VOTINGAND EXCHANGE TRUST AGREEMENT

 

THIS VOTING AND EXCHANGE TRUST AGREEMENT is entered into as of July 6, 2009, by and between JAG Media Holdings, Inc., a corporation incorporated under the laws of the State of Nevada ("JAG"), CardioGenics ExchangeCo Inc., an Ontario corporation ("ExchangeCo"), and WeirFoulds LLP, an Ontario limited liability partnership ("Trustee").

 

WHEREAS, pursuant to a share purchase agreement dated effective as of May 22, 2009 by and between JAG, ExchangeCo, CardioGenics Inc. ("CardioGenics") and Yahia Gawad (such agreement as it may be amended or restated is hereinafter referred to as the "Share Purchase Agreement"), the parties agreed that on or prior to the Effective Date (as defined in the Share Purchase Agreement), JAG and ExchangeCo would execute and deliver a Voting and Exchange Trust Agreement, a Support Agreement and such other terms and conditions as may be agreed to by the parties to the Share Purchase Agreement acting reasonably.

 

AND WHEREAS, pursuant to the Share Purchase Agreement, each issued and outstanding common share of CardioGenics, excluding 161,269 common shares of CardioGenics owned by a minority shareholder (a "CardioGenics Common Share") will be exchanged for the applicable number shares of JAG Common Stock or, at the option of the CardioGenics shareholders,  exchangeable shares of ExchangeCo in accordance with the terms of the Share Purchase Agreement (the "Exchangeable Shares");

 

AND WHEREAS, on or prior to the Effective Date, the Articles of Incorporation of ExchangeCo shall be amended to set forth the rights, privileges, restrictions and conditions attaching to the Exchangeable Shares (collectively, the "Exchangeable Share Provisions"), and a copy of the amendment to be filed with respect to such Articles of Incorporation is attached hereto as Exhibit A;

 

AND WHEREAS, JAG is to provide voting rights in JAG to each holder (other than JAG 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 JAG Common Stock;

 

AND WHEREAS, JAG is to grant to and in favor of the holders (other than JAG and its subsidiaries) from time to time of Exchangeable Shares the right, in the circumstances set forth herein, to require JAG 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 JAG shall be exercisable by holders (other than JAG and its subsidiaries) from time to time of Exchangeable Shares by and through the Trustee, which will hold legal title to and a share certificate in respect of one (1) share of JAG Series 1 Preferred Stock (the "JAG Special Voting Stock") to which voting rights attach for the benefit of such holders of Exchangeable Shares, which series of preferred stock shall be created on, or prior to, the Effective Date, and the rights, privileges, restrictions and conditions with respect to the JAG Special Voting Stock are set forth in Exhibit B attached hereto;

 

 

AND WHEREAS, the rights to require JAG or, at the option of JAG, JAG Holdco, to purchase Exchangeable Shares from the holders thereof (other than JAG 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 JAG and ExchangeCo 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:

 

 

1.1	Definitions

 

In this agreement, the following terms shall have the following meanings:

 

"Act" has the meaning in the recitals hereto;

 

"Aggregate Equivalent Vote Amount" means, with respect to any matter, proposition or question on which holders of JAG 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 Equivalent Vote Amount.

 

"Arrangement" has the meaning provided in the recitals hereto.

 

"Automatic Exchange Rights" means the benefit of the obligation of JAG to effect the automatic exchange of shares of JAG Common Stock for Exchangeable Shares pursuant to Section 5.12 hereof.

 

"Board of Directors" means the Board of Directors of ExchangeCo.

 

"Business Day" has the meaning provided in the Exchangeable Share Provisions.

 

"CardioGenics" has the meaning in the recitals hereto.

 

"Equivalent Vote Amount" means, with respect any matter, proposition or question on which holders of JAG Common Stock are entitled to vote, consent or otherwise act, the number of votes to which a holder of one share of JAG Common Stock is entitled with respect to such matter, proposition or question.

 

"ExchangeCo" has the meaning in the recitals hereto.

 

"Exchange Put Right" has the meaning provided in the Exchangeable Share Provisions.

 

"Exchange Right" has the meaning provided in Section 5.1(b) hereof.

 

 

"Exchangeable Share Consideration" has the meaning provided in the Exchangeable Share Provisions.

 

"Exchangeable Share Price" has the meaning provided in the Exchangeable Share Provisions.

 

"Exchangeable Share Provisions" has the meaning provided in the recitals hereto.

 

"Exchangeable Shares" has the meaning provided in the recitals hereto.

 

"Holder Votes" has the meaning provided in Section 4.2 hereof.

 

"Holders" means the registered holders from time to time of Exchangeable Shares, other than JAG and its Subsidiaries.

 

"Insolvency Event" means the institution by ExchangeCo of any proceeding to be adjudicated a bankrupt or insolvent or to be dissolved or wound-up, or the consent of ExchangeCo 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 ExchangeCo to contest in good faith any such proceedings commenced in respect of ExchangeCo within 15 days of becoming aware thereof, or if so contested the adjudication that ExchangeCo is bankrupt or insolvent or is to be dissolved or wound-up, or the consent by ExchangeCo to the filing of any such petition or to the appointment of a receiver, or the making by ExchangeCo of a general assignment for the benefit of creditors, or the admission in writing by ExchangeCo of its inability to pay its debts generally as they become due, or ExchangeCo's not being permitted, pursuant to liquidity or solvency requirements of applicable law, to redeem any Retracted Shares pursuant to Section 6.5 of the Exchangeable Share Provisions.

 

"JAG" has the meaning in the recitals hereto.

 

"JAG Common Stock" has the meaning provided in the Exchangeable Share Provisions.

 

"JAG Consent" has the meaning provided in Section 4.2 hereof.

 

"JAG Holdco" means a subsidiary of JAG (other than ExchangeCo) established by JAG for the purpose of purchasing Exchangeable Shares and delivering JAG Common Stock as provided for in this Agreement, the Exchangeable Share Provisions or the Support Agreement.

 

"JAG Meeting" has the meaning provided in Section 4.2 hereof.

 

"JAG Special Voting Stock" has the meaning provided in the recitals hereto.

 

"JAG Stock Options" means the outstanding (and committed to be issued) options entitling the holders to acquire upon exercise thereof up to 2,750,000 shares of JAG Common Stock in the aggregate.

 

"Liquidation Call Right" has the meaning provided in the Exchangeable Share Provisions.

 

 

"Liquidation Event" has the meaning provided in subsection 5.12(b) hereof.

 

"Liquidation Event Effective Time" has the meaning provided in subsection 5.12(c) hereof.

 

"List" has the meaning provided in Section 4.6 hereof.

 

"Officer's Certificate" means, with respect to JAG or ExchangeCo, as the case may be, a certificate signed by any one of the Chairman of the Board, the Vice-Chairman of the Board (if there be one), the President or any Vice-President of JAG or ExchangeCo, as the case may be.

 

"Person" includes an individual, body corporate, partnership, company, unincorporated syndicate or organization, trust, trustee, executor, administrator and other legal representative.

 

"Plan of Arrangement" has the meaning provided in the Exchangeable Share Provisions.

 

"Redemption Call Right" has the meaning provided in the Exchangeable Share Provisions.

 

"Retracted Shares" has the meaning provided in Section 5.7 hereof.

 

"Retraction Call Right" has the meaning provided in the Exchangeable Share Provisions.

 

"Share Purchase Agreement" has the meaning in the recitals hereto.

 

"Successor" has the meaning provided in subsection 11.1 (a) hereof.

 

"Support Agreement" means that certain support agreement made as of even date hereof by and between JAG and ExchangeCo.

 

"Trust" means the trust created by this agreement.

 

"Trust Estate" means the Voting Share, any other securities, the Exchange Put Right, the Exchange Right, the Automatic Exchange Rights and any money or other property which may be held by the Trustee from time to time pursuant to this agreement.

 

"Trustee" means WeirFoulds LLP and, subject to the provisions of Article 10 hereof, includes any successor trustee or permitted assigns.

 

"Voting Rights" means the voting rights attached to the Voting Share.

 

"Voting Share" means the one share of JAG Special Voting Stock, U.S. $0.01 par value, issued by JAG to and deposited with the Trustee, which entitles the holder of record to a number of votes at meetings of holders of JAG Common Stock equal to the Aggregate Equivalent Vote Amount.

 

1.2	Interpretation Not Affected by Headings, Etc.

 

The division of this agreement into articles, sections and paragraphs and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this agreement.

 

 

1.3	Number, Gender, Etc.

 

Words importing the singular number only shall include the plural and vice versa. Words importing the use of any gender shall include all genders.

 

1.4	Date for Any Action

 

If any date on which any action is required to be taken under this agreement is not a Business Day, such action shall be required to be taken on the next succeeding Business Day.

 

1.5

Payments

 

All payments to be made hereunder will be made without interest and less any tax required by Canadian law to be deducted or withheld.

 

 

The purpose of this agreement is to create the Trust for the benefit of the Holders, as herein provided. The Trustee will hold the Voting Share in order to enable the Trustee to exercise the Voting Rights and will hold the Exchange Put Right, the Exchange Right and the Automatic Exchange Rights in order to enable the Trustee to exercise such rights, in each case as trustee for and on behalf of the Holders as provided in this agreement.

 

 

3.1	Issuance and Ownership of the Voting Share

 

On the Effective Date, JAG will issue to and deposit 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. JAG 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 JAG to the Trustee. During the term of the Trust and subject to the terms and conditions of this agreement, the Trustee shall possess and be vested with full legal ownership of the Voting Share and shall be entitled to exercise all of the rights and powers of an owner with respect to the Voting Share, provided that the Trustee shall:

 

(a)

hold the Voting Share and the legal title thereto as trustee solely for the use and benefit of the Holders in accordance with the provisions of this agreement; and

 

(b)

except as specifically authorized by this agreement, have no power or authority to sell, transfer, vote or otherwise deal in or with the Voting Share, and the Voting Share shall not be used or disposed of by the Trustee for any purpose other than the purposes for which this Trust is created pursuant to this agreement.

 

 

3.2	Legended Share Certificates

 

ExchangeCo 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.

 

3.3	Safe Keeping of Certificate

 

The certificate representing the Voting Share shall at all times be held in safe keeping by the Trustee or its agent.

 

3.4	Holders' Benefit

 

For greater certainty, the Trustee holds the benefit of the Voting Rights for the Holders, but all other rights in respect of the Voting Share, including without limitation any rights to receive dividends on the Voting Share, are for benefit of JAG.

 

 

4.1	Voting Rights

 

The Trustee, as the holder of record of the Voting Share, shall be entitled to all of the Voting Rights, including the right to consent to or to vote in person or by proxy the Voting Share, on any matter, question or proposition whatsoever that may properly come before the stockholders of JAG at a JAG Meeting or in connection with a JAG Consent (in each case, as hereinafter defined). The Voting Rights shall be and remain vested in and exercised by the Trustee. Subject to Section 7.15 hereof, the Trustee shall exercise the Voting Rights only on the basis of instructions received pursuant to this Article 4 from Holders entitled to instruct the Trustee as to the voting thereof at the time at which a JAG Consent is sought or a JAG 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.

 

4.2	Number of Votes

 

With respect to all meetings of stockholders of JAG at which holders of shares of JAG Common Stock are entitled to vote (a "JAG Meeting") and with respect to all written consents sought by JAG from its stockholders including the holders of shares of JAG Common Stock (a "JAG 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 JAG or by applicable law for such JAG Meeting or JAG Consent, as the case may be, (the "Holder Votes") in respect of each matter, question or proposition to be voted on at such JAG Meeting or to be consented to in connection with such JAG Consent.

 

 

4.3	Mailings to Shareholders

 

With respect to each JAG Meeting and JAG Consent, the Trustee will use its reasonable efforts to mail or cause to be mailed (or otherwise communicate in the same manner as JAG utilizes in communications to holders of JAG 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 JAG to its stockholders:

 

(a)

a copy of such notice, together with any proxy or information statement and related materials to be provided to holders of JAG Common Stock;

 

(b)

a statement of the number of Holder Votes which the Holder is entitled to exercise;

 

(c)

a statement that such Holder is entitled to instruct the Trustee as to the exercise of the Holder Votes with respect to such JAG Meeting or JAG Consent, as the case may be, or, pursuant to Section 4.7 hereof, to attend such JAG Meeting and to exercise personally the Holder Votes thereat;

 

(d)

a statement as to the manner in which such instructions may be given to the Trustee, including an express indication that instructions may be given to the Trustee to give:

 

(i)

a proxy to such Holder or such Holder's designee to exercise personally the Holder Votes; or

 

(ii)

a proxy to a designated agent or other representative of the management of JAG to exercise such Holder Votes;

 

(e)

a statement that if no voting instructions are received from the Holder, the Holder Votes to which such Holder is entitled will not be exercised;

 

(f)

a form of direction whereby the Holder may so direct and instruct the Trustee as contemplated herein; and

 

(g)

a statement of (i) the time and date by which such instructions must be received by the Trustee in order to be binding upon it, which in the case of a JAG Meeting shall not be earlier than the close of business on the Business Day prior to such meeting, and (ii) the method for revoking or amending such instructions.

 

The materials referred to above are to be provided by JAG 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 JAG Meeting or JAG 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 JAG or by applicable law for purposes of determining stockholders entitled to vote at such JAG Meeting or to give written consent in connection with such JAG Consent. JAG will notify the Trustee in writing of any decision of the board of directors of JAG with respect to the calling of any such JAG Meeting or the seeking of any such JAG Consent and shall provide all necessary information and materials to the Trustee in each case promptly and in any event in sufficient time to enable the Trustee to perform its obligations contemplated by this Section 4.3.

 

4.4	Copies of Stockholder Information

 

JAG will deliver to the Trustee copies of all proxy materials, (including notices of JAG Meetings, but excluding proxies to vote shares of JAG 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 JAG Common Stock in sufficient quantities and in sufficient time so as to enable the Trustee to send those materials to each Holder, to the extent possible, at the same time as such materials are first sent to holders of JAG Common Stock. The Trustee will mail or otherwise send to each Holder, at the expense of JAG, copies of all such materials (and all materials specifically directed to the Holders or to the Trustee for the benefit of the Holders by JAG) received by the Trustee from JAG, to the extent possible, at the same time as such materials are first sent to holders of JAG Common Stock. The Trustee will make copies of all such materials available for inspection by any Holder at the Trustee's principal transfer office in the city of Toronto.

 

4.5	Other Materials

 

Immediately after receipt by JAG or any stockholder of JAG of any material sent or given generally to the holders of JAG 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), JAG shall use its reasonable 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 JAG, copies of all such materials received by the Trustee from JAG. The Trustee will also make copies of all such materials available for inspection by any Holder at the Trustee's principal transfer office in the city of Toronto.

 

4.6	List of Persons Entitled to Vote

 

ExchangeCo shall, (i) prior to each annual, general or special JAG Meeting or the seeking of any JAG 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 JAG Meeting or a JAG Consent, at the close of business on the record date established by JAG or pursuant to applicable law for determining the holders of JAG Common Stock entitled to receive notice of and/or to vote at such JAG Meeting or to give consent in connection with such JAG Consent. Each such List shall be delivered to the Trustee promptly after receipt by ExchangeCo 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. JAG agrees to give ExchangeCo written notice (with a copy to the Trustee) of the calling of any JAG Meeting or the seeking of any JAG Consent, together with the record dates therefor, sufficiently prior to the date of the calling of such meeting or seeking of such consent so as to enable ExchangeCo to perform its obligations under this Section 4.6.

 

 

4.7	Entitlement to Direct Votes

 

Any Holder named in a List prepared in connection with any JAG Meeting or any JAG Consent will be entitled (i) to instruct the Trustee in the manner described in Section 4.3 hereof with respect to the exercise of the Holder Votes to which such Holder is entitled or (ii) to attend such meeting and personally to exercise thereat (or to exercise with respect to any written consent), as the proxy of the Trustee, the Holder Votes to which such Holder is entitled.

 

4.8	Voting by Trustee, and Attendance of Trustee Representative, at Meeting

 

In connection with each JAG Meeting and JAG Consent, the Trustee shall exercise, either in person or by proxy, in accordance with the instructions received from a Holder pursuant to Section 4.3 hereof, the Holder Votes as to which such Holder is entitled to direct the vote (or any lesser number thereof as may be set forth in the instructions); provided, however, that such written instructions are received by the Trustee from the Holder prior to the time and date fixed by it for receipt of such instructions in the notice given by the Trustee to the Holder pursuant to Section 4.3 hereof.

 

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 JAG Meeting. Upon submission by a Holder (or its designee) of identification satisfactory to the Trustee's representatives, and at the Holder's request, such representatives shall sign and deliver to such Holder (or its designee) a proxy to exercise personally the Holder Votes as to which such Holder is otherwise entitled hereunder to direct the vote, if such Holder either:

 

(i)

has not previously given the Trustee instructions pursuant to Section 4.3 hereof in respect of such JAG Meeting, or

 

(ii)

submits to the Trustee's representatives written revocation of any such previous instructions.

 

At such JAG Meeting, the Holder exercising such Holder Votes shall have the same rights as the Trustee to speak at the meeting in respect of any matter, question or proposition, to vote by way of ballot at the meeting in respect of any matter, question or proposition and to vote at such meeting by way of a show of hands in respect of any matter, question or proposition.

 

 

 

4.9	Distribution of Written Materials

Any written materials to be distributed by the Trustee to the Holders pursuant to this agreement shall be delivered or sent by mail (or otherwise communicated in the same manner as JAG utilizes in communications to holders of JAG 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 Holder at its address as shown on the books of ExchangeCo. ExchangeCo shall provide or cause to be provided to the Trustee for this purpose, on a timely basis and without charge or other expense:

 

(a)

current lists of the Holders; and

 

(b)

on the request of the Trustee, mailing labels to enable the Trustee to carry out its duties under this agreement.

 

The materials referred to above are to be provided by ExchangeCo to the Trustee, but shall be subject to review and comment by the Trustee.

 

4.10	Termination of Voting Rights

 

Except as otherwise provided herein or in the Exchangeable Share Provisions, all of the rights of a Holder with respect to the Holder Votes 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 JAG, 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 Put Right or the Exchange Right or the occurrence of the automatic exchange of Exchangeable Shares for shares of JAG Common Stock, as specified in Article 5 hereof (unless in any case JAG or JAG Holdco 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 ExchangeCo or any other distribution of the assets of ExchangeCo among its shareholders for the purpose of winding up its affairs pursuant to Article 5 of the Exchangeable Share Provisions, or upon the purchase of Exchangeable Shares from the holder thereof by JAG pursuant to the exercise by JAG of the Retraction Call Right, the Redemption Call Right or the Liquidation Call Right.

 

 

5.1	Grant and Ownership of the Exchange Put Right, Exchange Right and Automatic Exchange Right

 

JAG hereby grants to the Trustee as trustee for and on behalf of, and for the use and benefit of, the Holders:

 

(a)

the Exchange Put Right;

 

(b)

the right (the "Exchange Right"), upon the occurrence and during the continuance of an Insolvency Event, to require JAG to purchase from each or any Holder all or any part of the Exchangeable Shares held by the Holders, provided that, upon exercise of such right, JAG may, at its option, cause JAG Holdco to purchase such shares; and

 

 

(c)

the Automatic Exchange Rights, all in accordance with the provisions of this agreement and the Exchangeable Share Provisions, as the case may be. JAG hereby acknowledges receipt from the Trustee as trustee for and on behalf of the Holders of good and valuable consideration (and the adequacy thereof) for the grant of the Exchange Put Right, the Exchange Right and the Automatic Exchange Rights by JAG to the Trustee. During the term of the Trust and subject to the terms and conditions of this agreement, the Trustee shall possess and be vested with full legal ownership of the Exchange Put Right, the Exchange Right and the Automatic Exchange Rights and shall be entitled to exercise and enforce for the benefit of the Holders all of the rights and powers of an owner with respect to the Exchange Put Right, the Exchange Right and the Automatic Exchange Rights, provided that the Trustee shall:

 

(d)

hold the Exchange Put Right, the Exchange Right and the Automatic Exchange Rights and the legal title thereto as trustee solely for the use and benefit of the Holders in accordance with the provisions of this agreement; and except as specifically authorized by this agreement, have no power or authority to exercise or otherwise deal in or with the Exchange Put Right, the Exchange Right or the Automatic Exchange Rights, and the Trustee shall not exercise any such rights for any purpose other than the purposes for which this Trust is created pursuant to this agreement.

 

5.2	Legended Share Certificates

 

ExchangeCo will cause each certificate representing Exchangeable Shares to bear an appropriate legend notifying the Holders of:

 

(a)

of their right to instruct the Trustee with respect to the exercise of the Exchange Put Right and the Exchange Right in respect of the Exchangeable Shares held by a Holder;

 

(b)

of the Automatic Exchange Rights; and

 

(c)

that none of their Exchangeable Shares may be registered for resale prior to six (6) months after the Effective Date.

 

5.3	General Exercise of Exchange Put Right and the Exchange Right

 

The Exchange Put Right and the Exchange Right shall be and remain vested in and exercised by the Trustee. Subject to Section 7.14 hereof, the Trustee shall exercise the Exchange Put Right and 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 Put Right and the Exchange Right, the Trustee shall not exercise or permit the exercise of the Exchange Put Right and the Exchange Right.

 

 

5.4	Purchase Price

 

The purchase price payable by JAG (or JAG Holdco, in the case of a purchase by JAG Holdco) for each Exchangeable Share to be purchased by JAG or JAG Holdco (as the case may be) (i) under the Exchange Put Right shall be the amount determined under the Exchangeable Share Provisions; and (ii) 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, JAG will provide to the Trustee an Officer's Certificate setting forth the calculation of the applicable Exchangeable Share Price for each Exchangeable Share. The applicable Exchangeable Share Price for each such Exchangeable Share so purchased may be satisfied only by JAG's issuing and delivering or causing to be issued and delivered to the Trustee, on behalf of the relevant Holder, the applicable Exchangeable Share Consideration representing the total applicable Exchangeable Share Price.

 

5.5	Exercise Instructions for Exchange Right

 

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 ExchangeCo. To cause the exercise of the Exchange Right by the Trustee, the Holder shall deliver to the Trustee, in person or by certified or registered mail, at its principal transfer offices in Toronto, Ontario or at such other places in Canada as the Trustee may from time to time designate by written notice to the Holders, the certificates representing the Exchangeable Shares which such Holder desires JAG 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 applicable law and the by-laws of ExchangeCo and such additional documents and instruments as the Trustee may reasonably require, together with:

 

(a)

a duly completed form of notice of exercise of the Exchange Right, contained on the reverse of or attached to the Exchangeable Share certificates, stating:

 

(i)

that the Holder thereby instructs the Trustee to exercise the Exchange Right so as to require JAG to purchase from the Holder the number of Exchangeable Shares specified therein,

 

(ii)

that such Holder has good title to and owns all such Exchangeable Shares to be acquired by JAG free and clear of all liens, claims, encumbrances, security interests and adverse claims or interests,

 

(iii)

the names in which the certificates representing JAG Common Stock issuable in connection with the exercise of the Exchange Right are to be issued, and

 

(iv)

the names and addresses of the persons to whom the Exchangeable Share Consideration should be delivered; and

 

 

(b)

payment (or evidence satisfactory to the Trustee, ExchangeCo and JAG of payment) of the taxes (if any) payable as contemplated by Section 5.8 of this Agreement.

 

If only a part of the Exchangeable Shares represented by any certificate or certificates delivered to the Trustee are to be purchased by JAG under the Exchange Right, a new certificate for the balance of such Exchangeable Shares shall be issued to the Holder at the expense of ExchangeCo.

 

5.6	Delivery of Exchangeable Share Consideration; Effect of Exercise

 

Promptly after receipt of the certificates representing the Exchangeable Shares which the Holder desires JAG to purchase under the Exchange Put Right or the Exchange Right (together with such documents and instruments of transfer and a duly completed form of notice of exercise of the Exchange Put Right or the Exchange Right), duly endorsed for transfer to JAG (or JAG Holdco as JAG may direct), the Trustee shall notify JAG and ExchangeCo of its receipt of the same, which notice to JAG and ExchangeCo shall constitute exercise of the Exchange Put Right or the Exchange Right by the Trustee on behalf of the Holder of such Exchangeable Shares, and JAG shall immediately thereafter deliver or cause to be delivered to the Trustee, for delivery to the Holder of such Exchangeable Shares (or to such other persons, if any, properly designated by such Holder), the Exchangeable Share Consideration deliverable in connection with the exercise of the Exchange Put Right or the Exchange Right; provided, however, that no such delivery shall be made unless and until the Holder requesting the same shall have paid (or provided evidence satisfactory to the Trustee, ExchangeCo and JAG of the payment of) the taxes (if any) payable as contemplated by Section 5.8 of this agreement. Immediately upon the giving of notice by the Trustee to JAG and ExchangeCo of the exercise of the Exchange Put Right or the Exchange Right, as provided in this Section 5.6, (i) the closing of the transaction of purchase and sale contemplated by the Exchange Put Right or the Exchange Right shall be deemed to have occurred, (ii) JAG shall be required to take all action necessary to permit it to occur, including delivery to the Trustee of the relevant Exchangeable Share Consideration, no later than the close of business on the third Business Day following the receipt by the Trustee of notice, certificates and other documents as aforesaid and (iii) the Holder of such Exchangeable Shares shall be deemed to have transferred to JAG (or JAG Holdco as JAG may direct) all of its right, title and interest in and to such Exchangeable Shares and the related interest in the Trust Estate, 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 JAG to the Trustee by the date specified above, in which case the rights of the Holder shall remain unaffected until such Exchangeable Share Consideration is delivered by JAG 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 deemed for all purposes to be the holder of the shares of JAG Common Stock delivered to it pursuant to the Exchange Put Right or the Exchange Right. Notwithstanding the foregoing, until the Exchangeable Share Consideration is delivered to the Holder, the Holder shall be deemed to still be a holder of the sold Exchangeable Shares for purposes of the Voting Rights with respect thereto.

 

 

5.7	Exercise of Exchange Right Subsequent to Retraction

 

In the event that a Holder has exercised its right under Article 6 of the Exchangeable Share Provisions to require ExchangeCo to redeem any or all of the Exchangeable Shares held by the Holder (the "Retracted Shares") and is notified by ExchangeCo pursuant to Section 6.6 of the Exchangeable Share Provisions that ExchangeCo will not be permitted as a result of liquidity or solvency provisions of applicable law to redeem all such Retracted Shares, subject to receipt by the Trustee of written notice to that effect from ExchangeCo and provided that JAG 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 ExchangeCo 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 ExchangeCo is unable to redeem. In any such event, ExchangeCo hereby agrees with the Trustee and in favour of the Holder immediately to notify the Trustee of such prohibition against ExchangeCo's redeeming all of the Retracted Shares and immediately to forward or cause to be forwarded to the Trustee all relevant materials delivered by the Holder to ExchangeCo or to the transfer agent of the Exchangeable Shares (including without limitation a copy of the retraction request delivered pursuant to Section 6.1 of the Exchangeable Share Provisions) in connection with such proposed redemption of the Retracted Shares, and the Trustee will thereupon exercise the Exchange Right with respect to the Retracted Shares which ExchangeCo is not permitted to redeem and will require JAG to purchase such shares in accordance with the provisions of this Article 5.

 

5.8	Stamp or Other Transfer Taxes

 

Upon any sale of Exchangeable Shares to JAG pursuant to the Exchange Put Right, the Exchange Right or the Automatic Exchange Rights, the share certificate or certificates representing JAG Common Stock to be delivered in connection with the payment of the total purchase price therefor shall be issued in the name of the Holder of the Exchangeable Shares so sold or in such names as such Holder may otherwise direct in writing without charge to the holder of the Exchangeable Shares so sold, provided, however, that such Holder:

 

(a)

shall pay (and none of JAG, ExchangeCo, JAG Holdco, CardioGenics or the Trustee shall be required to pay) any documentary, stamp, transfer or other similar taxes that may be payable in respect of any transfer involved in the issuance or delivery of such shares to a person other than such Holder; or

 

(b)

shall have established to the satisfaction of the Trustee, JAG and CardioGenics that such taxes, if any, have been paid.

 

 

JAG, ExchangeCo, JAG Holdco and the Trustee (as directed in writing by JAG) shall be entitled to deduct and withhold from any consideration otherwise payable under this Agreement to any Holder such amounts as JAG, ExchangeCo, JAG Holdco or the Trustee is required or permitted to deduct and withhold with respect to such payment under the Income Tax Act (Canada), the United States Internal Revenue Code of 1986 or any provision of provincial, state, local or foreign tax law, in each case as amended or succeeded unless such Holder provides to JAG and the Trustee certificates or such other assurances as are provided for under the Income Tax Act (Canada), the United States Internal Revenue Code of 1986 or such other applicable taxation provisions. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes as having been paid to the Holder in respect of which such deduction and withholding was made, provided that such withheld amounts are actually remitted to the appropriate taxing authority as and when required. To the extent that the amount so required or permitted to be deducted or withheld from any payment to a Holder exceeds the cash portion, if any, of the consideration otherwise payable to the Holder, JAG, ExchangeCo, JAG Holdco and the Trustee are hereby authorized to sell or otherwise dispose of such portion of the consideration as is necessary to provide sufficient funds to JAG, ExchangeCo, JAG Holdco or the Trustee, as the case may be, to enable it to comply with such deduction or withholding requirement and JAG, ExchangeCo, JAG Holdco or the Trustee, as the case may be, shall notify the Holder and remit to such Holder any unapplied balance of the net proceeds of such sale.

 

5.9	Notice of Insolvency Event

 

Immediately upon the occurrence of an Insolvency Event or any event which with the giving of notice or the passage of time or both would be an Insolvency Event, ExchangeCo and JAG shall give written notice thereof to the Trustee. As soon as practicable after receiving notice from ExchangeCo or JAG of the occurrence of an Insolvency Event, the Trustee will mail to each Holder, at the expense of JAG, a notice of such Insolvency Event in the form provided by JAG, which notice shall contain a brief statement of the right of the Holders with respect to the Exchange Right.

 

5.10	Qualification of JAG Common Stock

 

JAG covenants with the Trustee for the benefit of Holders that if any shares of JAG Common Stock to be issued and delivered pursuant to the Exchange Put Right, the Exchange Right or the Automatic Exchange Rights require registration or qualification with or approval of or the filing of any document including any prospectus or similar document, the taking of any proceeding with or the obtaining of any order, ruling or consent from any governmental or regulatory authority under any Canadian or United States federal, provincial or state law or regulation or pursuant to the rules and regulations of any regulatory authority, or the fulfillment of any other legal requirement (collectively, the "Applicable Laws") before such shares may be issued and delivered by JAG to the initial holder thereof (other than ExchangeCo) 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 JAG for purposes of Canadian provincial securities law or an "affiliate" of JAG for purposes of United States federal or state securities law), JAG will in good faith expeditiously take all such actions and do all such things as are necessary to cause such shares of JAG Common Stock to be and remain duly registered, qualified or approved to the extent expressly provided in the Share Purchase Agreement. JAG 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 JAG Common Stock to be issued and delivered pursuant to the Exchange Put Right, 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 JAG for the purposes of Canadian provincial securities law or an "affiliate" of JAG for the purposes of United States federal or state securities law). JAG will in good faith expeditiously take all such actions and do all such things as are necessary to cause all shares of JAG Common Stock to be delivered pursuant to the Exchange Put Right, the Exchange Right or the Automatic Exchange Rights to be listed, quoted or posted for trading on all stock exchanges and quotation systems on which such shares are listed, quoted or posted for trading at such time.

 

 

5.11	Reservation of Shares of JAG Common Stock

 

JAG hereby represents, warrants and covenants with the Trustee for the benefit of the Holders that, on or prior to the Effective Date, and thereafter as required, it will irrevocably reserve 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 JAG Common Stock:

 

(a)

as is equal to the sum of

 

(i)

the number of Exchangeable Shares issued and outstanding from time to time, and

 

(ii)

the number of shares of JAG Common Stock issuable pursuant to the JAG Stock Options outstanding on the date hereof; and

 

(b)

as are now and may hereafter be required to enable and permit ExchangeCo to meet its obligations hereunder, under the Certificate of Incorporation of JAG, under the Support Agreement, under the Exchangeable Share Provisions and under any other security or commitment pursuant to the Arrangement with respect to which JAG may now or hereafter be required to issue shares of JAG Common Stock (the “Exchangeable Share Reservation”).

 

As each Exchangeable Share is exchanged for the applicable number of shares of JAG Common Stock, the Exchangeable Share Reservation shall promptly be reduced by the number of shares of JAG Common Stock issued in connection with any such exchange.

 

5.12	Automatic Exchange on Liquidation of JAG

 

(a)

JAG will give the Trustee written notice of each of the following events at the time set forth below:

 

(i)

in the event of any determination by the board of directors of JAG to institute voluntary liquidation, dissolution or winding-up proceedings with respect to JAG or to effect any other distribution of assets of JAG 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

 

(ii)

immediately, upon the earlier of

 

(A)

receipt by JAG of notice of, and

 

 

(B)

JAG 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 JAG or to effect any other distribution of assets of JAG among its stockholders for the purpose of winding up its affairs.

 

(b)

Immediately following receipt by the Trustee from JAG of notice of any event (a "Liquidation Event") contemplated by Section 5.12(a) above, the Trustee will give notice thereof to the Holders. Such notice will be provided by JAG to the Trustee and shall include a brief description of the automatic exchange of Exchangeable Shares for shares of JAG Common Stock provided for in Section 5.12(c) below.

 

(c)

In order that the Holders will be able to participate on a pro rata basis with the holders of JAG Common Stock in the distribution of assets of JAG 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 JAG Common Stock. To effect such automatic exchange, JAG or, at the option of JAG, JAG Holdco, 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, JAG will provide to the Trustee an Officer's Certificate setting forth the calculation of the Exchangeable Share Price for each Exchangeable Share.

 

(d)

The closing of the transaction of purchase and sale contemplated by Section 5.12(c) above shall be deemed to have occurred immediately prior to the Liquidation Event Effective Time, and each Holder of Exchangeable Shares shall be deemed to have transferred to JAG or JAG Holdco, as the case may be, 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 JAG or JAG Holdco, as the case may be, shall deliver to the Holder the Exchangeable Share Consideration deliverable upon the automatic exchange of Exchangeable Shares. Concurrently with such Holder's ceasing to be a holder of Exchangeable Shares, the Holder shall be considered and deemed for all purposes to be the holder of the shares of JAG Common Stock issued to it pursuant to the automatic exchange of Exchangeable Shares for JAG Common Stock, and the certificates held by the Holder previously representing the Exchangeable Shares exchanged by the Holder with JAG or JAG Holdco, as the case may be, pursuant to such automatic exchange shall thereafter be deemed to represent the shares of JAG Common Stock issued to the Holder by JAG or JAG Holdco, as the case may be, 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 JAG Common Stock, duly endorsed in blank and accompanied by such instruments of transfer as JAG may reasonably require, JAG or JAG Holdco, as the case may be, shall deliver or cause to be delivered to the Holder certificates representing the shares of JAG Common Stock of which the Holder is the holder. Notwithstanding the foregoing, until each Holder is actually entered on the register of holders of JAG 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.

 

 

 

6.1                           During the term of this agreement, JAG will not issue any shares of JAG Special Voting Stock in addition to the Voting Share.

 

 

7.1	Powers and Duties of the Trustee

 

The rights, powers and authorities of the Trustee under this agreement, in its capacity as trustee of the Trust, shall include:

 

(a)

receipt and deposit of the Voting Share from JAG as trustee for and on behalf of the Holders in accordance with the provisions of this agreement;

 

(b)

granting proxies and distributing materials to Holders as provided in this agreement;

 

(c)

voting the Holder Votes in accordance with the provisions of this agreement;

 

(d)

receiving the grant of the Exchange Put Right and the Exchange Right and the Automatic Exchange Rights from JAG as trustee for and on behalf of the Holders in accordance with the provisions of this agreement;

 

(e)

exercising the Exchange Put Right and the Exchange Right and enforcing the benefit of the Automatic Exchange Rights, in each case in accordance with the provisions of this agreement, and in connection therewith receiving from Holders Exchangeable Shares and other requisite documents and distributing to such Holders the shares of JAG Common Stock and cheques, if any, to which such Holders are entitled upon the exercise of the Exchange Put Right and the Exchange Right or pursuant to the Automatic Exchange Rights, as the case may be;

 

(f)

holding title to the Trust Estate;

 

(g)

investing any moneys forming, from time to time, a part of the Trust Estate as provided in this agreement;

 

 

(h)

taking action at the direction of a Holder or Holders to enforce the obligations of JAG under this agreement; and

 

(i)

taking such other actions and doing such other things as are specifically provided in this agreement.

 

In the exercise of such rights, powers and authorities, the Trustee shall have (and is granted) such incidental and additional rights, powers and authority not in conflict with any of the provisions of this agreement as the Trustee, acting in good faith and in the reasonable exercise of its discretion, may deem necessary, appropriate or desirable to effect the purpose of the Trust. Any exercise of such discretionary rights, 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.

 

7.2	No Conflict of Interest

 

The Trustee represents to ExchangeCo and JAG 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 7.2, the Trustee has such a material conflict of interest, the validity and enforceability of this agreement shall not be affected in any manner whatsoever by reason only of the existence of such material conflict of interest. If the Trustee contravenes the foregoing provisions of this Section 7.2, any interested party may apply to the superior court of the province in which ExchangeCo has its registered office for an order that the Trustee be replaced as trustee hereunder.

 

7.3	Dealings with Transfer Agents, Registrars, Etc.

 

ExchangeCo and JAG irrevocably authorize the Trustee, from time to time, to:

 

(a)

consult, communicate and otherwise deal with the respective registrars and transfer agents, and with any such subsequent registrar or transfer agent, of the Exchangeable Shares and JAG Common Stock; and

 

 

(b)

requisition, from time to time,

 

(i)

from any such registrar or transfer agent any information readily   available from the records maintained by it which the Trustee may   reasonably require for the discharge of its duties and responsibilities   under this agreement, and

 

(ii)

from the transfer agent of JAG Common Stock, and any subsequent transfer agent of such shares, to complete the exercise from time to time of the Exchange Put Right, the Exchange Right and the Automatic Exchange Rights in the manner specified in Article 5 hereof, the share certificates issuable upon such exercise.

 

ExchangeCo and JAG irrevocably authorize their respective registrars and transfer agents to comply with all such requests. JAG covenants that it will supply its transfer agent with duly executed share certificates for the purpose of completing the exercise from time to time of the Exchange Put Right, the Exchange Right and the Automatic Exchange Rights, in each case pursuant to Article 5 hereof.

 

7.4	Books and Records

 

The Trustee shall keep available for inspection by JAG and ExchangeCo, at the Trustee's principal transfer office in Toronto, Ontario, correct and complete books and records of account relating to the Trustee's actions under this agreement, including without limitation all information relating to mailings and instructions to and from Holders and all transactions pursuant to the Voting Rights, the Exchange Put Right, the Exchange Right and the Automatic Exchange Rights for the term of this agreement. So long as the Voting Share is on deposit with the Trustee, and as requested from time to time by JAG and ExchangeCo, the Trustee shall transmit to JAG and ExchangeCo a brief report, dated as of the preceding December 31 of the applicable year, with respect to:

 

(a)

the property and funds comprising the Trust Estate as of that date;

 

(b)

the number of exercises of the Exchange Put Right and the Exchange Right, if any, and the aggregate number of Exchangeable Shares received by the Trustee on behalf of Holders in consideration of the issue and delivery by JAG of shares of JAG Common Stock in connection with the Exchange Put Right and the Exchange Right, during the calendar year ended on such date; and

 

(c)

all other actions taken by the Trustee in the performance of its duties under this agreement which it had not previously reported.

 

7.5	Income Tax Returns and Reports

 

ExchangeCo shall, to the extent necessary, prepare and file 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 ExchangeCo may consider necessary or advisable. At JAG's discretion, JAG may retain such experts for purposes of providing such advice and assistance upon it becoming aware of any obligation to report or withhold and remit any amounts pursuant to this section.

7.6	Indemnification Prior to Certain Actions by Trustee

 

The Trustee shall exercise any or all of the rights, duties, powers or authorities vested in it by this agreement at the request, order or direction of any Holder upon such Holder's furnishing to the Trustee reasonable funding, security and indemnity against the costs, expenses 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 7.15 hereof, and with respect to the Exchange Put Right and the Exchange Right pursuant to Article 5 hereof, subject to Section 7.15 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.

 

7.7	Actions by Holders

 

No Holder shall have the right to institute any action, suit or proceeding or to exercise any other remedy authorized by this agreement for the purpose of enforcing any of its rights or for the execution of any trust or power hereunder unless the Holder has requested the Trustee to take or institute such action, suit or proceeding and furnished the Trustee with the funding, security and indemnity referred to in Section 7.6 hereof and the Trustee shall have failed to act within a reasonable time thereafter. In such case, but not otherwise, the Holder shall be entitled to take proceedings in any court of competent jurisdiction such as the Trustee might have taken; it being understood and intended that no one or more Holders shall have any right in any manner whatsoever to affect, disturb or prejudice the rights hereby created by any such action, or to enforce any right hereunder or under the Voting Rights, the Exchange Put Right, the Exchange Right or the Automatic Exchange Rights, except subject to the conditions and in the manner herein provided, and that all powers and trusts hereunder shall be exercised and all proceedings at law shall be instituted, had and maintained by the Trustee, except only as herein provided, and in any event for the equal benefit of all Holders.

 

7.8	Reliance upon Declarations

 

The Trustee shall not be considered to be in contravention of any of its rights, powers, duties and authorities hereunder if, when required, it acts and relies in good faith upon lists, mailing labels, notices, statutory declarations, certificates, opinions, reports or other papers or documents furnished pursuant to the provisions hereof or required by the Trustee to be furnished to it in the exercise of its rights, powers, duties and authorities hereunder, and such lists, mailing labels, notices, statutory declarations, certificates, opinions, reports or other papers or documents comply with the provisions of Section 7.9 hereof, if applicable, and with any other applicable provisions of this agreement.

 

 

7.9	Evidence and Authority to Trustee

 

ExchangeCo and/or JAG 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 ExchangeCo and/or JAG or the Trustee under this agreement or as a result of any obligation imposed under this agreement, including, without limitation, in respect of the Voting Rights or the Exchange Put Right, the Exchange Right or the Automatic Exchange Rights and the taking of any other action to be taken by the Trustee at the request of or on the application of ExchangeCo and/or JAG forthwith if and when:

 

(a)

such evidence is required by any other section of this agreement to be furnished to the Trustee in accordance with the terms of this Section 7.9; or

 

(b)

the Trustee, in the exercise of its rights, powers, duties and authorities under this agreement, gives ExchangeCo and/or JAG 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 ExchangeCo and/or JAG or a statutory declaration or a certificate made by persons entitled to sign an Officer's Certificate stating that any such condition has been complied with in accordance with the terms of this agreement.

 

Whenever such evidence relates to a matter other than the Voting Rights or the Exchange Put Right, the Exchange Right or the Automatic Exchange Rights, and except as otherwise specifically provided herein, such evidence may consist of a report or opinion of any solicitor, auditor, accountant, appraiser, valuator, 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 ExchangeCo and/or JAG, it shall be in the form of an Officer's Certificate or a statutory declaration.

 

Each statutory declaration, certificate, opinion or report furnished to the Trustee as evidence of compliance with a condition provided for in this agreement shall include a statement by the person giving the evidence:

 

(i)

declaring that such person has read and understands the provisions of this agreement relating to the condition in question;

 

(ii)

describing the nature and scope of the examination or investigation upon which such person based the statutory declaration, certificate, statement or opinion; and

 

(iii)

declaring that such person has made such examination or investigation as such person believes is necessary to enable such person to make the statements or give the opinions contained or expressed therein.

 

 

7.10	Experts, Advisers and Agents

 

The Trustee may:

 

(a)

in relation to these presents act and rely on the opinion or advice of or information obtained from or prepared by any solicitor, auditor, accountant, appraiser, valuer, engineer or other expert, whether retained by the Trustee or by ExchangeCo and/or JAG or otherwise, and may employ such assistants as may be necessary to the proper determination and discharge of its powers and duties and determination of its rights hereunder and may pay proper and reasonable compensation for all such legal and other advice or assistance as aforesaid; and

 

(b)

employ such agents and other assistants as it may reasonably require for the proper determination and discharge of its powers and duties hereunder, and may pay reasonable remuneration for all services performed for it (and shall be entitled to receive reasonable remuneration for all services performed by it) in the discharge of the trusts hereof and compensation for all disbursements, costs and expenses made or incurred by it in the determination and discharge of its duties hereunder and in the management of the Trust.

 

7.11	Investment of Moneys Held by Trustee

 

Unless otherwise provided in this agreement, any moneys held by or on behalf of the Trustee which under the terms of this agreement may or ought to be invested or which may be on deposit with the Trustee or which may be in the hands of the Trustee, may be invested and reinvested in the name or under the control of the Trustee in securities in which, under the laws of the Province of Ontario, trustees are authorized to invest trust moneys; provided that such securities are stated to mature within two years after their purchase by the Trustee, and the Trustee shall so invest such moneys on the written direction of ExchangeCo. 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 ExchangeCo, in the deposit department of any loan or trust company authorized to accept deposits under the laws of Canada or any province thereof at the rate of interest then current on similar deposits.

 

7.12	Trustee Not Required to Give Security

 

The Trustee shall not be required to give any bond or security in respect of the execution of the trusts, rights, duties, powers and authorities of this agreement or otherwise in respect of the premises.

 

7.13	Trustee Not Bound to Act on Request

 

Except as in this agreement otherwise specifically provided, the Trustee shall not be bound to act in accordance with any direction or request of ExchangeCo and/or JAG 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.

 

 

7.14	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 shall not exercise any Voting Rights, Exchange Put Right, Exchange Right or Automatic Exchange Rights subject to such conflicting claims or demands and, in so doing, the Trustee shall not be or become liable to any person on account of such election or its failure or refusal to comply with any such conflicting claims or demands. The Trustee shall be entitled to continue to refrain from acting and to refuse to act until:

 

(a)

the rights of all adverse claimants with respect to the Voting Rights, Exchange Put Right, Exchange Right or Automatic Exchange Rights subject to such conflicting claims or demands have been adjudicated by a final judgment of a court of competent jurisdiction; or

 

(b)

all differences with respect to the Voting Rights, the Exchange Put Right, Exchange Right or Automatic Exchange Rights subject to such conflicting claims or demands have been conclusively settled by a valid written agreement binding on all such adverse claimants, and the Trustee shall have been furnished with an executed copy of such agreement.

 

If the Trustee elects to recognize any claim or comply with any demand made by any such adverse claimant, it may in its discretion require such claimant to furnish such surety bond or other security satisfactory to the Trustee as it shall deem appropriate fully to indemnify it as between all conflicting claims or demands.

 

7.15	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.

 

 

JAG and ExchangeCo jointly and severally agree to pay to the Trustee reasonable compensation for all of the services rendered and actions taken 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 JAG and ExchangeCo 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.  The Trustee shall be obligated to provide only one account or invoice to ExchangeCo from time to time in connection with its appointment hereunder.

 

 

9.1	Indemnification of the Trustee

 

JAG and ExchangeCo jointly and severally agree to indemnify and hold harmless the Trustee and each of its partners, officers, employees and agents appointed and acting in accordance with this agreement (collectively, the "Indemnified Parties") against all claims, losses, damages, costs, penalties, fines and reasonable expenses (including reasonable expenses of the Trustee's legal counsel) which, without fraud, negligence, 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 JAG or ExchangeCo pursuant hereto. In no case shall JAG or ExchangeCo be liable under this indemnity for any claim against any of the Indemnified Parties unless JAG and ExchangeCo 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, JAG and ExchangeCo shall be entitled to participate at their own expense in the defense and, if JAG or ExchangeCo 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 JAG or ExchangeCo, such authorization not to be unreasonably withheld; or (ii) the named parties to any such suit include both the Trustee and JAG or ExchangeCo and the Trustee shall have been advised by counsel acceptable to JAG or ExchangeCo that there may be one or more legal defenses available to the Trustee that are different from or in addition to those available to JAG or ExchangeCo and that an actual or potential conflict of interest exists (in which case JAG and ExchangeCo 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). This indemnity shall survive the resignation or removal of the Trustee and the termination of the trust.

 

9.2	Limitation of Liability

 

The Trustee shall not be held liable for any loss which may occur by reason of depreciation of the value of any part of the Trust Estate or any loss incurred on any investment of funds pursuant to this agreement, except to the extent that such loss is attributable to the fraud, negligence, willful misconduct or bad faith on the part of the Trustee.

 

 

10.1	Resignation

 

The Trustee, or any trustee hereafter appointed, may at any time resign by giving written notice of such resignation to JAG and ExchangeCo 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 JAG and ExchangeCo 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, JAG and ExchangeCo shall promptly appoint a successor trustee by written instrument, in duplicate, one copy of which shall be delivered to the resigning trustee and one copy to the successor trustee. Failing acceptance by a successor trustee, a successor trustee may be appointed by an order of the superior court of the province in which ExchangeCo has its registered office upon application of one or more of the parties hereto.

 

10.2

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 JAG and ExchangeCo, in duplicate, one copy of which shall be delivered to the trustee so removed and one copy to the successor trustee; provided that, in connection with such removal, provision is made for a replacement trustee similar to that contemplated in Section 10.1.

 

10.3	Successor Trustee

 

Any successor trustee appointed as provided under this agreement shall execute, acknowledge and deliver to JAG and ExchangeCo 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 JAG and ExchangeCo 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, JAG, ExchangeCo and such predecessor trustee shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers.

 

10.4	Notice of Successor Trustee

 

Upon acceptance of appointment by a successor trustee as provided herein, JAG and ExchangeCo shall cause to be mailed notice of the succession of such trustee hereunder to each Holder specified in a List. If JAG or ExchangeCo 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 JAG and ExchangeCo.

 

 

11.1	Certain Requirements in Respect of Combination, Etc.

 

Neither JAG nor ExchangeCo shall enter into any transaction (whether by way of reconstruction, reorganization, consolidation, merger, transfer, sale, lease or otherwise) whereby all or substantially all of its undertaking, property and assets would become the property of any other Person or, in the case of a merger, of the continuing corporation resulting therefrom, but may do so if:

 

(a)

such other Person or continuing corporation (the "Successor"), by operation of law, becomes, without further action, 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 Successor of liability for all moneys payable and property deliverable hereunder, the covenant of such 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 JAG or ExchangeCo, as the case may be, under this agreement; and

 

(b)

such transaction shall, to the satisfaction of the Trustee and in the opinion of legal counsel to the Trustee, be upon such terms which substantially preserve and do not impair in any material respect any of the rights, duties, powers and authorities of the Trustee or of the Holders hereunder.

 

11.2	Vesting of Powers in Successor

 

Whenever the conditions of Section 11. 1 hereof have been duly observed and performed, the Trustee, if required by Section 11.1 hereof, the Successor and JAG or ExchangeCo, as the case may be, shall execute and deliver the supplemental agreement provided for in Article 12 hereof, and thereupon the Successor shall possess and from time to time may exercise each and every right and power of JAG or ExchangeCo, as the case may be, under this agreement in the name of JAG or ExchangeCo, as the case may be, or otherwise and any act or proceeding by any provision of this agreement required to be done or performed by the board of directors or any officers of JAG or ExchangeCo may be done and performed with like force and effect by the directors or officers of such Successor.

 

11.3	Wholly-owned Subsidiaries

 

Nothing herein shall be construed as preventing the amalgamation or merger of any wholly-owned subsidiary of JAG with or into JAG or the winding-up, liquidation or dissolution of any wholly-owned subsidiary of JAG provided that all of the assets of such subsidiary are transferred to JAG or another wholly-owned subsidiary of JAG, and any such transactions are expressly permitted by this Article 11.

 

 

 

12.1	Amendments, Modifications, Etc.

 

Subject to Sections 12.2 and 12.4, this agreement may not be amended, modified or waived except by an agreement in writing executed by ExchangeCo, JAG and the Trustee and approved by the Holders in accordance with Section 10.2 of the Exchangeable Share Provisions. No amendment to or modification or waiver of any of the provisions of this agreement otherwise permitted hereunder shall be effective unless made in writing and signed by all of the parties hereto.

 

12.2	Ministerial Amendments

 

Notwithstanding the provisions of Section 12.1 hereof, the parties to this agreement may in writing, at any time and from time to time, without the approval of the Holders, amend or modify this agreement for the purposes of:

 

(a)

adding to the covenants of any or all of the parties hereto for the protection of the Holders hereunder subject to the receipt by the Trustee of an opinion of its counsel that the addition of the proposed covenant is not prejudicial to the interests of the holders as a whole or the Trustee;

 

(b)

making such amendments or modifications not inconsistent with this agreement as may be necessary or desirable with respect to matters or questions which, in the opinion of the board of directors of each of JAG and ExchangeCo 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;

 

(c)

making such changes or corrections which, on the advice of counsel to ExchangeCo, JAG and the Trustee, are required for the purpose of curing or correcting any ambiguity or defect or inconsistent provision or clerical omission or mistake or manifest error; provided that the Trustee and its counsel and the board of directors of each of ExchangeCo and JAG shall be of the opinion that such changes or corrections will not be prejudicial to the interests of the Holders as a whole; or

 

(d)

making such changes as may be necessary or appropriate to implement or give effect to any assignment or assumption made pursuant to Section 14.9 hereof.

 

12.3	Meeting to Consider Amendments

 

ExchangeCo, at the request of JAG, 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 ExchangeCo, the Exchangeable Share Provisions and all applicable laws.

 

 

12.4	Changes in Capital of JAG and ExchangeCo

 

At all times after the occurrence of any event effected pursuant to Section 2.7 or Section 2.8 of the Support Agreement, as a result of which either JAG 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 JAG 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.

 

12.5	Execution of Supplemental Agreements

 

From time to time, ExchangeCo (when authorized by a resolution of its Board of Directors), JAG (when authorized by a resolution of its board of directors) and the Trustee may, subject to the provisions of these presents, and they shall, when so directed by these presents, execute and deliver by their proper officers, agreements or other instruments supplemental hereto, which thereafter shall form part hereof, for any one or more of the following purposes:

 

(a)

evidencing the succession of any Successors to JAG and the covenants of and obligations assumed by each such Successor in accordance with the provisions of Article 11 and the successor of any successor trustee in accordance with the provisions of Article 10;

 

(b)

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 JAG, ExchangeCo, the Trustee or this agreement;

 

(c)

to implement or give effect to any assignment or assumption made pursuant to Section 14.9 hereof; and

 

(d)

for any other purposes not inconsistent with the provisions of this agreement, including without limitation to make or evidence any amendment or modification to this agreement as contemplated hereby, provided that, in the opinion of the Trustee and its counsel, the rights of the Trustee and the Holders as a whole will not be prejudiced thereby.

 

 

 

13.1

Term

 

This agreement and the Trust created hereby shall become effective on the Effective Date and the Trust shall continue until the earliest to occur of the following events:

 

(a)

no outstanding Exchangeable Shares are held by a Holder;

 

(b)

each of ExchangeCo and JAG elects in writing to terminate the Trust and such termination is approved by the Holders of the Exchangeable Shares in accordance with Section 10.1 of the Exchangeable Share Provisions; and

 

(c)

21 years after the death of the last survivor of the descendants of Her Majesty Queen Elizabeth II of the United Kingdom of Great Britain and Northern Ireland living on the date of the creation of the Trust.

 

13.2	Survival of Agreement

 

This agreement shall survive any termination of the Trust and shall continue until there are no Exchangeable Shares outstanding held by a Holder; provided, however, that the provisions of Articles 8 and 9 hereof shall survive any such termination of this agreement.

 

 

14.1	Severability

 

If any provision of this agreement is held to be invalid, illegal or unenforceable, the validity, legality or enforceability of the remainder of this agreement shall not in any way be affected or impaired thereby, and the agreement shall be carried out as nearly as possible in accordance with its original terms and conditions.

 

14.2

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.

 

14.3	Notices to Parties

 

All notices and other communications between the parties hereunder shall be in writing and shall be deemed to have been given if delivered personally or by confirmed telecopy to the parties at the following addresses (or at such other address for such party as shall be specified in like notice):

 

 

(a)

if to JAG:

 

6865 S.W. 18th Street, Suite B13

Boca Raton, FL  33433

Attention: Mr. Thomas J. Mazzarisi, CEO

Fax:   ###-###-####

(b)

if to ExchangeCo to:

 

6295 Northam Drive, Unit No. 8

Mississauga, ON  L4V 1H8

Attention: Brian S. Sterling, President

Fax:   ###-###-####

(c)

if to the Trustee to:

 

1600 - 130 King Street West

The Exchange Tower

Toronto, Ontario M5X 1J5 Canada

Attention: Sanjay M. Joshi, Partner

Fax:   ###-###-####

Any notice or other communication given personally shall be deemed to have been given and received upon delivery thereof, and if given by telecopy shall be deemed to have been given and received on the date of receipt thereof unless such day is not a Business Day in which case it shall be deemed to have been given and received upon the immediately following Business Day.

 

14.4	Notice to Holders

 

Any and all notices to be given and any documents to be sent to any Holders may be given or sent to the address of such Holder shown on the register of Holders of Exchangeable Shares in any manner permitted by the Exchangeable Share Provisions and shall be deemed to be received (if given or sent in such manner) at the time specified in such Exchangeable Share Provisions, the provisions of which Exchangeable Share Provisions shall apply mutatis mutandis to notices or documents as aforesaid sent to such Holders.

 

14.5	Risk of Payments by Post

 

Whenever payments are to be made or documents are to be sent to any Holder by the Trustee, by ExchangeCo or by JAG or by such Holder to the Trustee or to JAG or ExchangeCo, the making of such payment or sending of such document sent through the mail shall be at the risk of ExchangeCo or JAG, in the case of payments made or documents sent by the Trustee or ExchangeCo or JAG, and the Holder, in the case of payments made or documents sent by the Holder.

 

 

14.6	Counterparts

 

This agreement may be executed in counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.

 

14.7	Jurisdiction

 

This agreement shall be construed and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.

 

14.8	Attornment

 

JAG agrees that any action or proceeding arising out of or relating to this agreement may be instituted in the courts of Ontario, waives any objection which it may have now or hereafter to the venue of any such action or proceeding, irrevocably submits to the jurisdiction of such courts in any such action or proceeding, agrees to be bound by any judgment of such courts and agrees not to seek, and hereby waives, any review of the merits of any such judgment by the courts of any other jurisdiction and hereby appoints ExchangeCo at its registered office in the Province of Ontario as JAG's attorney for service of process.

 

14.9	Permitted Assignment

 

JAG may assign any or all of its rights and obligations under this Agreement to JAG Holdco, provided that each of JAG and JAG Holdco shall thereafter, jointly and severally, be liable for the performance by JAG Holdco of the obligations of JAG pursuant to this Agreement. Any and all of the obligations of JAG may be performed and satisfied by JAG Holdco, except that nothing in this Section 14.9 will permit any change to the rights, privileges, restrictions and conditions attaching to the Voting Share or Exchangeable Shares or to the Exchange Right, Exchange Put Right or Automatic Exchange Rights.

 

 

IN WITNESS WHEREOF, the parties hereby have caused this agreement to be duly executed as of the date first above written.

 

 

 

 

 

 

 

The common shares ("Common Shares") in the capital of the Corporation shall have attached thereto the following rights, privileges, restrictions and conditions:

 

 

Subject to the prior rights of the Exchangeable Shares and any other shares ranking prior to the Common Shares, holders of Common Shares have a right to receive dividends when declared by the Board of Directors out of property of the Corporation legally available therefor.

 

 

Subject to the prior rights of the Exchangeable Shares and any other shares ranking prior to the Common Shares, the holders of Common Shares shall, upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or other distribution of the assets of the Corporation for the purpose of winding-up its affairs, be entitled to receive the remaining property and assets of the Corporation.

 

 

The holders of the Common Shares shall be entitled to receive notice of and to attend all meetings of shareholders (other than separate meetings of other classes or series of shares), and shall be entitled to one vote for each Common Share held.

 

 

The Exchangeable Shares in the capital of the Corporation shall have the following rights, privileges, restrictions and conditions:

 

 

15.1	For the purposes of these rights, privileges, restrictions and conditions:

 

"Act" means the Business Corporations Act (Ontario), as amended, consolidated or re-enacted from time to time.

 

 

"Aggregate Equivalent Vote Amount" means, with respect to any matter, proposition or question on which holders of JAG Common Stock are entitled to vote, consent or otherwise act, the product of (i) the number of Exchangeable Shares then issued and outstanding and held by holders (other than JAG and its Subsidiaries) multiplied by (ii) the number of votes to which a holder of one share of JAG Common Stock is entitled with respect to such matter, proposition or question.

 

"Automatic Redemption Date" means the date for the automatic redemption by the Corporation of Exchangeable Shares pursuant to Article 7 of these share provisions, which date shall be the first to occur of (a) the date, if any, selected pursuant to this clause (a) by the Board of Directors of the Corporation, such date to be no earlier than the tenth anniversary of the Effective Date, (b) the date selected by the Board of Directors of the Corporation (such date to be no earlier than the third anniversary of the Effective Date of the Arrangement) at a time when less than 10% of the number of Exchangeable Shares issuable on the Effective Date (other than Exchangeable Shares held by JAG and its Subsidiaries, and as such number of shares may be adjusted as deemed appropriate by the Board of Directors to give effect to any subdivision or consolidation of or stock dividend on the Exchangeable Shares, any issuance or distribution of rights to acquire Exchangeable Shares or securities exchangeable for or convertible into or carrying rights to acquire Exchangeable Shares, any issue or distribution of other securities or rights or evidences of indebtedness or assets, or any other capital reorganization or other transaction involving or affecting the Exchangeable Shares), are outstanding, (c) the Business Day prior to the record date for any meeting or vote of the shareholders of the Corporation to consider any matter on which the holders of Exchangeable Shares would be entitled to vote as shareholders of the Corporation, but excluding any meeting or vote as described in clause (d) below, or (d) the Business Day following the day on which the holders of Exchangeable Shares fail to take the necessary action at a meeting or other vote of holders of Exchangeable Shares, if and to the extent such action is required, to approve or disapprove, as applicable, any change to, or in the rights of the holders of, Exchangeable Shares, if the approval or disapproval, as applicable, of such change would be required to maintain the economic and legal equivalence of the Exchangeable Shares and the JAG Common Stock.

 

"Board of Directors" means the board of directors of the Corporation and any committee thereof acting within its authority.

 

"Business Day" means any day other than a Saturday, a Sunday or a day when banks are not open for business in Toronto, Ontario.

 

"CardioGenics" means CardioGenics Inc., a corporation organized and existing under the Act.

 

"Common Shares" means the common shares in the capital of the Corporation.

 

"Corporation" means CardioGenics Exchangeco Inc., a corporation organized and existing under the Act and includes any successor corporation.

 

"Current Market Price" means, in respect of a share of JAG Common Stock on any date, the average of the closing sale prices per share (computed and rounded to the third decimal point) of shares of JAG Common Stock during the period of 20 consecutive trading days ending not more than five trading days before such date on the OTC Bulletin Board (“OTCBB”), or, if JAG Common Stock is not then traded on the OTCBB, on such other principal U.S. stock exchange or automated quotation system on which the JAG Common Stock is then listed or quoted, as the case may be, as may be selected by the Board of Directors for such purpose; provided, however, that if, in the opinion of the Board of Directors the public distribution or trading activity of JAG Common Stock during such period does not create a market which reflects the fair market value of a share of JAG Common Stock, then the Current Market Price of a share of JAG Common Stock shall be determined by the Board of Directors based upon the advice of such qualified independent financial advisors as the Board of Directors may deem to be appropriate, and provided further than any such selection, opinion or determination by the Board of Directors shall be conclusive and binding.

 

"Effective Date" the date hereof.

 

"Exchange Put Date" has the meaning provided in Section 8.2.

 

"Exchange Put Right" has the meaning provided in Section 8.1.

 

"Exchangeable Share Consideration" means, with respect to each Exchangeable Share, for any acquisition of or redemption of or distribution of assets of the Corporation in respect of or purchase pursuant to these share provisions, the Support Agreement or the Voting and Exchange Trust Agreement:

 

(a)

the Current Market Price of one share of JAG Common Stock deliverable in connection with such action;

 

(b)

a cheque or cheques payable at par at any branch of the bankers of the payor in the amount of all declared, payable and unpaid, and all undeclared but payable, cash dividends deliverable in connection with such action; and

 

(c)

such stock or other property constituting any declared and unpaid, and all undeclared but payable, non-cash dividends deliverable in connection with such action,

 

provided that (i) that part of the consideration which represents (a) above, shall be fully paid and satisfied by the delivery of one share of JAG Common Stock, such share to be duly issued as a fully paid and non-assessable share, (ii) that part of the consideration which represents (c), above, shall be fully paid and satisfied by delivery of such non-cash items, and (iii) any such consideration shall be delivered free and clear of any lien, claim, encumbrance, security interest or adverse claim or interest less any tax required to be deducted and withheld therefrom and without interest.

 

"Exchangeable Share Price" means, for each Exchangeable Share, an amount equal to the aggregate of:

 

(a)

the Current Market Price of a share of JAG Common Stock; plus

 

 

(b)

an additional amount equal to the full amount of all cash dividends declared, payable and unpaid, on such Exchangeable Share; plus

 

(c)

an additional amount equal to all dividends declared and payable on JAG Common Stock which have not been declared on Exchangeable Shares in accordance herewith; plus

 

(d)

an additional amount representing non-cash dividends declared, payable and unpaid, on such Exchangeable Share.

 

"Exchangeable Shares" means the Exchangeable Shares of the Corporation having the rights, privileges, restrictions and conditions set forth herein.

 

"JAG" means JAG Media Holdings, Inc., a corporation organized and existing under the laws of the State of Nevada and includes any successor corporation or any corporation in which the holders of JAG Common Stock hold securities resulting from the application of Section 2.7 of the Support Agreement;

 

"JAG Call Notice" has the meaning provided in Section 6.3.

 

"JAG Common Stock" means the shares of common stock of JAG, with a par value of U.S. $0.00001 per share, having voting rights of one vote per share, and any other securities resulting from the application of Section 2.7 of the Support Agreement.

 

"JAG Dividend Declaration Date" means the date on which the board of directors of JAG declares any dividend on the JAG Common Stock.

 

"JAG Holdco" has the meaning provided in the Voting and Exchange Trust Agreement.

 

"JAG Special Share" means the one share of Special Voting Stock of JAG, with a par value of U.S. $0.01, and having voting rights at meetings of holders of JAG Common Stock equal to the Aggregate Equivalent Voting Amount.

 

"Liquidation Amount" has the meaning provided in Section 5.1.

 

"Liquidation Call Right" has the meaning provided in the Articles of Incorporation of the Corporation.

 

"Liquidation Call Purchase Price" has the meaning provided in the Articles of Incorporation of the Corporation.

 

"Liquidation Date" has the meaning provided in Section 5.1.

 

"Purchase Price" has the meaning provided in Section 6.3.

 

"Redemption Call Purchase Price" has the meaning provided in the Articles of Incorporation of the Corporation.

 

 

"Redemption Call Right" has the meaning provided in the Articles of Incorporation of the Corporation.

 

"Redemption Price" has the meaning provided in Section 7.1.

 

"Retracted Shares" has the meaning provided in subsection 6.1 (a).

 

"Retraction Call Right" has the meaning provided in subsection 6.1 (c).

 

"Retraction Date" has the meaning provided in subsection 6.1 (b).

 

"Retraction Price" has the meaning provided in Section 6.1.

 

"Retraction Request" has the meaning provided in Section 6.1.

 

"Subsidiary", in relation to any person, means any body corporate, partnership, joint venture, association or other entity of which more than 50% of the total voting power of shares of stock or units of ownership or beneficial interest entitled to vote in the election of directors (or members of a comparable governing body) is owned or controlled, directly or indirectly, by such person.

 

"Support Agreement" means the Support Agreement between JAG and the Corporation, made as of the Effective Date.

 

"Transfer Agent" means the duly appointed transfer agent for the time being of the Exchangeable Shares, and, if there is more than one such transfer agent, then the principal Canadian transfer agent.

 

"Trustee" means the Trustee appointed under the Voting and Exchange Trust Agreement, and any successor trustee.

 

"Voting and Exchange Trust Agreement" means the Voting and Exchange Trust Agreement among the Corporation, JAG and the Trustee, made as of the Effective Date.

 

 

16.1                         The Exchangeable Shares shall be entitled to a preference over the Common Shares and any other shares ranking junior to the Exchangeable Shares, with respect to the payment of dividends and the distribution of assets in the event of the liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or any other distribution of the assets of the Corporation among its shareholders for the purpose of winding-up its affairs.

 

 

17.1                         A holder of an Exchangeable Share shall be entitled to receive and the Board of Directors shall, subject to applicable law, on each JAG Dividend Declaration Date, declare a dividend on each Exchangeable Share (a) in the case of a cash dividend declared on the JAG Common Stock, in an amount in cash for each Exchangeable Share equal to the cash dividend declared on each share of JAG Common Stock, (b) in the case of a stock dividend declared on the JAG Common Stock to be paid in JAG Common Stock, in such number of Exchangeable Shares for each Exchangeable Share as is equal to the number of shares of JAG Common Stock to be paid on each share of JAG Common Stock, (c) in the case of a dividend declared on the JAG Common Stock in property other than cash or securities of JAG, in such type and amount of property for each Exchangeable Share as is the same as the type and amount of property declared as a dividend on each share of JAG Common Stock or (d) in the case of a dividend declared on the JAG Common Stock to be paid in securities of JAG other than JAG Common Stock, in such number of either such securities or economically equivalent securities of the Corporation, as the Board of Directors determines, for each Exchangeable Share as is equal to the number of securities of JAG to be paid on each share of JAG Common Stock. Such dividends (less any tax required to be deducted and withheld from such dividends) shall be paid out of money, assets or property of the Corporation properly applicable to the payment of dividends, or out of authorized but unissued shares of the Corporation.

 

17.2                         Cheques of the Corporation payable at par at any branch of the bankers of the Corporation shall be issued in respect of any cash dividends contemplated by subsection 3.1 (a) hereof and the sending of such a cheque to each holder of an Exchangeable Share (less any tax required to be deducted and withheld from such dividends paid or credited by the Corporation) shall satisfy the cash dividends represented thereby unless the cheque is not paid on presentation. Certificates registered in the name of the registered holder of Exchangeable Shares shall be issued or transferred in respect of any stock dividends contemplated by subsections 3.1 (b) or (d) hereof and the sending of such a certificate to each holder of an Exchangeable Share shall satisfy the stock dividend represented thereby or dividend payable in other securities represented thereby. Such other type and amount of property in respect of any dividends contemplated by subsection 3.1 (c) hereof shall be issued, distributed or transferred by the Corporation in such manner as it shall determine and the issuance, distribution or transfer thereof by the Corporation to each holder of an Exchangeable Share shall satisfy the dividend represented thereby. In all cases, any such dividends shall be subject to any reduction or adjustment for tax required to be deducted and withheld from such dividends, and the Corporation shall be entitled to liquidate some of the property which would otherwise be deliverable in payment of such dividends to a particular holder of Exchangeable Shares to fund any statutory withholding obligation. No holder of an Exchangeable Share shall be entitled to recover by action or other legal process against the Corporation any dividend which is represented by a cheque that has not been duly presented to the Corporation's bankers for payment or which otherwise remains unclaimed for a period of six years from the date on which such dividend was payable.

 

17.3                         The record date for the determination of the holders of Exchangeable Shares entitled to receive payment of, and the payment date for, any dividend declared on the Exchangeable Shares under Section 3.1 hereof shall be the same dates as the record date and payment date, respectively, for the corresponding dividend declared on the JAG Common Stock.

 

17.4                         If on any payment date for any dividends declared on the Exchangeable Shares under Section 3.1 hereof the dividends are not paid in full on all of the Exchangeable Shares then outstanding, any such dividends which remain unpaid shall be paid on a subsequent date or dates determined by the Board of Directors on which the Corporation shall have sufficient moneys, assets or property properly applicable to the payment of such dividends.

 

17.5                      Except as provided in this Article 3, the holders of Exchangeable Shares shall not be entitled to receive dividends in respect thereof.

 

 

18.1                      So long as any of the Exchangeable Shares are outstanding, the Corporation shall not at any time without, but may at any time with, the approval of the holders of the Exchangeable Shares given as specified in Article 10 of these share provisions:

 

(a)

pay any dividends on the Common Shares, or any other shares ranking junior to the Exchangeable Shares, other than stock dividends payable in any such other shares ranking junior to the Exchangeable Shares;

 

(b)

redeem or purchase or make any capital distribution in respect of Common Shares or any other shares ranking junior to the Exchangeable Shares with respect to the payment of dividends or on any liquidation distribution;

 

(c)

redeem or purchase any other shares of the Corporation ranking equally with the Exchangeable Shares with respect of the payment of dividends or on any liquidation distribution; or

 

(d)

amend the articles or by-laws of the Corporation, in either case in any manner that would affect the rights or privileges of the holders of the Exchangeable Shares.

 

The restrictions in subsections 4.1 (a), 4.1 (b) and 4.1 (c) above shall not apply if all dividends on the outstanding Exchangeable Shares corresponding to dividends declared with a record date on or following the Effective Date on the JAG Common Stock shall have been declared on the Exchangeable Shares and paid in full. Nothing herein shall be interpreted to restrict the Corporation from issuing additional Common Shares or Exchangeable Shares.

 

 

19.1                      In the event of the liquidation, dissolution or winding-up of the Corporation or any other distribution of the assets of the Corporation among its shareholders for the purpose of winding-up its affairs, provided that neither JAG nor JAG Holdco shall have exercised the Liquidation Call Right, a holder of Exchangeable Shares shall be entitled, subject to applicable law, to receive from the assets of the Corporation in respect of each Exchangeable Share held by such holder on the effective date of such liquidation, dissolution or winding-up (the "Liquidation Date"), before any distribution of any part of the assets of the Corporation to the holders of the Common Shares or any other shares ranking junior to the Exchangeable Shares, an amount equal to the Exchangeable Share Price applicable on the last Business Day prior to the Liquidation Date (the "Liquidation Amount") in accordance with Section 5.2.  In connection with payment of the Liquidation Amount, the Corporation shall be entitled to liquidate some of the JAG Common Stock which would otherwise be deliverable as Exchangeable Share Consideration to the particular holder of Exchangeable Shares in order to fund any statutory withholding tax obligation.

 

 

19.2                      Within 10 Business Days after the Liquidation Date, and subject to the exercise by JAG or JAG Holdco of the Liquidation Call Right, the Corporation shall cause to be delivered to the holders of the Exchangeable Shares the Liquidation Amount for each such Exchangeable Share upon presentation and surrender of the certificates representing such Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under applicable law and the by-laws of the Corporation and such additional documents and instruments as the Transfer Agent may reasonably require, at the registered office of the Corporation or at any office of the Transfer Agent as may be specified by the Corporation in Schedule A hereto or by notice to the holders of the Exchangeable Shares. Payment of the total Liquidation Amount for such Exchangeable Shares shall be made by delivery to each holder, at the address of the holder recorded in the securities register of the Corporation for the Exchangeable Shares or by holding for pick up by the holder at the registered office of the Corporation or at any office of the Transfer Agent as may be specified by the Corporation in Schedule A hereto or by notice to the holders of Exchangeable Shares, on behalf of the Corporation of the Exchangeable Share Consideration representing the total Liquidation Amount. On and after the Liquidation Date, the holders of the Exchangeable Shares shall cease to be holders of such Exchangeable Shares and shall not be entitled to exercise any of the rights of holders in respect thereof, other than the right to receive their proportionate part of the total Liquidation Amount, unless payment of the total Liquidation Amount for such Exchangeable Shares shall not be made upon presentation and surrender of share certificates in accordance with the foregoing provisions, in which case the rights of the holders shall remain unaffected until the total Liquidation Amount has been paid in the manner hereinbefore provided. The Corporation shall have the right at any time on or after the Liquidation Date to deposit or cause to be deposited the Exchangeable Share Consideration in respect of the Exchangeable Shares represented by certificates that have not at the Liquidation Date been surrendered by the holders thereof in a custodial account or for safe keeping, in the case of non-cash items, with any chartered bank or trust company in Canada. Upon such deposit being made, the rights of the holders of Exchangeable Shares after such deposit shall be limited to receiving their proportionate part of the total Liquidation Amount for such Exchangeable Shares so deposited, against presentation and surrender of the said certificates held by them, respectively, in accordance with the foregoing provisions. Upon such payment or deposit of such Exchangeable Share Consideration, the holders of the Exchangeable Shares shall thereafter be considered and deemed for all purposes to be the holders of the JAG Common Stock delivered to them. Notwithstanding the foregoing, until such payment or deposit of such Exchangeable Share Consideration, the holder shall be deemed to still be a holder of Exchangeable Shares for purposes of all voting rights with respect thereto under the Voting and Exchange Trust Agreement.

 

19.3                      After the Corporation has satisfied its obligations to pay the holders of the Exchangeable Shares the Liquidation Amount per Exchangeable Share, such holders shall not be entitled to share in any further distribution of the assets of the Corporation.

 

 

19.4                      If JAG or JAG Holdco exercises the Liquidation Call Right, each holder of Exchangeable Shares shall be obligated to sell the Exchangeable Shares held by such holder to JAG or JAG Holdco, as the case may be, on the Liquidation Date on payment to such holder by JAG or JAG Holdco, as the case may be, of the Exchangeable Share Consideration representing the Liquidation Call Purchase Price for each Exchangeable Share.

 

 

20.1                      A holder of Exchangeable Shares shall be entitled at any time, subject to applicable law and the exercise by JAG or JAG Holdco of the Retraction Call Right (which, if exercised by JAG or JAG Holdco, shall be binding on the holder of Exchangeable Shares) and otherwise upon compliance with the provisions of this Article 6, to require the Corporation to redeem any or all of the Exchangeable Shares registered in the name of such holder for an amount equal to the Exchangeable Share Price applicable on the last Business Day prior to the Retraction Date (the "Retraction Price") which as set forth in Section 6.4, shall be fully paid and satisfied by the delivery by or on behalf of the Corporation of the Exchangeable Share Consideration representing such holder's Retraction Price. In connection with payment of the Retraction Price, the Corporation shall be entitled to liquidate some of the JAG Common Stock that would otherwise be deliverable as Exchangeable Share Consideration to the particular holder of Exchangeable Shares in order to fund any statutory withholding tax obligation. To effect such redemption, the holder shall present and surrender at the registered office of the Corporation or at any office of the Transfer Agent as may be specified by the Corporation in Schedule A hereto or by notice to the holders of Exchangeable Shares the certificate or certificates representing the Exchangeable Shares which the holder desires to have the Corporation redeem, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under applicable law and the by-laws of the Corporation and such additional documents and instruments as the Transfer Agent may reasonably require, and together with a duly executed statement (the "Retraction Request") in the form of Schedule "A" hereto or in such other form as may be acceptable to the Corporation:

 

(a)

specifying that the holder desires to have all or any number specified therein of the Exchangeable Shares represented by such certificate or certificates (the "Retracted Shares") redeemed by the Corporation;

 

(b)

stating the Business Day on which the holder desires to have the Corporation redeem the Retracted Shares (the "Retraction Date"), provided that the Retraction Date shall be not less than five Business Days nor more than 10 Business Days after the date on which the Retraction Request is received by the Transfer Agent as agent for the Corporation and further provided that, in the event that no such Business Day is specified by the holder in the Retraction Request, the Retraction Date shall be deemed to be the tenth Business Day after the date on which the Retraction Request is received by the Transfer Agent; and

 

(c)

acknowledging the overriding right (the "Retraction Call Right") of JAG or JAG Holdco to purchase all but not less than all the Retracted Shares directly from the holder and that the Retraction Request shall be deemed to be a revocable offer by the holder to sell the Retracted Shares in accordance with the Retraction Call Right on the terms and conditions set out in Section 6.3 below.

 

 

 

20.2                      Subject to the exercise by JAG or JAG Holdco of the Retraction Call Right, upon receipt by the Transfer Agent in the manner specified in Section 6.1 hereof of a certificate or certificates representing the number of Exchangeable Shares which the holder desires to have the Corporation redeem, together with a Retraction Request, and provided that the Retraction Request is not revoked by the holder in the manner specified in Section 6.6, the Corporation shall redeem the Retracted Shares effective at the close of business on the Retraction Date and shall cause to be delivered to such holder the total Retraction Price with respect to such shares in accordance with Section 6.4 hereof. If only a part of the Exchangeable Shares represented by any certificate are redeemed or purchased by JAG or JAG Holdco pursuant to the Retraction Call Right, a new certificate for the balance of such Exchangeable Shares shall be issued to the holder at the expense of the Corporation.

 

20.3                      Upon receipt by the Corporation of a Retraction Request, the Corporation shall immediately notify JAG and JAG Holdco thereof. In order to exercise the Retraction Call Right, JAG or JAG Holdco must notify the Corporation in writing of its determination to do so (the "JAG Call Notice") within two Business Days of such notification. If JAG or JAG Holdco does not so notify the Corporation within such two Business Days, the Corporation will notify the holder as soon as possible thereafter that neither JAG nor JAG Holdco will exercise the Retraction Call Right. If JAG or JAG Holdco delivers the JAG Call Notice within such two Business Days, and provided that the Retraction Request is not revoked by the holder in the manner specified in Section 6.6 hereof, the Retraction Request shall thereupon be considered only to be an offer by the holder to sell the Retracted Shares to JAG or JAG Holdco, as the case may be, in accordance with the Retraction Call Right. In such event, the Corporation shall not redeem the Retracted Shares and JAG or JAG Holdco, as the case may be, shall purchase from such holder and such holder shall sell to JAG or JAG Holdco, as the case may be, on the Retraction Date the Retracted Shares for a purchase price per share (the "Purchase Price") equal to the Retraction Price, which as set forth in Section 6.4 hereof, shall be fully paid and satisfied by the delivery by or on behalf of JAG or JAG Holdco, as the case may be, of the Exchangeable Share Consideration representing such holder's Purchase Price. For the purposes of completing a purchase pursuant to the Retraction Call Right, JAG or JAG Holdco, as the case may be, shall deposit with the Transfer Agent, on or before the Retraction Date, the Exchangeable Share Consideration representing the total Purchase Price. Provided that such Exchangeable Share Consideration has been so deposited with the Transfer Agent, the closing of the purchase and sale of the Retracted Shares pursuant to the Retraction Call Right shall be deemed to have occurred as at the close of business on the Retraction Date and, for greater certainty, no redemption by the Corporation of such Retracted Shares shall take place on the Retraction Date. In the event that JAG or JAG Holdco, as the case may be, does not deliver a JAG Call Notice within two Business Days or otherwise comply with these Exchangeable Share provisions in respect thereto, and provided that Retraction Request is not revoked by the holder in the manner specified in Section 6.6 hereof, the Corporation shall redeem the Retracted Shares on the Retraction Date and in the manner otherwise contemplated in this Article 6.

 

20.4                      Subject to receipt by the Corporation of a Retraction Request, the Corporation, JAG or JAG Holdco, as the case may be, shall deliver or cause the Transfer Agent to deliver to the relevant holder, at the address of the holder recorded in the securities register of the Corporation for the Exchangeable Shares or at the address specified in the holder's Retraction Request or by holding for pick up by the holder at the registered office of the Corporation or at any office of the Transfer Agent as may be specified by the Corporation in Schedule A hereto or by notice to the holders of Exchangeable Shares, the Exchangeable Share Consideration representing the total Retraction Price or the total Purchase Price, as the case may be, and such delivery of such Exchangeable Share Consideration to the Transfer Agent shall be deemed to be payment of and shall satisfy and discharge all liability for the total Retraction Price or total Purchase Price, as the case may be, except as to any cheque included therein which is not paid on due presentation.

 

20.5                      On and after the close of business on the Retraction Date, the holder of the Retracted Shares shall cease to be a holder of such Retracted Shares and shall not be entitled to exercise any of the rights of a holder in respect thereof, other than the right to receive such holder's proportionate part of the total Retraction Price or total Purchase Price, as the case may be, unless upon presentation and surrender of certificates in accordance with the foregoing provisions, payment of the total Retraction Price or the total Purchase Price, as the case may be, shall not be made, in which case the rights of such holder shall remain unaffected until the Exchangeable Share Consideration representing the total Retraction Price or the total Purchase Price, as the case may be, has been paid in the manner hereinbefore provided. On and after the close of business on the Retraction Date, provided that presentation and surrender of certificates and payment of the Exchangeable Share Consideration representing the total Retraction Price or the total Purchase Price, as the case may be, has been made in accordance with the foregoing provisions, the holder of the Retracted Shares so redeemed by the Corporation or purchased by JAG or JAG Holdco shall thereafter be considered and deemed for all purposes to be a holder of the JAG Common Stock delivered to it. Notwithstanding the foregoing, until such payment of such Exchangeable Share Consideration to the holder, the holder shall be deemed to still be a holder of Exchangeable Shares for purposes of all voting rights with respect thereto under the Voting and Exchange Trust Agreement.

 

Notwithstanding any other provision of this Article 6, the Corporation shall not be obligated to redeem Retracted Shares specified by a holder in a Retraction Request to the extent that such redemption of Retracted Shares would be contrary to liquidity or solvency requirements or other provisions of applicable law. If the Corporation believes that on any Retraction Date it would not be permitted by any of such provisions to redeem the Retracted Shares tendered for redemption on such date, and provided that neither JAG nor JAG Holdco shall have exercised the Retraction Call Right with respect to the Retracted Shares, the Corporation shall only be obligated to redeem Retracted Shares specified by a holder in a Retraction Request to the extent of the maximum number that may be so redeemed (rounded down to a whole number of shares) as would not be contrary to such provisions and shall notify the holder at least two Business Days prior to the Retraction Date as to the number of Retracted Shares which will not be redeemed by the Corporation. In any case in which the redemption by the Corporation of Retracted Shares would be contrary to liquidity or solvency requirements or other provisions of applicable law, the Corporation shall redeem Retracted Shares in accordance with Section 6.2 of these share provisions on a pro rata basis and shall issue to each holder of Retracted Shares a new certificate, at the expense of the Corporation, representing the Retracted Shares not redeemed by the Corporation pursuant to Section 6.2 hereof. Provided that the Retraction Request is not revoked by the holder in the manner specified in Section 6.6 hereof, the holder of any such Retracted Shares not redeemed by the Corporation pursuant to Section 6.2 hereof as a result of liquidity or solvency requirements or applicable law shall be deemed by giving the Retraction Request to require JAG or JAG Holdco, as the case may be, to purchase such Retracted Shares from such holder on the Retraction Date or as soon as practicable thereafter on payment by JAG or JAG Holdco, as the case may be, to such holder of the Purchase Price for each such Retracted Share, all as more specifically provided in the Voting and Exchange Trust Agreement, and JAG shall make such purchase.

 

 

20.6                      A holder of Retracted Shares may, by notice in writing given by the holder to the Corporation before the close of business on the Business Day immediately preceding the Retraction Date, withdraw its Retraction Request in which event such Retraction Request shall be null and void and, for greater certainty, the revocable offer constituted by the Retraction Request to sell the Retracted Shares to JAG or JAG Holdco, as the case may be, shall be deemed to have been revoked.

 

 

21.1                      Subject to applicable law, and if neither JAG or JAG Holdco exercises the Redemption Call Right (which, if exercised, shall be binding on the holders of Exchangeable Shares), the Corporation shall on the Automatic Redemption Date redeem the whole of the then outstanding Exchangeable Shares for an amount equal to the Exchangeable Share Price applicable on the last Business Day prior to the Automatic Redemption Date (the "Redemption Price") which, as set forth in Section 7.3 hereof, shall be fully paid and satisfied by the delivery by or on behalf of the Corporation of the Exchangeable Share Consideration representing the total Redemption Price. In connection with payment of the Exchangeable Share Consideration representing the Redemption Price, the Corporation shall be entitled to liquidate some of the JAG Common Stock which would otherwise be deliverable as Exchangeable Share Consideration to the particular holder of Exchangeable Shares in order to fund any statutory withholding tax obligation.

 

21.2                      In any case of a redemption of Exchangeable Shares under this Article 7, the Corporation, or the Transfer Agent on behalf of the Corporation, shall, at least 45 days before an Automatic Redemption Date or before a possible Automatic Redemption Date which may result from a failure of the holders of Exchangeable Shares to take necessary action as described in clause (d) of the definition of Automatic Redemption Date send or cause to be sent to each holder of Exchangeable Shares a notice in writing of the redemption or possible redemption by the Corporation or the purchase by JAG or JAG Holdco under the Redemption Call Right, as the case may be, of the Exchangeable Shares held by such holder. Such notice shall set out the Redemption Price or the Redemption Call Purchase Price, as the case may be, the Automatic Redemption Date and, if applicable, particulars of the Redemption Call Right. In the case of any notice given in connection with a possible Automatic Redemption Date, such notice will be given contingently and will be withdrawn if the contingency does not occur.

 

21.3                      On or after the Automatic Redemption Date, and subject to the exercise by JAG or JAG Holdco of the Redemption Call Right, the Corporation shall cause to be delivered to the holders of the Exchangeable Shares to be redeemed the Exchangeable Share Consideration representing the Redemption Price for each such Exchangeable Share upon presentation and surrender at any office of the Transfer Agent as may be specified by the Corporation in such notice of the certificates representing such Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under applicable law and the by-laws of the Corporation and such additional documents and instruments as the Transfer Agent may reasonably require. Payment of the total Redemption Price for such Exchangeable Shares shall be made by delivery to each holder, at the address of the holder recorded in the securities register or at any office of the Transfer Agent as may be specified by the Corporation in such notice, on behalf of the Corporation, of the Exchangeable Share Consideration representing the total Redemption Price. On and after the Automatic Redemption Date, the holders of the Exchangeable Shares called for redemption shall cease to be holders of such Exchangeable Shares and shall not be entitled to exercise any of the rights of holders in respect thereof, other than the right to receive their proportionate part of the Exchangeable Share Consideration representing the total Redemption Price, unless payment of the Exchangeable Share Consideration representing the total Redemption Price for such Exchangeable Shares shall not be made upon presentation and surrender of certificates in accordance with the foregoing provisions, in which case the rights of the holders shall remain unaffected until the Exchangeable Share Consideration representing the total Redemption Price has been paid in the manner hereinbefore provided. The Corporation shall have the right at any time after the sending of notice of its intention to redeem the Exchangeable Shares as aforesaid to deposit or cause to be deposited the Exchangeable Share Consideration with respect to the Exchangeable Shares so called for redemption, or of such of the said Exchangeable Shares represented by certificates that have not at the date of such deposit been surrendered by the holders thereof in connection with such redemption, in a custodial account or for safe keeping, in the case of non-cash items, with any chartered bank or trust company in Canada named in such notice. Upon the later of such deposit being made and the Automatic Redemption Date, the Exchangeable Shares in respect whereof such deposit shall have been made shall be redeemed and the rights of the holders thereof after such deposit or Automatic Redemption Date, as the case may be, shall be limited to receiving their proportionate part of the Exchangeable Share Consideration representing the total Redemption Price for such Exchangeable Shares so deposited, against presentation and surrender of the said certificates held by them, respectively, in accordance with the foregoing provisions. Upon such payment or deposit of such Exchangeable Share Consideration, the holders of the Exchangeable Shares shall thereafter be considered and deemed for all purposes to be holders of the JAG Common Stock delivered to them. Notwithstanding the foregoing, until such payment or deposit of such Exchangeable Share Consideration is made, the holder shall be deemed to still be a holder of Exchangeable Shares for purposes of all voting rights with respect thereto under the Voting and Exchange Trust Agreement.

 

21.4                      If JAG or JAG Holdco exercises the Redemption Call Right, each holder of Exchangeable Shares shall be obligated to sell all the Exchangeable Shares held by such holder to JAG or JAG Holdco, as the case may be, on the Automatic Redemption Date against payment to such holder by JAG of the Exchangeable Share Consideration representing the Redemption Call Purchase Price for each such share.

 

 

 

22.1                      Upon and subject to the terms and conditions contained in these share provisions and the Voting and Exchange Trust Agreement:

 

(a)

a holder of Exchangeable Shares shall have the right (the "Exchange Put Right") at any time to require JAG to purchase all or any part of the Exchangeable Shares of the holder, provided that, upon the exercise of such right, JAG may, at its option, cause JAG Holdco to purchase such shares; and

 

(b)

upon the exercise by the holder of the Exchange Put Right the holder shall be required to sell to JAG or JAG Holdco, as the case may be, and JAG shall be required to purchase, or cause JAG Holdco to purchase, from the holder, that number of Exchangeable Shares in respect of which the Exchange Put Right is exercised, in consideration of the payment by JAG or JAG Holdco, as the case may be, of the Exchangeable Share Price applicable thereto (which shall be the Exchangeable Share Price applicable on the last Business Day prior to receipt of notice required under Section 8.2 hereof) and delivery by or on behalf of JAG or JAG Holdco, as the case may be, of the Exchangeable Share Consideration representing the total applicable Exchangeable Share Price. In connection with payment of the Exchangeable Share Consideration, the Corporation shall be entitled to liquidate some of the JAG Common Stock which would otherwise be deliverable to the particular holder of Exchangeable Shares in order to fund any statutory withholding tax obligation.

 

 

 

22.2                      The Exchange Put Right provided in Section 8.1 hereof and in Article 5 of the Voting and Exchange Trust Agreement may be exercised at any time by notice in writing given by the holder to and received by the Trustee (the date of such receipt, the "Exchange Put Date") and accompanied by presentation and surrender of the certificates representing such Exchangeable Shares, together with such documents and instruments as may be required to effect a transfer of Exchangeable Shares under the Act and the by-laws of the Corporation and such additional documents and instruments as the Trustee may reasonably require, at the principal transfer offices in Toronto, Ontario of the Trustee, or at such other office or offices of the Trustee or of other persons designated by the Trustee for that purpose as may from time to time be maintained by the Trustee for that purpose. Such notice may be (i) in the form of the panel, if any, on the certificates representing Exchangeable Shares, (ii) in the form of the notice and election contained in any letter of transmittal distributed or made available by the Corporation for that purpose, or (iii) in other form satisfactory to the Trustee (or such other persons aforesaid), shall stipulate the number of Exchangeable Shares in respect of which the right is exercised (which may not exceed the number of shares represented by certificates surrendered to the Trustee), shall be irrevocable unless the exchange is not completed in accordance herewith and with the Voting and Exchange Trust Agreement and shall constitute the holder's authorization to the Trustee (and such other persons aforesaid) to effect the exchange on behalf of the holder.

 

22.3                      The completion of the sale and purchase referred to in Section 8.1 hereof shall be required to occur, and JAG shall be required to take all actions on its part necessary to permit it to occur, not later than the close of business on the third Business Day following the Exchange Put Date.

 

22.4                      The surrender by the holder of Exchangeable Shares under Section 8.2 hereof shall constitute the representation, warranty and covenant of the holder that the Exchangeable Shares so surrendered are sold free and clear of any lien, encumbrance, security interest or adverse claim or interest.

 

22.5                      If a part only of the Exchangeable Shares represented by any certificate are to be sold and purchased pursuant to the exercise of the Exchange Put Right, a new certificate for the balance of such Exchangeable Shares shall be issued to the holder at the expense of the Corporation.

 

22.6                      Upon receipt by the Trustee of the notice, certificates and other documents or instruments required by Section 8.2, the Trustee shall deliver or cause to be delivered, on behalf of JAG or JAG Holdco, as the case may be, and subject to receipt by the Trustee from JAG or JAG Holdco, as the case may be, of the applicable Exchangeable Share Consideration, to the relevant holder at the address of the holder specified in the notice or by holding for pick-up by the holder at any office of the Trustee (or other persons aforesaid) maintained for that purpose, the Exchangeable Share Consideration representing the total applicable Exchangeable Share Price, within the time stipulated in Section 8.3 hereof. Delivery by JAG or JAG Holdco, as the case may be, to the Trustee of such Exchangeable Share Consideration shall be deemed to be payment of and shall satisfy and discharge all liability for the total applicable Exchangeable Share Price, except as to any cheque included therein which is not paid on due presentation.

 

 

22.7                      On and after the close of business on the Exchange Put Date, the holder of the Exchangeable Shares in respect of which the Exchange Put Right is exercised shall not be entitled to exercise any of the rights of a holder in respect thereof, other than the right to receive the total applicable Exchangeable Share Price, unless upon presentation and surrender of certificates in accordance with the foregoing provisions, payment of the Exchangeable Share Consideration shall not be made, in which case the rights of such holder shall remain unaffected until such payment has been made. On and after the close of business on the Exchange Put Date provided that presentation and surrender of certificates and payment of the Exchangeable Share Consideration has been made in accordance with the foregoing provisions, the holder of the Exchangeable Shares so purchased by JAG or JAG Holdco, as the case may be, shall thereafter be considered and deemed for all purposes to be a holder of the JAG Common Stock delivered to it. Notwithstanding the foregoing, until payment of the Exchangeable Share Consideration to the holder, the holder shall be deemed to still be a holder of Exchangeable Shares for purposes of all voting rights with respect thereto under the Voting and Exchange Trust Agreement.

 

 

23.1                      Except as required by applicable law and the provisions hereof, the holders of the Exchangeable Shares shall not be entitled as such to receive notice of or to attend any meeting of the shareholders of the Corporation or to vote at any such meeting.

 

 

24.1                      The rights, privileges, restrictions and conditions attaching to the Exchangeable Shares may be added to, changed or removed but, except as hereinafter provided, only with the approval of the holders of the Exchangeable Shares given as hereinafter specified.

 

24.2                      Any approval given by the holders of the Exchangeable Shares to add to, change or remove any right, privilege, restriction or condition attaching to the Exchangeable Shares or any other matter requiring the approval or consent of the holders of the Exchangeable Shares shall be deemed to have been sufficiently given if it shall have been given in accordance with applicable law subject to a minimum requirement that such approval be evidenced by resolution passed by not less than 66 2/3% of the votes cast on such resolution by persons represented in person or by proxy at a meeting of holders of Exchangeable Shares (excluding Exchangeable Shares beneficially owned by JAG or its Subsidiaries) duly called and held at which the holders of at least 20% of the outstanding Exchangeable Shares at that time are present or represented by proxy. If at any such meeting the holders of at least 20% of the outstanding Exchangeable Shares at that time are not present or represented by proxy within one-half hour after the time appointed for such meeting, then the meeting shall be adjourned to such date not less than 10 days thereafter and to such time and place as may be designated by the Chairman of such meeting. At such adjourned meeting, the holders of Exchangeable Shares present or represented by proxy thereat may transact the business for which the meeting was originally called and a resolution passed thereat by the affirmative vote of not less than 66 2/3% of the votes cast on such resolution by persons represented in person or by proxy at such meeting (excluding Exchangeable Shares beneficially owned by JAG or its Subsidiaries) shall constitute the approval or consent of the holders of the Exchangeable Shares. For the purposes of this Section, any spoiled votes, illegible votes, defective votes and abstinences shall be deemed to be votes not cast.

 

 

 

25.1

(a)

Each holder of an Exchangeable Share acknowledges that the Support Agreement provides, in part, that JAG will not:

 

(i)

issue or distribute shares of JAG Common Stock (or securities exchangeable for or convertible into or carrying rights to acquire shares of JAG Common Stock) to the holders of all or substantially all of the then outstanding shares of JAG Common Stock by way of stock dividend or other distribution; or

 

(ii)

issue or distribute rights, options or warrants to the holders of all or substantially all of the then outstanding shares of JAG Common Stock entitling them to subscribe for or to purchase shares of JAG Common Stock (or securities exchangeable for or convertible into or carrying rights to acquire shares of JAG Common Stock); or

 

(iii)

issue or distribute to the holders of all or substantially all of the then outstanding shares of JAG Common Stock (A) shares or securities of JAG of any class other than JAG Common Stock (other than shares convertible into or exchangeable for or carrying rights to acquire shares of JAG Common Stock), (B) rights, options or warrants other than those referred to in subsection 11.1 (a) (ii) above, (C) evidences of indebtedness of JAG or (D) assets of JAG;

 

unless

 

(iv)

one or both of JAG and the Corporation is permitted under applicable law to issue or distribute the economic equivalent on a per share basis of such rights, options, warrants, securities, shares, evidences of indebtedness or other assets to the holders of the Exchangeable Shares; and

 

(v)

one or both of JAG and the Corporation shall issue or distribute the economic equivalent on a per share basis of such rights, options, warrants, securities, shares, evidences of indebtedness or other assets simultaneously to the holders of the Exchangeable Shares.

 

(b)

Each holder of an Exchangeable Share acknowledges that the Support Agreement further provides, in part, that JAG will not:

 

(i)

subdivide, redivide or change the then outstanding shares of JAG Common Stock into a greater number of shares of JAG Common Stock; or

 

 

 

(ii)

reduce, combine or consolidate or change the then outstanding shares of JAG Common Stock into a lesser number of shares of JAG Common Stock; or

 

(iii)

reclassify or otherwise change the shares of JAG Common Stock or effect an amalgamation, merger, reorganization or other transaction involving or affecting the shares of JAG Common Stock;

 

unless

 

(iv)

the Corporation is permitted under applicable law to simultaneously make the same or an economically equivalent change to, or in the rights of  the holders of, the Exchangeable Shares; and

 

(v)

the same or an economically equivalent change is simultaneously made to, or in the rights of the holders of, the Exchangeable Shares.

 

The Support Agreement further provides, in part, that, with the exception of certain ministerial amendments, the aforesaid provisions of the Support Agreement shall not be changed without the approval of the holders of the Exchangeable Shares given in accordance with Article 10 of these share provisions.

 

 

26.1                      The Corporation will take all such actions and do all such things as shall be necessary or advisable to perform and comply with and to ensure performance and compliance by JAG with all provisions of the Support Agreement, the Voting Trust and Exchange Agreement and JAG's Certificate of Incorporation applicable to the Corporation and JAG, respectively, in accordance with the terms thereof including, without limitation, taking all such actions and doing all such things as shall be necessary or advisable to enforce to the fullest extent possible for the direct benefit of the Corporation all rights and benefits in favour of the Corporation under or pursuant thereto.

 

26.2                      The Corporation shall not propose, agree to or otherwise give effect to any amendment to, or waiver or forgiveness of its rights or obligations under, the Support Agreement, the Voting Trust and Exchange Agreement or JAG's Certificate of Incorporation without the approval of the holders of the Exchangeable Shares given in accordance with Section 10.2 hereof other than such amendments, waivers and/or forgiveness as may be necessary or advisable for the purpose of:

 

(a)

adding to the covenants of the other party or parties to such agreement for the protection of the Corporation or the holders of Exchangeable Shares; or

 

(b)

making such provisions or modifications not inconsistent with such agreement or certificate as may be necessary or desirable with respect to matters or questions arising thereunder which, in the opinion of the Board of Directors, it may be expedient to make, provided that the Board of Directors shall be of the opinion, after consultation with counsel, that such provisions and modifications will not be prejudicial to the interests of the holders of the Exchangeable Shares; or

 

 

 

(c)

making such changes in or corrections to such agreement or certificate which, on the advice of counsel to the Corporation, are required for the purpose of curing or correcting any ambiguity or defect or inconsistent provision or clerical omission or mistake or manifest error contained therein, provided that the Board of Directors shall be of the opinion, after consultation with counsel, that such changes or corrections will not be prejudicial to the interests of the holders of the Exchangeable Shares.

 

 

27.1                      The certificates evidencing the Exchangeable Shares shall contain or have affixed thereto a legend, in form and on terms approved by the Board of Directors, with respect to the Support Agreement, the provisions of the Articles of the Corporation relating to the Liquidation Call Right, the Retraction Call Right and the Redemption Call Right, and the Voting and Exchange Trust Agreement (including the provisions with respect to the voting rights and exchange provisions thereunder).

 

 

28.1                      Any notice, request or other communication to be given to the Corporation by a holder of Exchangeable Shares shall be in writing and shall be valid and effective if given by mail (postage prepaid) or by telecopy or by delivery to the registered office of the Corporation and addressed to the attention of the President. Any such notice, request or other communication, if given by mail, telecopy or delivery, shall only be deemed to have been given and received upon actual receipt thereof by the Corporation.

 

28.2                      Any presentation and surrender by a holder of Exchangeable Shares to the Corporation or the Transfer Agent of certificates representing Exchangeable Shares in connection with the liquidation, dissolution or winding-up of the Corporation or the retraction, redemption or exchange of Exchangeable Shares shall be made by registered mail (postage prepaid) or by delivery to such office of the Transfer Agent as may be specified by the Corporation, addressed to the attention of the President of the Corporation. Any such presentation and surrender of certificates shall only be deemed to have been made and to be effective upon actual receipt thereof by the Transfer Agent, and the method of any such presentation and surrender of certificates shall be at the sole risk of the holder.

 

28.3                      Any notice, request or other communication to be given to a holder of Exchangeable Shares by or on behalf of the Corporation shall be in writing and shall be valid and effective if given by mail (postage prepaid) or by delivery to the address of the holder recorded in the securities register of the Corporation or, in the event of the address of any such holder not being so recorded, then at the last address of such holder known to the Corporation. Any such notice, request or other communication, if given by mail, shall be deemed to have been given and received on the fifth Business Day following the date of mailing and, if given by delivery, shall be deemed to have been given and received on the date of delivery. Accidental failure or omission to give any notice, request or other communication to one or more holders of Exchangeable Shares shall not invalidate or otherwise alter or affect any action or proceeding to be or intended to be taken by the Corporation.

 

 

28.4                      For greater certainty, the Corporation shall not be required for any purpose under these share provisions to recognize or take account of persons who are not so recorded in such securities register.

 

28.5                      All Exchangeable Shares acquired by the Corporation upon the redemption or retraction thereof shall be cancelled.

 

28.6                      For greater certainty, any payments to the holders of Exchangeable Shares shall be net of applicable taxes, if any, and the payor shall not be obliged to gross up or increase the amount of such payment which would otherwise be made to take into account such taxes. Any such taxes which have been withheld or deducted by the payor thereof shall be remitted to the applicable tax authority within the time required for such remittance.

 

 

To:                        CardioGenics ExchangeCo Inc. (the "Corporation")

 

And To:                JAG Media Holdings, Inc. ("JAG")

 

And To:                CardioGenics CallCo Inc. ("JAG Holdco")

 

This request is given pursuant to Article 6 of the provisions (the "Share Provisions") attaching to the Exchangeable Shares of the Corporation and all capitalized words and expressions used in this request which are defined in the Share Provisions have the meaning attributed to such words and expressions in such Share Provisions.

 

The undersigned hereby notifies the Corporation that, subject to the Retraction Call Right referred to below, the undersigned requests the Corporation to redeem in accordance with Article 6 of the Share Provisions:

 

[__]:

all share(s) represented by the accompanying certificate(s); or

 

[__]:

__________ share(s) only.

 

The undersigned hereby notifies the Corporation that the Retraction Date shall be _____________________.

 

NOTE:

The Retraction Date must be a Business Day and must not be less than five Business Days nor more than 10 Business Days after the date upon which this notice and the accompanying shares are received at any office of the Transfer Agent as may be specified in this Retraction Request or as may be specified by the Corporation by notice to the holders of the Exchangeable Shares. In the event that no such Business Day is correctly specified above, the Retraction Date shall be deemed to be the tenth Business Day after the date on which this request is received by the Corporation.

 

The undersigned acknowledges the Retraction Call Right of JAG and JAG Holdco (as defined in the Share Provisions) to purchase all but not less than all the Retracted Shares from the undersigned and that this request shall be deemed to be a revocable offer by the undersigned to sell the Retracted Shares to JAG or JAG Holdco, as the case may be, in accordance with the Retraction Call Right on the Retraction Date for the Retraction Price and on the other terms and conditions set out in Section 6.3 of the Share Provisions. If neither JAG or JAG Holdco, as the case may be, determines to exercise the Retraction Call Right, the Corporation will notify the undersigned of such fact as soon as possible. This retraction request, and offer to sell the Retracted Shares to JAG or JAG Holdco, as the case may be, may be revoked and withdrawn by the undersigned by notice in writing given to the Corporation at any time before the close of business on the Business Date immediately preceding the Retraction Date.

 

 

The undersigned acknowledges that if, as a result of liquidity or solvency provisions of applicable law, the Corporation is unable to redeem all Retracted Shares, the undersigned will be deemed to have exercised the Exchange Right (as defined in the Voting and Exchange Trust Agreement) so as to require JAG to purchase, or cause JAG Holdco to purchase, the unredeemed Retracted Shares.

 

The undersigned hereby represents and warrants to the Corporation and JAG that the undersigned has good title to, and owns, the share(s) represented by the accompanying certificate free and clear of all liens, claims, encumbrances, security interests and adverse claims or interests.

 

[__]

Please check box if the legal or beneficial owner of the Retracted Shares is a non-resident of Canada.

 

[__]

Please check box if the securities and any cheque(s) or other non-cash assets resulting from the retraction of the Retracted Shares are to be held for pick-up by the shareholder at the principal transfer offices of Equity Transfer & Trust Company (the "Transfer Agent") in Toronto, Ontario, failing which the securities and any cheque(s) or other non-cash assets will be delivered to the shareholder in accordance with the share provisions.

 

NOTE:

This panel must be completed and the accompanying share certificate(s), together with such additional documents as the Transfer Agent may require, must be deposited with the Transfer Agent at its principal transfer offices in Toronto, Ontario. The securities and any cheque(s) or other non-cash assets resulting from the retraction or purchase of the Retracted Shares will be issued and registered in, and made payable to, or transferred into, respectively, the name of the shareholder as it appears on the register of the Corporation and the securities, cheque(s) and other non-cash assets resulting from such retraction or purchase will be delivered to the shareholder in accordance with the Share Provisions.

 

 

 

NOTE:

If this retraction request is for less than all of the share(s) represented by the accompanying certificate, a certificate representing the remaining shares of the Corporation will be issued and registered in the name of the shareholder as it appears on the register of the Corporation or its lawful transferee.

 

 

 

 

 

The designation of the Series 1 Preferred Stock including the powers, preferences, rights, qualifications, limitations and restrictions are as follows:

1. INITIAL SERIES OF PREFERRED STOCK. The Corporation’s initial series of preferred stock shall be designated as “Series 1 Preferred Stock” and the initial number of shares constituting such series shall be one (1).

2. DIVIDENDS. Neither the holder nor, if different, the owner of the Series 1 Preferred Stock shall be entitled to receive dividends in its capacity as holder or owner thereof.

3. VOTING RIGHTS. Subject to paragraph 7 hereof, the holder of record of the Series 1 Preferred Stock shall be entitled to all of the voting rights, including the right to vote in person or by proxy, of the Series 1 Preferred Stock on any matters, questions, proposals or propositions whatsoever that may properly come before the shareholders of the Corporation at a meeting of the shareholders or in connection with a consent of the shareholders.

4. LIQUIDATION PREFERENCE. Upon any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation, the holder of the Series 1 Preferred Stock shall be entitled to receive out of the assets of the Corporation available for distribution to the shareholders, an amount equal to $0.01 before any distribution is made on the common stock of the Corporation or any other stock ranking junior to the Series 1 Preferred Stock as to distribution of assets upon liquidation, dissolution or winding-up.

5. RANKING. The Series 1 Preferred Stock shall, with respect to rights on liquidation, winding up and dissolution, rank (i) senior to all classes of common stock of the Corporation and (ii) junior to any other class or series of capital stock of the Corporation.

6. REDEMPTION. The Series 1 Preferred Stock shall not be subject to redemption, except that at such time as no exchangeable shares (“Exchangeable Shares”) of CardioGenics Exchangeco Inc. (other than Exchangeable Shares owned by the Corporation and its affiliates) shall be outstanding, and no shares of stock, debt, options or other agreements which could give rise to the issuance of any Exchangeable Shares to any person (other than the Corporation and its affiliates) shall exist, the Series 1 Preferred Stock shall automatically be redeemed and canceled, for an amount equal to $0.01 per share due and payable upon such redemption. Upon any such redemption or other purchase or acquisition of the Series 1 Preferred Stock by the Corporation, the Series 1 Preferred Stock shall be deemed retired and may not be reissued.

 

7. OTHER PROVISIONS. Pursuant to the terms of the certain Voting and Exchange Trust Agreement dated July 6, 2009 by and among the Corporation, CardioGenics Exchangeco Inc. and WeirFoulds LLP, as such agreement may be amended, modified or supplemented from time to time (the “Trust Agreement”):

 

 

(a) during the term of the Trust Agreement, the Corporation may not, without the consent of the holders of the Exchangeable Shares (as defined in the Trust Agreement), issue any shares of its Series I Preferred Stock in addition to the one (1) share of Series 1 Preferred Stock issued to the trustee pursuant to the Trust Agreement;

 

(b) the Series 1 Preferred Stock entitles the holder of record to a number of votes at meetings of holders of common shares of the Corporation equal to the number of Exchangeable Shares outstanding from time to time (other than the Exchangeable Shares held by the Corporation and its affiliates);

 

(c) the Trustee (as defined in the Trust Agreement) shall exercise the votes held by the Series 1 Preferred Stock pursuant to and in accordance with the Trust Agreement;

 

(d) the voting rights attached to the Series 1 Preferred Stock shall terminate pursuant to and in accordance with the Trust Agreement; and

 

(e) the powers, designations, preferences and relative, participating, optional and other special rights, and the qualifications, limitations and restrictions of such Series 1 Preferred Stock shall be otherwise provided in the Trust Agreement.