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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: (Date of earliest event reported): August 30, 1996
VERITAS DGC INC.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Delaware 1-7427 76-0343152
(State of Incorporation) (Commission File Number) (IRS Employer Identification No.)
</TABLE>
3701 Kirby Drive
Houston, Texas 77098
(Address of Principal Executive Offices)
713/526-5611
(Registrant's telephone number, including area code)
Digicon Inc.
(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On August 30, 1996, Digicon Inc. (the "Company") and Veritas Energy
Services Inc. ("Veritas") reported the closing of the previously announced
merger of the two companies. In connection with the merger, the Company
changed its name to "Veritas DGC Inc." and its common stock began trading on
the New York Stock Exchange and The Toronto Stock Exchange under the ticker
symbol "VTS."
All Veritas common shares have been converted to Veritas exchangeable
shares which will trade on The Toronto Stock Exchange under the symbol "VES" and
which are exchangeable for the common stock of Veritas DGC Inc. The voting
equity of Veritas is now held by Veritas DGC Inc. The August 30, 1996 joint
news release of the Company and Veritas concerning the closing of this
transaction and a copy of the agreements entered in connection therewith have
been filed with the Securities and Exchange Commission as exhibits to this Form
8-K. This summary description of the transaction does not purport to be
complete and is qualified by reference to such press release and exhibits.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired. The required financial
statements have previously been filed in the Company's definitive proxy
materials dated July 19, 1996.
(b) Pro forma financial information. The required pro forma financial
information has previously been filed in the Company's definitive proxy
materials dated July 19, 1996.
(c) Exhibits.
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Exhibit No. Exhibit
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<S> <C>
3.1 Restated Certificate of Incorporation of Digicon Inc. dated
August 30, 1996. (Filed herewith.)
9.1 Voting and Exchange Trust Agreement dated as of August 30, 1996
among Digicon Inc., Veritas Energy Services Inc. and The R-M
Trust Company. (Filed herewith.)
10.1 Support Agreement dated as of August 30, 1996 between Digicon
Inc. and Veritas Energy Services Inc. (Filed herewith.)
20.1 Joint Press Release of Digicon Inc. and Veritas Energy
Services, Inc. dated August 30, 1996. (Filed herewith.)
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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 thereunto duly authorized.
Date: September 16, 1996
DIGICON INC.
By: /s/ Richard W. McNairy
-------------------------------
Richard W. McNairy,
Vice President and Principal
Financial Officer
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EXHIBIT INDEX
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Exhibit No. Exhibit
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<S> <C>
3.1 Restated Certificate of Incorporation of Digicon Inc. dated
August 30, 1996. (Filed herewith.)
9.1 Voting and Exchange Trust Agreement dated as of August 30, 1996
among Digicon Inc., Veritas Energy Services Inc. and The R-M
Trust Company. (Filed herewith.)
10.1 Support Agreement dated as of August 30, 1996 between Digicon
Inc. and Veritas Energy Services Inc. (Filed herewith.)
20.1 Joint Press Release of Digicon Inc. and Veritas Energy
Services, Inc. dated August 30, 1996. (Filed herewith.)
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<PAGE> 1
EXHIBIT 3.1
RESTATED
CERTIFICATE OF INCORPORATION
(WITH AMENDMENTS)
OF
DIGICON INC.
Digicon Inc., a corporation organized and existing under the laws of
Delaware (the "Corporation"), hereby certifies as follows:
FIRST: The present name of the Corporation is Digicon Inc. The original
name of the Corporation was "New Digicon Inc.", and its original date of
incorporation was June 21, 1991.
SECOND: This Restated Certificate of Incorporation (with Amendments) was
duly adopted in accordance with the provisions of Section 245 of the General
Corporation Law of the State of Delaware.
THIRD: Pursuant to Sections 242 and 245 of the General Corporation Law of
the State of Delaware, this Restated Certificate of Incorporation (with
Amendments) restates and integrates and further amends the provisions of the
Certificate of Incorporation of the Corporation.
FOURTH: The text of the Restated Certificate of Incorporation (with
Amendments) as heretofore amended and supplemented is hereby restated and
further amended to read in its entirety as follows:
ARTICLE I
The name of the Corporation is Veritas DGC Inc.
ARTICLE II
The registered office of the Corporation in the State of Delaware is
located at 1209 Orange Street in the City of Wilmington, County of New Castle.
The name and address of its registered agent at such address is The Corporation
Trust Company.
ARTICLE III
The nature of the business and the objects and purposes to be transacted,
promoted or carried on by the Corporation are to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
ARTICLE IV
Section 1. The aggregate number of shares which the Corporation will have
authority to issue is 41,000,000, of which 40,000,000 will be common shares,
par value $.01 per share, ("Ordinary
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Shares") and 1,000,000 will be shares of preferred stock, par value $.01
per share ("Preferred Stock").
Section 2. Preferred Stock. Shares of Preferred Stock may be issued from
time to time in one or more series, each of which is to have a distinctive
designation specified in the resolution or resolutions of the Board of
Directors providing for the issuance of such Preferred Stock from time to time.
Each series of Preferred Stock:
(a) may have such number of shares;
(b) may have such voting powers, full or limited;
(c) may be subject to redemption upon such terms and conditions;
(d) may be entitled to receive dividends (which may be cumulative or
noncumulative) payable in cash, property, rights or securities at such rate or
rates, on such conditions, from such date or dates, and at such times, and
payable in preference to, or in such relation to, the dividends payable on any
other class or series of stock;
(e) may have such rights and preferences upon the dissolution or
liquidation (whether voluntary or involuntary) of the Corporation;
(f) may be made convertible into or exchangeable for other securities, or
cash, or other property or rights at such price or prices or at such rates of
exchange, and with such adjustments;
(g) may be entitled to the benefit of a sinking fund to be applied to the
redemption of shares of such series upon such terms and in such amount or
amounts;
(h) may be subject to such restrictions as to issuance or as to the
powers, preferences or rights of any such other series; and
(i) may have such other preferences, privileges and relative rights;
as in such instance is stated in the resolution or resolutions of the Board of
Directors providing for the issuance of such Preferred Stock. Except where
otherwise set forth in such resolution or resolutions, the number of shares
comprising such series may be increased or decreased (but not below the number
of shares then outstanding from time to time) by like action of the Board of
Directors. Shares of any series of Preferred Stock, which have been redeemed
(whether through the operation of a sinking fund or otherwise) by the
Corporation, or which, if convertible or exchangeable, have been converted into
or exchanged for shares of stock of any other class, will have the status of
authorized but unissued shares of Preferred Stock and may be reissued as a part
of the series of which they were originally a part or may be reclassified and
reissued as part of a new series of Preferred Stock created by resolution or
resolutions of the Board of Directors or as part of any other series of
Preferred Stock, all subject to the conditions or restrictions on
issuance set forth in the
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resolution or resolutions adopted by the Board of Directors providing for
the issuance of any series of Preferred Stock and to any filing required by
law.
Section 3. Ordinary Shares. Ordinary Shares may be issued from time to
time in one or more series. The designations, powers, preferences and
relative, participating, optional and other special rights, and the
qualifications, limitations and restrictions thereon, of the Ordinary Shares of
each series shall be such as are stated and expressed herein, and to the extent
not stated and expressed herein, shall be such as may be fixed by the Board of
Directors and stated and expressed in the resolution or resolutions providing
for the issuance of such Ordinary Shares from time to time; provided, however,
that:
(a) except as otherwise provided by law or by the resolution or
resolutions of the Board of Directors providing for the issuance of any series
of Preferred Stock, Ordinary Shares will have the exclusive right to vote for
the election of directors and for all other purposes;
(b) all outstanding Ordinary Shares shall vote together as a single class
on all matters presented to stockholders, with each outstanding share of each
series of Ordinary Shares to have such number of votes as specified herein or
as set forth in the resolution or resolutions of the Board of Directors
authorizing such series; and
(c) no series of Ordinary Shares (except for such series as are herein
designated and except for any increase in the number of shares constituting
such a series) shall be designated by resolution of the Board of Directors
except upon the unanimous approval of all outstanding Ordinary Shares.
Section 4. Special Voting Stock Designated. A series of Ordinary Shares,
consisting of one such share, is hereby designated as "Special Voting Stock."
Each outstanding share of Special Voting Stock shall be entitled at any
relevant date to the number of votes determined in accordance with the "Plan of
Arrangement" (as that term is defined in that certain "Combination Agreement"
dated as of May 10, 1996, by and between Digicon Inc. and Veritas Energy
Services Inc. ("Veritas")) on all matters presented to the stockholders. No
dividend or distribution of assets shall be paid to the holders of Special
Voting Stock. The Special Voting Stock is not convertible into any other class
or series of the capital stock of the Corporation or into cash, property or
other rights, and may not be redeemed. Any shares of Special Voting Stock
purchased or otherwise acquired by the Corporation shall be deemed retired and
shall be canceled and may not thereafter be reissued or otherwise disposed of
by the Corporation. So long as any "Exchangeable Shares" (as that term is
defined in the Combination Agreement) shall be outstanding, the number of
shares comprising the Special Voting Stock shall not be increased or decreased
and no other term of the Special Voting Stock shall be amended, except upon the
unanimous approval of all outstanding Ordinary Shares.
Section 5. Common Stock Designated. All Ordinary Shares not otherwise
designated as to series herein or in a resolution of the Board of Directors
creating another series of Ordinary Shares, is designated as "Common Stock."
Such resulting number of shares may be decreased by resolution of the
Board of Directors and without stockholder action; provided, however, that no
decrease shall reduce the number of shares of Common Stock to a number less
than the number of
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shares then outstanding plus the number of shares reserved for issuance upon
the exercise of outstanding options, rights and/or warrants, the conversion
of any outstanding convertible securities and/or the exchange of any
outstanding exchangeable securities which are directly or indirectly
exercisable for, convertible into or exchangeable for Common Stock. Each
outstanding share of Common Stock shall be entitled to one vote on all matters
presented to the stockholders. Subject to the rights and preferences of any
Preferred Stock which may be designated and issued, the holders of Common Stock
are entitled (i) to receive such dividends as may be declared thereon from time
to time by the Board of Directors in its discretion, out of any assets of the
Corporation at the time legally available for the payment of dividends and (ii)
in the event of liquidation, dissolution or winding up of the affairs of the
Corporation, whether voluntary or involuntary, or in the event of its
insolvency, to receive any net assets of the Corporation remaining after the
holders of any other classes or series of the Corporation's capital stock which
by their respective terms are senior to the Common Stock as to dividends and
distributions of assets have been paid in full the amounts to which they
respectively are entitled or a sum sufficient for such payment in full has been
set aside.
Section 6. No holder of securities of the Corporation shall have any
preemptive right to acquire any shares or securities of any kind, whether now
or hereafter authorized, which may at any time be issued, sold or offered for
sale by the Corporation.
ARTICLE V
The existence of the Corporation is to be perpetual.
ARTICLE VI
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized:
(a) to authorize and cause to be executed mortgages and liens upon the
real and personal property of the Corporation;
(b) to set apart out of any of the funds of the Corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created; and
(c) when and as authorized by the affirmative vote of the holders of a
majority of the stock issued and outstanding having voting power given at a
stockholders' meeting duly called upon such notice as is required by statute to
sell, lease or exchange all or substantially all of the property and assets of
the Corporation, including its goodwill and its corporate franchises, upon such
terms and conditions and for such consideration, which may consist in whole or
in part of money or property including securities of any other corporation or
corporations, as the Board of Directors shall deem expedient and for the best
interests of the Corporation.
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ARTICLE VII
Meetings of stockholders may be held within or without the State of
Delaware, at such date and time as is requested by the person or persons
calling the meeting, within the limits fixed by law. Special meetings of
stockholders of the Corporation for any purpose or purposes may only be called
by a majority of the entire Board of Directors, by the Chairman of the Board or
the President of the Corporation. Special meetings may not be called by any
other person or persons. The books of the Corporation may be kept (subject to
any provision contained in the statutes) outside the State of Delaware at such
place or places as may be designated from time to time by the Board of
Directors or in the Bylaws of the Corporation. Elections of directors need not
be by written ballot unless the Bylaws of the Corporation shall so provide.
ARTICLE VIII
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Restated Certificate of Incorporation (with
Amendments), in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
ARTICLE IX
The number of directors of the Corporation shall be not less than three
nor more than ten, the exact number to be fixed by the Board of Directors as
provided in the Bylaws. Any vacancy created by an increase in the number of
directors in accordance with the Bylaws may only be filled by the Board of
Directors. A director of the Corporation may only be removed by a majority
vote of the stockholders entitled to elect such director.
ARTICLE X
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that the foregoing clause shall not
apply to any liability of a director (i) for any breach of the director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit.
If the Delaware General Corporation Law hereafter is amended to authorize
the further elimination or limitation of the liability of directors, then the
liability of a director of the Corporation, in addition to the limitation on
personal liability provided herein, shall be limited to the fullest extent
permitted by the amended Delaware General Corporation Law. Any repeal or
modification of this paragraph by the stockholders of the Corporation shall be
prospective only, and shall not adversely affect any limitation on the personal
liability of a director of the Corporation existing at the time of such repeal
or modification.
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The Corporation shall indemnify its officers and directors to the fullest
extent permitted by the Delaware General Corporation Law as the same may be in
effect from time to time.
ARTICLE XI
The Corporation expressly elects not to be governed by Section 203 of the
Delaware General Corporation Law.
ARTICLE XII
Notwithstanding any other provisions herein to the contrary, so long as
any Exchangeable Shares are outstanding, the Corporation shall (i) fully comply
with all terms of the Exchangeable Shares and with all contractual obligations
of the Corporation associated with such Exchangeable Shares and (ii) not amend,
alter, change or repeal this Article XII except upon the unanimous approval of
all outstanding Ordinary Shares.
IN WITNESS WHEREOF, the undersigned has executed this RESTATED CERTIFICATE
OF INCORPORATION (WITH AMENDMENTS) on August 28, 1996, which shall become
effective at 4:00 p.m. eastern standard time on August 30, 1996 in accordance
with Section 103(d) of the Delaware General Corporation Law.
By: /s/ RICHARD W. MCNAIRY
-----------------------------------
Richard W. McNairy, Vice President
and Chief Financial Officer
Attest:
/s/ ALLAN C. POGACH
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Allan C. Pogach, Secretary
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EXHIBIT 9.1
VOTING AND EXCHANGE TRUST AGREEMENT
MEMORANDUM OF AGREEMENT MADE AS OF THE 30th DAY OF AUGUST, 1996.
B E T W E E N:
DIGICON INC.,
a corporation existing under the
laws of the State of Delaware
(hereinafter referred to as
"Digicon")
OF THE FIRST PART,
- and -
VERITAS ENERGY SERVICES INC.,
a corporation existing under
the laws of the Province of
Alberta
(hereinafter referred to as
"Veritas")
OF THE SECOND PART,
- and -
THE R-M TRUST COMPANY,
a trust company existing under the laws of Canada
(hereinafter referred to as the
"Trustee")
OF THE THIRD PART.
WHEREAS pursuant to a combination agreement dated as of May 10, 1996, by
and between Digicon and Veritas (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),
Digicon and Veritas would execute and deliver a Voting and Exchange Trust
Agreement containing the terms and conditions set forth in Exhibit E to the
Combination Agreement together with such other terms and conditions as may be
agreed to by the parties to the Combination Agreement acting reasonably;
AND WHEREAS pursuant to an arrangement (the "Arrangement") effected by
Articles of Arrangement dated August 30, 1996 filed pursuant to the Business
Corporations Act (Alberta), each issued and outstanding common share of Veritas
(a "Veritas Common Share") was exchanged for 0.8 issued and outstanding
Exchangeable Shares of Veritas (the "Exchangeable Shares"), and thereafter,
Veritas's sole issued and outstanding Class A Preferred Share was exchanged by
the holder thereof for one issued and outstanding Veritas Common Share;
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AND WHEREAS the above-mentioned Articles of Arrangement set forth the
rights, privileges, restrictions and conditions (collectively, the
"Exchangeable Share Provisions") attaching to the Exchangeable Shares;
AND WHEREAS Digicon is to provide voting rights in Digicon to each holder
(other than Digicon 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 Digicon Common Stock (the "Digicon Common Stock");
AND WHEREAS Digicon is to grant to and in favour of the holders (other
than Digicon and its Subsidiaries) from time to time of Exchangeable Shares the
right, in the circumstances set forth herein, to require Digicon to purchase
from each such holder all or any part of the Exchangeable Shares held by the
holder;
AND WHEREAS the parties desire to make appropriate provision and to
establish a procedure whereby voting rights in Digicon shall be exercisable by
holders (other than Digicon and its Subsidiaries) from time to time of
Exchangeable Shares by and through the Trustee, which will hold legal title to
one share of Digicon Special Voting Stock (the "Digicon Special Voting Stock")
to which voting rights attach for the benefit of such holders and whereby the
rights to require Digicon to purchase Exchangeable Shares from the holders
thereof (other than Digicon 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;
AND WHEREAS these recitals and any statements of fact in this agreement
are made by Digicon and Veritas 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:
1. DEFINITIONS AND INTERPRETATION
(a) 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 Digicon Common Stock are entitled
to vote, consent or otherwise act, the product of (i) the number of shares of
Exchangeable Shares issued and outstanding and held by Holders multiplied by
(ii) the number of votes to which a holder of one share of Digicon Common Stock
is entitled with respect to such matter, proposition or question.
"Exchangeable Share Consideration" has the meaning attributed thereto in the
Exchangeable Share Provisions.
"Exchangeable Share Price" has the meaning attributed thereto in the
Exchangeable Share Provisions.
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"Arrangement" has the meaning attributed thereto in the recitals hereto.
"Automatic Exchange Rights" means the benefit of the obligation of Digicon to
effect the automatic exchange of shares of Digicon Common Stock for
Exchangeable Shares pursuant to Section 5(l) hereof.
"Board of Directors" means the Board of Directors of Veritas.
"Business Day" has the meaning attributed thereto in the Exchangeable Share
Provisions;
"Digicon Common Stock" has the meaning attributed thereto in the recitals
hereto.
"Digicon Consent" has the meaning attributed thereto in Section 4(b) hereof.
"Digicon Meeting" has the meaning attributed thereto in Section 4(b) hereof.
"Digicon Special Voting Stock" has the meaning attributed thereto in the
recitals hereto.
"Digicon Successor" has the meaning attributed thereto in subsection 11(a)(i)
hereof.
"Equivalent Vote Amount" means, with respect any matter, proposition or
question on which holders of Digicon Common Stock are entitled to vote, consent
or otherwise act, the number of votes to which a holder of one share of Digicon
Common Stock is entitled with respect to such matter, proposition or question.
"Exchange Right" has the meaning attributed thereto in Article 5 hereof.
"Exchangeable Share Provisions" has the meaning attributed thereto in the
recitals hereto.
"Exchangeable Shares" has the meaning attributed thereto in the recitals
hereto.
"Holder Votes" has the meaning attributed thereto in Section 4(b) hereof.
"Holders" means the registered holders from time to time of Exchangeable
Shares, other than Digicon and its Subsidiaries.
"Insolvency Event" means the institution by Veritas of any proceeding to be
adjudicated a bankrupt or insolvent or to be dissolved or wound-up, or the
consent of Veritas 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 Veritas to contest in good faith any such proceedings commenced
in respect of Veritas within 15 days of becoming aware thereof, or the consent
by Veritas to the filing of any such petition or to the appointment of a
receiver, or the making by Veritas of a general assignment for the benefit of
creditors, or the admission in writing by Veritas of its inability to pay its
debts generally as they become due, or Veritas not being
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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.
"Liquidation Call Right" has the meaning attributed thereto in the Exchangeable
Share Provisions.
"Liquidation Event" has the meaning attributed thereto in subsection 5(l)(ii)
hereof.
"Liquidation Event Effective Date" has the meaning attributed thereto in
subsection 5(l)(iii) hereof.
"List" has the meaning attributed thereto in Section 4(f) hereof.
"Officer's Certificate" means, with respect to Digicon or Veritas, as the case
may be, a certificate signed by any one of the Chairman of the Board, the
Vice-Chairman of the Board, the President, any Vice-President or any other
senior officer of Digicon or Veritas, as the case may be.
"Person" includes an individual, partnership, corporation, company,
unincorporated syndicate or organization, trust, trustee, executor,
administrator and other legal representative.
"Plan of Arrangement" has the meaning attributed thereto in the Exchangeable
Share Provisions.
"Redemption Call Right" has the meaning attributed thereto in the Exchangeable
Share Provisions.
"Retracted Shares" has the meaning attributed thereto in Section 5(g) hereof.
"Retraction Call Right" has the meaning attributed thereto in the Exchangeable
Share Provisions.
"Subsidiary" has the meaning attributed thereto in the Exchangeable Share
Provisions.
"Support Agreement" means that certain support agreement made as of even date
hereof between Veritas and Digicon.
"Trust" means the trust created by this agreement.
"Trust Estate" means the Voting Share, any other securities, 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 The R-M Trust Company and, subject to the provisions of Article
10 hereof, includes any successor trustee or permitted assigns.
"Veritas Common Shares" has the meaning attributed thereto in the recitals
hereto.
"Voting Rights" means the voting rights attached to the Voting Share.
"Voting Share" means the one share of Digicon Special Voting Stock, U.S. $0.01
par value, issued by Digicon to and deposited with the Trustee, which entitles
the holder of record to a number of
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votes at meetings of holders of Digicon Common Stock equal to the Aggregate
Equivalent Vote Amount.
(b) 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.
(c) 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.
(d) 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.
2. PURPOSE OF AGREEMENT
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 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.
3. VOTING SHARE
(a) ISSUANCE AND OWNERSHIP OF THE VOTING
SHARE. Digicon 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. Digicon 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
Digicon 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:
(i) 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
(ii) 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.
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(b) LEGENDED SHARE CERTIFICATES. Veritas
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.
(c) 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.
4. EXERCISE OF VOTING RIGHTS
(a) 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 stockholders of Digicon at a
Digicon Meeting or in connection with a Digicon 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(o) hereof, the Trustee
shall exercise the Voting Rights only on the basis of
instructions received pursuant to this Article 4 from
Holders entitled to instruct the Trustee as to the voting
thereof at the time at which a Digicon Consent is sought
or a Digicon Meeting is held. To the extent that no
instructions are received from a Holder with respect to
the Voting Rights to which such Holder is entitled, the
Trustee shall not exercise or permit the exercise of such
Holder's Voting Rights.
(b) NUMBER OF VOTES. With respect to all
meetings of stockholders of Digicon at which holders of
shares of Digicon Common Stock are entitled to vote (a
"Digicon Meeting") and with respect to all written
consents sought by Digicon from its stockholders including
the holders of shares of Digicon Common Stock (a "Digicon
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 Digicon or by applicable
law for such Digicon Meeting or Digicon Consent, as the
case may be (the "Holder Votes") in respect of each
matter, question or proposition to be voted on at such
Digicon Meeting or to be consented to in connection with
such Digicon Consent.
(c) MAILINGS TO SHAREHOLDERS. With respect
to each Digicon Meeting and Digicon Consent, the Trustee
will mail or cause to be mailed (or otherwise communicate
in the same manner as Digicon utilizes in communications
to holders of Digicon 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 Digicon to its stockholders:
(i) a copy of such notice, together with any proxy
or information statement and related materials to
be provided to stockholders of the Digicon;
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<PAGE> 7
(ii) a statement that such Holder is entitled to
instruct the Trustee as to the exercise of the
Holder Votes with respect to such Digicon Meeting
or Digicon Consent, as the case may be, or,
pursuant to Section 4(g) hereof, to attend such
Digicon Meeting and to exercise personally the
Holder Votes thereat;
(iii) 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:
(A) a proxy to such Holder or his designee to
exercise personally the Holder Votes; or
(B) a proxy to a designated agent or other
representative of the management of Digicon
to exercise such Holder Votes;
(iv) 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;
(v) a form of direction whereby the Holder may so
direct and instruct the Trustee as contemplated
herein; and
(vi) a statement of (A) 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 a Digicon Meeting shall not be earlier than the
close of business on the Business Day prior to such
meeting, and (B) the method for revoking or
amending such instructions.
The materials referred to above are to be provided by Digicon
to the Trustee, but shall be subject to review and comment by
the Trustee.
For the purpose of determining Holder Votes to which a Holder
is entitled in respect of any such Digicon Meeting or Digicon
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 Digicon or by applicable law for
purposes of determining stockholders entitled to vote at such
Digicon Meeting or to give written consent in connection with
such Digicon Consent. Digicon will notify the Trustee in
writing of any decision of the board of directors of Digicon
with respect to the calling of any such Digicon Meeting or the
seeking of any such Digicon 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(c).
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<PAGE> 8
(d) COPIES OF STOCKHOLDER INFORMATION. Digicon will deliver
to the Trustee copies of all proxy materials,
(including notices of Digicon Meetings but excluding
proxies to vote shares of Digicon 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 Digicon 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 Digicon Common Stock. The Trustee will mail
or otherwise send to each Holder, at the expense of
Digicon, copies of all such materials (and all materials
specifically directed to the Holders or to the Trustee for
the benefit of the Holders by Digicon) received by the
Trustee from Digicon at the same time as such materials
are first sent to holders of Digicon Common Stock. The
Trustee will make copies of all such materials available
for inspection by any Holder at the Trustee's principal
office in the cities of Calgary and Toronto.
(e) OTHER MATERIALS. Immediately after receipt by Digicon or
any stockholder of Digicon of any material sent or
given generally to the holders of Digicon 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),
Digicon 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 Digicon, copies of all such materials
received by the Trustee from Digicon. The Trustee will
also make copies of all such materials available for
inspection by any Holder at the Trustee's principal office
in the cities of Toronto and Vancouver.
(f) LIST OF PERSONS ENTITLED TO VOTE. Veritas shall, (i) prior
to each annual, general and special Digicon Meeting or
the seeking of any Digicon 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 a Digicon Meeting or a Digicon Consent, at
the close of business on the record date established by
Digicon or pursuant to applicable law for determining the
holders of Digicon Common Stock entitled to receive notice
of and/or to vote at such Digicon Meeting or to give
consent in connection with such Digicon Consent. Each
such List shall be delivered to the Trustee promptly after
receipt by Veritas 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.
Digicon agrees to give Veritas written notice (with a copy
to the Trustee) of the calling of any Digicon Meeting or
the seeking of any Digicon Consent, together with the
record dates therefor, sufficiently prior to the date
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<PAGE> 9
of the calling of such meeting or seeking of such
consent so as to enable Veritas to perform its obligations
under this Section 4(f).
(g) ENTITLEMENT TO DIRECT VOTES. Any Holder named in a List
prepared in connection with any Digicon Meeting or any
Digicon Consent will be entitled (i) to instruct the
Trustee in the manner described in Section 4(c) 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.
(h) VOTING BY TRUSTEE, AND ATTENDANCE OF TRUSTEE
REPRESENTATIVE, AT MEETING.
(i) In connection with each Digicon Meeting and
Digicon Consent, the Trustee shall exercise, either
in person or by proxy, in accordance with the
instructions received from a Holder pursuant to
Section 4(c) 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(c) hereof.
(ii) 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 Digicon 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 (A) has
not previously given the Trustee instructions
pursuant to Section 4(c) hereof in respect of such
meeting, or (B) 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.
(i) 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
Digicon utilizes in communications to holders of Digicon
Common Stock) to each Holder at its address as shown on
the books of Veritas. Veritas shall provide or cause to
be provided to the Trustee for this purpose, on a timely
basis and without charge or other expense:
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<PAGE> 10
(A) current lists of the Holders; and
(B) upon the request of the Trustee, mailing
labels to enable the Trustee to carry out its
duties under this agreement.
The materials referred to above are to be provided by
Digicon to the Trustee, but shall be subject to review
and comment by the Trustee.
(j) 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 exercisable 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 Digicon and such Holder Votes
and the Voting Rights represented thereby shall cease
immediately upon the delivery by such Holder to the
Trustee of the certificates representing such Exchangeable
Shares in connection with the exercise by the Holder of
the Exchange Right or the occurrence of the automatic
exchange of Exchangeable Shares for shares of Digicon
Common Stock, as specified in Article 5 hereof (unless in
either case Digicon shall not have delivered the
Exchangeable Share Consideration deliverable in exchange
therefor to the Trustee for delivery to the Holders), 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 Veritas pursuant to Article 5
of the Exchangeable Share Provisions, or upon the purchase
of Exchangeable Shares from the holder thereof by Digicon
pursuant to the exercise by Digicon of the Retraction Call
Right, the Redemption Call Right or the Liquidation Call
Right.
5. EXCHANGE RIGHT AND AUTOMATIC EXCHANGE
(a) GRANT AND OWNERSHIP OF THE EXCHANGE RIGHT. Digicon hereby
grants to the Trustee as trustee for and on behalf of,
and for the use and benefit of, the Holders (i) the right
(the "Exchange Right"), upon the occurrence and during the
continuance of an Insolvency Event, to require Digicon to
purchase from each or any Holder all or any part of the
Exchangeable Shares held by the Holders, and (ii) the
Automatic Exchange Rights, all in accordance with the
provisions of this agreement. Digicon 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 Right and
the Automatic Exchange Rights by Digicon 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
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 Right and the Automatic
Exchange Rights, provided that the Trustee shall:
(iii) hold 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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<PAGE> 11
(iv) except as specifically authorized by this
agreement, have no power or authority to
exercise or otherwise deal in or with 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.
(b) LEGENDED SHARE CERTIFICATES. Veritas will cause each
certificate representing Exchangeable Shares to bear an
appropriate legend notifying the Holders of:
(i) their right to instruct the Trustee with
respect to the exercise of the Exchange Right in
respect of the Exchangeable Shares held by a
Holder; and
(ii) the Automatic Exchange Rights.
(c) GENERAL EXERCISE OF EXCHANGE RIGHT. The Exchange Right
shall be and remain vested in and exercised by the
Trustee. Subject to Section 7(o) hereof, the Trustee
shall exercise the Exchange Right only on the basis of
instructions received pursuant to this Article 5 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 Right,
the Trustee shall not exercise or permit the exercise of
the Exchange Right.
(d) PURCHASE PRICE. The purchase price payable by Digicon for
each Exchangeable Share to be purchased by Digicon
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,
Digicon will provide to the Trustee an Officer's
Certificate setting forth the calculation of the
Exchangeable Share Price for each Exchangeable Share. The
Exchangeable Share Price for each such Exchangeable Share
so purchased may be satisfied only by Digicon issuing and
delivering or causing to be delivered to the Trustee, on
behalf of the relevant Holder, the Exchangeable Share
Consideration representing the total Exchangeable Share
Price.
(e) 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 Veritas. 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 office in Calgary,
Alberta 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 Digicon to purchase, duly
endorsed in blank, and accompanied by such other documents
and instruments as may be required to effect a transfer of
Exchangeable Shares under the Business Corporations Act
(Alberta) and the by-laws of Veritas and such additional
documents
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<PAGE> 12
and instruments as the Trustee may reasonably require
together with (i) 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 (A) that the Holder thereby instructs the Trustee
to exercise the Exchange Right so as to require Digicon
to purchase from the Holder the number of Exchangeable
Shares specified therein, (B) that such Holder has good
title to and owns all such Exchangeable Shares to be
acquired by Digicon free and clear of all liens, claims
and encumbrances, (C) the names in which the certificates
representing Digicon Common Stock issuable in connection
with the exercise of the Exchange Right are to be issued
and (D) the names and addresses of the persons to whom
the Exchangeable Share Consideration should be delivered
and (ii) payment (or evidence satisfactory to the
Trustee, Veritas and Digicon of payment) of the taxes (if
any) payable as contemplated by Section 5(h) 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 Digicon under the
Exchange Right, a new certificate for the balance of such
Exchangeable Shares shall be issued to the Holder at the
expense of Veritas.
(f) DELIVERY OF EXCHANGEABLE SHARE CONSIDERATION; EFFECT OF
EXERCISE. Promptly after receipt of the certificates
representing the Exchangeable Shares which the Holder
desires Digicon to purchase under the Exchange Right
(together with such documents and instruments of transfer
and a duly completed form of notice of exercise of the
Exchange Right), duly endorsed for transfer to Digicon,
the Trustee shall notify Digicon and Veritas of its
receipt of the same, which notice to Digicon and Veritas
shall constitute exercise of the Exchange Right by the
Trustee on behalf of the Holder of such Exchangeable
Shares, and Digicon 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 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, Veritas and
Digicon of the payment of) the taxes (if any) payable as
contemplated by Section 5(h) of this agreement.
Immediately upon the giving of notice by the Trustee to
Digicon and Veritas of the exercise of the Exchange Right,
as provided in this Section 5(f), the closing of the
transaction of purchase and sale contemplated by the
Exchange Right shall be deemed to have occurred, and the
Holder of such Exchangeable Shares shall be deemed to have
transferred to Digicon all of its right, title and
interest in and to such Exchangeable Shares and in the
related interest in the Trust Estate and shall cease to be
a holder of such Exchangeable Shares and shall not be
entitled to exercise any of the rights of a holder in
respect thereof, other than the right to receive his
proportionate part of the total purchase price therefor,
unless such Exchangeable Share Consideration is not
delivered by Digicon to the Trustee, for delivery to such
Holder (or to such other persons, if any, properly
designated by such Holder), within five Business Days of
the date of the giving of such notice by the Trustee, in
which case the rights of the Holder shall remain
unaffected until such Exchangeable Share Consideration is
delivered by Digicon and any cheque included therein is
paid. Concurrently with such Holder ceasing to be a
holder of Exchangeable Shares, the Holder shall be
considered and
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<PAGE> 13
deemed for all purposes to be the holder of the shares of
Digicon Common Stock delivered to it pursuant to 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.
(g) 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
Veritas to redeem any or all of the Exchangeable Shares
held by the Holder (the "Retracted Shares") and is
notified by Veritas pursuant to Section 6.6 of the
Exchangeable Share Provisions that Veritas 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 Veritas and provided
that Digicon shall not have exercised the Retraction Call
Right with respect to the Retracted Shares and that the
Holder has not revoked the retraction request delivered by
the Holder to Veritas 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 Veritas is unable to redeem. In
any such event, Veritas hereby agrees with the Trustee and
in favour of the Holder immediately to notify the Trustee
of such prohibition against Veritas 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 Veritas 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 that Veritas is not
permitted to redeem and will require Digicon to purchase
such shares in accordance with the provisions of this
Article 5.
(h) STAMP OR OTHER TRANSFER TAXES. Upon any sale of
Exchangeable Shares to Digicon pursuant to the Exchange
Right or the Automatic Exchange Rights, the share
certificate or certificates representing Digicon 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 (i)
shall pay (and neither Digicon, Veritas 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 (ii) shall
have established to the satisfaction of the Trustee,
Digicon and Veritas that such taxes, if any, have been
paid.
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<PAGE> 14
(i) 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, Veritas and Digicon shall
give written notice thereof to the Trustee. As soon as
practicable after receiving notice from Veritas and
Digicon or from any other Person of the occurrence of an
Insolvency Event, the Trustee will mail to each Holder, at
the expense of Digicon, a notice of such Insolvency Event
in the form provided by Digicon, which notice shall
contain a brief statement of the right of the Holders with
respect to the Exchange Right.
(j) QUALIFICATION OF DIGICON COMMON STOCK. Digicon covenants
that if any shares of Digicon Common Stock to be issued
and delivered pursuant to 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 or
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 fulfillment of any other legal requirement
(collectively, the "Applicable Laws") before such shares
may be issued and delivered by Digicon to the initial
holder thereof (other than Veritas) or in order that such
shares may be freely traded thereafter (other than any
restrictions on transfer by reason of a holder being a
"control person" of Digicon for purposes of Canadian
federal or provincial securities law or an "affiliate" of
Digicon for purposes of United States federal or state
securities law), Digicon will in good faith expeditiously
take all such actions and do all such things as are
necessary to cause such shares of Digicon Common Stock to
be and remain duly registered, qualified or approved.
Digicon 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 Digicon Common Stock to be issued and
delivered pursuant to the Exchange Right and the Automatic
Exchange Rights and to be freely tradeable thereafter
(other than restrictions on transfer by reason of a holder
being a "control person" of Digicon for the purposes of
Canadian federal and provincial securities law or an
"affiliate" of Digicon for the purposes of United States
federal or state securities law). Digicon will in good
faith expeditiously take all such actions and do all such
things as are necessary to cause all shares of Digicon
Common Stock to be delivered pursuant to 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 shares are listed, quoted
or posted for trading at such time.
(k) RESERVATION OF SHARES OF DIGICON COMMON STOCK.
Digicon 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 Digicon Common Stock (i) as is
equal to the sum of (A) the number of Exchangeable Shares
issued and outstanding from time to time and (B) the
number of Exchangeable Shares issuable upon the exercise
of all rights to acquire Exchangeable Shares outstanding
from time to time and (ii) as are now and may hereafter
be required to enable and
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<PAGE> 15
permit Veritas to meet its obligations hereunder, under
the Restated Certificate of Incorporation of Digicon,
under the Support Agreement, under the Exchangeable Share
Provisions and under any other security or commitment
pursuant to the Arrangement with respect to which Digicon
may now or hereafter be required to issue shares of
Digicon Common Stock.
(l) AUTOMATIC EXCHANGE ON LIQUIDATION OF DIGICON.
(i) Digicon will give the Trustee written notice of
each of the following events at the time set forth
below:
(A) in the event of any determination by the
board of directors of the Digicon to
institute voluntary liquidation,
dissolution or winding-up proceedings with
respect to Digicon or to effect any other
distribution of assets of Digicon among its
stockholders 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
(B) immediately, upon the earlier of (I) receipt
by Digicon of notice of and (II)
Digicon 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 Digicon or to effect any other
distribution of assets of Digicon among its
stockholders for the purpose of winding-up
its affairs.
(ii) Immediately following receipt by the Trustee
from Digicon of notice of any event (a "Liquidation
Event") contemplated by Section 5(l)(i) above, the
Trustee will give notice thereof to the Holders.
Such notice will be provided by Digicon to the
Trustee and shall include a brief description of
the automatic exchange of Exchangeable Shares for
shares of Digicon Common Stock provided for in
Section 5(l)(iii) below.
(iii) In order that the Holders will be able to
participate on a PRO RATA basis with the holders of
Digicon Common Stock in the distribution of assets
of Digicon in connection with a Liquidation Event,
immediately prior to the effective time (the
"Liquidation Event Effective Time") of a
Liquidation Event all of the then outstanding
Exchangeable Shares shall be automatically
exchanged for shares of Digicon Common Stock. To
effect such automatic exchange, Digicon 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, Digicon will provide
to the Trustee an Officer's Certificate setting
forth the calculation of the purchase price for
each Exchangeable Share.
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<PAGE> 16
(iv) The closing of the transaction of purchase and
sale contemplated by Section 5(l)(iii) 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 Digicon all of the Holder's right,
title and interest in and to such Exchangeable
Shares and the related interest in the Trust Estate
and shall cease to be a holder of such Exchangeable
Shares and Digicon shall deliver to the Holder the
Exchangeable Share Consideration deliverable upon
the automatic exchange of Exchangeable Shares.
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 Digicon
Common Stock issued to it pursuant to the automatic
exchange of Exchangeable Shares for Digicon Common
Stock and the certificates held by the Holder
previously representing the Exchangeable Shares
exchanged by the Holder with Digicon pursuant to
such automatic exchange shall thereafter be deemed
to represent the shares of Digicon Common Stock
issued to the Holder by Digicon pursuant to such
automatic exchange. Upon the request of a Holder
and the surrender by the Holder of Exchangeable
Share certificates deemed to represent shares of
Digicon Common Stock, duly endorsed in blank and
accompanied by such instruments of transfer as
Digicon may reasonably require, Digicon shall
deliver or cause to be delivered to the Holder
certificates representing the shares of Digicon
Common Stock of which the Holder is the holder.
Notwithstanding the foregoing until each Holder is
actually entered on the register of holders of
Digicon Common Stock, such 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.
6. RESTRICTIONS ON ISSUANCE OF DIGICON SPECIAL VOTING STOCK
During the term of this agreement, Digicon will not issue any
shares of Digicon Special Voting Stock in addition to the
Voting Share.
7. CONCERNING THE TRUSTEE
(a) 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:
(i) receipt and deposit of the Voting Share from
Digicon as trustee for and on behalf of the
Holders in accordance with the provisions of this
agreement;
(ii) granting proxies and distributing materials to
Holders as provided in this agreement;
(iii) voting the Holder Votes in accordance with
the provisions of this agreement;
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(iv) receiving the grant of the Exchange Right and
the Automatic Exchange Rights from Digicon as
trustee for and on behalf of the Holders in
accordance with the provisions of this agreement;
(v) exercising 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 Digicon Common Stock and
cheques, if any, to which such Holders are
entitled upon the exercise of the Exchange Right or
pursuant to the Automatic Exchange Rights, as the
case may be;
(vi) holding title to the Trust Estate;
(vii) investing any moneys forming, from time to
time, a part of the Trust Estate as provided in
this agreement;
(viii) taking action at the direction of a Holder
or Holders to enforce the obligations of Digicon
under this agreement; and
(ix) 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, powers 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.
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<PAGE> 18
(b) NO CONFLICT OF INTEREST. The Trustee represents to
Veritas and Digicon 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 10 hereof. If, notwithstanding the
foregoing provisions of this Section 7(b), 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(b),
any interested party may apply to the Alberta Court of
Queen's Bench an order that the Trustee be replaced as
trustee hereunder.
(c) DEALINGS WITH TRANSFER AGENTS, REGISTRARS, ETC. Veritas
and Digicon irrevocably authorize the Trustee, from time
to time, to:
(i) 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 Digicon
Common Stock; and
(ii) requisition, from time to time, (A) 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 (B) from the transfer agent of
Digicon Common Stock, and any subsequent transfer
agent of such shares, the share certificates
issuable upon the exercise from time to time of
the Exchange Right and pursuant to the Automatic
Exchange Rights in the manner specified in Article
5 hereof.
Veritas and Digicon irrevocably authorize their respective
registrars and transfer agents to comply with all such
requests. Digicon 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 Right
and the Automatic Exchange Rights, in each case pursuant to
Article 5 hereof.
(d) BOOKS AND RECORDS. The Trustee shall keep available for
inspection by Digicon and Veritas, at the Trustee's
principal office in Calgary, Alberta, 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 Right and the Automatic
Exchange Rights for the term of this agreement. On or
before June 30, 1997, and on or before June 30 in every
year thereafter, so long as the Voting Share is on deposit
with the Trustee, the Trustee shall transmit to Digicon
and Veritas a brief report, dated as of the preceding
March 31, with respect to:
(i) the property and funds comprising the Trust
Estate as of that date;
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(ii) the number of exercises of 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 Digicon of shares of Digicon Common Stock in
connection with the Exchange Right, during the
calendar year ended on such date; and
(iii) all other actions taken by the Trustee in the
performance of its duties under this agreement
which it had not previously reported.
(e) 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,
Digicon shall retain such experts for purposes of
providing such advice and assistance.
(f) 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 furnishing to the Trustee reasonable
funding, security and indemnity against the costs,
expenses 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 4 hereof, subject to Section 7(o) hereof, and with
respect to the Exchange Right pursuant to Article 5
hereof, subject to Section 7(o) hereof, and with respect
to the Automatic Exchange Rights pursuant to Article 5
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
funded, given funds, security and indemnified as
aforesaid.
(g) 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(f) 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
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<PAGE> 20
Voting Rights, 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.
(h) 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(i) hereof, if applicable, and with any other
applicable provisions of this agreement.
(i) EVIDENCE AND AUTHORITY TO TRUSTEE.
Veritas and/or Digicon 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 Veritas and/or Digicon 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 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 Veritas and/or
Digicon forthwith if and when:
(i) 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(i); or
(ii) the Trustee, in the exercise of its rights,
powers, duties and authorities under this
agreement, gives Veritas and/or Digicon 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 Veritas and/or Digicon 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 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 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 Veritas
and/or Digicon it shall be in the form of an Officer's
Certificate or a statutory declaration.
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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:
(iii) declaring that he has read and understands
the provisions of this agreement relating to the
condition in question:
(iv) describing the nature and scope of the
examination or investigation upon which he based
the statutory declaration, certificate, statement
or opinion; and
(v) 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.
(j) EXPERTS, ADVISERS AND AGENTS. The Trustee may:
(i) 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
Veritas and/or Digicon 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
(ii) 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.
(k) 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 Alberta, 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 Veritas.
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 Veritas, 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.
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<PAGE> 22
(l) 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.
(m) 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 Veritas and/or
Digicon or of the directors thereof until a duly
authenticated copy of the instrument or resolution
containing such direction 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 believed by the Trustee to be
genuine.
(n) AUTHORITY TO CARRY ON BUSINESS. The
Trustee represents to Veritas and Digicon 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 Province of Alberta but if, notwithstanding the
provisions of this Section 7(n), it ceases to be so
authorized to carry on business, the validity and
enforceability of this agreement and the Voting Rights,
the Exchange Right and the Automatic Exchange Rights shall
not be affected in any manner whatsoever by reason only of
such event but the Trustee shall, within 90 days after
ceasing to be authorized to carry on the business of a
trust company in the Province of Alberta, either become so
authorized or resign in the manner and with the effect
specified in Article 10 hereof.
(o) 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 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:
(i) the rights of all adverse claimants with
respect to the Voting Rights, 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
(ii) all differences with respect to the Voting
Rights, 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
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<PAGE> 23
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.
(p) 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.
8. COMPENSATION
(a) Digicon and Veritas 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 Digicon and Veritas shall have no
obligation to reimburse the Trustee for any expenses or
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 willful
misconduct.
9. INDEMNIFICATION AND LIMITATION OF LIABILITY
(a) INDEMNIFICATION OF THE TRUSTEE. Digicon
and Veritas 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 on a solicitor and his own client basis) which,
without fraud, negligence, willful 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 Digicon or
Veritas pursuant hereto. In no case shall Digicon or
Veritas be liable under this indemnity for any claim
against any of the Indemnified Parties unless Digicon and
Veritas 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 (ii),
below, Digicon and Veritas shall
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<PAGE> 24
be entitled to participate at their own expense in the
defense and, if Digicon or Veritas 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 Digicon or Veritas,
such authorization not to be unreasonably withheld; or
(ii) the named parties to any such suit include both the
Trustee and Digicon or Veritas and the Trustee shall have
been advised by counsel acceptable to Digicon or Veritas
that there may be one or more legal defenses available to
the Trustee that are different from or in addition to
those available to Digicon or Veritas and that an actual
or potential conflict of interest exists (in which case
Digicon and Veritas 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).
(b) 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,
willful misconduct or bad faith on the part of the
Trustee.
10. CHANGE OF TRUSTEE
(a) RESIGNATION. The Trustee, or any trustee
hereafter appointed, may at any time resign by giving
written notice of such resignation to Digicon and Veritas
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
Digicon and Veritas 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, Digicon and
Veritas 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 Alberta Court of Queen's Bench upon application of
one or more of the parties hereto.
(b) REMOVAL. The Trustee, or any trustee
hereafter appointed, may be removed with or without cause,
at any time on 60 days' prior notice by written instrument
executed by Digicon and Veritas, 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(a).
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<PAGE> 25
(c) SUCCESSOR TRUSTEE. Any successor trustee
appointed as provided under this agreement shall execute,
acknowledge and deliver to Digicon and Veritas 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 Digicon and Veritas 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, Digicon, Veritas 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.
(d) NOTICE OF SUCCESSOR TRUSTEE. Upon
acceptance of appointment by a successor trustee as
provided herein, Digicon and Veritas shall cause to be
mailed notice of the succession of such trustee hereunder
to each Holder specified in a List. If Digicon or Veritas
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 Digicon and Veritas.
11. DIGICON SUCCESSORS
(a) CERTAIN REQUIREMENTS IN RESPECT OF
COMBINATION, ETC. Digicon 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 unless,
but may do so if:
(i) such other Person or continuing corporation
(the "Digicon 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 Digicon Successor of liability for all
moneys payable and property deliverable hereunder
and the covenant of such Digicon 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 Digicon under this
agreement; and
(ii) such transaction shall, to the satisfaction of
the Trustee and in the opinion of legal counsel to
the Trustee, be upon such terms as substantially
to preserve and not to impair in any material
respect any of the rights, duties, powers and
authorities of the Trustee or of the Holders
hereunder.
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<PAGE> 26
(b) VESTING OF POWERS IN SUCCESSOR. Whenever
the conditions of Section 11(a) hereof have been duly
observed and performed, the Trustee, if required, by
Section 11(a) hereof, the Digicon Successor and Veritas
shall execute and deliver the supplemental agreement
provided for in Article 12 hereof and thereupon the
Digicon Successor shall possess and from time to time may
exercise each and every right and power of Digicon under
this agreement in the name of Digicon 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 Digicon or any officers of Digicon may be done and
performed with like force and effect by the directors or
officers of such Digicon Successor.
(c) WHOLLY-OWNED SUBSIDIARIES. Nothing
herein shall be construed as preventing the amalgamation
or merger of any wholly-owned subsidiary of Digicon with
or into Digicon or the winding-up, liquidation or
dissolution of any wholly-owned subsidiary of Digicon
provided that all of the assets of such subsidiary are
transferred to Digicon or another wholly-owned subsidiary
of Digicon, and any such transactions are expressly
permitted by this Article 11.
12. AMENDMENTS AND SUPPLEMENTAL AGREEMENTS
(a) AMENDMENTS, MODIFICATIONS, ETC. This
agreement may not be amended or modified except by an
agreement in writing executed by Veritas, Digicon and the
Trustee and approved by the Holders in accordance with
Section 9.2 of the Exchangeable Share Provisions.
(b) MINISTERIAL AMENDMENTS. Notwithstanding
the provisions of Section 12(a) 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:
(i) adding to the covenants of any or all of the
parties hereto for the protection of the Holders
hereunder;
(ii) 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 Digicon and Veritas 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
(iii) making such changes or corrections which, on
the advice of counsel to Veritas, Digicon 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
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<PAGE> 27
counsel and the board of directors of each of
Veritas and Digicon shall be of the opinion that
such changes or corrections will not be
prejudicial to the interests of the Holders as a
whole.
(c) MEETING TO CONSIDER AMENDMENTS. Veritas,
at the request of Digicon, 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 Veritas,
the Exchangeable Share Provisions and all applicable laws.
(d) CHANGES IN CAPITAL OF DIGICON AND
VERITAS. At all times after the occurrence of any event
effected pursuant to Section 2(g) or Section 2(h) of the
Support Agreement, as a result of which either Digicon
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 Digicon Common Stock or the
Exchangeable Shares or both are so changed and the parties
hereto shall execute and deliver a supplemental agreement
giving effect to and evidencing such necessary amendments
and modifications.
(e) EXECUTION OF SUPPLEMENTAL AGREEMENTS. 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. From time to time
Veritas (when authorized by a resolution of its Board of
Directors), Digicon (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:
(i) evidencing the succession of any Digicon
Successors to Digicon and the covenants of and
obligations assumed by each such Digicon Successors
in accordance with the provisions of Article 11 and
the successor of any successor trustee in
accordance with the provisions of Article 10;
(ii) making any additions to, deletions from or
alterations of the provisions of this agreement or
the Voting Rights, 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 Digicon, Veritas,
the Trustee or this agreement; and
(iii) 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
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opinion of the Trustee and its counsel, the
rights of the Trustee and the Holders as a whole
will not be prejudiced thereby.
13. TERMINATION
(a) TERM. The Trust created by this
agreement shall continue until the earliest to occur of
the following events:
(i) no outstanding Exchangeable Shares are held by
a Holder;
(ii) each of Veritas and Digicon elects in writing
to terminate the Trust and such termination is
approved by the Holders of the Exchangeable Shares
in accordance with Section 9.2 of the Exchangeable
Share Provisions; and
(iii) 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.
(b) 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 8 and 9 hereof shall survive any
such termination of this agreement.
14. GENERAL
(a) 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.
(b) INUREMENT. This agreement shall be
binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted
assigns and to the benefit of the Holders.
(c) 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):
(i) if to Digicon at:
Digicon Inc.
3701 Kirby Drive, Suite 112
Houston, Texas 77098
Attention: President
Telecopy:(713) 526-5611
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<PAGE> 29
(ii) if to Veritas at:
Veritas Energy Services Inc.
Suite 300, 615 - Third Avenue S.W.
Calgary, Alberta T2P 0G6
Attention: President
Telecopy:(403) 266-9359
(iii)if to the Trustee at:
if by mail or delivery:
The R-M Trust Company
600 The Dome Tower
333 - 7th Avenue S.W.
Calgary, Alberta T2P 2Z1
Attention: _______________
Telecopy: (403) 232-2400
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.
(d) NOTICE OF 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 the Exchangeable Share
Provisions shall apply mutatis mutandis to notices or
documents as aforesaid sent to such Holders.
(e) RISK OF PAYMENTS BY POST. Whenever
payments are to be made or documents are to be sent to any
Holder by the Trustee, by Veritas or by Digicon or by such
Holder to the Trustee or to Digicon or Veritas, the making
of such payment or sending of such document sent through
the post shall be at the risk of Veritas or Digicon, in
the case of payments made or documents sent by the Trustee
or Veritas or Digicon, and the Holder, in the case of
payments made or documents sent by the Holder.
(f) 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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<PAGE> 30
(g) JURISDICTION. This agreement shall be
construed and enforced in accordance with the laws of the
Province of Alberta and the laws of Canada applicable
therein.
(h) ATTORNMENT. Digicon agrees that any
action or proceeding arising out of or relating to this
agreement may be instituted in the courts of Alberta,
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 the said courts in any such
action or proceeding, agrees to be bound by any judgment
of the said 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
Veritas at its registered office in the Province of
Alberta as Digicon'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.
DIGICON INC.
Per: /s/ RICHARD W. McNAIRY
------------------------------
Richard W. McNairy,
Vice President and
Chief Financial Officer
VERITAS ENERGY SERVICES INC.
Per: /s/ DAVID B. ROBSON
------------------------------
------------------------------
THE R-M TRUST COMPANY
Per: /s/ JOYCE WHITELAW
------------------------------
/s/ PATRICIA HODSON
------------------------------
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<PAGE> 1
EXHIBIT 10.1
SUPPORT AGREEMENT
MEMORANDUM OF AGREEMENT made as of August 30, 1996.
B E T W E E N:
DIGICON INC.,
a corporation existing under the laws of the State of Delaware,
(hereinafter referred to as "Digicon"),
OF THE FIRST PART,
- and -
VERITAS ENERGY SERVICES INC.
a corporation existing under the laws of the Province of Alberta,
(hereinafter referred to as "Veritas"),
OF THE SECOND PART.
WHEREAS pursuant to a combination agreement dated as of May 10, 1996,
by and between Digicon and Veritas (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),
Digicon and Veritas would execute and deliver a Support Agreement containing
the terms and conditions set forth in Exhibit D to the Combination Agreement
together with such other terms and conditions as may be agreed to by the
parties to the Combination Agreement acting reasonably;
AND WHEREAS pursuant to an arrangement (the "Arrangement") effected by
Articles of Arrangement dated August 30, 1996 filed pursuant to the Business
Corporations Act (Alberta) each issued and outstanding common share of Veritas
(a "Veritas Common Share") was exchanged for 0.8 issued and outstanding
Exchangeable Shares of Veritas (the "Exchangeable Shares"), and thereafter,
Veritas' sole issued and outstanding Class A Preferred Share was exchanged by
the holder thereof for one issued and outstanding Veritas Common Share;
AND WHEREAS the above-mentioned Articles of Arrangement set forth the
rights, privileges, restrictions and conditions (collectively the "Exchangeable
Share Provisions") attaching to the Exchangeable Shares;
AND WHEREAS the parties hereto desire to make appropriate provision and to
establish a procedure whereby Digicon will take certain actions and make
certain payments and deliveries necessary to ensure that Veritas will be able
to make certain payments and to deliver or cause to be delivered shares of
Digicon Common Stock in satisfaction of the obligations of Veritas 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;
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<PAGE> 2
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:
1. DEFINITIONS AND INTERPRETATION
(a) 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.
(b) 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.
(c) 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.
(d) 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.
2. COVENANTS OF DIGICON AND VERITAS
(a) COVENANTS OF DIGICON REGARDING EXCHANGEABLE SHARES. So long
as any Exchangeable Shares are outstanding, Digicon will:
(i) not declare or pay any dividend on Digicon
Common Stock unless (A) Veritas 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 (B) subsection 2(a)(ii) shall be
complied with in connection with such dividend;
(ii) cause Veritas to declare simultaneously with
the declaration of any dividend on Digicon Common
Stock an equivalent dividend on the Exchangeable
Shares and, when such dividend is paid on Digicon
Common Stock, cause Veritas to pay simultaneously
therewith such equivalent dividend on the
Exchangeable Shares, in each case in accordance
with the Exchangeable Share Provisions;
(iii) advise Veritas sufficiently in advance of the
declaration by Digicon of any dividend on Digicon
Common Stock and take all such other actions as
are necessary, in cooperation with Veritas, 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 record
date, declaration date and payment date for the
corresponding dividend on Digicon Common Stock
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<PAGE> 3
and such dividend on the Exchangeable Shares shall
correspond with any requirement of the principal
stock exchange on which the Exchangeable Shares are
listed;
(iv) ensure that the record date for any dividend
declared on Digicon Common Stock is not less than
10 Business Days after the declaration date for
such dividend;
(v) take all such actions and do all such things as
are necessary or desirable to enable and permit
Veritas, 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 Veritas, including
without limitation all such actions and all such
things as are necessary or desirable to enable and
permit Veritas to cause to be delivered shares of
Digicon Common Stock to the holders of Exchangeable
Shares in accordance with the provisions of
Article 5 of the Exchangeable Share Provisions;
(vi) take all such actions and do all such things
as are necessary or desirable to enable and permit
Veritas, in accordance with applicable law, to pay
and otherwise perform its obligations with 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
Veritas to cause to be delivered shares of Digicon
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;
and
(vii) not exercise its vote as a shareholder to
initiate the voluntary liquidation, dissolution or
winding-up of Veritas nor take any action or omit
to take any action that is designed to result in
the liquidation, dissolution or winding-up of
Veritas.
(b) SEGREGATION OF FUNDS. Digicon will cause Veritas 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 Veritas 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 Veritas 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.
(c) RESERVATION OF SHARES OF DIGICON COMMON STOCK. Digicon
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
3
<PAGE> 4
authorized and unissued capital stock such number of shares of
Digicon Common Stock (or other shares or securities into which
Digicon Common Stock may be reclassified or changed as contemplated
by section 2(g) hereof) (i) as is equal to the sum of (A) the number
of Exchangeable Shares issued and outstanding from time to time and
(B) the number of Exchangeable Shares issuable upon the exercise of
all rights to acquire Exchangeable Shares outstanding from time to
time and (ii) as are now and may hereafter be required to enable and
permit Veritas 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 Digicon may now or hereafter
be required to issue shares of Digicon Common Stock.
(d) NOTIFICATION OF CERTAIN EVENTS. In order to assist Digicon
to comply with its obligations hereunder, Veritas will give Digicon
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 Veritas to institute voluntary
liquidation, dissolution or winding-up proceedings
with respect to Veritas or to effect any other
distribution of the assets of Veritas 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;
(ii) immediately, upon the earlier of (A) receipt
by Veritas of notice of, and (B) Veritas 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 Veritas or to effect
any other distribution of the assets of Veritas
among its shareholders for the purpose of
winding-up its affairs;
(iii) immediately, upon receipt by Veritas of a
Retraction Request (as defined in the Exchangeable
Share Provisions);
(iv) at least 130 days prior to any accelerated
Automatic Redemption Date determined by the Board
of Directors of Veritas in accordance with the
Exchangeable Share Provisions; and
(v) as soon as practicable upon the issuance by
Veritas of any Exchangeable Shares or rights to
acquire Exchangeable Shares.
(e) DELIVERY OF SHARES OF DIGICON COMMON STOCK. In furtherance
of its obligations hereunder, upon notice of any event which
requires Veritas to cause to be delivered shares of Digicon Common
Stock to any holder of Exchangeable Shares, Digicon shall forthwith
issue and deliver the requisite shares of Digicon Common Stock to or
to the order of the former holder of the surrendered Exchangeable
Shares, as Veritas shall direct. All such shares of Digicon Common
Stock shall be duly issued
4
<PAGE> 5
as fully paid and non-assessable and shall be free and clear of any
lien, claim, encumbrance, security interest or adverse claim.
(f) QUALIFICATION OF SHARES OF DIGICON COMMON STOCK. Digicon
covenants that if any shares of Digicon Common Stock (or other
shares or securities into which Digicon Common Stock may be
reclassified or changed as contemplated by Section 2(g) hereof) to
be issued and delivered hereunder, including for greater certainty,
pursuant to the Exchangeable Share Provisions, or pursuant to the
Exchange Right or the Automatic Exchange Rights (both as defined in
the Voting and Exchange Trust Agreement) require registration or
qualification with or approval of or the filing of any document
including any prospectus or similar document or 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 fulfillment of any other legal requirement (collectively, the
"Applicable Laws") before such shares (or other shares or securities
into which Digicon Common Stock may be reclassified or changed as
contemplated by Section 2(g) hereof) may be issued and delivered by
Digicon to the initial holder thereof (other than Veritas) or in
order that such shares may be freely traded thereafter (other than
any restrictions on transfer by reason of a holder being a "control
person" of Digicon for purposes of Canadian federal or provincial
securities law or an "affiliate" of Digicon for purposes of United
States federal or state securities law), Digicon will in good faith
expeditiously take all such actions and do all such things as are
necessary to cause such shares of Digicon Common Stock (or other
shares or securities into which Digicon Common Stock may be
reclassified or changed as contemplated by Section 2(g) hereof) to
be and remain duly registered, qualified or approved. Digicon
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 Digicon Common Stock
(or other shares or securities into which Digicon Common Stock may
be reclassified or changed as contemplated by Section 2(g) hereof)
to be issued and delivered hereunder, including for greater
certainty, pursuant to the Exchangeable Share Provisions, or
pursuant to the Exchange Right and the Automatic Exchange Rights to
be freely tradeable thereafter (other than restrictions on transfer
by reason of a holder being a "control person" of Digicon for the
purposes of Canadian federal and provincial securities law or an
"affiliate" of Digicon for the purposes of United States federal or
state securities law). Digicon will in good faith expeditiously
take all such actions and do all such things as are necessary to
cause all shares of Digicon Common Stock (or other shares or
securities into which Digicon Common Stock may be reclassified or
changed as contemplated by Section 2(g) hereof) to be delivered
hereunder, including for greater certainty, pursuant to the
Exchangeable Share Provisions, or pursuant to 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
shares are listed, quoted or posted for trading at such time.
Digicon 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. Digicon will in good faith expeditiously take
all such
5
<PAGE> 6
action and do all such things as are necessary to cause all
the shares of Digicon Common Stock to be and to continue to be
listed and posted for trading on The Toronto Stock Exchange.
(g) EQUIVALENCE.
(i) Digicon will not without the prior approval of
Veritas and the prior approval of the holders of
the Exchangeable Shares given in accordance with
Section 9.2 of the Exchangeable Share Provisions:
(A) issue or distribute shares of Digicon Common Stock (or
securities exchangeable for or convertible into or carrying
rights to acquire shares of Digicon Common Stock) to
the holders of all or substantially all of the then
outstanding Digicon Common Stock by way of stock dividend or
other distribution; or
(B) issue or distribute rights, options or warrants to the
holders of all or substantially all of the then
outstanding shares of Digicon Common Stock entitling them
to subscribe for or to purchase shares of Digicon Common
Stock (or securities exchangeable for or convertible into or
carrying rights to acquire shares of Digicon Common Stock);
or
(C) issue or distribute to the holders of all or substantially
all of the then outstanding shares of Digicon Common
Stock (I) shares or securities of Digicon of any class
other than Digicon Common Stock (other than shares
convertible into or exchangeable for or carrying rights to
acquire shares of Digicon Common Stock), (II) rights,
options or warrants other than those referred to in
subsection 2(g)(i)(A) above, (III) evidences of indebtedness
of Digicon or (IV) assets of Digicon;
unless (D) Veritas is permitted under applicable law to issue or
distribute the equivalent on a per share basis of such rights,
options, securities, shares, evidences of indebtedness or other
assets to holders of the Exchangeable Shares and (E) Veritas shall
issue or distribute such rights, options, securities, shares,
evidences of indebtedness or other assets simultaneously to holders
of the Exchangeable Shares.
(ii) Digicon will not without the prior approval of Veritas and the
prior approval of the holders of the Exchangeable Shares given
in accordance with Section 9.2 of the Exchangeable Share
Provisions:
(A) subdivide, redivide or change the then outstanding shares
of Digicon Common Stock into a greater number of shares
of Digicon Common Stock; or
(B) reduce, combine or consolidate or change the then
outstanding shares of Digicon Common Stock into a lesser
number of shares of Digicon Common Stock; or
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<PAGE> 7
(C) reclassify or otherwise change the shares of Digicon
Common Stock or effect an amalgamation, merger,
reorganization or other transaction affecting the shares
of Digicon Common Stock;
unless (I) Veritas is permitted under applicable law to
simultaneously make the same or an equivalent change to, or in the
rights of holders of, the Exchangeable Shares and (II) the same or
an equivalent change is made to, or in the rights of the holders of,
the Exchangeable Shares.
(iii) Digicon will ensure that the record date for any event
referred to in section 2(g)(i) or 2(g)(ii) 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
Digicon (with simultaneous notice thereof to be given by
Digicon to Veritas).
(h) TENDER OFFERS, ETC. In the event that a tender offer, share
exchange offer, issuer bid, take-over bid or similar transaction
with respect to Digicon Common Stock (an "Offer") is proposed by
Digicon or is proposed to Digicon or its shareholders and is
recommended by the Board of Directors of Digicon, or is otherwise
effected or to be effected with the consent or approval of the Board
of Directors of Digicon, Digicon shall 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
Digicon Common Stock, without discrimination, including, without
limiting the generality of the foregoing, Digicon will use its good
faith efforts expeditiously to (and shall, in the case of a
transaction proposed by Digicon or where Digicon 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 Veritas (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).
(i) OWNERSHIP OF OUTSTANDING SHARES. Without the prior approval
of Veritas and the prior approval of the holders of the Exchangeable
Shares given in accordance with Section 9.2 of the Exchangeable
Share Provisions, Digicon covenants and agrees in favour of Veritas
that, as long as any outstanding Exchangeable Shares are owned by
any person or entity other than Digicon or any of its Subsidiaries,
Digicon will be and remain the direct or indirect beneficial
owner of all issued and outstanding shares in the capital of Veritas
and all outstanding securities of Veritas carrying or otherwise
entitled to voting rights in any circumstances, in each case other
than the Exchangeable Shares.
(j) DIGICON NOT TO VOTE EXCHANGEABLE SHARES. Digicon covenants
and agrees that it will appoint and cause to be appointed
proxyholders with respect to all Exchangeable Shares held by Digicon
and its Subsidiaries for the sole purpose of attending each meeting
of holders of Exchangeable Shares in order to be counted as
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<PAGE> 8
part of the quorum for each such meeting. Digicon 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
Business Corporations Act (Alberta) (or any successor or other
corporate statute by which Veritas may in the future be governed)
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.
(k) DUE PERFORMANCE. On and after the Effective Date, Digicon
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 Digicon's rights under the Exchangeable Share
Provisions.
(l) ELECTION OF DIGICON BOARD AND NOMINATING COMMITTEE. At or
prior to the Effective Time (as defined in the Combination
Agreement), (i) such number of directors of Digicon shall resign or
be removed such that there shall be no more than six directors of
Digicon ("Digicon Designees") serving in such a capacity, (ii) the
size of the board of directors of Digicon shall be increased so that
it shall initially consist of ten directors and (iii) a nominating
committee (the "Nominating Committee") will be created. At the
Effective Time, four individuals designated by Veritas (the "Veritas
Designees") shall be elected to the board of directors of Digicon.
The Nominating Committee (i) shall consist initially of two outside
directors who are Veritas Designees and two outside directors who
are Digicon Designees, (ii) shall take action by the vote of a
majority of its authorized number of members and (iii) shall
nominate directors for election for not less than the two annual
stockholder meetings of Digicon (or special meetings in lieu
thereof) following the Closing (as defined in the Combination
Agreement). Any member of the Nominating Committee who ceases to be
such a member (whether by reason of resignation from the Nominating
Committee or death, disability, removal or resignation as a director
or otherwise) shall be promptly replaced with a Digicon director
designated by a majority of the Veritas Designees or the Digicon
Designees, as applicable. Digicon shall put forth those
individuals nominated by the Nominating Committee for election to
its board of directors and will solicit proxies for its
stockholder's meetings in favour of the election of each such
individual.
3. GENERAL
(a) 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 convertible into or exchangeable for or carrying rights to
acquire Exchangeable Shares) are held by any party other than
Digicon and any of its Subsidiaries.
(b) CHANGES IN CAPITAL OF DIGICON AND VERITAS. Notwithstanding
the provisions of section 3(d) hereof, at all times after the
occurrence of any event effected pursuant to section 2(g) or 2(h)
hereof, as a result of which either Digicon
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<PAGE> 9
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 Digicon 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.
(c) 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.
(d) AMENDMENTS, MODIFICATIONS, ETC. This agreement may not be
amended or modified except by an agreement in writing executed by
Veritas and Digicon and approved by the holders of the Exchangeable
Shares in accordance with Section 9.2 of the Exchangeable Share
Provisions.
(e) MINISTERIAL AMENDMENTS. Notwithstanding the provisions of
section 3(d), 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:
(i) adding to the covenants of either or both
parties for the protection of the holders of the
Exchangeable Shares;
(ii) 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 Veritas and Digicon, it may be
expedient to make, provided that each such boards
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
(iii) making such changes or corrections which, on
the advice of counsel to Veritas and Digicon, 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
Veritas and Digicon shall be of the opinion that
such changes or corrections will not be
prejudicial to the interests of the holders of the
Exchangeable Shares.
(f) MEETING TO CONSIDER AMENDMENTS. Veritas, at the request of
Digicon, 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 Veritas, the Exchangeable Share Provisions and
all applicable laws.
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<PAGE> 10
(g) 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.
(h) INUREMENT. This agreement shall be binding upon and inure 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.
(i) 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):
(i) if to Digicon at: Digicon Inc.
3701 Kirby Drive, Suite 112
Houston, Texas 77098
Attention: President
Telecopy: (713) 526-5611
(ii) if to Veritas at: Veritas Energy Services Inc.
Suite 300, 615 - Third Avenue S.W.
Calgary, Alberta T2P 0G6
Attention: President
Telecopy: (403) 266-9359
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.
(j) 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.
(k) JURISDICTION. This agreement shall be construed and enforced
in accordance with the laws of the Province of Alberta and the laws
of Canada applicable therein.
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(l) ATTORNMENT. Digicon agrees that any action or proceeding
arising out of or relating to this agreement may be instituted in
the courts of Alberta, 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 the said courts in any such action or
proceeding, agrees to be bound by any judgment of the said courts
and 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 Veritas at its registered office in the Province of Alberta
as Digicon's attorney for service of process.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
duly executed as of the date first above written.
DIGICON INC. VERITAS ENERGY SERVICES INC.
Per: /s/ RICHARD W. MCNAIRY Per: /s/ DAVID B. ROBSON
----------------------- ------------------------
Richard W. McNairy
Vice President and Per:
Chief Financial Officer ------------------------
11
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EXHIBIT 20.1
JOINT PRESS RELEASE
VERITAS ENERGY SERVICES INC. DIGICON INC.
CALGARY, ALBERTA, CANADA HOUSTON, TEXAS, U.S.A.
August 30, 1996 - Veritas Energy Services Inc. and Digicon Inc. reported today
the closing of the previously announced merger of the two companies. In
connection with the merger, Digicon will change its name to "Veritas DGC Inc."
and its common stock will trade on the New York Stock Exchange and The Toronto
Stock Exchange under the ticker symbol "VTS".
All Veritas Energy common shares have been converted to Veritas Energy
exchangeable shares which will trade on The Toronto Stock Exchange under the
symbol "VES" and which are exchangeable for Veritas DGC common stock. The
voting equity of Veritas Energy is now held by Veritas DGC.
Veritas DGC Inc. is actively engaged in land, transition zone and marine-based
seismic data acquisition, seismic data processing, multi-client data sales, and
exploration and development information services in selected markets worldwide.
-30-
For additional information, please contact:
Larry Fichtner Dick McNairy
Veritas Energy Services Inc. Digicon Inc.
Suite 300, 615 Third Avenue S.W. Suite 112, 3701 Kirby Drive
Calgary, AB T2P 0G6 Houston, TX 77098
(403) 266-9350 (713) 526-5611
