Page 102 - Brook-Hollow Due Diligence Package

(other than for the purposes of a solvent amalgamation or reconstruction ) or a liquidator, examiner or trustee or be paid, as and when they are required to be paid until such time that all remaining payments have been made or
similar officer is appointed over all or any substantial part of the assets of KACL or KACL enters into or proposes
any composition or arrangement with its creditors generally or anything analogous to the foregoing occurs in any
applicable jurisdiction.
Insolvency Event shall also mean in respect of KACL, that KACL voluntarily ceases operations for any purpose
whatsoever.
Payment Obligations are the payment obligations assumed by KACL solely to the Payee in the Assignment
Agreement and which are reproduced in the Schedule to this Substitution Agreement;
Substitution Agreement means clauses 1 to 5 and Schedules 1 to 3 inclusive;
Upstream Agreement means the agreement referred to in Recital B above, whereby Asset Custodian has undertaken
obligations to KACL, which enables KACL to assume its Payment Obligations in the Assignment Agreement to the
Payee.
2. Statement of Obligations
2.1 The Asset Custodian has undertaken those obligations to KACL as set out in the Upstream Agreement.
2.2 KACL has assumed the Payment Obligations to the Payee as set out in the Assignment Agreement and
reproduced in Schedule 1 hereof.
3. Administration
3.1 Notice of Allegation. If the Payee, at any time (while KACL has Payment Obligations to the Payee pursuant
to the Assignment Agreement), wishes to make an allegation that KACL has suffered an Insolvency Event or is
in breach of its payment obligations to the Payee, the Payee shall give written notice signed by a Payee Authorized
Signatory, of such allegation to KACL and send a copy to the Asset Custodian, specifying in reasonable detail the basis
of his allegation and in the case of a breach the nature and extent of the breach or breaches that have occurred.
3.2 Response. Within 30 days of the notice served by the Payee on KACL and the Asset Custodian, KACL may
give written notice (“Response Notice”) to the Asset Custodian and the Payee:
3.2.1 agreeing with the allegation; or
3.2.2 disagreeing with the allegation and specifying in reasonable detail why it is disagreeing.
3.3 No Response. If no Response Notice from KACL is received by the Payee within the 30 days period, KACL
will be conclusively deemed to have accepted the allegation made by the Payee. In such case:
3.3.1 the Payee shall serve notice on the Asset Custodian and KACL in the form set out in Schedule 3, part 1,
confirming that no Response Notice was received from KACL within the day 30 day period (“Confirmation Notice”);
3.3.2 the Asset Custodian undertakes from the date of receipt by the Asset Custodian of the Confirmation Notice:
3.3.2.1 to serve notice on the Payee and KACL, in the form set out in part 2 of Schedule 3; and
3.3.2.2 henceforth pay to the Payee, amounts equal to each of the KACL Payments which at that date remain to
until such time as there are no remaining assets in the custody account, whichever shall occur first. It is specifically
understood that 1) there may not exist in the custody account sufficient assets to make all the remaining payments
referred to in this subsection, and 2) that Asset Custodian is not required to engage in, nor provide any asset
management services, advice under this agreement, and 3) the Payment Obligation is not an obligation of the Asset
Custodian and such payments shall only be made to the extent the associated assets of KACL are sufficient and
available. Further, should this provision be enacted Asset Custodian is specifically authorized to proportionally sell the
securities held in the custody account as is reasonably necessary to make any remaining payments and Asset Custodian
is not required to nor held responsible in any way, including fiduciary, for any investment losses suffered as a result of
the sale of any such securities to make the remaining payments;
3.3.2.3 cease making payments to KACL pursuant to the Upstream Agreement.
3.4.1 Payee Acknowledgment and Release. The Payee upon receipt of the notice in the form set out in part 2 of
Schedule 3, acknowledges and agrees that KACL shall be released from its Payment Obligations to the Payee pursuant
to the Assignment Agreement.
3.4.2 KACL Acknowledgement and Release. KACL upon receipt of the notice in the form set out in part 2 of
Schedule 3, acknowledges and agrees that the Asset Custodian shall be released from its payment obligations to KACL
pursuant to the Upstream Agreement.
3.5.1 KACL Notice of Dispute. Where KACL has in accordance with clause 3.2.2 served notice disagreeing with
the allegation, each of the Payee and KACL shall have a period of thirty days measured from the date of the receipt of
the KACL notice in accordance with clause 3.2.2 (“the negotiation period”) to resolve the dispute (represented in the
case of KACL by a designee of its Board of Directors and in the case of the Payee, by the Payee or his designee).
3.5.2 If by the end of the negotiation period, each of the Payee and KACL has not resolved the dispute, then the
Payee may serve notice on KACL and the Asset Custodian that the dispute remains unresolved (“unresolved dispute
notice”) and that it wishes henceforth that the Payment Obligations of KACL be satisfied by the Asset Custodian.
3.5.3 In the event of the Payee serving such an unresolved dispute notice on each of the Asset Custodian and
KACL, then:
3.5.3.1. the Asset Custodian undertakes from the date of receipt by the Asset Custodian of the unresolved dispute
notice:
3.5.3.1.1 to serve notice on the Payee and KACL, in the form set out in part 3 of Schedule 3; and
3.5.3.1.2 henceforth pay to the Payee, amounts as set forth in 3.3.2.2 above;
3.5.3.1.3 cease making payments to KACL pursuant to the Upstream Agreement;
3.6.1. Payee Acknowledgement and Release. The Payee upon receipt of the notice in the form set out in part 3 of
Schedule 3, acknowledges and agrees that KACL shall be released from its Payment Obligations to the Payee pursuant
to the Assignment Agreement;
3.6.2 KACL Acknowledgement and Release. KACL upon receipt of the notice in the form set out in part 3 of
Schedule 3, acknowledges and agrees that the Asset Custodian shall be released from its payment obligations to KACL
pursuant to the Upstream Agreement.