EXHIBIT 99.2
SECURITIES ACT
ESCROW AGREEMENT
THIS AGREEMENT made as of the 29 day of November, 1996.
AMONG
ISI Ventures Inc., a body corporate, incorporated pursuant to
the laws of the Province of Alberta
(hereinafter called "the Issuer")
- and -
Montreal Trust Company of Canada, a body corporate authorized
to carry on business as a trust company in the Province of
Alberta
(hereinafter called "the Trustee")
- and -
Those parties who execute and deliver this Escrow Agreement as
Security Holders
(hereinafter called "the Security Holders")
WHEREAS in order to comply with the requirements of the
policies of the Alberta Securities Commission, the Security Holders are desirous
of depositing in escrow certain securities in the Issuer owned by them and have
for that purpose delivered to the Trustee the security certificates described in
Schedule "A", the receipt of which certificates the Trustee hereby acknowledges;
AND WHEREAS the Trustee has agreed to undertake and perform
its duties according to the terms and conditions hereof;
NOW THEREFORE this agreement witnesses that, in consideration
of the sum of one dollar ($1.00) paid by the parties to each other, receipt of
this sum being acknowledged by each of the parties, the Security Holders jointly
and severally covenant and agree with the Issuer and with the Trustee, and the
Issuer and the Trustee covenant and agree each with the other and with the
Security Holders jointly and severally, as follows:
1. In this Escrow Agreement:
(a) "Common Shares" means fully paid and non-assessable common
shares of the Issuer;
71
<PAGE>
(b) "Control Person" means a Control Person as that term is
defined in Alberta Securities Commission Policy 4.11, as
amended from time to time, being any person or company that
holds or is one of a combination of persons or companies that
holds:
(i) a sufficient number of securities of the Issuer so as
to affect materially control of the Issuer; or
(ii) more than 20% of the outstanding voting securities of
the Issuer except where there is evidence showing
that the holding of these securities does not
materially affect control of the Issuer;
(c) "Executive Director" mans the Executive Director of the Alberta
Securities Commission Agency;
(d) "Major Transaction" means a Major Transaction as that term is
used and defined in Alberta Securities Commission Policy 4.11,
and includes a transaction whereby:
(i) the Issuer issues more than 25% of its issued and
outstanding securities prior to the completion of a
Major Transaction to acquire assets (other than cash)
or securities of another issuer;
(ii) the Issuer enters into an arrangement, amalgamation,
merger or reorganization (all or any one of which are
hereinafter referred to as a "Reorganization") with
another issuer whereby the ratio of securities which
are distributed to the two sets of security holders
results in the security holders of the other issuer
acquiring control of the entity arising from the
Reorganization;
(iii) the Issuer acquires significant assets (other than
cash) or a business in any way other than as set out
in (i) and (ii) above; or
(iv) the Issuer issues more than 25% of its issued and
outstanding securities prior to the completion of a
Major Transaction for cash.
(e) "Private Placement" means a Major Transaction referred to in
paragraph 1(d) (iv) hereof;
(f) "Prospectus" means the prospectus of the Issuer, approved,
signed and certified in accordance with the Securities Act
(Alberta) and relating to the offering of Common Shares in
Alberta by the Issuer; and
(g) "Related Party" means a person or company that is a promoter,
officer, director, or other insider of the Issuer, or an
associate or affiliate of these persons or companies.
72
<PAGE>
2. Each of the Security Holders hereby places and deposits in escrow with the
Trustee those of his securities in the Issuer which are represented by the
certificates described in Schedule "A"" and the Trustee hereby acknowledges
receipt of those certificates. Each of the Security Holders agrees to deposit in
escrow any further certificates representing securities in the Issuer which he
may receive as a stock dividend on securities hereby escrowed, and to deliver to
the Trustee immediately on receipt thereof the certificates for any such further
securities and any replacement certificates which may at any time be issued for
any escrowed securities.
3. Each of the Security Holders shall be entitled to a letter or
receipt from the Trustee stating the number of securities represented by
certificates held for him by the trustee subject to the terms of this agreement.
It is expressly understood and agreed by the parties hereto that such letter or
receipt shall not be assignable.
4. Each of the Security Holders hereby undertakes and agrees to
deposit in escrow any
securities of the Issuer which he may acquire in any of the following ways:
(a) pursuant to the distribution under the Prospectus;
(b) pursuant to the exercise, prior to the completion of
a Major Transaction, of any option granted to him by
the Issuer;
(c) in the secondary market, prior to the completion of a
Major Transaction, if the Security Holder is a Control
Person.
5. The securities deposited in escrow as aforesaid shall remain
in escrow and shall be released only on the written consent of the Executive
Director to the Trustee. Any such release may be either total or partial; a
partial release shall release from escrow only the securities specified in it,
and this agreement shall continue in force as respects those securities as may
from time to time remain in escrow until all the escrowed securities have been
either released on the written consent of the Executive Director or cancelled
pursuant to paragraph 14 hereof.
6. Except with the written consent of the Executive Director, the
securities held in escrow under this agreement and the beneficial ownership of
interest in them and the certificates representing them (including any
replacement certificates) shall not be sold, assigned, hypothecated, transferred
within escrow or otherwise dealt with in any manner and the Trustee shall not
acknowledge or implement any of the foregoing. In the event bankruptcy or death
of a Security Holder, the Trustee, on written notification to the Executive
Director, may transmit the Security Holder's securities by operation of law to
the trustee in bankruptcy, personal representative, or surviving joint tenant as
the case may be but, notwithstanding such transmission, the securities shall
remain in escrow subject to this agreement.
7.
Notwithstanding the provisions of paragraph 5 hereof,
securities deposited with the Trustee pursuant to this agreement shall be
released with the written consent of the Executive Director, upon the Issuer
completing a Major Transaction (other than a Private Placement) as to one- third
(1/3) of the original number of escrowed securities on each of the first, second
and third
73
<PAGE>
anniversaries of the completion of the Major Transaction. The Executive
Director, in his discretion, may consent to the release of securities on the
second and third anniversaries of the completion of the Major Transaction when
consent is granted for the release of securities on the occasion of the first
anniversary.
8. The Executive Director may consent in writing to the transfer
within escrow or hypothecation within escrow of any of the escrowed securities,
subject to the transferee or mortgagee agreeing in writing under seal to be
bound by this agreement and subject also to such other terms and conditions as
the Executive Director may impose, and the Trustee, on receipt of the written
consent of the Executive Director and of the agreement of the transferee or
mortgagee as aforesaid, shall permit such transfer within escrow or
hypothecation within escrow.
9. Any Security Holder applying to the Executive Director for a
consent for a release from escrow or to a transfer or hypothecation within
escrow shall, before applying, give reasonable notice in writing of his
intention to the Issuer and the Trustee.
10. All voting rights attached to the escrowed securities shall at
all times be exercised the respective registered owners thereof.
11. The Security Holders hereby renounce and release any right to
receive payment of any dividend (other than a stock dividend) which may be
payable on any securities held in escrow pursuant to this agreement with the
intent that the dividend shall not be paid on securities which are in escrow on
the record date set for the dividend.
12. The Security Holders agree that, while any of their securities
are held in escrow under this agreement, they will not, without the prior
written consent of the Executive Director, vote any of their securities (whether
escrowed or not) in support of any arrangement that would result in a repayment
of capital being made on escrowed securities prior to the commencement of the
winding up of the Issuer.
13. If the Issuer is would up and any securities remain in escrow
under this agreement at the time when assets of the Issuer are distributed to
holders of securities pursuant to the winding up, the Security Holders do hereby
assign their right to receive that part of the distribution which is
attributable to the escrowed securities to the Trustee, for the benefit of, and
in trust for the persons and companies who are then holders of securities in the
Issuer which securities are not subject to this escrow agreement, ratably in
proportion to their holdings.
14. (a) Securities not released from the escrow under this
agreement before the expiration of ten years from the date of
this agreement shall be cancelled forthwith and the Issuer and
the Trustee hereby agree to take all actions as may be
necessary to expeditiously effect cancellation.
74
<PAGE>
(b) For the purposes of effecting cancellation of securities
pursuant to paragraph 14(a), the Security Holders hereby
irrevocably appoint the Trustee as their attorney for the
purpose of cancelling the securities, with authority to
substitute one or more persons with like full power.
15. The Trustee accepts the responsibilities placed on it by this
agreement and agrees to perform them in accordance with the terms hereof and
with the applicable consents, orders or directions of the Executive Director.
16. The Issuer hereby acknowledges the terms and conditions of
this agreement and agrees to take all reasonable steps to facilitate performance
of this agreement and to pay the Trustee's proper charges for its services as
trustee of this escrow.
17. This agreement may be executed in several parts in the same
form and the parts as so executed shall together constitute one original
agreement, and the parts, if more than one, shall be read together and construed
as if all the signing parties hereto had executed one copy of this agreement.
18. The Issuer and the Security Holders hereby jointly and
severally agree to and do hereby release and indemnify and save harmless the
Trustee from and against all claims, suits, demands, costs, damages and expenses
which may be occasioned by reason of the Trustee's compliance in good faith with
the terms hereof.
19. If the Trustee should wish to retire, the Trustee shall
provide ninety (90) days notice to the Issuer, upon which the Issuer may, with
the written consent of the Executive Director, appoint by writing another
Trustee in its place and such appointment shall be binding on the Security
Holders, and the new Trustee shall assume and be bound by the obligations of the
Trustee hereunder.
20. The covenants of the Security Holders with the Issuer in this
agreement are made with the Issuer both in its own right and as trustee for the
holders from time to time of free securities in the Issuer, and may be enforced
not only by the Issuer but also by any holder of free securities.
21. In this agreement, the expression "the Security Holders" shall
include their respective permitted transferees within escrow and any person to
who the interest of a Security Holder may be transmitted by operation of law as
provided in paragraph 6, and the expression "the Trustee" shall include a new
trustee appointed under paragraph 19, and wherever the singular or masculine is
used, the same shall be construed to include the plural or feminine or neuter
where the context so requires.
22. This agreement may be amended upon agreement of the Issuer,
the Trustee and the Security Holders and upon the written consent having been
obtained from the Executive Director.
75
<PAGE>
23. The written consent of the Executive Director as to a release
from escrow of all or part of the escrowed securities shall terminate this
agreement only in respect to those securities so released. For greater certainty
this paragraph does not apply to securities transferred within escrow.
24. This agreement shall enure to the benefit of and be binding on
the parties to this agreement and each of their heirs, executors,
administrators, successors and assigns.
IN WITNESS WHEREOF the Issuer and the Trustee have caused
their respective corporate seals to be hereto affixed and the Security Holders
have hereto set their respective hands and seals.
ISI Ventures Inc.
Per: /s/ James R. Yeates
-------------------------
c/s
Per: /s/ Terry M. Holland
--------------------------
Montreal Trust Company of Canada
Per: /s/ not legible
--------------------
c/s
Per: /s/ not legible
---------------------
76
<PAGE>
SIGNED, by the respective Security Holders whose names are
subscribed in the right- hand column below in the presence of the respective
persons whose names are subscribed in the left- hand column.
TMH CAPITAL CORP.
per: /s/ Terry M. Holland, President
-----------------------------------------
/s/ Terry M. Holland /s/ James R. Yeates
------------------------------- ---------------------------
Yorkton Securities Inc., in trust for RRSP 63
8903 5 (Tycholis)
per: /s/ not legible
---------------------------------------
Interactive Selling Inc.
per: /s/ not legible
---------------------------------------
77
<PAGE>
SCHEDULE "A"
to the Escrow Agreement dated effective the 29 day of November, 1996.
NAME OF NUMBER OF
SECURITY HOLDER TYPE OF SECURITIES SECURITIES
--------------- ------------------ ----------
TMH Capital Corp. Common Shares 100,000
James R. Yeates Common Shares 100,000
Yorkton Securities Inc. in trust for Common Shares 100,000
RRSP 63 8903 5 (Tycholis)
Interactive Selling Inc. Common Shares 700,00
78
