Form 53 - Trust agreement (contingency fund) [F - Rescinded]

FORM 53

SECURITIES ACT

TRUST AGREEMENT

THIS AGREEMENT, made as of the __________________ day of __________________

BETWEEN _________________________________________

a company incorporated under the laws of _________________________________________

OF THE FIRST PART

AND ______________________________________________
(hereinafter called the "Trustee")

OF THE SECOND PART

WHEREAS the Executive Director for the British Columbia Securities Commission (the "Executive Director") has established certain requirements for certain classes of registrant coming under his direct supervision, for the protection of clients of such registrants;

AND WHEREAS one of such requirements is that a fund be established for the protection of certain of such clients in the event of a default of a registrant;

AND WHEREAS the Registrant is one of a number of such registrants or proposed registrants who are entering or who may hereafter enter into separate agreements with the Trustee in the form hereof in order to establish such a fund;

AND WHEREAS all necessary proceedings have been taken and conditions complied with by the Registrant to make this agreement and the execution thereof legal and valid and in accordance with the laws relating to the Registrant and with all other laws and regulations in that behalf (where applicable, i.e., corporations);

AND WHEREAS the foregoing recitals are made as representations and statements of fact by the Registrant and not by the Trustee.

NOW THEREFORE, the parties hereto do mutually covenant and agree as follows:

1. ESTABLISHMENT OF TRUST

The Registrant hereby assigns, transfers and delivers unto and in favour of the Trustee the sum of _____________________ dollars, receipt whereof is hereby acknowledged by the Trustee, to be held by the Trustee (together with such other sums as the Trustee may from time to time receive from the Registrant or others for the purpose and in accordance with the provisions hereof) upon the trusts hereof and in accordance with the terms and conditions of this agreement.

2. CONTINGENCY PLAN AND TRUST

The Registrant shall participate in the contingency trust plan (hereinafter called the "Plan") and the contingency trust fund (hereinafter called the "Trust Fund") established hereby and by other existing or future agreements between registrants or proposed registrants and the Trustee in the same or substantially similar form, and the instrument entitled "Terms of Contingency Trust Plan" annexed as Schedule A hereto, together with this agreement, constitute the terms and conditions of the Plan and Trust Fund and each of the Registrant and Trustee covenants and agrees with the other to be bound by and perform and observe the obligations and conditions on its part to be observed or performed hereunder.

3. SITUS OF TRUST

The situs of the trust established hereunder shall be at all times in the Province of British Columbia, and the property and interest comprising such trust shall at all times be held by the Trustee from time to time in the Province of British Columbia.

4. PROOF OF EXECUTIVE DIRECTOR'S APPROVAL

IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and seals at the _____________________ of _____________________, in the Province of British Columbia, the day and year first above written.

Witness the corporate seal of

________________________________________

per ________________________________________

per ________________________________________

Witness the corporate seal of

________________________________________

per ________________________________________

per ________________________________________

 

 

SCHEDULE A - TERMS OF CONTINGENCY TRUST PLAN

ARTICLE I - INTERPRETATION

__________________________________________________________

Section 1.01. In this agreement, unless there is something in the subject matter inconsistent therewith,

Section 1.02. The headings of all the articles and sections hereof are inserted for convenience of reference only and shall not affect the construction or interpretation of this agreement.

Section 1.03. Whether there is a reference herein to the exercise of a discretion by either the Trustee or the Executive Director, such exercise shall be sole, absolute, and uncontrolled, and in no circumstances shall any exercise be subject to any right in respect thereof of any person for any reason whatsoever. Any consent or approval of the Executive Director may be granted or refused and any requirement may be made in his discretion as aforesaid, and any determination of the Executive Director shall constitute a binding and final exercise of his discretion.

Section 1.04. This agreement shall be governed by and construed in accordance with the laws of the Province of British Columbia.

ARTICLE II - ESTABLISHMENT OF CONTINGENCY TRUST FUND

Section 2.01. The Plan and Trust Fund hereby established shall be known and described as the Contingency Trust Plan (hereinafter referred to as the "Plan").

Section 2.02. The Plan shall be established as of the Effective Date, and this agreement shall be effective from such date in respect of Participants entering into an agreement in form the same or substantially similar to this agreement on or before such date and, in respect of Participants entering into such an agreement after such date, on the date of entering into thereof.

ARTICLE III - PAYMENTS FROM PARTICIPANTS

Section 3.01. Each Participant who becomes such prior to the Effective Date shall, subject to the provisions of Section 3.10, make an initial payment of $ __________ to the Trustee in respect of the Plan, on or before the Effective Date, and each Participant who becomes such after the Effective Date shall make such initial payment before or at the time of becoming a Participant; provided that with respect to Participants who become such after the Effective Date, the Executive Director may require such additional payment or payments so that the Withdrawal Credits of all Participants are equal in amount.

Section 3.02. Save as hereinafter provided, at any time when the capital of the Trust Fund is or would be reduced by reason of the payment or proposed payment by the Trustee of any claim, each Participant (except the person in respect of whose Default such claim was made) shall pay into the Trust Fund his pro rata share of such claim at the time or times and in the manner required by the Trustee. For the purposes of this Section 3.02 such "pro rata share" shall be determined as follows:

Section 3.03. The Participant in respect of whose Default any claims are paid shall be liable to pay and shall pay to the Trustee the aggregate amount of all such claims paid, so that at all times the Withdrawal Credit of such Participant is equal to not less than $__________ or such other amount as may from time to time be required by the Executive Director under Section 3.10 hereof. This liability of any such Participant to the Trustee under this Section 3.03 shall not adversely affect the right of the Trustee to require any assignment of and to enforce any such claim and any security or guarantee therefor, provided that any amount so recovered shall be added to the Withdrawal Credit of such Participant and from part of the Trust Fund and shall reduce by such amount the liability, if any, of such Participant under this Section 3.03.

Section 3.04. Notwithstanding the fact that a Participant shall be in Default hereunder or shall have failed to perform or observe any obligation or condition hereof on his part to be performed or observed, such Participant shall remain liable in respect of his pro rata share under the provisions of Section 3.02 hereof.

Section 3.05. In the event one or more Participants shall fail to pay any pro rata share or other amount required to be paid to the Trustee pursuant to Section 3.02 hereof, such deficiency shall be, at the discretion of the Trustee, added on a pro rata basis among the remaining Participants required to pay such a pro rata share.

Section 3.06. Subject only to the provisions of Section 3.07 hereof, and without limiting the generality of any other provisions of this agreement, the Trustee may at any time and from time to time require an additional payment into the Trust Fund from a Participant at any time when the Withdrawal Credit of such Participant is for any reason whatsoever less than $__________ or such greater or lesser amount as the Executive Director may from time to time require under Section 3.10 hereof, provided that the Trustee need not require an additional payment otherwise required hereunder, to the extent such additional payment would result in a Withdrawal Credit for a Participant in excess of $__________ or such greater or lesser amount as aforesaid.

Section 3.07. Notwithstanding any other provision hereof, other than Section 3.10 hereof which shall not be affected by this Section 3.07, the obligation hereunder of a Participant to make additional payments into the Trust Fund shall be limited in any one period of 365 days to a maximum amount of $__________.

Section 3.08. The Trustee may at any time and from time to time retain and set off against any unpaid or unperformed liability or obligation hereunder of any Participant any any amount in its possession howsoever obtained of which the Participant would, but for this provision, be entitled to receive payment.

Section 3.09. A Participant shall not be obligated to make any payment in addition to the initial payment under Section 3.01 unless and until he shall have received a notice of the amount to be paid from the Trustee, but shall make any such payment within 60 days after receipt of such notice, and thereafter shall be liable to pay interest at the rate of 10 per cent per annum compounded annually on the amount unpaid from time to time.

Section 3.10. The Executive Director may at any time and from time to time require that the amount of the Withdrawal Credit of any Participant shall be greater than or less than $__________, in which event the Trustee shall, within such period as the Executive Director may require, demand such additional payments from Participants as may be thereby required to eliminate any Withdrawal Credit deficiency, and the Participants shall pay such amounts forthwith to the Trustee hereunder, or, as the case may be, pay such amounts to Participants as may be thereby required to eliminate any Withdrawal Credit excess.

Section 3.11. Wherever a Participant has failed to pay to the Trustee any amount required to be paid hereunder, as a result of which other Participants have made additional payments hereunder, and amounts are subsequently paid to or recovered by the Trustee in respect of the amounts previously not so paid by such Participant, such amounts subsequently paid shall be credited on a fair proportionate basis, having regard to all the facts among the Participants who have made such additional payments and shall reduce the amounts otherwise required to be paid by such Participant hereunder; provided further that amounts subsequently so paid shall, where amounts in respect thereof were due but not paid by other Participants, reduced the liability of such Participants on a fair proportionate basis having regard to all the facts. The Trustee shall determine what is a fair proportionate basis as aforesaid, and its decision shall be final and binding.

ARTICLE IV - TRUST FUND

Section 4.01. The Trustee shall hold all money and other property, if any, received by it from Participants or others pursuant hereto or in respect hereof and all income on any such money or from any such property, and all rights hereby conferred, in trust for the benefit of such of the holders of claims from time to time as the Trustee may from time to time in its discretion appoint, and subject thereto and hereto, for the benefit of the Participants, and all such money, property, and income thereon or therefrom shall constitute a trust fund to be dealt with and invested or distributed in accordance with the terms of this agreement. The capital of the Trust Fund shall mean all amounts held by the trustee as part of the Trust Fund other than amounts designated from time to time by the Trustee in its discretion as payable to a client, Participant, or other person hereunder.

Section 4.02. The Trustee shall maintain a record of amounts received from, on behalf of, or in respect of each Participant and shall distinguish in such record the section hereof pursuant to which each such amount was received and shall show in such record the Withdrawal Credit account from time to time of each Participant. All amounts received by the Trustee into the Trust Fund shall be credited to a Participant or Participants, and the Trustee's decision in respect of such crediting shall be final and conclusive, provided that the Trustee may in it discretion change any such crediting from time to time as it sees fit. No crediting of an amount to a Participant shall, as such, give such Participant any rights thereto, and a Participant shall only be entitled to receive any amounts from the Trust Fund in accordance with the specific provisions hereof respecting payments to a Participant.

Section 4.03. The Trustee shall keep the Trust Fund invested in Approved Securities.

Section 4.04. The Trustee shall collect and receive all income on or from the Trust Fund and shall, after deducting therefrom the fees, costs, charges, and expenses referred to in section 7.01 hereof, and subject as hereinafter provided, credit all of the income of the Trust Fund to the capital of the Trust Fund, in which event no part of such income so credited shall be paid to any of the Participants.

Section 4.05. Notwithstanding the provisions of Section 4.04, the Trustee shall from time to time, upon receipt of a Participants' Request, subject to the consent of the Executive Director, distribute the balance of the income as referred to in Section 4.04 to the Participants. From and after the receipt of such Request, income on or from the Trust Fund received during the period ended on the last day of September in each year (which date is herein referred to as the "Determination Date") shall, subject to the provisions of Section 4.06 hereof, be distributed annually on or before the last day of November in each year (which date is herein referred to as the "Distribution Date"). Each Participant having a Withdrawal Credit on the Determination Date shall, subject as hereinafter provided, receive a pro rata portion of the income distributed in respect of the period ended on such Determination Date. The Trustee shall determine in its discretion such reasonable pro rata portions of income to each Participant in respect of the distribution based on the amount of the withdrawal Credit of each Participant from time to time during such period and the portion or portions of the 12-month period covered thereby and shall forward to such Participant by first-class mail on or before the Distribution Date a cheque for the pro rata portion of income so determined. No Participant shall be entitled to a distribution of income hereunder if on the Distribution Day any claim has been made in respect of such Participant or there has been a failure by the Participant to perform or observe any obligation or condition hereunder on its part to be performed or observed. If and so long as any such claim exists and has not been paid by the Participant, or any such failure continues and has not been rectified by the Participant, such income and all other income thereafter accruing to such Participant shall be added to such Participant's Withdrawal Credit, and, where applicable, shall be treated by the Trustee in its discretion as discharging the liability to make a payment or payments under Article III hereof, in which event the amount so credited shall form part of the capital of the Trust Fund. The Trustee may pay any income tax or other tax that it honestly and in good faith believes to be payable in respect of any receipt, crediting, or payment or any such income to or in respect of a Participant, and any such payment shall constitute a discharge pro tanto of any obligation of the Trustee hereunder in respect of the payment or crediting of such income to such Participant.

Section 4.06. Notwithstanding the provisions of Section 4.05 hereof, the Trustee shall, if so required by the Executive Director or a Participants' Request, apply all or any part of the income Trust Fund to acquire such insurance payable to the Trustee having such coverage, and with such limits, deductibles, and other terms as the Trustee shall see fit, to insure against all or any part of the obligation of Participants hereunder to make payments into the Trust Fund and to apply any proceeds thereunder in discharge pro tanto of any such obligation, provided that no such application of proceeds in respect of any such obligation shall be treated as a payment by a Participant for the purpose of limiting the obligation of a Participant to make additional payments into the Trust Fund in any one period of 365 days, pursuant to section 3.07 hereof.

Section 4.07. Notwithstanding the provisions of Section 4.05, the Trustee shall from time to time, at the request of the Executive Director, credit all or any part of the income of the Trust Fund to the capital of the Trust Fund, in which event no part of such income so credited shall be paid to any of the Participants.

Section 4.08. The Trustee shall keep complete records of its administration of the Trust Fund on the basis of a fiscal year ended on the last day of __________ in each year. A copy of the financial statements of the Trust Fund, certified by the Trustee, shall be delivered to the Executive Director and the Participants within three months after the end of each fiscal year. Such statements shall include, where applicable, the following information:

(a) The amount of the Withdrawal Credit of each Participant;

(b) The amount owing hereunder by any Participant to the Trustee by reason of any provision hereof which has not been paid when due;

(c) The amount of all receipts and the source thereof;

(d) The amount of all payments to Participants and in respect of claims of clients of Participants;

(e) A complete statement of all receipts and disbursements in respect of each Participant who was in Default during such fiscal year; and

(f) A statement of all credits and debits to the capital of the Trust Fund.

In addition to the foregoing information, the Executive Director may from time to time require the Trustee to deliver such other information as he deems necessary.

Section 4.09. The Trust Fund may, at the sole discretion of the Trustee from time to time, constitute a single fund in respect of all Participants or separate funds in respect of each Participant, which separate funds may nonetheless be dealt with for the purposes of the convenient administration of the Plan as though they were a single fund.

Section 4.10. No Participant may assign any right or interest he may have in the Trust Fund to any person, nor shall any Participant, his heirs, executors, administrators, successors, or assigns assert any right at any time over and against the Trustee in respect of the Trust Fund or any Withdrawal Credit to which he might but for this section be entitled.

ARTICLE V - CLAIMS ON THE TRUST FUND

Section 5.01. The Plan is established to provide for the payment out of the capital of the Trust Fund of the amount of claims of clients of Participants, which meet the requirements hereinafter set forth, in such amounts and to such of such clients as the Trustee shall in its discretion from time to time determine and appoint:

(a) A claim shall be limited to the direct out-of-pocket loss suffered by a person who was a bona fide client of a Participant at the time the liability, duty, or obligation was first incurred by such Participant in respect of which such loss thereafter arose, and such loss shall have arisen either due to

(i) the failure of such Participant to refund any payment received from a client for a security ordered by and not delivered as directed by that client, or to pay as directed by a client funds received by such Participant in connection with the sale of a security on behalf of that client; or

(ii) any conversion of funds or securities of such a client while in the hands of or under the control of the Participant or by or on behalf of or for the benefit of the Participant or a partner, director, or shareholder of the Participant, but only to the extent the Participant does not have a bond or insurance providing for payment in respect of any such conversion; or

(iii) the failure of such Participant to fulfill any contractual obligation to a client.

(b) No claim shall be eligible for payment if the client making such claim was, at the time the liability giving rise to the loss was first incurred or at any time thereafter prior to payment,

(i) a Participant or a partner, director, officer, employee, agent, or shareholder of a Participant or an Associate of any of the foregoing; or

(ii) a person or company registered under the provisions of the Securities Act or an Associate of any thereof; or

(iii) a person or company described in paragraph (c) of subsection (l) of Section 21 of the Securities Act; or

(iv) a Promoter, as defined in the Securities Act of any person or company in respect of whose securities any loss has occurred.

(c) No claim shall be eligible for payment to the extent that the amount of such claim is in excess of $2,500 and any amount received by the client in payment of any loss giving rise to such claim otherwise than out of the Trust Fund shall be applied to reduce the said maximum amount of $2,500. Claims by a group of persons acting together in a single transaction shall be considered to be a single claim subject to the maximum limitation and the reduction provided for in this subparagraph (c).

[Paras. (c), (d) renumbered by B.C. Reg. 194/75.]

Notwithstanding the provisions of section 5.07, if the total amount of claims made and considered payable by the Trustee is more than the total amount of the Trust Fund eligible for payment of claims, then the total amount of claims payable shall be reduced to the amount of the Trust Fund eligible for payment of claims on a pro rata basis.

If any question or doubt shall arise as to whether or not any claim meets the requirements of this Section 5.01 as to eligibility for payment out of the capital of the Trust Fund either in whole or in part, the Trustee in its discretion shall determine such eligibility, and any decision of the Trustee shall be final and conclusive for all purposes hereof and as against all persons. For greater certainty, it is hereby agreed and declared that no client of any Participant shall have any absolute or vested right to payment of any claim against the Trustee or the Trust Fund, notwithstanding such claim may qualify and be eligible for payment in every respect except only that the Trustee shall not have in its discretion appointed such client to receive such payment.

Section 5.02. A claim for payment out of the Trust Fund may only be made by a claimant giving written notice of such claim to the Trustee with full particulars thereof, including the amount thereof, any security or guarantee therefor, and any payment or recovery in respect thereof. A claim shall be deemed to have been made when written notice thereof is received by the Trustee.

Section 5.03. As a condition precedent to the authorization by the Trustee of the payment of any claim, the Trustee may, in its discretion, require that the claimant making such claim execute and deliver or arrange for the execution and delivery of such documents as the Trustee in its discretion deems necessary. The Trustee shall be entitled to seek the advice of Counsel as to the documentation necessary to support a claim and shall be entitled to rely on the opinion of Counsel as to the sufficiency of the documentation required and presented by a claimant for the purposes of paying any claim.

Section 5.04. As a condition precedent to the payment of the claim, the Trustee may in its discretion require that the client making such claim execute such documents as Counsel may advise are necessary or desirable for the purpose of transferring to the Trustee the interest of such client in the claim so as to subrogate the Trustee to the position of the client and enable the Trustee to prosecute the proceedings contemplated by Section 7.06 hereof.

Section 5.05. Notwithstanding any of the foregoing provisions of this Article V, the following limitations in respect of payments of claims shall apply:

(a) The maximum aggregate amount of claims which may be paid in respect of the Default of any one Participant shall never exceed the total amount of the Trust Fund at the time such claims are made.

(b) The Trustee may in its discretion pay claims in one or more installments, as it sees fit, in which event all claims of a Participant which the Trustee has determined and appointed for payment shall be paid on the same basis.

(c) No claims in respect of the Default of any Participant shall be paid by the Trustee until the Trustee is reasonable satisfied that all claims likely to be made in respect of Defaults of a Participant have been made or reserved against by the Trustee.

(d) The Trustee may in its discretion reserve against claims which it thinks may be validly made, and any such reservation shall be the equivalent of payment of such claim for the purposes of requiring additional payments of pro rata shares under Section 3.02 hereof.

[Para. (a) amended by B.C. Reg. 194/75.]

Section 5.06. The Trustee may in its discretion pay any claim notwithstanding that no demand for payment has been made by the client against a Participant in respect of whom a Default has occurred or that no action has been commenced or that no final judgement of a Court of competent jurisdiction has been obtained against such Participant or that no all reasonable efforts have been taken to have judgement satisfied; provided that the Trustee may require any or all of the foregoing steps to be taken by the client making the claim hereunder before paying the same or appointing such a client for payment in respect thereof. Should the Trustee pay any claim as aforesaid, then the Trustee may require the client to assign to the Trustee all the client's right, title, and interest in and to the said claim.

Section 5.07. The Trustee, on being satisfied that a claim complies with the requirements of this Article V, may in its discretion appoint the person making such claim to receive payment of all or any part thereof, in which event the Trustee shall, subject to the provisions of paragraph (b) of Section 5.05 hereof, promptly forwarded by first-class mail to the address specified by the client a cheque payable to the client in the amount of the claim or part thereof as so determined by the Trustee.

ARTICLE VI - TERMINATION OF PARTICIPATION IN PLAN

Section 6.01. The amount of the Trust Fund, if any, standing to the credit of a Participant shall constitute the Withdrawal Credit of the Participant, and such amount at any time shall be the aggregate of all payments made by or on behalf of such Participant pursuant to Article III, all income and recoveries credited to a Participant pursuant to any provision hereof, and all amounts (other than income or recoveries so credited) not distributed to a Participant pursuant to sections 4.05 and 7.06 hereof, minus the aggregate amount of:

(a) his pro rata share of any claim subject to payment referred to in Section 3.02 (excluding any upward adjustment in such pro rata share made by the Trustee pursuant to Section 3.02); and

(b) of any amounts charged hereunder against the Participant by the Trustee in respect of any amount paid out of the Trust Fund by the Trustee, whether to the Trustee or others.

Section 6.02.

(a) Upon compliance with the requirements of this Section 6.02 on surrender, cancellation, or lapse of the registration of a Participant under the Securities Act or on such Participant satisfying the Trustee and the Executive Director that he has joined some other plan similar to the Plan and acceptable to the Executive Director, upon the Executive Director advising the Trustee that a Participant is no longer required to participate in the Plan as a condition of registration under the Securities Act, such Participant may apply for the withdrawal from the Plan and for the return of his Withdrawal Credit, the amount of which shall be computed at the time when the Trustee determines that all such requirements are fulfilled.

(b) A Participant wishing to so apply for withdrawal from the Plan shall give written notice of his intention to so withdraw to the Executive Director and the Trustee, but may not give any such notice at any time when such Participant has failed to perform or observe any obligation or condition on his part to be performed or observed hereunder.

(c) The Participant so withdrawing shall file with the Executive Director and the Trustee such financial statements and other evidence as they may in their discretion require, to establish that the affairs of such Participant have been settled so as to preclude any claims on the Trust Fund arising out of such affairs which cannot be satisfied out of the Withdrawal Credit applicable to such Participant and that arrangements satisfactory to the Trustee and the Executive Director have been made to ensure that all liabilities and obligations of the Participant which could give rise to any claim have been met and discharged.

(d) No Withdrawal Credit shall be paid to a withdrawing Participant until there are no unpaid claims which have been made against the Trust Fund and for which a payment would be required in respect of such Participant pursuant to Section 3.02 hereof if such claims were paid.

(e) At the time provided for under paragraph (d) of this section 6.02 and provided the Participant has performed and observed all the obligations and conditions on his part to be performed or observed hereunder, the Trustee may in its discretion pay the amount of the Withdrawal Credit or a Participant to the withdrawing Participant, subject only to the following:

(i) To the extent that the financial statements and other evidence referred to in this Section 6.02 disclose unsatisfied liabilities which would qualify as claims, the amount to be paid shall be reduced and such reduction shall be applied by the Trustee to the pro rata payment of such liabilities, upon receipt of such satisfactory evidence and documentation in respect of such claims as Counsel and the Trustee may require, or, if any of the events hereinafter mentioned have occurred;

(ii) the balance of any payment after reduction, if any, as provided in the preceding subsection (i) shall be paid to any receiver and manager designated by the Executive Director or appointed pursuant to the Securities Act in respect of the withdrawing Participant, or if no such receiver or receiver and manager has been so designated, to any trustee in bankruptcy or liquidator or similar person duly appointed by law to administer the estate or affairs of the withdrawing Participant.

Any such payment shall be made by the Trustee forwarding by first-class mail a cheque for the payment in the amount and to the Participant, person, or company, as the case may be, at the address specified by the withdrawing Participant or other person or company to whom the payment is to be made.

Section 6.03. Upon payment of a Withdrawal Credit to or in respect of a Participant under Section 6.02 hereof, such Participant shall cease to be a Participant, his participation in the Plan shall cease, and he shall no longer be subject to the Plan or to any further obligation under this agreement, and the Trustee may at the request and expense of the Participant give a formal release to the Participant of all his obligations hereunder in such form and subject to such conditions as Counsel may advise.

Section 6.04. For the purpose of computing a Withdrawal Credit hereunder, the Trustee may at any time and from time to time determine and use the cost or market value or the lower of cost or market value of all or any Approved Securities held in the Trust Fund as the Trustee in its sole discretion shall see fit, and the Trustee shall in such event increase or decrease the Withdrawal Credit of a Participant by his proportionate share of any increase or decrease in value of Approved Securities from cost or from any previous determination hereunder, such proportionate share to be computed on such basis as the Trustee may in its sole discretion determine to be fair as among all Participants.

Section 6.05. In the event that a Participant who becomes such prior to becoming a registrant under the Securities Act does not for any reason become such a registrant, the amount paid by such Participant to the Trustee into the Trust Fund shall be returned without interest and the Trustee shall notify the Executive Director forthwith of such return. Any income earned in respect of any such amount so returned shall thereafter be held by the Trustee under the Trust Fund, but shall not be credited to the Withdrawal Credit or any Participant. Such amount shall be first applied to fees of the Trustee hereunder, and, second to any claim hereunder, and until so applied shall form part of the capital of the Trust Fund.

ARTICLE VII - THE TRUSTEE

Section 7.01. The Trustee accepts the trusts herein created upon the terms and conditions of the agreement and represents and warrants that it is a corporation authorized to do business in British Columbia as a trust company under the Trust Companies Act. The Trustee shall not be required to give any bond or other security for the faithful performance of its duties hereunder and shall not be responsible for any diminution in the funds, securities, or property of whatsoever character constituting part of the Trust Fund, or for any loss resulting from the making of any investment or from the retention in good faith for any length of time of securities or other property of whatsoever character purchased or acquired by it, notwithstanding that such securities or property may not be, or may have ceased to be, income producing, or from any mistake in judgement made in good faith, or from any loss of whatsoever character, unless resulting from its own fraud, negligence, or willful misconduct.

Section 7.02. The Trustee may rely and shall be protected in acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, letter, telegram, cablegram, or other paper or document believed by it to be genuine and to have been signed, sent, or delivered by or on behalf of the proper party or parties. The Trustee may employ or retain such counsel, accountants, appraisers, or other experts or advisors as it may reasonably require for the purpose of discharging its duties hereunder; may act and shall be protected in acting in good faith on the opinion or advice of information obtained from any one of them; and shall not be responsible for any misconduct on the part of any of them.

Section 7.03. The Trustee may at any time resign as Trustee hereunder by giving 90 days' notice to the Executive Director. Either the Executive Director or the Participants by Participants' Request delivered to the Trustee may at any time require the removal of the Trustee hereunder on giving 90 days' notice to the Trustee. In the event of the resignation or removal of the Trustee or if the Trustee shall at any time be unable to act, the Executive Director shall appoint as a successor Trustee a corporation authorized to do business in British Columbia as a trust company under the Trust Companies Act of British Columbia and who, upon acceptance of such appointment, shall have vested in it without further act or formality all the rights and powers given hereunder to the Trustee, and upon written request of the Executive Director the Trustee ceasing to act shall execute and deliver an instrument in writing transferring to such successor Trustee all the rights, powers, and Trust Fund assets reposing in or with the Trustee ceasing to act, and shall do all such other acts or things necessary or desirable for the vesting of the Trust Fund assets in the successor Trustee. Upon any such resignation or removal becoming effective, the Trustee ceasing to act shall render to the Executive Director and to each Participant an account of its administration hereof during the period following that covered by its last annual accounting, which shall contain the information required under the provisions of Section 4.08, verified by a certificate of the Inspector of Trust Companies under the Trust Companies Act of British Columbia.

Section 7.04. Subject to section 4.03 hereof, the Trustee, in the administration of the Trust Fund, shall power and authority:

(a) to invest and reinvest the Trust Fund in Approved Securities, and may do all acts and things and execute, acknowledge, and deliver all instruments in respect thereof;

(b) to hold in the form of cash awaiting investment or other application hereunder any portion of the Trust Fund and without limiting the generality of the foregoing the Trustee may hold the cash in any deposit or current account operated by the Trustee;

(c) to sell, convert, assign, exchange, transfer, or otherwise dispose of any Approved Securities at any time constituting part of the Trust Fund at public or private sale for such consideration and upon such terms and conditions as the Trustees shall see fit;

(d) to vote in person or by proxy any Approved Security constituting part of the Trust Fund, to exercise personally or by general or limited power of attorney any right appurtenant to any Approved Securities or to any other property held by it at any time; to join in or dissent from and oppose the reorganization, redistribution, consolidation, merger, liquidation, or sale of corporations or properties; to exchange Approved Securities for other securities issued in connection with or resulting from any such reorganization and retain such securities; to exercise or sell any rights issued upon or with respect to any property necessary to protect the investment of the Trust Fund in such property;

(e) to register any Approved Security or other property held by it hereunder in its own name or in the name of a nominee with or without the addition of words indicating that such securities are held in fiduciary capacity, but the books and records of the Trustee shall at all times show that all Approved Securities and property howsoever held are part of the Trust Fund;

(f) to compromise, adjust, or settle any claims in favour of or against the Trust Fund, and to conduct any litigation arising out of such claims.

Section 7.05. In the event that any Participant shall fail to perform or observe any obligation hereunder on its part to be performed or observed, then the Trustee may, and shall, when and to the extent requested to do so by a Participants' Request delivered to the Trustee, bring whatever legal action against such Participant which the Trustee, in its discretion deems necessary to compel such Participant to fulfill its obligations hereunder, provided that the Trustee shall only be required to take such legal action after it shall have been fully indemnified to its satisfaction by the Participants signing such Participants' Request against all actions, proceedings, claims, and demands to which it may thereby render itself liable and all fees, costs, charges, damages, and expenses whatsoever which it may have or incur by so doing. Any amount recovered as a result of any such legal action shall form part of the Trust Fund and shall be appropriately credited to the Withdrawal Credits of such Participants, with appropriate adjustments to the Withdrawal Credits of such other Participants.

Section 7.06.

(a) The Trustee may, and shall, when and to the extent requested to do so by a Participants' Request delivered to the Trustee, take all proceedings necessary to recover any monies which may be payable by any person or company to a client on account of a claim to which the Trustee has been subrogated as provided in Section 5.04 hereof or is otherwise entitled; the Trustee shall only be required to take such proceedings after it shall have been fully indemnified to its satisfaction by such Participants against all actions, proceedings, claims, and demands to which it may thereby render itself liable and all fees, costs, charges, damages, and expenses which it may incur by do doing.

(b) In the event of any recovery by the Trustee of monies as a result of proceedings described in Section 7.06 hereof, all fees, costs, charges, damages, and expenses of the Trustee incurred in connection with such proceedings shall be deducted from such monies and, subject to any other provision hereof, the balance, if any, of such monies shall be distributed to Participants as provided in Section 7.06(c) hereof. In the event that any monies so recovered shall not be sufficient to defray such fees, costs, charges, and expenses, the portion of such fees, costs, charges, and expenses not so defrayed shall be added to the amounts payable to the Trustee under Section 7.07 hereof and shall be paid in the manner therein provided.

(c) Subject to the provisions of section 3.08 and of paragraph (b) of this Section 7.06, all monies recovered by the Trustee and available for distribution to Participants pursuant to this Section 7.06 shall be distributed equally among those Participants by or on behalf of whom the required payment has been made pursuant to Section 3.02 hereof on account of the claim on which such monies were received, and the Trustee shall distribute by first-class mail to such Participants cheques representing the entitlement of such Participants pursuant to this paragraph (c) of Section 7.06.

Section 7.07. The Trustee's fees for performing its duties hereunder shall be such as may be mutually agreed upon from time to time between the Executive Director and the Trustee, and in default of such agreement shall be as fixed by the courts upon application thereto by the Trustee, and the costs of such application shall be paid out of the Trust Fund, except in the case of the Trustee, in the event that the compensation so fixed is not more than the amount thereto to which the Executive Director was prepared to agree. The Trustee shall also be entitled to be reimbursed for any and all costs, charges, and expenses reasonably incurred by the Trustee in the performance of its duties pursuant to this agreement. All such fees, costs, charges, and expenses shall be deducted first from the income of the Trust Fund and, in the event of any deficiency, from the capital of the Trust Fund. Fees, costs, charges, and expenses of the Trustee accrued and unpaid shall be calculated on the last days of May and November in each year and shall be deducted from the income of the Trust Fund for the six-month periods ended on those dates.

Section 7.08. The Trustee shall not exercise any discretion granted to it hereunder without first notifying the Executive Director of its intention to do so and giving the Executive Director reasonable opportunity to making any views he may have known in such respect to the Trustee prior to the exercise of such discretion.

Section 7.09. The Trustee shall notify the Executive Director promptly of any Default of any Participant, of any claim made in respect thereof, of any failure by a Participant to perform any obligation or condition on his part to be performed or observed hereunder, and shall furnish the Executive Director with all other information, records, and documents in its possession in connection with this agreement and its administration of the Trust Fund as the Executive Director may from time to time reasonably request.

ARTICLE VIII - AMENDMENT AND TERMINATION

Section 8.01. The Trustee may agree to amendments of this agreement, subject to the approval of the Participants evidenced by a Participants' Consent delivered to the Trustee and approval of the Executive Director, provided, however, that no such amendment shall be effective to prevent the payment of any claim which but for the amendment the Trustee would have determined to pay out of the Trust Fund.

Section 8.02. This Plan shall only be terminated at such time when all Participants have withdrawn from the Plan in accordance with the provisions of Article VI hereof.

ARTICLE IX - MISCELLANEOUS

Section 9.01. Notwithstanding any other provisions hereof, nothing herein contained shall be deemed to give any Participant any interest or right hereunder except the right to receive such payments out of the Trust Fund, if any, as may from time to time be determined by the Trustee in its discretion, or in default of the exercise by the Trustee of such discretion after one year following termination of the Plan, in accordance with the Withdrawal Credits of each Participant at the time of termination of the Plan.

Section 9.02. No assignment, anticipation, surrender, pledge, or encumbrance of any kind of any right of Participants or other persons to receive funds pursuant to this agreement shall be permitted or recognized under any circumstances, and any such rights shall not be subject to attachments or other legal processes for debts of such Participants or other persons.

Section 9.03. In order to protect the Trust Fund against depletion as a result of litigation, no Participant or person claiming under or against it shall bring legal or equitable action against the Trustee or the Trust Fund for any matter of cause whatsoever, except that the Participants by Participants' Request delivered to the Trustee and the Executive Director may claim against the Trustee for any loss resulting from the fraud, gross negligence, or willful misconduct of the Trustee, and in default of a satisfaction or settlement of such claim between the Participants' Consent, any Participant may commence such action or other proceeding as it may see fit against the Trustee, but in no event shall any part of the Trust Fund be attachable or otherwise made available to satisfy or settle any such claim or judgement or other Court order in respect thereof.

Section 9.04. All information, records, and documents of any kind whatsoever about any of the Participants or any officer, director or shareholder of any thereof or relating to the business relations between the Participant and any other person at any time in the possession or control of either the Trustee or the Executive Director and howsoever obtained, may be freely exchanged between the Trustee and the Executive Director; and no Participant or any such officer, director or shareholder shall have any claim of any kind whatsoever against either of the Executive Director or Trustee arising from or out of the exchange of any information by either the Executive Director or the Trustee or their use in good faith by either the Trustee or the Executive Director for any purpose hereof or of the Securities Act provided that nothing herein shall constitute an obligation of the Executive Director to furnish or disclose any information to any of the Trustee or the Participants or any other person.

Section 9.05. The Trustee or any person to whom as its representative it may in writing delegate such authority, may enter upon the premises of a Participant and examine such books, documents, and records of the Participant and make copies of such books, documents and records which, in the opinion of the Trustee or its representative, are necessary to assist in determining the validity of a claim or in the exercise of any discretion hereunder, and no person is, as against the Trustee, entitled to withhold possession of the aforesaid books, documents, and records belonging to the Participant or set up any lien thereon; all fees of and costs, charges, and expenses incurred by the Trustee in conducting such examination shall be added to the fees, costs, charges and expenses of the Trustee payable under section 7.07 hereof, and shall be paid in the manner therein provided.

Section 9.06. If at any time the Trustee is in doubt as to whether or not a person is a client of a Participant and/or whether or not such a person has a valid claim under the terms hereof, it may apply to the Supreme Court of British Columbia for a construction of the relevant sections hereof and directions as to whether or not the person is a client and/or has a valid claim under the terms hereof or the extent to which such person has a valid claim under the terms hereof; all fees of and costs, charges and expenses incurred by the Trustee in connection with any such application shall be added to the expenses of the Trustee payable under Section 7.07 hereof and shall be paid in the manner therein provided. The decision of the Supreme Court as to whether or not a person is a client of a Participant, and/or whether or not such a person or the extent to which such a person has a valid claim, shall be conclusive and binding, provided that no such decision of the Supreme Court of British Columbia shall in any way affect the discretion of the Trustee to appoint or not to appoint any part of the Trust Fund in respect of such a claim.

Section 9.07. Nothing herein shall under any circumstances whatsoever give any persons any right, demand, or claim of any kind whatsoever against or in respect of the Executive Director.

Section 9.08. Wherever an amount is recovered by the Trustee in respect of which a Participant has previously made or was liable to make but has not yet made a payment into the Trust Fund pursuant to any provision hereof, the appropriate share of the amount so recovered shall be credited to the Withdrawal Credit of such Participant; and the action by the Trustee in crediting or recrediting an appropriate share shall be final and binding on all Participants.

Section 9.09. Any notice to a Participant under the provision hereof shall be valid and effective if given by registered letter, postage prepaid, addressed to the Participant at his or its last address with the Executive Director and shall be deemed to have been received by the Participant in the ordinary course of mail.

Section 9.10. This agreement shall be binding upon and subject to the provisions of Sections 4.10, 9.01, and 9.03 hereof, shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and assigns.