Form Of Voting And Exchange Trust Agreement

EXHIBIT 10.21


VOTING AND EXCHANGE TRUST AGREEMENT


MEMORANDUM OF AGREEMENT made as of the -- day of November, 1996.


B E T W E E N:
SOURCE MEDIA, INC.,
a corporation subsisting under the
laws of the State of Delaware,


(hereinafter referred to as "Source"),


OF THE FIRST PART,


- and -


CABLESHARE INC.,
a corporation subsisting under the laws
of the Province of Ontario,


(hereinafter referred to as "Cableshare"),


OF THE SECOND PART,


- and -


-- TRUST COMPANY,
a trust company incorporated under the
laws of --,


(hereinafter referred to as the "Trustee"),


OF THE THIRD PART.


WHEREAS pursuant to an arrangement agreement (the "Arrangement Agreement") dated as of November 13, 1996 between Source and Cableshare, the parties agreed that Source and Cableshare would execute and deliver a voting and exchange trust agreement forthwith following the filing of articles of arrangement to give effect to the arrangement referred to therein, such voting and exchange trust agreement to contain the terms and conditions set forth in Exhibit 6 to the Arrangement Agreement together with such other terms and conditions as may be customary for agreements of a similar nature and as may be agreed to by the parties to the Arrangement Agreement, acting reasonably;


AND WHEREAS pursuant to an arrangement (the "Arrangement") effected by articles of arrangement dated -- , 1996 filed pursuant to the Business Corporations Act (Ontario), each shareholder of Cableshare who properly elected to do so received Exchangeable Non-Voting Shares in the capital of Cableshare ("Exchangeable Shares") for the issued and outstanding Class A Subordinate Voting Shares in the capital of Cableshare ("Class A Shares") and the issued and outstanding Class B Multiple Voting Shares in the capital of Cableshare ("Class B Shares") held by such shareholder, in a ratio determined pursuant to the Arrangement Agreement;


AND WHEREAS pursuant to the Arrangement, each other shareholder of Cableshare (other than those who properly exercised dissent rights and will become entitled to be paid the fair value of the Cableshare shares held by them and other than IT Network, Inc. and 997758 Ontario Inc. (the "Source Affiliates")), received issued and outstanding shares of the Common Stock of Source ("Source Common Shares"), in a


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ratio determined pursuant to the Arrangement Agreement in exchange for the issued and outstanding Class A Shares and Class B Shares held by such shareholder;


AND WHEREAS pursuant to the Arrangement and immediately following the above-mentioned exchanges and conversions of shares, each issued and outstanding Class A Share and Class B Share was converted into one common share in the capital of Cableshare (a "Cableshare New Common Share");


AND WHEREAS pursuant to the Arrangement and the exchanges and conversions of shares referred to above, Source holds all of the issued and outstanding shares of Cableshare other than the issued and outstanding Exchangeable Shares;


AND WHEREAS the above-mentioned articles of arrangement set forth the rights, privileges, restrictions and conditions (collectively the "Share Provisions") attaching to the Exchangeable Shares;


AND WHEREAS Source is to provide voting rights in Source to each holder (other than Source, its subsidiaries and Affiliates) from time to time of Exchangeable Shares, such voting rights per Exchangeable Share to be equivalent to the voting rights per Source Common Share;


AND WHEREAS Source is to grant to and in favour of the holders (other than Source, its subsidiaries and Affiliates) from time to time of Exchangeable Shares the right, in the circumstances set forth herein, to require Source to purchase from each such holder all but not less than all the Exchangeable Shares held by the holder;


AND WHEREAS the parties hereto desire to make appropriate provisions and to establish a procedure whereby votes at Source Meetings shall be exercisable by holders (other than Source, its subsidiaries and Affiliates) from time to time of Exchangeable Shares by and through the Trustee, which will hold legal title to the Source Special Voting Share to which voting rights attach for the benefit of such holders, and whereby the right to require Source to purchase Exchangeable Shares from the holders thereof (other than Source, its subsidiaries and Affiliates) 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 right for the benefit of such holders;


AND WHEREAS these recitals and any statements of fact in this trust agreement are made by Source and Cableshare 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:


ARTICLE 1


DEFINITIONS AND INTERPRETATION


1.1 DEFINITIONS. In this trust agreement, the following terms shall have the following meanings:


"AFFILIATE" of any person means any other person directly or indirectly
controlled by, or under control of, that person. For the purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control of"), as applied to any person,
means the possession by another person, directly or indirectly, of the
power to direct or cause the direction of the management and policies of
that first mentioned person, whether through the ownership of voting
securities, by contract or otherwise.


"AUTOMATIC EXCHANGE RIGHTS" means the benefit of the obligation of Source
to effect the automatic exchange of Source Common Shares for Exchangeable
Shares pursuant to section 5.12.


"BENEFICIARIES" means the registered holders from time to time of
Exchangeable Shares, other than Source, its subsidiaries and Affiliates.


"BENEFICIARY VOTES" has the meaning ascribed thereto in section 4.2.


"BOARD OF DIRECTORS" means the Board of Directors of Cableshare.


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"BUSINESS DAY" means a day other than a Saturday, a Sunday or a statutory
holiday in the City of Toronto, Ontario or the City of Dallas, Texas.


"CANADIAN DOLLAR EQUIVALENT" means in respect of an amount expressed in a
foreign currency (the "Foreign Currency Amount") at any date the product
obtained by multiplying (a) the Foreign Currency Amount by (b) the noon
spot exchange rate on such date for such foreign currency expressed in
Canadian dollars as reported by the Bank of Canada or, in the event such
spot exchange rate is not available, such exchange rate on such date for
such foreign currency expressed in Canadian dollars as may be deemed by
the Board of Directors to be appropriate for such purpose.


"CURRENT MARKET PRICE" means, in respect of a Source Common Share on any
date, the Canadian Dollar Equivalent of the average of the closing bid and
asked prices of Source Common Shares during a period of 20 consecutive
trading days ending not more than five trading days before date on the
National Market System of the National Association of Securities Dealers
Automated Quotation System, or, if Source Common Shares are not then
quoted on the National Market System of the National Association of
Securities Dealers Automated Quotation System, on such other stock
exchange or automated quotation system on which Source Common Shares are
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
Source Common Shares during such period does not create a market which
reflects the fair market value of a Source Common Share, then the Current
Market Price of a Source Common Share shall be determined by the Board of
Directors based upon the advice of such qualified independent financial
advisors as the Board of Directors of Source may deem to be appropriate,
and provided further that any such selection, opinion or determination by
the Board of Directors shall be conclusive and binding.


"EXCHANGE RIGHT" has the meaning ascribed thereto in section 5.1.


"INSOLVENCY EVENT" means the institution by Cableshare of any proceeding
to be adjudicated a bankrupt or insolvent or to be wound up, or the
consent of Cableshare to the institution of bankruptcy, insolvency 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 Cableshare to contest in good faith any such
proceedings commenced in respect of Cableshare within 15 days of becoming
aware thereof, or the consent by Cableshare to the filing of any such
petition or to the appointment of a receiver, or the making by Cableshare
of a general assignment for the benefit of creditors, or the admission in
writing by Cableshare of its inability to pay its debts generally as they
become due, or Cableshare not being permitted, pursuant to solvency
requirements of applicable law, to redeem any Retracted Shares pursuant to
Section 6.6 of the Share Provisions.


"LIQUIDATION CALL RIGHT" has the meaning ascribed thereto in the Plan of
Arrangement.


"LIQUIDATION EVENT" has the meaning ascribed thereto in section 5.12(b).


"LIQUIDATION EVENT EFFECTIVE DATE" has the meaning ascribed thereto in
section 5.12(c).


"LIST" has the meaning ascribed thereto in section 4.6.


"OFFICER'S CERTIFICATE" means, with respect to Source or Cableshare, as
the case may be, a certificate signed by any one of the Chairman of the
Board, the Vice-Chairman of the Board, the President, any Vice-President
or any other senior officer of Source or Cableshare, as the case may be.


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


"PLAN OF ARRANGEMENT" means the plan of arrangement of Cableshare
providing for the Arrangement.


"REDEMPTION CALL RIGHT" has the meaning ascribed thereto in the Share
Provisions.


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"RETRACTED SHARES" has the meaning ascribed thereto in section 5.7.


"RETRACTION CALL RIGHT" has the meaning ascribed thereto in the Share
Provisions.


"SOURCE AFFILIATES" means Affiliates of Source.


"SOURCE COMMON SHARE" means one share of Source Common Stock, U.S.$0.001
par value.


"SOURCE CONSENT" has the meaning ascribed thereto in section 4.2.


"SOURCE MEETING" has the meaning ascribed thereto in section 4.2.


"SOURCE SPECIAL VOTING SHARE" means the one share of Special Voting Stock
of Source, which entitles the holder of record to a number of votes at
meetings of holders of Source Common Shares equal to the number of
Exchangeable Shares outstanding from time to time (other than Exchangeable
Shares held by Source and its Affiliates), which share is to be issued to,
deposited with, and voted by, the Trustee as described herein.


"SOURCE SUCCESSOR" has the meaning ascribed thereto in section 11.1(a).


"SUPPORT AGREEMENT" means that certain support agreement made as of even
date hereto between Cableshare and Source.


"TRUST" means the trust created by this agreement.


"TRUST ESTATE" means the Source Special Voting Share, any other
securities, the Exchange Right, the Automatic Exchange Rights and any
money or other property which may be held by the Trustee from time to time
pursuant to this trust agreement.


"TRUSTEE" means -- Trust Company and, subject to the provisions of
Article 10, includes any successor trustee.


"VOTING RIGHTS" means the voting rights attached to the Source Special
Voting Share.


1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC. The division of this trust 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 trust 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 trust agreement is not a Business Day, such action shall be required to be taken on the next succeeding Business Day.


ARTICLE 2


PURPOSE OF AGREEMENT


2.1 ESTABLISHMENT OF TRUST. The purpose of this trust agreement is to create the Trust for the benefit of the Beneficiaries, as herein provided. The Trustee will hold the Source Special Voting Share in order to enable the Trustee to exercise the Voting Rights and will hold the Exchange Right and the Automatic Exchange Rights in order to enable the Trustee to exercise such rights, in each case as trustee for and on behalf of the Beneficiaries as provided in this trust agreement.


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ARTICLE 3


SOURCE SPECIAL VOTING SHARE


3.1 ISSUE AND OWNERSHIP OF THE SOURCE SPECIAL VOTING SHARE. Source hereby issues to and deposits with the Trustee the Source Special 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 Beneficiaries and in accordance with the provisions of this trust agreement. Source hereby acknowledges receipt from the Trustee as trustee for and on behalf of the Beneficiaries of good and valuable consideration (and the adequacy thereof) for the issuance of the Source Special Voting Share by Source to the Trustee. During the term of the Trust and subject to the terms and conditions of this trust agreement, the Trustee shall possess and be vested with full legal ownership of the Source Special Voting Share and shall be entitled to exercise all of the rights and powers of an owner with respect to the Source Special Voting Share provided that the Trustee shall:


(a) hold the Source Special Voting Share and the legal title thereto as
trustee solely for the use and benefit of the Beneficiaries in
accordance with the provisions of this trust agreement; and


(b) except as specifically authorized by this trust agreement, have no
power or authority to sell, transfer, vote or otherwise deal in or
with the Source Special Voting Share and the Source Special 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 trust agreement.


3.2 LEGENDED SHARE CERTIFICATES. Cableshare will cause each certificate representing Exchangeable Shares to bear an appropriate legend notifying the Beneficiaries of their right to instruct the Trustee with respect to the exercise of the Voting Rights with respect to the Exchangeable Shares held by the Beneficiary.


3.3 SAFE KEEPING OF CERTIFICATE. The certificate representing the Source Special Voting Share shall at all times be held in safe keeping by the Trustee.


ARTICLE 4


EXERCISE OF VOTING RIGHTS


4.1 VOTING RIGHTS. The Trustee, as the holder of record of the Source Special 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 Source Special Voting Share on any matter, question or proposition whatsoever that may properly come before the shareholders of Source at a Source Meeting or in connection with a Source 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:


(a) on the basis of instructions received pursuant to this Article 4 from
Beneficiaries entitled to instruct the Trustee as to the voting
thereof at the time at which Source Consent is effective or Source
Meeting is held; or


(b) to the extent that no instructions are received from a Beneficiary
with respect to the Voting Rights to which such Beneficiary is
entitled, the Trustee shall not exercise or permit the exercise of
such Voting Rights.


4.2 NUMBER OF VOTES. With respect to all meetings of shareholders of Source at which holders of Source Common Shares are entitled to vote (a "Source Meeting") and with respect to all written consents sought by Source from its shareholders including the holders of Source Common Shares (a "Source Consent"), each Beneficiary shall be entitled to instruct the Trustee to cast and exercise one of the votes comprised in the Voting Rights for each Exchangeable Share owned of record by such Beneficiary on the record date established by Source or by applicable law for such Source Meeting or Source Consent, as the case may be (the "Beneficiary Votes") in respect of each matter, question or proposition to be voted on at such Source Meeting or to be consented to in connection with such Source Consent.


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4.3 MAILINGS TO SHAREHOLDERS. With respect to each Source Meeting and Source Consent, the Trustee will mail or cause to be mailed (or otherwise communicate in the same manner as Source utilizes in communications to holders of Source Common Shares) to each of the Beneficiaries named in the List referred to in section 4.6 on the same day as the initial mailing or notice (or other communication) with respect thereto is given by Source to its shareholders:


(a) a copy of such notice, together with any related materials to be
provided to shareholders of Source;


(b) a statement that such Beneficiary is entitled to instruct the Trustee
as to the exercise of the Beneficiary Votes with respect to such
Source Meeting or Source Consent, as the case may be, or, pursuant to
section 4.7, to attend such Source Meeting and to exercise personally
the Beneficiary Votes thereat;


(c) 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 Beneficiary or his designee to exercise
personally the Beneficiary Votes; or


(ii) a proxy to a designated agent or other representative of the
management of Source to exercise such Beneficiary Votes;


(d) a statement that if no such instructions are received from the
Beneficiary, the Beneficiary Votes to which such Beneficiary is
entitled will not be exercised;


(e) a form of direction whereby the Beneficiary may so direct and
instruct the Trustee as contemplated herein; and


(f) a statement of 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 Source Meeting shall not be earlier than the close of
business on the second Business Day prior to such meeting, and of the
method for revoking or amending such instructions.


For the purpose of determining Beneficiary Votes to which a Beneficiary is entitled in respect of any such Source Meeting or Source Consent, the number of Exchangeable Shares owned of record by the Beneficiary shall be determined at the close of business on the record date established by Source or by applicable law for purposes of determining shareholders entitled to vote at such Source Meeting or to give written consent in connection with such Source Consent. Source will notify the Trustee of any decision of the Board of Directors of Source with respect to the calling of any such Source Meeting or the seeking of any such Source 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 SHAREHOLDER INFORMATION. Source will deliver to the Trustee copies of all proxy materials (including notices of Source Meetings but excluding proxies to vote Source Common Shares), 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 Source Common Shares in sufficient quantities and in sufficient time so as to enable the Trustee to send those materials to each Beneficiary at the same time as such materials are first sent to holders of Source Common Shares. The Trustee will mail or otherwise send to each Beneficiary, at the expense of Source, copies of all such materials (and all materials specifically directed to the Beneficiaries or to the Trustee for the benefit of the Beneficiaries by Source) received by the Trustee from Source at the same time as such materials are first sent to holders of Source Common Shares. The Trustee will also make available for inspection by any Beneficiary at the Trustee's principal corporate trust office in the City of Toronto all proxy materials, information statements, reports and other written communications that are:


(a) received by the Trustee as the registered holder of the Source
Special Voting Share and made available by Source to the holders of
Source Common Shares; or


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(b) specifically directed to the Beneficiaries or to the Trustee for the
benefit of the Beneficiaries by Source.


4.5 OTHER MATERIALS. Immediately after receipt by Source or any shareholder of Source of any material sent or given to the holder of Source Common Shares 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), Source shall use its best efforts to obtain and deliver to the Trustee copies thereof in sufficient quantities so as to enable the Trustee to forward such material (unless the same has been provided directly to Beneficiaries by such third party) to each Beneficiary as soon as possible thereafter. Immediately upon receipt thereof, the Trustee will mail or otherwise send to each Beneficiary, at the expense of Source, copies of all such materials received by the Trustee from Source. The Trustee will also make available for inspection by any Beneficiary at the Trustee's principal corporate trust office in the City of Toronto copies of all such materials.


4.6 LIST OF PERSONS ENTITLED TO VOTE. Cableshare shall, (a) prior to each annual, general and special Source Meeting or the seeking of any Source Consent and (b) 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 Beneficiaries arranged in alphabetical order and showing the number of Exchangeable Shares held of record by each such Beneficiary, 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 Source Meeting or a Source Consent, 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 Source Meeting or a Source Consent, at the close of business on the record date established by Source or pursuant to applicable law for determining the holders of Source Common Shares entitled to receive notice of and/or to vote at such Source Meeting or to give consent in connection with such Source Consent. Each such List shall be delivered to the Trustee promptly after receipt by Cableshare of such request or the record date for such meeting or seeking of consent, as the case may be. Source agrees to give Cableshare notice (with a copy to the Trustee) of the calling of any Source Meeting or the seeking of any Source 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 Cableshare to perform its obligations under this section 4.6.


4.7 ENTITLEMENT TO DIRECT VOTES. Any Beneficiary named in a List prepared in connection with any Source Meeting or any Source Consent will be entitled (a) to instruct the Trustee in the manner described in section 4.3 with respect to the exercise of the Beneficiary Votes to which such Beneficiary is entitled or (b) 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 Beneficiary Votes to which such Beneficiary is entitled except, in each case, to the extent that such Beneficiary has transferred the ownership of any Exchangeable Shares in respect of which such Beneficiary is entitled to Beneficiary Votes after the close of business on the record date for such meeting or seeking of consent.


4.8 VOTING BY TRUSTEE, AND ATTENDANCE OF TRUSTEE REPRESENTATIVE AT MEETING.


(a) In connection with each Source Meeting and Source Consent, the
Trustee shall exercise, either in person or by proxy, in accordance
with the instructions received from a Beneficiary pursuant to section
4.3, the Beneficiary Votes as to which such Beneficiary 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 Beneficiary prior to the time and
date fixed by it for receipt of such instructions in the notice given
by the Trustee to the Beneficiary pursuant to section 4.3.


(b) The Trustee shall cause a representative who is empowered by it to
sign and deliver, on behalf of the Trustee, proxies f ...