict of interest in the role of the Trustee as a fiduciary
hereunder and the role of the Trustee in any other capacity. The Trustee shall,
within 90 days after it becomes aware that such a material conflict of interest
exists, either eliminate such material conflict of interest or resign in the
manner and with the effect specified in Article X hereof. If, notwithstanding
the foregoing provisions of this Section 7.2, the Trustee has such a material
conflict of interest, the validity and enforceability of this agreement shall
not be affected in any manner whatsoever by reason only of the existence of such
material conflict of interest. If the Trustee contravenes the foregoing
provisions of this Section 7.2, any interested party may apply to the superior
court of the province in which ITI has its registered office for an order that
the Trustee be replaced as trustee hereunder.
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7.3 DEALINGS WITH TRANSFER AGENTS, REGISTRARS, ETC. ITI and EduTrek
irrevocably authorize the Trustee, from time to time, to:
(a) consult, communicate and otherwise deal with the
respective registrars and transfer agents, and with any such subsequent
registrar or transfer agent, of the Exchangeable Shares and EduTrek
Common Stock; and
(b) requisition, from time to time,
(i) from any such registrar or transfer agent any
information readily available from the records maintained by
it which the Trustee may reasonably require for the discharge
of its duties and responsibilities under this agreement, and
(ii) from the transfer agent of EduTrek Common Stock,
and any subsequent transfer agent of such stock, to complete
the exercise from time to time of the Exchange Put Right, the
Exchange Right and the Automatic Exchange Rights in the manner
specified in Article V hereof, the share certificates issuable
upon such exercise.
ITI and EduTrek irrevocably authorize their respective registrars and
transfer agents to comply with all such requests. EduTrek covenants that it will
supply its transfer agent with duly executed share certificates for the purpose
of completing the exercise from time to time of the Exchange Put Right, the
Exchange Right and the Automatic Exchange Rights, in each case pursuant to
Article V hereof.
7.4 BOOKS AND RECORDS. The Trustee shall keep available for inspection
by EduTrek and ITI, at the Trustee's principal transfer office in Toronto,
Ontario correct and complete books and records of account relating to the
Trustee's actions under this agreement, including without limitation all
information relating to mailings and instructions to and from Holders and all
transactions pursuant to the Voting Rights, the Exchange Put Right, the Exchange
Right and the Automatic Exchange Rights for the term of this agreement. On or
before March 31, 1999, and on or before March 31 in every year thereafter, so
long as the Voting Share is on deposit with the Trustee, the Trustee shall
transmit to EduTrek and ITI a brief report, dated as of the preceding December
31, with respect to:
(a) property and funds comprising the Trust Estate as of that
date;
(b) the number of exercises of the Exchange Put Right and the
Exchange Right, if any, and the aggregate number of Exchangeable Shares
received by the Trustee on behalf of Holders in consideration of the
issue and delivery by EduTrek of shares of EduTrek Common Stock in
connection with the Exchange Put Right and the Exchange Right, during
the calendar year ended on such date; and
(c) all other actions taken by the Trustee in the performance
of its duties under this agreement which it had not previously
reported.
7.5 INCOME TAX RETURNS AND REPORTS. The Trustee shall, to the extent
necessary, prepare and file on behalf of the Trust appropriate United States and
Canadian income tax returns and any other returns or reports as may be required
by applicable law or pursuant to the rules and regulations of any securities
exchange or other trading system through which the Exchangeable Shares are
traded and, in connection therewith, may obtain the advice and assistance of
such experts as the Trustee may consider necessary or advisable. If requested by
the Trustee, EduTrek shall retain such experts for purposes of providing such
advice and assistance.
7.6 INDEMNIFICATION PRIOR TO CERTAIN ACTIONS BY TRUSTEE. The Trustee
shall exercise any or all of the rights, duties, powers or authorities vested in
it by this agreement at the request, order or direction of any Holder upon such
Holder's furnishing to the Trustee reasonable funding, security and indemnity
against the costs, expenses
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and liabilities which may be incurred by the Trustee therein or thereby;
provided that no Holder shall be obligated to furnish to the Trustee any such
funding, security or indemnity in connection with the exercise by the Trustee of
any of its rights, duties, powers and authorities with respect to the Voting
Share pursuant to Article IV hereof, subject to Section 7.15 hereof, and with
respect to the Exchange Put Right and the Exchange Right pursuant to Article V
hereof, subject to Section 7.15 hereof, and with respect to the Automatic
Exchange Rights pursuant to Article V hereof. None of the provisions contained
in this agreement shall require the Trustee to expend or risk its own funds or
otherwise incur financial liability in the exercise of any of its rights,
powers, duties or authorities unless given funds, security and indemnity as
aforesaid.
7.7 ACTIONS BY HOLDERS. No Holder shall have the right to institute any
action, suit or proceeding or to exercise any other remedy authorized by this
agreement for the purpose of enforcing any of its rights or for the execution of
any trust or power hereunder unless the Holder has requested the Trustee to take
or institute such action, suit or proceeding and furnished the Trustee with the
funding, security and indemnity referred to in Section 7.6 hereof and the
Trustee shall have failed to act within a reasonable time thereafter. In such
case, but not otherwise, the Holder shall be entitled to take proceedings in any
court of competent jurisdiction such as the Trustee might have taken; it being
understood and intended that no one or more Holders shall have any right in any
manner whatsoever to affect, disturb or prejudice the rights hereby created by
any such action, or to enforce any right hereunder or under the Voting Rights,
the Exchange Put Right, the Exchange Right or the Automatic Exchange Rights,
except subject to the conditions and in the manner herein provided, and that all
powers and trusts hereunder shall be exercised and all proceedings at law shall
be instituted, had and maintained by the Trustee, except only as herein
provided, and in any event for the equal benefit of all Holders.
7.8 RELIANCE UPON DECLARATIONS. The Trustee shall not be considered to
be in contravention of any of its rights, powers, duties and authorities
hereunder if, when required, it acts and relies in good faith upon lists,
mailing labels, notices, statutory declarations, certificates, opinions, reports
or other papers or documents furnished pursuant to the provisions hereof or
required by the Trustee to be furnished to it in the exercise of its rights,
powers, duties and authorities hereunder, and such lists, mailing labels,
notices, statutory declarations, certificates, opinions, reports or other papers
or documents comply with the provisions of Section 7.9 hereof, if applicable,
and with any other applicable provisions of this agreement.
7.9 EVIDENCE AND AUTHORITY TO TRUSTEE. ITI and/or EduTrek shall furnish
to the Trustee evidence of compliance with the conditions provided for in this
agreement relating to any action or step required or permitted to be taken by
ITI and/or EduTrek or the Trustee under this agreement or as a result of any
obligation imposed under this agreement, including, without limitation, in
respect of the Voting Rights or the Exchange Put Right, the Exchange Right or
the Automatic Exchange Rights and the taking of any other action to be taken by
the Trustee at the request of or on the application of ITI and/or EduTrek
forthwith if and when:
(a) such evidence is required by any other section of this
agreement to be furnished to the Trustee in accordance with the terms
of this Section 7.9; or
(b) the Trustee, in the exercise of its rights, powers, duties
and authorities under this agreement, gives ITI and/or EduTrek written
notice requiring it to furnish such evidence in relation to any
particular action or obligation specified in such notice.
Such evidence shall consist of an Officer's Certificate of ITI and/or
EduTrek or a statutory declaration or a certificate made by persons entitled to
sign an Officer's Certificate stating that any such condition has been complied
with in accordance with the terms of this agreement.
Whenever such evidence relates to a matter other than the Voting Rights
or the Exchange Put Right, the Exchange Right or the Automatic Exchange Rights,
and except as otherwise specifically provided herein, such evidence may consist
of a report or opinion of any solicitor, auditor, accountant, appraiser, valuer,
engineer or other
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expert or any other person whose qualifications give authority to a statement
made by him, provided that if such report or opinion is furnished by a director,
officer or employee of ITI and/or EduTrek it shall be in the form of an
Officer's Certificate or a statutory declaration.
Each statutory declaration, certificate, opinion or report furnished to
the Trustee as evidence of compliance with a condition provided for in this
agreement shall include a statement by the person giving the evidence:
(i) declaring that he has read and understands the
provisions of this agreement relating to the condition in question,
(ii) describing the nature and scope of the examination or
investigation upon which he based the statutory declaration,
certificate, statement or opinion; and
(iii) declaring that he has made such examination or
investigation as he believes is necessary to enable him to make the
statements or give the opinions contained or expressed therein.
7.10 EXPERTS, ADVISERS AND AGENTS. The Trustee may:
(a) in relation to these presents act and rely on the
opinion or advice of or information obtained from or prepared by any
solicitor, auditor, accountant, appraiser, valuer, engineer or other
expert, whether retained by the Trustee or by ITI and/or EduTrek or
otherwise, and may employ such assistants as may be necessary to the
proper determination and discharge of its powers and duties and
determination of its rights hereunder and may pay proper and reasonable
compensation for all such legal and other advice or assistance as
aforesaid; and
(b) employ such agents and other assistants as it may
reasonably require for the proper determination and discharge of its
powers and duties hereunder, and may pay reasonable remuneration for
all services performed for it (and shall be entitled to receive
reasonable remuneration for all services performed by it) in the
discharge of the trusts hereof and compensation for all disbursements,
costs and expenses made or incurred by it in the determination and
discharge of its duties hereunder and in the management of the Trust.
7.11 INVESTMENT OF MONEYS HELD BY TRUSTEE. Unless otherwise provided in
this agreement, any moneys held by or on behalf of the Trustee which under the
terms of this agreement may or ought to be invested or which may be on deposit
with the Trustee or which may be in the hands of the Trustee, may be invested
and reinvested in the name or under the control of the Trustee in securities in
which, under the laws of the Province of Ontario, trustees are authorized to
invest trust moneys; provided that such securities are stated to mature within
two years after their purchase by the Trustee, and the Trustee shall so invest
such moneys on the written direction of ITI. Pending the investment of any
moneys as hereinbefore provided, such moneys may be deposited in the name of the
Trustee in any chartered bank in Canada or, with the consent of ITI, in the
deposit department of the Trustee or any other loan or trust company authorized
to accept deposits under the laws of Canada or any province thereof at the rate
of interest then current on similar deposits.
7.12 TRUSTEE NOT REQUIRED TO GIVE SECURITY. The Trustee shall not be
required to give any bond or security in respect of the execution of the trusts,
rights, duties, powers and authorities of this agreement or otherwise in respect
of the premises.
7.13 TRUSTEE NOT BOUND TO ACT ON REQUEST. Except as in this agreement
otherwise specifically provided, the Trustee shall not be bound to act in
accordance with any direction or request of ITI and/or EduTrek or of the
directors thereof until a duly authenticated copy of the instrument or
resolution containing such direction
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or request shall have been delivered to the Trustee, and the Trustee shall be
empowered to act and rely upon any such copy purporting to be authenticated and
reasonably believed by the Trustee to be genuine.
7.14 AUTHORITY TO CARRY ON BUSINESS. The Trustee represents to ITI and
EduTrek that at the date of execution and delivery by it of this agreement it is
authorized to carry on the business of a trust company in the provinces of Nova
Scotia and Ontario but if, notwithstanding the provisions of this Section 7.14,
it ceases to be so authorized to carry on business, the validity and
enforceability of this agreement and the Voting Rights, the Exchange Put Right,
the Exchange Right and the Automatic Exchange Rights shall not be affected in
any manner whatsoever by reason only of such event; provided, however, the
Trustee shall, within 90 days after ceasing to be authorized to carry on the
business of a trust company in the provinces of Nova Scotia and Ontario, either
become so authorized or resign in the manner and with the effect specified in
Article X hereof.
7.15 CONFLICTING CLAIMS. If conflicting claims or demands are made or
asserted with respect to any interest of any Holder in any Exchangeable Shares,
including any disagreement between the heirs, representatives, successors or
assigns succeeding to all or any part of the interest of any Holder in any
Exchangeable Shares resulting in conflicting claims or demands being made in
connection with such interest, then the Trustee shall be entitled, at its sole
discretion, to refuse to recognize or to comply with any such claim or demand.
In so refusing, the Trustee may elect not to exercise any Voting Rights,
Exchange Put Right, Exchange Right or Automatic Exchange Rights subject to such
conflicting claims or demands and, in so doing, the Trustee shall not be or
become liable to any person on account of such election or its failure or
refusal to comply with any such conflicting claims or demands. The Trustee shall
be entitled to continue to refrain from acting and to refuse to act until:
(a) the rights of all adverse claimants with respect to the
Voting Rights, Exchange Put Right, Exchange Right or Automatic Exchange
Rights subject to such conflicting claims or demands have been
adjudicated by a final judgment of a court of competent jurisdiction;
or
(b) all differences with respect to the Voting Rights,
Exchange Put Right, Exchange Right or Automatic Exchange Rights subject
to such conflicting claims or demands have been conclusively settled by
a valid written agreement binding on all such adverse claimants, and
the Trustee shall have been furnished with an executed copy of such
agreement.
If the Trustee elects to recognize any claim or comply with any demand
made by any such adverse claimant, it may in its discretion require such
claimant to furnish such surety bond or other security satisfactory to the
Trustee as it shall deem appropriate fully to indemnify it as between all
conflicting claims or demands.
7.16 ACCEPTANCE OF TRUST. The Trustee hereby accepts the Trust created
and provided for by and in this agreement and agrees to perform the same upon
the terms and conditions herein set forth and to hold all rights, privileges and
benefits conferred hereby and by law in trust for the various persons who shall
from time to time be Holders, subject to all the terms and conditions herein set
forth.
ARTICLE VIII
COMPENSATION
EduTrek and ITI jointly and severally agree to pay to the Trustee
reasonable compensation for all of the services rendered by it under this
agreement and will reimburse the Trustee for all reasonable expenses (including
but not limited to taxes, compensation paid to experts, agents and advisors and
travel expenses) and disbursements, including the cost and expense of any suit
or litigation of any character and any proceedings before any governmental
agency, reasonably incurred by the Trustee in connection with its rights and
duties under this agreement; provided that EduTrek and ITI shall have no
obligation to reimburse the Trustee for any expenses or
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disbursements paid, incurred or suffered by the Trustee in any suit or
litigation in which the Trustee is determined to have acted in bad faith or with
negligence or wilful misconduct.
ARTICLE IX
INDEMNIFICATION AND LIMITATION OF LIABILITY
9.1 INDEMNIFICATION OF THE TRUSTEE. EduTrek and ITI jointly and
severally agree to indemnify and hold harmless the Trustee and each of its
directors, officers, employees and agents appointed and acting in accordance
with this agreement (collectively, the "Indemnified Parties") against all
claims, losses, damages, costs, penalties, fines and reasonable expenses
(including reasonable expenses of the Trustee's legal counsel) which, without
fraud, negligence, wilful misconduct or bad faith on the part of such
Indemnified Party, may be paid, incurred or suffered by the Indemnified Party by
reason of or as a result of the Trustee's acceptance or administration of the
Trust, its compliance with its duties set forth in this agreement, or any
written or oral instructions delivered to the Trustee by EduTrek or ITI pursuant
hereto. In no case shall EduTrek or ITI be liable under this indemnity for any
claim against any of the Indemnified Parties unless EduTrek and ITI shall be
notified by the Trustee of the written assertion of a claim or of any action
commenced against the Indemnified Parties, promptly after any of the Indemnified
Parties shall have received any such written assertion of a claim or shall have
been served with a summons or other first legal process giving information as to
the nature and basis of the claim. Subject to (i) below, EduTrek and ITI shall
be entitled to participate at their own expense in the defense and, if EduTrek
or ITI so elect at any time after receipt of such notice, either of them may
assume the defense of any suit brought to enforce any such claim. The Trustee
shall have the right to employ separate counsel in any such suit and participate
in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of the Trustee unless: (i) the employment of such counsel has been
authorized by EduTrek or ITI, such authorization not to be unreasonably
withheld; or (ii) the named parties to any such suit include both the Trustee
and EduTrek or ITI and the Trustee shall have been advised by counsel acceptable
to EduTrek or ITI that there may be one or more legal defenses available to the
Trustee that are different from or in addition to those available to EduTrek or
ITI and that an actual or potential conflict of interest exists (in which case
EduTrek and ITI shall not have the right to assume the defense of such suit on
behalf of the Trustee, but shall be liable to pay the reasonable fees and
expenses of counsel for the Trustee).
9.2 LIMITATION OF LIABILITY. The Trustee shall not be held liable for
any loss which may occur by reason of depreciation of the value of any part of
the Trust Estate or any loss incurred on any investment of funds pursuant to
this agreement, except to the extent that such loss is attributable to the
fraud, negligence, wilful misconduct or bad faith on the part of the Trustee.
ARTICLE X
CHANGE OF TRUSTEE
10.1 RESIGNATION. The Trustee, or any successor trustee hereafter
appointed, may at any time resign by giving written notice of such resignation
to EduTrek and ITI specifying the date on which it desires to resign, provided
that such notice shall never be given less than 60 days before such desired
resignation date unless EduTrek and ITI otherwise agree and provided further
that such resignation shall not take effect until the date of the appointment of
a successor trustee and the acceptance of such appointment by the successor
trustee. Upon receiving such notice of resignation, EduTrek and ITI shall
promptly appoint a successor trustee by written instrument in duplicate, one
copy of which shall be delivered to the resigning trustee and one copy to the
successor trustee. Failing acceptance by a successor trustee, a successor
trustee may be appointed by an order of the superior court of the province in
which ITI has its registered office upon application of one or more of the
parties hereto.
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10.2 REMOVAL. The Trustee, or any successor trustee hereafter
appointed, may be removed with or without cause, at any time on 60 days' prior
notice by written instrument executed by EduTrek and ITI, in duplicate, one copy
of which shall be delivered to the trustee so removed and one copy to the
successor trustee, provided that, in connection with such removal, provision is
made for a replacement trustee similar to that contemplated in Section 10.1.
10.3 SUCCESSOR TRUSTEE. Any successor trustee appointed as provided
under this agreement shall execute, acknowledge and deliver to EduTrek and ITI
and to its predecessor trustee an instrument accepting such appointment.
Thereupon the resignation or removal of the predecessor trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, duties and
obligations of its predecessor under this agreement, with like effect as if
originally named as trustee in this agreement. However, on the written request
of EduTrek and ITI or of the successor trustee, the trustee ceasing to act
shall, upon payment of any amounts then due it pursuant to the provisions of
this agreement, execute and deliver an instrument transferring to such successor
trustee all the rights and powers of the trustee so ceasing to act. Upon the
request of any such successor trustee, EduTrek, ITI and such predecessor trustee
shall execute any and all instruments in writing for more fully and certainly
vesting in and confirming to such successor trustee all such rights and powers.
10.4 NOTICE OF SUCCESSOR TRUSTEE. Upon acceptance of appointment by a
successor trustee as provided herein, EduTrek and ITI shall cause to be mailed
notice of the succession of such trustee hereunder to each Holder specified in a
List. If EduTrek or ITI shall fail to cause such notice to be mailed within 10
days after acceptance of appointment by the successor trustee, the successor
trustee shall cause such notice to be mailed at the expense of EduTrek and ITI.
ARTICLE XI
EDUTREK SUCCESSORS
11.1 CERTAIN REQUIREMENTS IN RESPECT OF COMBINATION, ETC. EduTrek shall
not enter into any transaction (whether by way of reconstruction,
reorganization, consolidation, merger, transfer, sale, lease or otherwise)
whereby all or substantially all of its undertaking, property and assets would
become the property of any other Person or, in the case of a merger, of the
continuing corporation resulting therefrom, but may do so if:
(a) such other Person or continuing corporation (the "EduTrek
Successor"), by operation of law, becomes, without more, bound by the
terms and provisions of this agreement or, if not so bound, executes,
prior to or contemporaneously with the consummation of such transaction
an agreement supplemental hereto and such other instruments (if any) as
are satisfactory to the Trustee and in the opinion of legal counsel to
the Trustee are necessary or advisable to evidence the assumption by
the EduTrek Successor of liability for all moneys payable and property
deliverable hereunder, the covenant of such EduTrek Successor to pay
and deliver or cause to be delivered the same and its agreement to
observe and perform all the covenants and obligations of EduTrek under
this agreement; and
(b) such transaction shall, to the satisfaction of the Trustee
and in the opinion of legal counsel to the Trustee, be upon such terms
which substantially preserve and do not impair in any material respect
any of the rights, duties, powers and authorities of the Trustee or of
the Holders hereunder.
11.2 VESTING OF POWERS IN SUCCESSOR. Whenever the conditions of Section
11.1 hereof have been duly observed and performed, the Trustee, if required by
Section 11.1 hereof, the EduTrek Successor and ITI shall execute and deliver the
supplemental agreement provided for in Article XII hereof, and thereupon the
EduTrek Successor shall possess and from time to time may exercise each and
every right and power of EduTrek under this
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agreement in the name of EduTrek or otherwise and any act or proceeding by any
provision of this agreement required to be done or performed by the board of
directors of EduTrek or any officers of EduTrek may be done and performed with
like force and effect by the directors or officers of such EduTrek Successor.
11.3 WHOLLY-OWNED SUBSIDIARIES. Nothing herein shall be construed as
preventing the amalgamation or merger of any wholly-owned subsidiary of EduTrek
with or into EduTrek or the winding-up, liquidation or dissolution of any
wholly-owned subsidiary of EduTrek provided that all of the assets of such
subsidiary are transferred to EduTrek or another wholly-owned subsidiary of
EduTrek, and any such transactions are expressly permitted by this Article XI.
ARTICLE XII
AMENDMENTS AND SUPPLEMENTAL AGREEMENTS
12.1 AMENDMENTS, MODIFICATIONS, ETC. Subject to Section 12.4, this
agreement may not be amended, modified or waived except by an agreement in
writing executed by ITI, EduTrek and the Trustee and approved by the Holders in
accordance with Section 10.1 of the Exchangeable Share Provisions. No amendment
to or modification or waiver of any of the provisions of this agreement
otherwise permitted hereunder shall be effective unless made in writing and
signed by all of the parties hereto.
12.2 MINISTERIAL AMENDMENTS. Notwithstanding the provisions of Section
12.1 hereof, the parties to this agreement may in writing, at any time and from
time to time, without the approval of the Holders, amend or modify this
agreement for the purposes of:
(a) adding to the covenants of any or all of the parties
hereto for the protection of the Holders hereunder;
(b) making such amendments or modifications not inconsistent
with this agreement as may be necessary or desirable with respect to
matters or questions which, in the opinion of the board of directors of
each of EduTrek and ITI and in the opinion of the Trustee and its
counsel, having in mind the best interests of the Holders as a whole,
it may be expedient to make, provided that such boards of directors and
the Trustee and its counsel shall be of the opinion that such
amendments and modifications will not be prejudicial to the interests
of the Holders as a whole; or
(c) making such changes or corrections which, on the advice of
counsel to ITI, EduTrek and the Trustee, are required for the purpose
of curing or correcting any ambiguity or defect or inconsistent
provision or clerical omission or mistake or manifest error; provided
that the Trustee and its counsel and the board of directors of each of
ITI and EduTrek shall be of the opinion that such changes or
corrections will not be prejudicial to the interests of the Holders as
a whole.
12.3 MEETING TO CONSIDER AMENDMENTS. ITI, at the request of EduTrek,
shall call a meeting or meetings of the Holders for the purpose of considering
any proposed amendment or modification requiring approval pursuant hereto. Any
such meeting or meetings shall be called and held in accordance with the by-laws
of ITI, the Exchangeable Share Provisions and all applicable laws.
12.4 CHANGES IN CAPITAL OF EDUTREK AND ITI. At all times after the
occurrence of any event effected pursuant to Section 2.7 or Section 2.8 of the
Support Agreement, as a result of which either EduTrek Common Stock or the
Exchangeable Shares or both are in any way changed, this agreement shall
forthwith be amended and modified as necessary in order that it shall apply with
full force and effect, mutatis mutandis, to all new securities into which
EduTrek Common Stock or the Exchangeable Shares or both are so changed, and the
parties hereto shall
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execute and deliver a supplemental agreement giving effect to and evidencing
such necessary amendments and modifications.
12.5 EXECUTION OF SUPPLEMENTAL AGREEMENTS. From time to time ITI (when
authorized by a resolution of its Board of Directors), EduTrek (when authorized
by a resolution of its board of directors) and the Trustee, may, subject to the
provisions of these presents, and they shall, when so directed by these
presents, execute, and deliver by their proper officers, agreements or other
instruments supplemental hereto, which thereafter shall form part hereof, for
any one or more of the following purposes:
(a) evidencing the succession of any EduTrek Successors to
EduTrek and the covenants of and obligations assumed by each such
EduTrek Successor in accordance with the provisions of Article XI and
the successor of any successor trustee in accordance with the
provisions of Article X;
(b) making any additions to, deletions from or alterations of
the provisions of this agreement or the Voting Rights, the Exchange Put
Right, the Exchange Right or the Automatic Exchange Rights which, in
the opinion of the Trustee and its counsel, will not be prejudicial to
the interests of the Holders as a whole or are in the opinion of
counsel to the Trustee necessary or advisable in order to incorporate,
reflect or comply with any legislation the provisions of which apply to
EduTrek, ITI, the Trustee or this agreement; and
(c) for any other purposes not inconsistent with the
provisions of this agreement, including without limitation to make or
evidence any amendment or modification to this agreement as
contemplated hereby, provided that, in the opinion of the Trustee and
its counsel, the rights of the Trustee and the Holders as a whole will
not be prejudiced thereby.
ARTICLE XIII
TERMINATION
13.1 TERM. The Trust created by this agreement shall continue until the
earliest to occur of the following events:
(a) no outstanding Exchangeable Shares are held by a Holder,
(b) each of ITI and EduTrek elects in writing to terminate the
Trust and such termination is approved by the Holders of the
Exchangeable Shares in accordance with Section 10.1 of the Exchangeable
Share Provisions; and
(c) 21 years after the death of the last survivor of the
descendants of His Majesty King George VI of the United Kingdom of
Great Britain and Northern Ireland living on the date of the creation
of the Trust.
13.2 SURVIVAL OF AGREEMENT. This agreement shall survive any
termination of the Trust and shall continue until there are no Exchangeable
Shares outstanding held by a Holder, provided, however, that the provisions of
Articles VIII and IX hereof shall survive any such termination of this
agreement.
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ARTICLE XIV
GENERAL
14.1 SEVERABILITY. If any provision of this agreement is held to be
invalid, illegal or unenforceable, the validity, legality or enforceability of
the remainder of this agreement shall not in any way be affected or impaired
thereby, and the agreement shall be carried out as nearly as possible in
accordance with its original terms and conditions.
14.2 ENUREMENT. This agreement shall be binding upon and enure to the
benefit of the parties hereto and their respective successors and permitted
assigns and to the benefit of the Holders.
14.3 NOTICES TO PARTIES. All notices and other communications between
the parties hereunder shall be in writing and shall be deemed to have been given
if delivered personally or by confirmed telecopy to the parties at the following
addresses (or at such other address for such party as shall be specified in like
notice):
(a) if to EduTrek to: EduTrek International, Inc., 3340
Peachtree Road, Suite 2000, Atlanta, Georgia, USA 30326, Attention:
Chairman and Chief Executive Officer, Facsimile No. (404) 812-8241 with
required copies to Smith, Gambrell & Russell, LLP, Suite 3100,
Promenade II, 1230 Peachtree Street, N.E. Atlanta, Georgia, USA
30309-3592 Attention: A. Jay Schwartz, Esq., Facsimile No. (404) 685-
6932, and to Blake, Cassels & Graydon, 28th Floor, Box 25, Commerce
Court West, Toronto, Ontario, Canada M5L 1A9, Attention: Pamela S.
Hughes, Facsimile No. (416) 863-2653.
(b) if to ITI to: ITI Education Corporation, 1791 Barrington
Street, Suite 1400, Halifax, Nova Scotia, Canada B3J 3K9, Attention:
Chairman and Chief Executive Officer, Facsimile No. (902) 492-2288,
with required copies to Stewart McKelvey Stirling Scales, Purdy's
Wharf, Tower One, 1959 Upper Water Street, Halifax, Nova Scotia, Canada
B3J 2X2, Attention: R. Blois Colpitts, Facsimile No. (902) 496-6183.
(c) if to the Trustee to: o
Any notice or other communication given personally shall be
deemed to have been given and received upon delivery thereof, and if
given by telecopy shall be deemed to have been given and received on
the date of receipt thereof unless such day is not a Business Day in
which case it shall be deemed to have been given and received upon the
immediately following Business Day.
14.4 NOTICE TO HOLDERS. Any and all notices to be given and any
documents to be sent to any Holders may be given or sent to the address of such
Holder shown on the register of Holders of Exchangeable Shares in any manner
permitted by the Exchangeable Share Provisions and shall be deemed to be
received (if given or sent in such manner) at the time specified in such
Exchangeable Share Provisions, the provisions of which Exchangeable Share
Provisions shall apply mutatis mutandis to notices or documents as aforesaid
sent to such Holders.
14.5 RISK OF PAYMENTS BY POST. Whenever payments are to be made or
documents are to be sent to any Holder by the Trustee, by ITI or by EduTrek or
by such Holder to the Trustee or to EduTrek or ITI, the making of such payment
or sending of such document sent through the post shall be at the risk of ITI or
EduTrek, in the case of payments made or documents sent by the Trustee or ITI or
EduTrek, and the Holder, in the case of payments made or documents sent by the
Holder.
14.6 COUNTERPARTS. This agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
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14.7 JURISDICTION. This agreement shall be construed and enforced in
accordance with the laws of the Province of Nova Scotia and the laws of Canada
applicable therein.
14.8 ATTORNMENT. EduTrek agrees that any action or proceeding arising
out of or relating to this agreement may be instituted in the courts of Nova
Scotia, waives any objection which it may have now or hereafter to the venue of
any such action or proceeding, irrevocably submits to the jurisdiction of such
courts in any such action or proceeding, agrees to be bound by any judgment of
such courts and agrees not to seek, and hereby waives, any review of the merits
of any such judgment by the courts of any other jurisdiction and hereby appoints
ITI at its registered office in the Province of Nova Scotia as EduTrek's
attorney for service of process.
IN WITNESS WHEREOF, the parties hereby have caused this agreement to be
duly executed as of the date first above written.
EDUTREK INTERNATIONAL, INC.
By:
-------------------------------------------------
R. Steven Bostic
Chairman of the Board and Chief Executive Officer
ITI EDUCATION CORPORATION
By:
-------------------------------------------------
By:
-------------------------------------------------
TRUST COMPANY
By:
-------------------------------------------------
[name]
[title]
24
<PAGE> 104
EXHIBIT D
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
EDUTREK INTERNATIONAL, INC.
1.
The name of the Corporation is EduTrek International, Inc.
2.
A. The aggregate number of shares of capital stock the Corporation shall
have the authority to issue shall be fifty-five million and one (55,000,001)
shares, consisting of the following securities:
(1) forty million (40,000,000) shares of common stock, without par
value, designated as Class A Common Stock;
(2) ten million (10,000,000) shares of common stock, without par
value, designated as Class B Common Stock;
(3) one (1) share of Special Voting Stock, without par value,
designated as Special Voting Stock; and
(4) five million (5,000,000) shares of preferred stock as the Board of
Directors of the Corporation may decide to issue pursuant to Article II(D)
hereof.
B. Except to the extent otherwise provided below, the holders of shares of
Class A Common Stock ("Class A Holders") and the holders of shares of Class B
Common Stock ("Class B Holders") shall have the same powers, designations,
preferences and participation rights and privileges. The Class A Holders and the
Class B Holders shall share with each other on a ratable basis as a single class
in the net assets of the Corporation upon dissolution,
<PAGE> 105
subject to any preferences that may be established for the Corporation's
preferred stock. The Class A Holders, the Class B Holders and the holder of the
shares of Special Voting Stock ("Special Voting Holder") shall have the
following specific powers, designations, preferences, and relative participating
rights and privileges:
(1) With respect to each matter, proposition or question to be voted
upon, each Class A Holder shall be entitled to one (1) vote per share of Class A
Common Stock standing in his name on the transfer books of the Corporation, each
Class B Holder shall be entitled to ten (10) votes per share of Class B Common
Stock standing in his name on the transfer books of the Corporation and the
Special Voting Holder shall be entitled at any relevant date to a number of
votes equal to the product of (i) the number of exchangeable shares (the
"Exchangeable Shares") of the Corporation's subsidiary that are issued and
outstanding on the relevant date which are exchangeable into shares of Class A
Common Stock pursuant to the terms and conditions as set forth in the "Plan of
Arrangement" (as that term is defined in that certain "Combination Agreement"
dated as of December 10, 1997 by and between the Corporation and ITI Education
Corporation) and which are held by registered holders other than the Corporation
or any subsidiary of the Corporation multiplied by (ii), with respect to any
matter, proposition, or question on which holders of shares of Class A Common
Stock are entitled to vote, consent or otherwise act, the number of votes to
which a holder of one share of Class A Common Stock is entitled with respect to
such matter, proposition or question.
(2) The Class A Holders, the Class B Holders and the Special Voting
Holder shall have the right to vote, but not as separate classes except to the
extent required by law or as otherwise provided in subsection B (3) below, upon
all matters submitted to the shareholders of the Corporation. A quorum shall be
present when the majority of all votes eligible to be cast by
2
<PAGE> 106
the Class A Holders, the Class B Holders and the Special Voting Holder taken as
a whole is present in person or by proxy.
(3) In addition to any other vote required by law, the Corporation may
not alter or change, by increase, diminution, or otherwise, the relative rights,
preferences, privileges, restrictions, dividend rights, voting power or other
powers given to the Class A Holders, the Class B Holders and the Special Voting
Holder pursuant to this Article II other than by the affirmative vote of not
less than sixty-six and two thirds percent (662/3%) of all the votes entitled to
be voted by the holders of each class of stock to be adversely affected thereby
voting as a separate class, except that the Corporation may increase the total
number of authorized shares of Class A Common Stock that may be issued by the
Corporation by the affirmative vote of a majority of all the votes entitled to
be cast by the Class A Holders, the Class B Holders and the Special Voting
Holder voting together, without regard to class. In the event that the Board of
Directors declares a dividend or distribution payable in the Common Stock of the
corporation and there are an insufficient number of authorized Class B Common
Stock shares available to distribute in accordance with Paragraph (4)(b) below,
then the Class B Holders may vote on an amendment to these Articles of
Incorporation increasing the number of authorized shares of such class to the
number sufficient to permit the issuance of the stock dividend or distribution,
without submitting such vote for approval of the Class A Holders and the Special
Voting Holder.
(4) No dividend or distribution in cash, stock or property shall be
paid to the holder of Special Voting Stock. The Class A Holders and the Class B
Holders shall be entitled to receive such dividends and other distributions in
cash, stock or property of the Corporation as may be declared thereon by the
Board of Directors from time to time out of assets or funds of the Corporation
legally available therefor; provided, however, that:
3
<PAGE> 107
(a) No cash dividend may be declared and paid on the Class B
Common Stock unless a dividend of an equal or greater amount of cash per share
has been declared and paid on the Class A Common Stock; and
(b) In the case of dividends or other distributions payable in
stock of the Corporation, including a distribution pursuant to any stock split
or division, which occurs after the initial issuance of Class B Common Stock by
the Corporation, only shares of Class A Common Stock shall be distributed with
respect to Class A Common Stock and only shares of Class B Common Stock, in an
amount per share equal to the amount per share distributed with respect to the
Class A Common Stock, shall be distributed with respect to Class B Common Stock.
(c) In the case of any combination, reclassification or
recapitalization of the Class A Common Stock, the shares of Class B Common shall
also be combined, reclassified or recapitalized so that the number of shares of
Class B Common Stock outstanding immediately following such combination,
reclassification or recapitalization shall bear the same relationship to the
number of shares of Class B Common Stock outstanding immediately prior to such
combination, reclassification or recapitalization as the number of shares of
Class A Common Stock outstanding immediately following such combination,
reclassification or recapitalization bears to the number of shares of Class A
Common Stock outstanding immediately prior to such combination, reclassification
or recapitalization.
(d) Shares of Class B Common Stock outstanding at any time shall
not be reverse split or combined, whether by reclassification, recapitalization
or otherwise, so as to decrease the number of shares thereof issued and
outstanding unless at the same time the shares of Class A Common Stock are
reverse split or combined so that the number of shares of Class A Common Stock
outstanding immediately following such reclassification or recapitalization
shall
4
<PAGE> 108
bear the same relationship to the number of shares of Class A Common Stock
outstanding immediately prior to such reclassification or recapitalization as
the number of shares of Class B Common Stock outstanding immediately following
such reclassification or recapitalization bears to the number of shares of Class
B Common Stock outstanding immediately prior to such reclassification or
recapitalization.
(5) Any outstanding shares of Class B Common Stock shall be
convertible into fully paid and nonassessable shares of Class A Common Stock at
the option of the holder thereof on a one-share-for-one-share basis. In order
for a shareholder to effect any such conversion, such shareholder must furnish
the Corporation with a written notice of the request for conversion, which
notice shall be addressed to the principal office of the Corporation or to the
Corporation's designated transfer agent, shall state the number of shares of
Class B Common Stock to be converted into Class A Common Stock, shall state the
name of the person(s) in whose name(s) the shares of Class A Common Stock are to
be registered and shall be accompanied by a certificate or certificates
representing such shares, properly endorsed and ready for transfer. A conversion
shall be deemed to be made (and the holder of such shares shall be deemed to be
the holder of record of an equal number of shares of Class A Common Stock) at
the close of business on the date when the Corporation or transfer agent has
received the prescribed written notice and required certificate or certificates,
properly endorsed and ready for transfer. The Corporation hereby reserves and
shall at all times reserve and keep available out of its authorized and unissued
shares of Class A Common Stock, for the purposes of effecting conversion such
number of duly authorized shares of Class A Common Stock as shall from time to
time be sufficient to effect the conversion of all outstanding shares of Class B
Common Stock.
5
<PAGE> 109
(6) The Special Voting Stock is not convertible into any other class
or other rights, and may not be redeemed. If the Special Voting Stock is
purchased or otherwise acquired by the Corporation it shall be deemed retired
and shall be canceled and may not thereafter be reissued or otherwise disposed
of by the Corporation. At such time as the Special Voting Stock has no votes
attached to it because there are no Exchangeable Shares outstanding, the Special
Voting Stock shall be canceled.
C. (1) The Corporation shall not issue, either from its authorized,
unissued shares or from its treasury, a Class B Holder shall not transfer record
or beneficial ownership of, and the Corporation shall not register the transfer
of, whether by sale, assignment, gift, bequest, appointment or otherwise, any
shares of Class B Common Stock except to R. Steven Bostic, Alice Jane Bostic,
the Bostic Family Limited Partnership (collectively, a "Bostic Affiliate") or a
Permitted Transferee (as hereinafter defined). Subsequent issuances or transfers
of Class B Common Stock and dividends and distributions payable in Class B
Common Stock, including any distribution pursuant to a stock split or division,
shall be subject to the rights and limitations set forth in this Article II. Any
transfer of record or beneficial ownership of shares of Class B Common Stock to
a person or entity other than a Bostic Affiliate or a Permitted Transferee shall
result in the conversion of such shares of Class B Common Stock into Class A
Common Stock as provided in subsection C(4) below. A "Permitted Transferee"
shall mean, with respect to each person or entity from time to time shown as the
record holder of shares of Class B Common Stock:
(a) A member of any such holder's immediate family which
immediate family consists of the spouse, parents, lineal descendants (including
adopted children and step children), the spouse of any lineal descendant, and
brothers and sisters of such holders;
6
<PAGE> 110
(b) The trustee of a trust (including a voting trust) exclusively
for the benefit of such holder and/or one or more of his Permitted Transferees
described in subsection C(1) other than this clause (b), provided that such
trust may grant a general or special power of appointment to any person subject
to the limitation that no shares of Class B Common Stock shall be transferred to
any person or entity that is not a Permitted Transferee; or
(c) A corporation if all of the outstanding capital stock of such
corporation which is entitled to vote for the election of directors is owned by,
or a partnership if all of the partners of such partnership are and all of the
beneficial interests in the partnership are owned by, the Class B Holder or his
Permitted Transferees determined pursuant to this subsection C(1); provided
that, if by reason of any change in ownership of such stock or partnership
interest, such corporation or partnership would no longer qualify as a Permitted
Transferee under this clause (c), all of the shares of Class B Common Stock held
by such corporation or partnership shall, immediately and without further act,
be converted into Class A Common Stock as provided in subsection C(4) below.
(2) Notwithstanding the foregoing, any Class B Holder may pledge such
holder's shares of Class B Common Stock to a pledgee pursuant to a bona fide
pledge of such shares as collateral for security for indebtedness due to the
pledgee, provided that such shares shall not be transferred to or registered in
the name of pledgee and shall remain subject to the provisions of this Article
II(C). In the event of foreclosure or other similar action by the pledgee, such
pledged shares of Class B Common Stock may only be transferred to a Bostic
Affiliate or a Permitted Transferee of the pledgor or converted into shares of
Class A Common Stock as provided in subsection C(4) below, as the pledgee may
elect.
7
<PAGE> 111
(3) For purposes of this Article II(C), each reference to a
corporation shall include any successor corporation resulting from merger or
consolidation.
(4) Upon any transfer of shares of Class B Common Stock of record or
beneficially to any person or entity other than a Bostic Affiliate or a
Permitted Transferee, all of the shares of Class B Common Stock so transferred
shall convert into an equal number of shares of Class A Common Stock, effective
as of the date on which the certificates representing such shares of Class B
Common Stock being transferred are presented for transfer on the books of the
Corporation. The Corporation may, in connection with preparing or verifying a
list of shareholders entitled to vote at any meeting of shareholders or as a
condition to the transfer or registration of shares of Class B Common Stock on
the books of the Corporation, require the furnishing of such affidavits or other
proof as it may deem necessary to confirm that conversion of any shares of Class
B Common Stock to shares of Class A Common Stock is not required under these
Articles prior to any such vote, transfer or registration.
(5) The shares of Class B Common Stock shall be registered only in the
name of a Bostic Affiliate or a Permitted Transferee as the registered or
beneficial owner thereof and not in a "street" or "nominee" name. For purposes
of this Article II(C), a "beneficial owner" shall mean a person who can, or any
entity which possesses the power to, either singly or jointly, direct the voting
or disposition of such shares. The Corporation shall note on the certificates
representing shares of Class B Common Stock that there are restrictions on the
transfer and the registration of the transfer of such shares imposed by these
Articles.
D. The Board of Directors may determine the designation, par value,
preferences, qualifications, voting rights and powers, limitations and relative
rights of one or more series of preferred stock to be issued by the Corporation
from time to time upon such terms as the Board
8
<PAGE> 112
of Directors may adopt and upon filing of an amendment to these Articles in
accordance with Section 14-2-602 of the Georgia Business Corporation Code, or
any successor statute authorizing the issuance of preferred stock.
E. Any action required or permitted to be taken at a meeting of the
shareholders may be taken without a meeting by written consent signed by persons
who would be entitled to vote at a meeting shares of voting capital stock having
voting power to cast not less than the minimum number of votes that would be
necessary to authorize or take the action at a meeting of the shareholders, in
accordance with Section 14-2-704 of the Georgia Business Corporation Code, or
any successor statute.
III.
The mailing address of the principal office of the Corporation is Suite
2000, 3340 Peachtree Road, N.E., Atlanta, Georgia 30326.
IV.
No director of the Corporation shall be personally liable to the
Corporation or its shareholders for monetary damages for breach of duty of care
or other duty as a director; provided, however, that to the extent required by
applicable law, this Article shall not eliminate or limit the liability of a
director (i) for any appropriation, in violation of his duties, of any business
opportunity of the Corporation, (ii) for acts or omissions which involve
intentional misconduct or a knowing violation of law, (iii) for the types of
liability set forth in Section 14-2-832 of the Georgia Business Corporation
Code, or (iv) for any transaction from which the director derived an improper
personal benefit. If applicable law is amended to authorize corporate action
further eliminating or limiting the liability of directors, then the liability
of each director of the Corporation shall be eliminated or limited to the
fullest extent permitted by applicable law, as amended. Neither the amendment or
repeal of this
9
<PAGE> 113
Article, nor the adoption of any provision of these Articles of Incorporation
inconsistent with this Article, shall eliminate or reduce the effect of this
Article in respect of any acts or omissions occurring prior to such amendment,
repeal or adoption of an inconsistent provision.
V.
In discharging the duties of their respective provisions and in determining
what is believed to be in the best interests of the Corporation, the board of
directors, committees of the board of directors, and individual directors, in
addition to considering the effects of any action on the Corporation or its
shareholders, may consider the interests of the employees, customers, suppliers,
and creditors of the Corporation and its subsidiaries, the communities in which
offices or other establishments of the Corporation and its subsidiaries are
located, and all other factors such directors consider pertinent; provided,
however, that this Article shall be deemed solely to grant discretionary
authority to the directors and shall not be deemed to provide to any
constituency any right to be considered.
VI.
A. The Corporation shall, to the fullest extent permitted by applicable law
as the same exists or may hereafter be in effect, and as set forth in the
By-Laws, indemnify any person who is or was made or threatened to be made a
party to or is involved in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, including
an action by or in the right of the Corporation to procure a judgment in its
favor and an action by or in the right of any other corporation of any type or
kind, domestic or foreign, or any partnership, joint venture, trust, employee
benefit plan or any other entity, which any director, officer, employee of the
Corporation or other person is serving, has served or has agreed to serve in any
capacity at the request of the Corporation, by reason of the fact that such
person or such person's testator or intestate is or was or has agreed to become
a director or officer of the Corporation, or is or was serving or has agreed to
10
<PAGE> 114
serve such other corporation, partnership, joint venture, trust, employee
benefit plan or other entity in any capacity, against judgments, fines, amounts
paid or to be paid in settlement, taxes or penalties, and costs, charges and
expenses, including attorneys' fees, incurred in connection with such action or
proceeding or any appeal therein; provided, however, that no indemnification
shall be provided to any such person in circumstances for which indemnification
is prohibited by the Georgia Business Corporation Code. The Corporation shall
provide for the advancement of expenses to directors, and may, at the discretion
of the Board of Directors, provide for the advancement of expenses incurred in
connection with any such action or proceeding to officers, employees and others,
subject to the requirements of applicable law and as set forth in the By-Laws.
B. Nothing contained in this Article VI shall limit the right to
indemnification and advancement of expenses to which any person would be
entitled by law in the absence of this Article, or shall be deemed exclusive of
any other rights to which such person seeking indemnification or advancement of
expenses may have or hereafter may be entitled under law, any provision of these
Articles of Incorporation, or By-Laws, any agreement approved by the Board of
Directors, or a resolution of shareholders or directors; and the adoption of any
such resolution or entering into of any such agreement approved by the Board of
Directors is hereby authorized. The Corporation may purchase and maintain
insurance on behalf of any or all persons for whom indemnification is authorized
or required.
C. The indemnification and advancement of expenses provided by, or
authorized pursuant to, this Article VI shall: (i) apply with respect to acts or
omissions occurring prior to the adoption of this Article VI to the fullest
extent permitted by law, and (ii) survive the full or partial repeal or
restrictive amendment hereof with respect to events occurring prior thereto.
12
<PAGE> 115
VII.
These Amended and Restated Articles of Incorporation contain an amendment
requiring shareholders' approval, which amendment, together with these Amended
and Restated Articles of Incorporation, were approved by the Board of Directors
of the Corporation on December 5, 1997 and recommended to the shareholders of
the Corporation, which shareholders approved such amendment and these Amended
and Restated Articles of Incorporation at a special meeting of shareholders, on
______________, 1998, all in accordance with O.C.G.A. ss. 14-2-1003. Said
Amended and Restated Articles of Incorporation supersede the Articles of
Incorporation of the Corporation as heretofore amended.
13
<PAGE> 116
IN WITNESS WHEREOF, EDUTREK INTERNATIONAL, INC. has caused these
Amended and Restated Articles of Incorporation to be executed and its corporate
seal to be affixed and has caused the foregoing to be attested, all by its duly
authorized officers, on this ___day of ________________, 1998.
EDUTREK INTERNATIONAL, INC.
By:
---------------------------------------
Steve Bostic
Chairman and Chief Executive Officer
Attest:
By:
------------------------------------------
Name:
Title:
13
<PAGE> 117
EXHIBIT E
EduTrek International, Inc.
3340 Peachtree Road
Suite 2000
Atlanta, Georgia 30326
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be an
"affiliate" of ITI Education Corporation ("ITI"), a corporation incorporated
under the Canada Business Corporations Act, as the term "affiliate" is (i)
defined for purposes of paragraphs (c) and (d) of Rule 145 ("Rule 145") of the
Rules and Regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"), and (ii) used in and for purposes of Accounting Series
Releases 130 and 135, as amended, of the Commission. I have been further advised
that pursuant to the terms of the Combination Agreement dated as of December 10,
1997 (the "Combination Agreement"), by and between EduTrek International, Inc.
("EduTrek"), a Georgia corporation and ITI, ITI will be acquired and become a
subsidiary of EduTrek (the "Arrangement") and that as a result of the
Arrangement, I will receive ITI Exchangeable Shares (as defined in the
Combination Agreement) in exchange for ITI Common Shares (as defined in the
Combination Agreement) owned by me at the Effective Time of the Arrangement as
determined by the Combination Agreement. ITI Exchangeable Shares will be
exchangeable on a one-for-one basis for shares of EduTrek Common Stock (as
defined in the Combination Agreement) and will have voting and dividend rights
identical to those of the holders of EduTrek Common Stock.
I represent, warrant and covenant to EduTrek that:
1. I shall not make any sale, transfer or other disposition of the ITI
Exchangeable Shares or the EduTrek Common Stock in violation of the Act or the
Rules and Regulations.
2. I have carefully read this letter and the Combination Agreement and
discussed its requirements and other applicable limitations upon my ability to
sell, transfer, or otherwise dispose of ITI Exchangeable Shares or the EduTrek
Common Stock to the extent I believed necessary, with my counsel or counsel for
ITI.
3. I have been advised that the (i) issuance of ITI Exchangeable Shares
to me pursuant to the Arrangement was exempt from the registration requirements
of the Act and (ii) the issuance of shares of EduTrek Common Stock to me in
exchange for ITI Exchangeable Shares received pursuant to the Arrangement has
been or will be registered with the Commission under the Act on a Registration
Statement on Form S-4. However, I have also been advised that, since at the time
the Arrangement was or is submitted for a vote of the shareholders of ITI, I
also may be deemed to have
<PAGE> 118
been an affiliate of EduTrek and the distribution by me of the ITI Exchangeable
Shares or the shares of EduTrek Common Stock has not been registered under the
Act, and that I may not sell, transfer, or otherwise dispose of ITI Exchangeable
Shares or the shares EduTrek Common Stock issued to me in exchange for ITI
Exchangeable Shares received pursuant to the Arrangement unless (i) such sale,
transfer, or other disposition has been registered under the Act, (ii) such
sale, transfer, or other disposition is made in conformity with the volume and
other limitations of Rule 145 promulgated by the Commission under the Act, or
(iii) in the opinion of counsel reasonably acceptable to EduTrek, such sale,
transfer, or other disposition is otherwise exempt from registration under the
Act.
4. I understand that EduTrek is under no obligation to register the
sale, transfer, or other disposition of the ITI Exchangeable Shares or the
shares of EduTrek Common Stock by me or on my behalf under the Act or to take
any other action necessary in order to make compliance with an exemption from
such registration available.
5. I also understand that stop transfer instructions will be given to
EduTrek's transfer agent with respect to the shares of EduTrek Common Stock and
that there will be placed on the certificates for the EduTrek Common Stock
issued to me, or any substitutions therefor, a legend stating in substance:
The shares represented by this certificate have been issued in
a transaction to which Rule 145 promulgated under the
Securities Act of 1933 applies and may only be sold or
otherwise transferred in compliance with the require ments of
Rule 145 or pursuant to a registration statement under said
act or an exemption from such registration.
6. I also understand that unless the transfer by me of my shares of
EduTrek Common Stock has been registered under the Act or is a sale made in
conformity with the provisions of Rule 145, EduTrek reserves the right to put
the following legend on the certificates issued to my transferee:
The shares represented by this certificate have not been
registered under the Securities Act of 1933 and were acquired
from a person who received such shares in a transaction to
which Rule 145 promulgated under the Securities Act of 1933
applies. The shares have been acquired by the holder not with
a view to, or for resale in connection with, any distribution
thereof within the meaning of Securities Act of 1933 and may
not be sold, pledged or otherwise transferred except in
accordance with an exemption from the registration
requirements of the Securities Act of 1933.
It is understood and agreed that the legends set forth in paragraphs 5
and 6 above shall be removed by delivery of substitute certificates without such
legend if the undersigned shall have delivered to EduTrek a copy of a letter
from the staff of the Commission, or an opinion of counsel in form and substance
reasonably satisfactory to EduTrek, to the effect that such legend is not
required for purposes of the Act.
2
<PAGE> 119
I further represent to and covenant with EduTrek that during the 30
days immediately preceding the Effective Time (as defined in the Combination
Agreement), I have not and will not sell, transfer, or otherwise dispose of or
reduce the risk of holding the ITI Common Shares held by me and that I will not
sell, transfer, or otherwise dispose of or reduce the risk of holding (i) any
ITI Exchangeable Shares received by me in the Arrangement, (ii) any shares of
EduTrek Common Stock received by me in exchange for ITI Exchangeable Shares, or
(iii) other shares of capital stock of EduTrek until after such time as results
covering at least 30 days of combined operations of EduTrek and ITI have been
published by EduTrek, in the form of a quarterly earnings report, an effective
registration statement filed with the Commission, a report to the Commission on
Form 10-K, 10-Q, or 8-K, or any other public filing or announcement which
includes the results of at least 30 days of combined operations; provided,
however, that this paragraph shall not prevent me from selling, transferring, or
disposing of such number of ITI Common Shares or ITI Exchangeable Shares or
EduTrek capital stock as will not, in the reasonable judgment of accountants to
EduTrek, interfere with or prevent the Arrangement being accounted for as a
"pooling of interests," taking into account the nature, extent and timing of
such sale, transfer, or disposition and of similar sales, transfers, or
dispositions by all other affiliates of ITI and all affiliates of EduTrek.
I understand that pursuant to the Combination Agreement, no certificate
for ITI Exchangeable Shares shall be delivered to me in exchange for
certificates representing ITI Common Shares until I have executed and delivered
this agreement.
Very truly yours,
By:
-------------------------------------
Name:
-------------------------------------
Accepted this ___ day of
_______________, 199__, by
EduTrek International, Inc.
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
3
<PAGE> 120
EXHIBIT F
EduTrek International, Inc.
3340 Peachtree Road
Suite 2000
Atlanta, Georgia 30326
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be an
"affiliate" of EduTrek International, Inc. ("EduTrek"), a Georgia corporation,
as the term "affiliate" is (i) defined for purposes of paragraphs (c) and (d) of
Rule 145 ("Rule 145") of the Rules and Regulations (the "Rules and Regulations")
of the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"), and (ii) used in and for
purposes of Accounting Series Releases 130 and 135, as amended, of the
Commission. I have been further advised that pursuant to the terms of the
Combination Agreement dated as of December 10, 1997 (the "Combination
Agreement"), by and between EduTrek and ITI Education Corporation ("ITI"), a
corporation incorporated under the Canada Business Corporations Act, ITI will be
acquired and become a subsidiary of EduTrek (the "Arrangement").
I represent to and covenant with EduTrek that during the 30 days
immediately preceding the Effective Time (as defined in the Combination
Agreement), I have not and will not sell, transfer, or otherwise dispose of or
reduce the risk of holding the ITI Common Shares (as defined in the Combination
Agreement) held by me and that I will not sell, transfer, or otherwise dispose
of or reduce the risk of holding (i) any ITI Exchangeable Shares (as defined in
the Combination Agreement) received by me in the Arrangement, (ii) any shares of
EduTrek Common Stock (as defined in the Combination Agreement) received by me in
exchange for ITI Exchangeable Shares, or (iii) other shares of capital stock of
EduTrek held by me until after such time as results covering at least 30 days of
combined operations of EduTrek and ITI have been published by EduTrek, in the
form of a quarterly earnings report, an effective registration state ment filed
with the Commission, a report to the Commission on Form 10-K, 10-Q, or 8-K, or
any other public filing or announcement which includes the results of at least
30 days of combined operations; provided, however, that this paragraph shall not
prevent me from selling, transferring, or disposing of such number of shares of
ITI Common Shares, ITI Exchangeable Shares or EduTrek capital stock as will not,
in the reasonable judgment of accountants to EduTrek, interfere with or prevent
the Arrangement being accounted for as a "pooling of interests," taking into
account the nature, extent and timing of such sale, transfer, or disposition and
of similar sales, transfers, or dispositions by all other affiliates of ITI and
all affiliates of EduTrek.
<PAGE> 121
I understand that pursuant to the Combination Agreement, no certificate
for ITI Exchangeable Shares shall be delivered to me in exchange for
certificates representing ITI Common Shares until I have executed and delivered
this agreement.
Very truly yours,
By:
-------------------------------------
Name:
-------------------------------------
Accepted this _____ day of
_______________, 199__, by
EduTrek International, Inc.
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
2
