SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT
PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF
1934 (AMENDMENT NO. )
Filed by the registrant / /
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14(a)-12
TECE, INC.
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(Name of Registrant as Specified in Charter)
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(Name of Person(s) filing Proxy Statement, if other than Registrant)
Payment of filing fee (check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
-2-
TECE, INC.
740 ST. MAURICE, SUITE 410
MONTREAL, QUEBEC, CANADA H3C 1L5
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NOTICE OF 2001 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 21, 2001
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To the Holders of Common Stock of TECE, Inc. and
Holders of Exchangeable Preferred Stock of 3786137 Canada Inc.:
NOTICE IS HEREBY GIVEN that the 2001 Annual Meeting of Stockholders
(the "Annual Meeting") of TECE, Inc., a Nevada corporation (the "Company"), will
be held at the Via Rail and Port of Montreal rooms of the Board of Trade of
Metropolitan Montreal at 5 Place Ville Marie, Plaza Level, Suite 12500,
Montreal, Quebec, Canada H3B 4Y2, on June 21, 2001 at 11:00 A.M., local time,
for the following purposes:
1. To ratify the share exchange transactions by and among
the Company, 3786137 Canada, Inc. ("3786137 Canada"),
TEC TechnologyEvaluation.com Corporation ("TEC.com"),
and stockholders of TEC.com;
2. To approve the adoption of Amended and Restated Articles
of Incorporation of the Company;
3. To elect six members of the Board of Directors;
4. To approve the adoption of the Company's 2001 Stock
Option Plan;
5. To ratify the appointment of PricewaterhouseCoopers LLP
as the Company's independent auditors for the fiscal
year ending December 31, 2001; and
6. To transact such other business as may properly be
brought before the Annual Meeting or any adjournment or
postponement thereof.
The Board of Directors has fixed the close of business on May 11,
2001 as the record date for the Annual Meeting (the "Record Date"). Holders of
record of common stock, $.001 par value of the Company (the "Common Stock"), on
the stock transfer books of the Company at the close of business on the Record
Date are entitled to notice of, and to vote at, the Annual Meeting. In addition,
holders of record of shares of exchangeable preferred stock of 3786137 Canada as
of the Record Date have voting
rights in that number of shares of the Company's Common Stock equal in number to
the number of shares of such exchangeable preferred stock held.
By Order of the Board of Directors
David Perez
Secretary
Dated: May 15, 2001
Montreal, Quebec, Canada
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, YOU ARE URGED TO
FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE THAT IS
PROVIDED.
TECE, INC.
740 ST. MAURICE, SUITE 410
MONTREAL, QUEBEC, CANADA H3C 1L5
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PROXY STATEMENT
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INTRODUCTION
This Proxy Statement is being furnished to the holders of shares of
common stock, $.001 par value (the "Common Stock"), of TECE, Inc. (the
"Company," "we," or "us") and the holders of exchangeable preferred stock (the
"Exchangeable Shares") of the Company's subsidiary, 3786137 Canada, Inc.
("3786137 Canada") in connection with the solicitation of the accompanying Proxy
or Voting Instructions for use at the 2001 Annual Meeting of Stockholders of the
Company (the "Annual Meeting") to be held at the Via Rail and Port of Montreal
rooms of the Board of Trade of Metropolitan Montreal at 5 Place Ville Marie,
Plaza Level, Suite 12500, Montreal, Quebec, Canada H3B 4Y2, on June 21, 2001, at
11:00 a.m., and any adjournment or postponement thereof.
The approximate date on which this Proxy Statement and the
accompanying Proxy and Voting Instructions will first be sent or given to the
Company's stockholders and the holders of Exchangeable Shares is May 21, 2001.
SUMMARY OF THE SHARE EXCHANGE TRANSACTIONS
The following is a brief summary of the share exchange transactions,
which the Board of Directors is recommending that you ratify. While this summary
describes the most important terms that you should consider, Proposal 1 in the
proxy statement contains a more detailed description of those terms. You should
read it carefully before deciding whether to ratify the share exchange
transactions.
o TEC TechnologyEvaluation.com Corporation is in the business of
decision support and selection services in the information technology industry.
Before the share exchange transactions, TECE, Inc. had no material operations,
revenues, assets or liabilities. (See Proposal 1 - "Identity of the Parties").
o We entered into the share exchange transactions to acquire an
operating business in the information technology industry. We believed that the
information technology industry was an important and growing segment of the
economy. (See Proposal 1 - "Reasons for the Transaction").
o Under agreements we entered into in November 2000, we agreed to
issue shares of the exchangeable preferred stock of our subsidiary to
stockholders and debentureholders of TEC TechnologyEvaluation.com Corporation
in exchange for their interests. This resulted in the acquisition by us of the
business of TEC TechnologyEvaluation.com Corporation. The exchangeable
preferred stock of our subsidiary is exchangeable at the option of its holders
for shares of our common stock. (See Proposal 1 - "Description of the Shares
Exchange Transactions").
o If all of the stockholders and debentureholders of TEC
TechnologyEvaluation.com Corporation exchange their interests for shares of our
common stock, they would own approximately 60% of the common stock. Since
November 2000, stockholders and debentureholders who have exchanged their
interests have controlled us.
o The share exchange transactions do not result in any change in
the rights of the holders of our common stock.
o The exchangeable preferred shares of our subsidiary are
considered in substance to be the same as our shares of common stock. Each owner
of exchangeable preferred shares has voting rights in that number of shares of
our common stock as equals the number of exchangeable preferred shares owned.
Each owner of exchangeable preferred shares has rights economically equal to the
owners of our common stock in the event we declare dividends or determine to
liquidate. (See Proposal 1 - "Description of Share Exchange Transactions.")
o There are no United States income tax effects on the holders of
our common stock. The share exchange transactions were structured to provide the
stockholders of TEC TechnologyEvaluation.com Corporation with the opportunity to
defer the recognition of capital gains under Canadian tax laws upon disposition
of their stock of TEC TechnologyEvaluation.com Corporation. Nevertheless, such
stockholders were strongly advised to seek professional tax advice which is
applicable to their particular situation.
o Under Nevada law, you are not entitled to appraisal rights,
regardless of your vote on Proposal 1.
Our counsel has advised us that it would be desirable for the share
exchange transactions to be ratified by the holders of a majority of the
outstanding shares of our common stock both as of the record date of the annual
meeting and as of a date prior to November 9, 2000. The holders of a majority of
the outstanding shares of our common stock as of October 3, 2000 have been
provided with this proxy statement and are expected to ratify the share exchange
transactions by written consent prior to the annual meeting.
RECORD DATE AND VOTING SECURITIES
Only holders of record of Common Stock and Exchangeable Shares at
the close of business on May 11, 2001, the record date (the "Record Date") for
the Annual Meeting, will be entitled to notice of, and to vote at, the Annual
Meeting and any adjournment or postponement thereof. As of the Record Date,
there were 25,665,757 shares of Common Stock outstanding, which includes
15,221,086 shares of Common Stock that were issued in trust (the "Trust Shares")
for the benefit of the holders of Exchangeable Shares.
The Company has only one class of voting shares. All shares in this
class have one vote per share. The Exchangeable Shares are exchangeable on a
share-for-share basis into the Trust Shares. Each holder of Exchangeable Shares
has voting rights in that number of Trust Shares as equals the number of
Exchangeable Shares held by such holder. References herein to "stockholders"
include holders of Exchangeable Shares, unless the context otherwise requires.
VOTING OF SHARES AND TRUST SHARES
Stockholders represented by Proxies or Voting Instructions to the
trustee of the Trust Shares (the "Trustee") that are properly executed, duly
returned and not revoked will be voted in accordance with the instructions
contained therein. If no specification is indicated in the Proxy or in Voting
Instructions to the Trustee, all such shares will be voted (i) for the
ratification of the share exchange transactions by and among the Company,
3786137 Canada, TEC TechnologyEvaluation.com Corporation ("TEC.com"), and
stockholders of TEC.com; (ii) for the adoption of Amended and Restated Articles
of Incorporation; (iii) for the election as directors of the persons who have
been nominated by the Board of Directors; (iv)
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for the approval of the adoption of the Company's 2001 Stock Option Plan (the
"Plan"); (v) for the ratification of the appointment of PricewaterhouseCoopers
LLP as the Company's independent auditors for the fiscal year ending December
31, 2001; and (vi) on any other matter that may properly be brought before the
Annual Meeting, in accordance with the judgment of the person or persons voting
the Proxies or the Trustee.
The execution of a Proxy or Voting Instructions to the Trustee will
in no way affect a stockholder's right to attend the Annual Meeting and to vote
in person. Any Proxy or Voting Instructions to the Trustee executed and returned
by a stockholder may be revoked at any time thereafter if written notice of
revocation is given to the Secretary of the Company by the holders of Common
Stock, or to the Trustee by the holders of Exchangeable Shares, prior to the
vote to be taken at the Annual Meeting, or by execution of a subsequent Proxy or
Voting Instructions to the Trustee that is presented at the Annual Meeting or if
the stockholder attends the Annual Meeting and votes by ballot, except as to any
matter or matters upon which a vote shall have been cast pursuant to the
authority conferred by such Proxy or Voting Instructions to the Trustee prior to
such revocation.
The cost of solicitation of the Proxies and Voting Instructions
being solicited on behalf of the Board of Directors will be borne by the
Company. In addition to the use of the mails, solicitation may be made by
telephone, telegraph and personal interview by officers, directors and employees
of the Company. The Company will, upon request, reimburse brokerage houses and
persons holding Common Stock in the names of their nominees for their reasonable
expenses in sending soliciting materials to their principals.
VOTES NEEDED
The holders of a majority of the outstanding shares of Common Stock,
whether present in person or represented by proxy, will constitute a quorum for
each of the matters identified in the notice of the Annual Meeting, as well as
for any other matters that may come before the Annual Meeting.
Broker "non-votes" and the shares as to which a stockholder abstains
from voting are included for purposes of determining whether a quorum of shares
is present at a meeting. A broker "non-vote" occurs when a nominee holding
shares for a beneficial owner does not vote on a particular proposal because the
nominee does not have discretionary voting power with respect to that item and
has not received instructions from the beneficial owner. Brokers that do not
receive instructions from the stockholders are entitled to vote on the election
of directors and the ratification of auditors.
The affirmative vote of a majority of the outstanding shares of
Common Stock is required to ratify the share exchange transactions and to
approve the adoption of Amended and Restated Articles of Incorporation. In
tabulating the votes on such proposals, abstentions and broker non-votes will
have the same effect as a negative vote.
A plurality of the votes cast is required for the election of
directors. In tabulating the vote on the election of directors, abstentions and
broker "non-votes" will be disregarded and will have no effect on the outcome of
such vote.
The affirmative vote of a majority of the votes cast is required to
approve the adoption of the Plan and the proposal to ratify the appointment of
PricewaterhouseCoopers LLP. In tabulating the votes on such proposals,
abstentions and broker non-votes are not considered shares entitled to vote on
the applicable proposals and are not included in determining whether the
adoption of the Plan and the proposal to ratify the appointment of
PricewaterhouseCoopers LLP are approved.
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ATTENDING IN PERSON
Only stockholders, their proxy holders, and the Company's invited
guests may attend the Annual Meeting. If a person wishes to attend the Annual
Meeting, but holds his shares through someone else, such as a broker, the person
must bring proof of his ownership and identification with a photo to the Annual
Meeting. For example, the person could bring an account statement showing that
he owned shares of Common Stock or Exchangeable Shares as of the Record Date as
acceptable proof of ownership.
WHERE YOU CAN FIND INFORMATION
The Company files annual, quarterly and special reports, proxy
statements and other information with the United States Securities and Exchange
Commission (the "Commission"). The Company's filings are available to the public
over the Internet at the Commission's website at http://www.sec.gov. You may
also read and copy any document the Company files at the Commission's public
reference rooms in Washington, D.C. Please call the Commission at 1-800-SEC-0330
for further information on the public reference rooms. You may also request a
copy of these filings at no cost, by writing or telephoning us at the following
address: TECE, Inc. 740 St. Maurice, Suite 410, Montreal, Quebec, Canada H3C
1L5, Attention: Secretary.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table contains information as of the Record Date
regarding the beneficial ownership of shares of Common Stock by the Company's
current directors and nominees for director, the Company's executive officers
named in the Summary Compensation Table below (the "Named Executive Officers"),
those persons or entities who, to the Company's knowledge, beneficially own more
than 5% of the Common Stock and by all directors and executive officers as a
group. Unless otherwise indicated, (i) each stockholder has sole voting power
and dispositive power with respect to the indicated shares and (ii) the address
of each stockholder is c/o the Company, 740 St. Maurice, Suite 410, Montreal,
Quebec, Canada H3C 1L5.
Shares of Common Percentage of Common
Name and Address of Stock Beneficially Stock Beneficially
Beneficial Owner Owned (1)(2) Owned(3)
---------------- ------------ --------
Manitex Capital Inc. (4) 4,284,441(4) 16.7%
1, Place Ville-Marie, Suite 2001, Montreal, Quebec,
Canada
H3B 2C4
Intasys Corporation (5) 6,522,710(5) 25.4%
1, Place Ville-Marie, Suite 2001, Montreal, Quebec,
Canada
H3B 2C4
Claude E. Forget 100,000(6) (7)
Andre Telmosse 590,000(8) 2.3%
Steve Saviuk 652,271(9) 2.5%
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Shares of Common Percentage of Common
Name and Address of Stock Beneficially Stock Beneficially
Beneficial Owner Owned (1)(2) Owned(3)
---------------- ------------ --------
Louis Lu 119,669(10) (7)
c/o Alpha Capital Inc.
1, Place Ville-Marie, Suite 2002, Montreal, Quebec,
Canada
H3B 2C4
Guy Faure - -
86 Chemin Beakie
Ste. Anne des Lacs, Quebec, Canada J0R 1B0
Philip W. Roizin - -
c/o Brookstone Inc.
17 Riverside Street, Nashua, New Hampshire, USA 03062
Michael Clayton 3,333(11) (7)
All Officers and Directors 1,465,273 5.71%
as a group (8 persons)
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(1) Includes shares of Common Stock that may be acquired through the
exchange of Exchangeable Shares.
(2) A person is deemed to be the beneficial owner of voting securities that
can be acquired by such person within 60 days after the Record Date
upon the exercise, conversion or exchange of options, warrants or
convertible or exchangeable securities. Each beneficial owner's
percentage ownership is determined by assuming that options, warrants
and convertible and exchangeable securities that are held by such
person (but not those held by any other person) and that are
exercisable, convertible or exchangeable within 60 days after the
Record Date have been exercised, converted or exchanged.
(3) Based upon 25,665,757 outstanding shares of Common Stock.
(4) Based upon information contained in a Schedule 13D filed by Manitex
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
(5) Based upon information contained in a Schedule 13D filed by Intasys
under the Exchange Act.
(6) Represents shares that may be acquired upon exercise of an option. Mr.
Forget is a director of Intasys, which is the beneficial owner of
6,522,710 Exchangeable Shares. Mr. Forget disclaims beneficial
ownership of the Exchangeable Shares beneficially owned by Intasys.
(7) Less than 1 percent.
(8) Includes 490,000 shares of Common Stock issuable upon exercise of an
option.
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(9) Mr. Saviuk is the President of Manitex, which is the beneficial owner
of 4,284,441 Exchangeable Shares. Mr. Saviuk is also the Chairman of
the Board and Chief Executive Officer of Intasys, which is the
beneficial owner of 6,522,710 Exchangeable Shares. The shares reflected
in the table represent Exchangeable Shares that may be acquired by Mr.
Saviuk from Intasys pursuant to a compensation agreement. Mr. Saviuk
disclaims beneficial ownership of the Exchangeable Shares beneficially
owned by Manitex and Intasys, except to the extent of such 652,271
Exchangeable Shares.
(10) Mr. Lu is a director of Manitex, which is the beneficial owner of
4,284,441 Exchangeable Shares. Mr. Lu disclaims beneficial ownership of
the Exchangeable Shares beneficially owned by Manitex except to the
extent of his pecuniary interest therein.
(11) Represents 3,333 shares of Common Stock that would be beneficially
owned by Mr. Clayton upon exchange of 3,333 Exchangeable Shares
issuable upon exercise of an option held by Mr. Clayton.
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PROPOSAL 1
RATIFICATION OF THE SHARE EXCHANGE TRANSACTIONS BY AND AMONG THE
COMPANY, 3786137 CANADA, TEC.COM AND STOCKHOLDERS OF TEC.COM
Under a Share Exchange Agreement and related agreements, as amended
(the "Exchange Agreements"), dated October 10, 2000 among the Company, 3786137
Canada, TEC.com, Manitex Capital Inc.("Manitex"), Intasys Corporation
("Intasys"), and Don Lobley (together with Manitex and Intasys, the "Majority
TEC.com Stockholders"), on November 9, 2000 (i) 3786137 Canada acquired from the
Majority TEC.com Stockholders common shares, no par value (the "TEC.com Common
Shares"), of TEC.com and debentures convertible into TEC.com Common Shares
representing 67.6% of the issued and outstanding TEC.com Common Shares and (ii)
the Majority TEC.com Stockholders were issued Exchangeable Shares of 3786137
Canada, exchangeable on a one-for-one basis at the option of their holders into
an aggregate of 11,913,140 shares of Common Stock (the "First Exchange Shares").
On January 24, 2001, after obtaining required regulatory approvals from the
Quebec Securities Commission, 3786137 Canada made an offer (the "Canadian
Offer") to the remaining stockholders and holders of convertible debentures of
TEC.com who are residents of Canada to exchange their TEC.com securities for
Exchangeable Shares on the same terms and conditions as those under which the
Company acquired the TEC.com securities from the Majority TEC.com Stockholders.
In the Canadian Offer, which was consummated in a series of transactions between
February 15, 2001 and March 31, 2001, (i) the Company acquired TEC.com Common
Shares and convertible debentures representing an additional 29.7% of the issued
and outstanding TEC.com Common Shares, and (ii) 3786137 Canada issued
Exchangeable Shares exchangeable on a one-for-one-basis at the option of their
holders into an aggregate of 3,307,946 shares of Common Stock (the "Second
Exchange Shares"). As of the Record Date, the Company had issued an aggregate of
15,221,086 shares of Common Stock issuable upon the exchange of the First
Exchange Shares and Second Exchange Shares, which is equivalent to 59.3% of the
Company's issued and outstanding shares of Common Stock.
Subject to required regulatory approvals, the Company presently
intends to offer to the remaining holders of TEC.com Common Shares and
convertible debentures the opportunity to exchange their TEC.com securities for
Exchangeable Shares on the same terms and conditions as those under which the
Company completed the prior exchanges. The Exchangeable Shares issuable to such
holders are referred to herein as the "Third Exchange Shares." The transactions
in which the First Exchange Shares and Second Exchange Shares were issued and
the Third Exchange Shares would be issued are referred to herein collectively as
the "Share Exchange Transactions" and individually as a "Share Exchange
Transaction."
Counsel to the Company has advised it that it would be desirable for
the Share Exchange Transactions to be ratified by the holders of a majority of
the outstanding shares of Common Stock both as of the Record Date and as of a
date prior to November 9, 2001. The holders of a majority of the outstanding
shares of Common Stock as of October 3, 2000 have been provided with this proxy
statement and are expected to ratify by written consent the Share Exchange
Transactions prior to the Annual Meeting.
IDENTITY OF THE PARTIES
The Company (f/k/a Internet Food Co., Inc.) was incorporated under
the laws of the State of Nevada on April 14, 1998. The Company was originally
formed to sell retail gourmet and specialty cheese on the Internet and at a
retail location. At September 30, 2000, the Company reported assets of $9,296,
and current liabilities of $34,220. On October 31, 2000, in anticipation of the
Share Exchange
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Transactions, the Company transferred its assets and liabilities relating to
such business to Janice M. Demainew and Diane S. Button, then directors of the
Company, in consideration of the cancellation of 25,076,719 shares of Common
Stock. Additionally, the Company changed its name to "TECE, Inc."
TEC TechnologyEvaluation.com Corporation was incorporated in
November 1998. It was formed to focus on decision support and selection services
in the information technology industry. TEC.com commenced operations in January
1999 and in December 1999 launched its website, www.technologyevaluation.com, to
publish news analysis and research notes on matters of concern to the
information technology industry.
3786137 Canada was incorporated under the laws of Canada on October
10, 2000. All of its outstanding common stock is owned by the Company. Its
Exchangeable Shares are owned by former stockholders and holders of convertible
debentures of TEC.com. 3786137 Canada was formed and the Share Exchange
Transactions were structured to provide the holders of TEC.com Common Shares
with the opportunity to defer the recognition of capital gains under Canadian
tax laws as a result of the disposition of their TEC.com Common Shares, while
maintaining voting and economic rights in the Company.
As a result of the Share Exchange Transactions, the complete mailing
address and telephone number of the principal executive offices of each of the
Company, TEC.com and 3786137 Canada is 740 St. Maurice, Suite 410, Montreal,
Quebec, Canada H3C 1L5, Attention: Secretary; (514) 954-3665.
REASONS FOR THE TRANSACTION
The Company entered into the Share Exchange Transactions to acquire
an operating business in the information technology industry. The Company
believed that the information technology industry was an important and growing
segment of the economy. The Share Exchange Transactions also provided TEC.com
the opportunity to become part of a publicly-traded entity, which its former
management believed would provide an avenue to obtain additional financing for
the development of its products and/or future acquisitions. Additionally, the
Share Exchange Transactions allowed the former TEC.com stockholders to defer
recognition of gains under the Canadian tax laws as a result of the disposition
of their TEC.com Common Shares.
DESCRIPTION OF THE SHARE EXCHANGE TRANSACTIONS
The following is a summary of the material terms of the Share
Exchange Transactions. For additional information, you should carefully read the
Exchange Agreements, which are attached as Annex I to this proxy statement and
the Company's Annual Report on Form 10-KSB for the fiscal year ended December
31, 2000 (the "Annual Report"), which is being distributed together with this
proxy statement.
The Exchange Agreements provided for an exchange rate of one
Exchangeable Share for every two TEC.com Common Shares. The exchange rate was
determined by arm's length negotiation among the parties referred to above.
Among the factors considered were the financial condition of each corporation,
their future potential, and the market price of the shares of Common Stock. Each
beneficial holder of the Exchangeable Shares has voting rights in that number of
shares of Common Stock equal in number to the number of the Exchangeable Shares
held by such holder.
All of the Exchangeable Shares issued in the Share Exchange
Transactions are subject to the terms and conditions of an Exchange and Voting
Agreement (the "Voting Agreement") among the Company, 3786137 Canada, TEC.com
and Pierre Barnard (the "Trustee"). In order to facilitate the closing of the
Share Exchange Transaction with the Majority TEC.com Stockholders, the Company
also
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entered into a Support Agreement (the "Support Agreement") to guarantee certain
rights to the holders of Exchangeable Shares, including the right to receive
shares of Common Stock in exchange for their Exchangeable Shares. If the Share
Exchange Transactions are ratified and the Company issues any Third Exchange
Shares, they will be subject to the terms and conditions of the Voting Agreement
and the Support Agreement.
The Exchangeable Shares may be exchanged for an equal number of
shares of Common Stock (which shares are held by the Trustee for such exchange)
upon proper notification to the Company. The Company has issued and placed with
the Trustee the First Exchange Shares and Second Exchange Shares, consisting of
an aggregate of 15,221,086 shares of Common Stock, for use in exchange of the
Exchangeable Shares pursuant to the Exchange Agreements.
The Exchange Agreements set forth the rights and restrictions
pertaining to the Exchangeable Shares. The First Exchange Shares and Second
Exchange Shares will be held by the Trustee pending exchange of the Exchangeable
Shares. Upon exchange by the holder of Exchangeable Shares, a corresponding
number from the First Exchange Shares or the Second Exchange Shares, as the case
may be, will be released to the exchanging holder thereof and an equal number of
Exchangeable Shares will be delivered to the Company. The holders of
Exchangeable Shares have the right to vote their interests in the Company
directly or through the Trustee.
The First Exchange Shares and the Second Exchange Shares, while held
by the Trustee, will not be entitled to participate in dividends declared by the
Company, but the Company has agreed that should it declare a dividend on its
Common Stock, it will ensure that 3786137 Canada has the means to pay a like
dividend on the Exchangeable Shares. Additionally, only at such time as the
holders of Exchangeable Shares have exchanged such shares for the First Exchange
Shares and Second Exchange Shares will they have the right to direct the
disposition of such First Exchange Shares and the Second Exchange Shares.
The Exchange Agreements include the following provisions:
Exchange Rights on the Liquidation of the Company. Holders of the
Exchangeable Shares have the right, upon the occurrence and during the
continuance of any proceeding in bankruptcy, insolvency, liquidation,
dissolution or winding up commenced by 3786137 Canada or against 3786137 Canada,
to require the Company to purchase all or any part of the Exchangeable Shares
held by them at an amount equal to (a) the current market price of the Common
Stock on the last business day prior to the day of purchase plus (b) an
additional amount equal to the full amount of all dividends declared and paid on
the shares of Common Stock that have not been declared and paid on the
Exchangeable Shares.
Automatic Exchange on the Liquidation of the Company. In order for
holders of the Exchangeable Shares to participate on a pro rata basis with the
holders of the shares of Common Stock in the event of a voluntary or involuntary
dissolution, liquidation or winding-up of the Company, all of the then
outstanding Exchangeable Shares will be automatically exchanged for shares of
Common Stock in the absence of an affirmative written election from a holder of
Exchangeable Shares not to participate in the automatic exchange.
Retraction by Holder. A holder of Exchangeable Shares is entitled at
any time to require 3786137 Canada, subject to the Company's right to purchase
the Exchangeable Shares (the "Call Right"), to redeem any or all of the
Exchangeable Shares held by it for an amount equal to the current market price
of the Common Stock on the last business day prior to the retraction date (the
"Retraction Price"), which may be satisfied in full by 3786137 Canada causing to
be delivered to such holder one share of common stock of the Company held by the
Trustee for each Exchangeable Share held by the retracting holder. If the
Company exercises its Call Right, the retraction will be considered an offer to
sell the Exchangeable
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Shares to the Company at a price equal to (a) the Retraction Price plus (b) an
additional amount equal to the full amount of all dividends declared and paid on
the shares of Common Stock that have not been declared and paid on the
Exchangeable Shares.
Purchase for Cancellation. 3786137 Canada may at any time and from
time to time offer to purchase for cancellation all or any of the outstanding
Exchangeable Shares by tender to all of the holders of the Exchangeable Shares
then outstanding at any price per share determined by 3786137 Canada plus an
amount equal to all declared and unpaid dividends thereon. If in response to
such tender offer, more Exchangeable Shares are tendered than 3786137 Canada is
willing to purchase, 3786137 Canada will purchase as nearly as possible pro rata
according to the number of shares tendered by each holder.
Reciprocal Changes. If the Company issues or distributes warrants,
options or other rights to purchase its securities to the holders of its
outstanding Common Stock or issues shares or securities of any other class of
the Company than the Common Stock exchangeable for the Exchangeable Shares, or
evidences of indebtedness of the Company or assets of the Company, then 3786137
Canada will issue to the holders of the Exchangeable Shares the economic
equivalent on a per share basis of such rights, options, securities, shares,
evidences of indebtedness or other assets.
Reclassifications. If the Company subdivides, redivides or changes
the outstanding number of shares of its Common Stock into a greater number, or
reduces, combines or consolidates the outstanding number of its Common Stock
into a lesser number, or reclassifies or otherwise changes its Common Stock or
effects an amalgamation, merger, reorganization or other transaction affecting
its Common Stock, then 3786137 Canada will make the same or an economically
equivalent change simultaneously to, or in the rights of the holders of, the
Exchangeable Shares.
The Exchangeable Shares are considered in substance to be the same
as shares of Common Stock and consequently are included in the calculation of
the total issued and outstanding shares of the Company, as that number is used
for earnings per share and stockholders' equity presentation. The Share Exchange
Transactions do not result in any change in the rights of the outstanding shares
of Common Stock.
As of the Record Date, 3786137 Canada had acquired all of the
remaining TEC.com Common Shares and convertible debentures outstanding, with the
exception of 543,252 TEC.com Common Shares and convertible debentures having a
face value of $125,000, which are convertible into 294,120 TEC.com Common
Shares. In the event that all of the remaining holders of TEC.com securities
exchange such shares into Exchangeable Shares, 3786137 Canada would have issued
an aggregate of 15,639,759 Exchangeable Shares, which is equivalent to
approximately 60% of the Company's issued and outstanding shares of Common Stock
on a fully diluted basis.
As of November 9, 2000, control of the Company was acquired by the
Majority TEC.com Stockholders, by virtue of the issuance of the 11,913,140
Exchangeable Shares. Prior to the Share Exchange Transactions, the Company was
controlled by Janice M. Demainew and Diane S. Button, of Las Vegas, Nevada.
CONSIDERATION
The sole source of consideration for issuance to the TEC.com
stockholders of the Exchangeable Shares is the exchange of the TEC.com Common
Shares and convertible debentures held by them. At such time as the holders of
Exchangeable Shares exchange such shares for Common Stock, the sole source of
consideration for the transfer to them of the Common Stock will be such
Exchangeable Shares.
10
TRANSACTIONS WITH DIRECTORS, EXECUTIVE OFFICERS AND AFFILIATES
The following table lists the number of Exchangeable Shares that
were issued to directors, executive officers and affiliates of TEC.com
immediately prior to the first Share Exchange Transaction.
Position Held /Relationship Number of Exchangeable
Name with TEC.com Shares Issued
Manitex Holder of more than 5% of outstanding TEC.com 4,284,441
shares
Intasys Holder of more than 5% of outstanding TEC.com 6,552,710
shares
Donald J. Lobley Director, Founder 1,105,989
Additionally, Mr. Telmosse, the Company's Chief Executive Officer
was issued 100,000 Exchangeable Shares in exchange for 200,000 TEC.com Common
Shares he held.
ACCOUNTING TREATMENT/CERTAIN UNITED STATES AND CANADIAN FEDERAL INCOME TAX
CONSIDERATIONS
For accounting purposes, the Share Exchange Transactions are treated
as a recapitalization of TEC.com with the Company and the issuance of shares to
the stockholders of the Company for an amount equivalent to the par value of the
shares of Common Stock. The Share Exchange Transactions are not a business
combination. The transaction costs have been charged to the statement of loss
since the cash held by the Company was minimal prior to the Share Exchange
Transactions.
There are no United States income tax effects of the Share Exchange
Transactions on the holders of Common Stock.
The Share Exchange Transactions were structured to provide the
stockholders of TEC.com with the opportunity to defer the recognition of capital
gains under Canadian tax laws upon the disposition of their TEC.com stock.
GOVERNMENTAL AND REGULATORY APPROVALS
The Company, 3786137 Canada and TEC.com were required to obtain and
did obtain approval from the Quebec Securities Commission in order to make and
consummate the Canadian Offer. Depending upon the domicile of the holders of the
remaining TEC.com securities, the approval of one or more regulatory authorities
may be required to consummate an exchange of securities with them.
DESCRIPTION OF BUSINESS, MARKET PRICE AND DIVIDENDS AND MANAGEMENT'S DISCUSSION
AND ANALYSIS; FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL STATEMENTS
The information set forth in "Item 1. Description of Business,"
"Item 5. Market for Common Stock and Related Stockholder Matters," "Item 6.
Management's Discussion and Analysis or Plan of Operations," and "Item 7.
Financial Statements" of the Annual Report is incorporated herein by reference.
See Annex II to the proxy statement for pro forma financial
information of the Company.
REQUIRED VOTE
The affirmative vote of a majority of the outstanding shares of
Common Stock as of the Record Date is required to approve the proposal to ratify
the Share Exchange Transactions. The Company
11
expects to obtain prior to the Annual Meeting the ratification of the holders of
a majority of the outstanding shares of Common Stock as of October 3, 2000.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
APPROVAL OF THE PROPOSAL TO RATIFY THE SHARE EXCHANGE TRANSACTIONS
BY AND AMONG THE COMPANY, 3786137 CANADA, TEC.COM AND THE
STOCKHOLDERS OF TEC.COM
PROPOSAL 2
APPROVAL OF ADOPTION OF AMENDED AND RESTATED
ARTICLES OF INCORPORATION OF THE COMPANY
The Board of Directors recommends the approval of the adoption of
the proposed Amended and Restated Articles of Incorporation. The Board of
Directors believes that it would be desirable to amend and restate the Articles
of Incorporation because of the extent of the changes proposed to be made in
them and for ease of future reference. In approving this proposal, the
stockholders will be (i) ratifying a change in the Company's name from "Internet
Food Co., Inc." to "TECE, Inc."; (ii) approving an increase from 50,000,000 to
100,000,000 in the Company's authorized shares of Common Stock and the creation
of a new class of Preferred Stock consisting of five million (5,000,000) shares,
par value $.001 per share (the "Preferred Stock"); and (iii) approving a
provision that would make mandatory the indemnification of directors and
officers to the fullest extent provided by he Nevada General Corporation Law
(the "NGCL"). The amended provisions relating to the Company's capital structure
will also remove references to any prior actions by the Company relating to its
capital structure.
The following describes the ratification of the name change and the
proposed changes in the Company's capital structure. The Amended and Restated
Articles of Incorporation are attached hereto as Annex III and this discussion
of the Amended and Restated Articles of Incorporation is qualified in its
entirety by reference to Annex III.
CHANGE IN CORPORATE NAME
Prior to October 2000, the Company was a publicly-traded corporation
without operations known as "Internet Food Co, Inc." In connection with the
Share Exchange Transactions, the Company sought to change its name to "TECE,
Inc." so that the Company's name would be aligned with its operating business.
Ratification of the name change is necessary because the Company did not
previously obtain the approval of stockholders of the Company, as required by
the NGCL. In addition to ensuring that the Company's name would be aligned with
its operating business, the ratification of the name change would eliminate
potential confusion over the identity of the Company, because it has been doing
business and has filed reports with the Commission as "TECE, Inc." since October
10, 2000.
There will be no consequences to stockholders of the ratification of
the name change. If this proposal is adopted, stockholders will not be required
to exchange outstanding stock certificates for new certificates.
INCREASE IN AUTHORIZED CAPITAL
The Company is currently authorized to issue 50,000,000 shares of
Common Stock. As of the Record Date, 25,665,757 shares of Common Stock were
issued and outstanding (including 15,221,086 Trust Shares), 3,262,500 shares of
Common Stock were reserved for issuance upon the exercise of
12
options granted or to be granted under the Plan and 1,000,000 shares of Common
Stock were reserved for issuance upon exercise of outstanding warrants. If this
Proposal 2 is approved, the Company's authorized shares of Common Stock would
increase from fifty million (50,000,000) shares to one hundred million
(100,000,000) shares, and five million (5,000,000) shares of Preferred Stock
would be authorized.
The Company anticipates that it will seek to raise additional equity
capital over the next several years. These efforts may include both public and
private offerings of Common Stock, as well as other securities exercisable for
or convertible into Common Stock. The Company currently does not have any
specific plans, understandings or agreements for the issuance or use of the
proposed additional shares of Common Stock or Preferred Stock. The Board of
Directors believes that if an increase in the authorized number of shares of
Common Stock and the authorization of Preferred Stock were to be postponed until
a specific need arose, the delay and expense incident to obtaining the approval
of the Company's stockholders at that time could significantly impair the
Company's ability to meet its financing objectives.
The Board of Directors believes the proposed increase in the number
of authorized shares of Common Stock is necessary to provide the Company with
the flexibility to act in the future with respect to financing programs,
acquisitions, mergers, stock splits, convertible debt financing, employee
benefit plans and other corporate purposes. If the proposed Amended and Restated
Articles of Incorporation become effective, the Board of Directors will be free
to issue the additional authorized shares of Common Stock without further action
on the part of stockholders (except as may be required for a particular
transaction by applicable law, requirements of regulatory agencies or by stock
exchange or automated quotation system rules). The additional shares of Common
Stock to be authorized will have rights identical to the shares of Common Stock
currently outstanding.
The Board of Directors also believes the complexity of modern
business financing and possible future transactions require greater flexibility
in the Company's capital structure than currently exists. Should Preferred Stock
be issued, the powers, preferences and rights, such as dividend or interest
rates, conversion prices, voting rights, redemption prices, maturity dates and
similar matters, would be determined by the Board of Directors, without further
authorization of the stockholders. If this proposal is approved, the Board of
Directors would be permitted to issue Preferred Stock from time to time for any
proper corporate purpose. Shares of Preferred Stock could be issued publicly or
privately, in one or moreseries, and each series of Preferred Stock would rank
senior to the Common Stock with respect to dividend and/or liquidation rights
and could have greater voting power than the Common Stock.
The authorization of additional shares of Common Stock under this
proposal will itself have no dilutive effect upon the proportionate voting power
of the present stockholders of the Company. However, to the extent that the
Company subsequently issues shares of Common Stock and Preferred Stock to
persons other than the present stockholders, the issuance could have a
substantial dilutive effect on present stockholders. The issuance of additional
shares of Common Stock and Preferred Stock may also have the effect of diluting
the stock ownership of persons seeking to obtain control of the Company.
Although the Board of Directors has no present intention of doing so, the
Company's authorized but unissued Common Stock and Preferred Stock could be
issued in one or more transactions that would make it more difficult or costly,
and less likely, to take control of the Company. The proposed amendment to the
Company's Articles of Incorporation is not being recommended in response to any
specific effort to obtain control of the Company of which the Company is aware.
No stockholder of the Company will have any preemptive rights regarding future
issuance of any shares of Common Stock or Preferred Stock.
13
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article VIII of the proposed Amended and Restated Articles of
Incorporation would require the Corporation, to the fullest extent permitted by
the provisions of the NGCL, to indemnify each person who is or was a director or
officer of the Corporation. Such indemnification would not be exclusive of any
other indemnification rights to which a person might be entitled under any
by-law, agreement, vote of stockholders or disinterested directors or otherwise.
It would continue as to persons who cease to be directors and officers and would
inure to such persons' heirs, executors and administrators. There is no
indemnification provision in the current Articles of Incorporation of the
Company, but the Board of Directors believes that in all likelihood
indemnification would be authorized by it in all appropriate cases.
The effect of the inclusion of proposed Article VIII would be to
make mandatory indemnification of directors and officers, which is permissive
under the NGCL. The Board of Directors believes that Article VIII is necessary
to remove uncertainty as to the degree of protection the Company would provide
to its directors and officers. For example, without the provision, the decision
to provide indemnification would reside with a Board of Directors that could be
hostile to a person seeking indemnification, particularly if there were to be a
change of control of the Company.
The Board of Directors believes that without protection from the
risk of unfounded litigation against directors and officers, individuals would
be unwilling to serve or to continue to serve the Company in such capacities. It
believes that the inclusion of proposed Article VIII would serve the best
interests of the Company and its stockholders by strengthening the Company's
ability to attract and retain the services of knowledgeable and experienced
persons as directors and officers. Moreover, as a matter of fairness, the
Board of Directors believes that the Company should provide the maximum possible
protection to its directors and officers. At present, there is no pending
litigation or proceeding involving directors or officers of the Company and the
Company is not aware of any such threatened litigation or proceeding for which
indemnification has been or may be requested.
REQUIRED VOTE
The affirmative vote of a majority of the outstanding shares of
Common Stock is required to approve the proposal to amend and restate the
Company's Articles of Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
APPROVAL OF THE PROPOSAL TO ADOPT AMENDED AND RESTATED
ARTICLES OF INCORPORATION OF THE COMPANY
PROPOSAL 3
ELECTION OF THE BOARD OF DIRECTORS
Six directors will be elected at the Annual Meeting each to serve
for a one-year term until the 2002 Annual Meeting of Stockholders and until
their successors are elected and qualified. Unless otherwise specified, all
Proxies received will be voted in favor of the election of the persons named
below as directors of the Company.
Each of the nominees is currently serving as a director of the
Company. The terms of office of the current directors expire at the Annual
Meeting, and when their successors are duly elected and qualify. Management has
no reason to believe that any of the nominees will be unable or unwilling to
serve as a director, if elected. Should any of the nominees not remain a
candidate for election at the date of the
14
Annual Meeting, the Proxies will be voted in favor of those nominees who remain
candidates and may be voted for substitute nominees selected by the Board of
Directors. The names of the nominees and certain information concerning them are
set forth below:
Nominee Age Director Since
------- --- --------------
Philip W. Roizin 42 February 2001
Guy Faure 43 November 2000
Louis Lu 42 November 2000
Steve Saviuk 42 October 2000
Andre Telmosse 42 November 2000
Claude E. Forget 64 October 2000
CLAUDE E. FORGET, an Officer of the Order of Canada, is an
independent consultant with experience and interest in the areas of regulatory
affairs, public policy analysis and business strategies in the financial and
telecommunications sectors. He holds bachelor's degrees in law from the
Universite de Montreal, in economics from the London School of Economics and
Political Science, a master's degree in public finance and studied towards a
doctoral degree in economics and operations research from Johns Hopkins
University. He has been an independent consultant since 1996. He currently
serves as a director of Intasys, a global provider of wireless
Internet-compatible billing and customer information systems and a strategic
investor in the technology industry with a concentration in the wireless and
e-commerce sectors, and is Chairman and CEO of its subsidiary, Intasys Billing
Technologies (f/k/a Noha Systems Inc.), a provider of billing and customer
information systems.
ANDRE TELMOSSE is an engineering graduate of Ecole Polytechnique,
Montreal. From 1993 until his employment by the Company, Mr. Telmosse was a
partner at Andersen Consulting in Montreal where he was actively involved in
large-scale technology initiatives, such as Customer Relationship Management and
eCommerce and had successfully implemented Information Technology projects in
several industries, including telecommunications and aerospace. He became the
Company's Chief Executive Officer on November 16, 2000.
STEVE SAVIUK, C.A., is a chartered accountant with extensive
experience in the telecommunications, investment and software industries. He has
worked closely with technology companies throughout his career in strategic
planning, financing and management. Since 1995, Mr. Saviuk has been the
President of Manitex, a diversified technology investment company, where he
plays significant roles with companies active in satellite transmission, the
development of fiber optic components and the provision of technology to the
cellular telephone industry. He serves on the board of directors of Manitex, NSI
Communications Inc., a satellite communications company, Pinetree CapitalCorp.,
a venture capital company, and is currently Chairman of the Board and Chief
Executive Officer of Intasys.
LOUIS LU is a chartered accountant and since 1990, the executive
vice-president of Alpha Capital Inc., an investment bank focusing on the
technology and telecommunications sectors. He holds a
15
bachelors degree from the University of Hautes Etudes Commerciales in Montreal.
He currently is a director of Manitex.
GUY FAURE has a background in corporate management, sales and
marketing and strategic planning. From 1988 to 1993, Mr. Faure gained pioneering
knowledge in the e-commerce industry as a co-founder of Mpact Media (now known
as BCE Emergis, an electronic news services company. From 1994 to 1997, Mr.
Faure was General Manager of the Internet services and applications division of
Le Groupe Videotron Ltee, a communications and media company. From 1997 to 1998,
Mr. Faure was Vice President Operations at Quebecor Multimedia, a leading
integrator of Internet based applications of Fortune 1000 companies. From 1998
to the present, Mr. Faure has been an independent consultant focusing on the
Internet and e-commerce industries. He has a Bachelor of Commerce degree in
marketing and accounting from Concordia University.
PHILIP W. ROIZIN holds a Masters in Business Administration in
Finance from The Wharton School and a Bachelor of Commerce from McGill
University. Since December 1996, Mr. Roizin has been an Executive Vice President
of Finance and Administration of Brookstone, Inc., a specialty retailer. From
May 1995 to December 1996, Mr. Roizin served as Chief Financial Officer of the
Franklin Mint, a creator and supplier of collectibles and die casts. From June
1989 to May 1995, Mr. Roizin held various senior positions with Dole Food
Company, including Vice President/General Manager of Dole Beverages and Vice
President of Strategic Services.
MEETINGS
The Board of Directors held one meeting during the period beginning
on November 9, 2000 and ending on December 31, 2000. All directors were present
in at least 75% of the number of meetings of the Board of Directors, except as
indicated below, and each member of the Audit Committee was present in at least
75% of its number of meetings. From time to time, the members of the Board of
Directors may act by unanimous written consent pursuant to the NGCL.
COMMITTEES OF THE BOARD OF DIRECTORS
The Audit Committee of the Board of Directors reviews the Company's
financial statements and recommends to the Board of Directors that such
financial statements be included in the Company's annual report, reviews filings
with the Commission that contain financial statements of the Company, reviews
and recommends to the Board of Directors the independent auditors to be
selected, reviews the nature and scope of other professional services provided
to the Company by the independent auditors, and reviews the adequacy and
effectiveness of the accounting and financial controls of the Company. For the
fiscal year ended December 31, 2000, the chairman of the Audit Committee was
Claude E. Forget and the members were Louis Lu and Philip Roizin. The Company
believes that all members of the Audit Committee are independent, as
independence is defined in Rule 4200(a)(14) of the NASD listing standards. The
Audit Committee has adopted a written Audit Committee Charter that is attached
hereto as Annex IV.
The Audit Committee held three meetings to discuss the financial
statements for the fiscal year ended December 31, 2000. Messrs. Forget and Lu
were present at all meetings and Mr. Roizin was present at one such meeting.
Members of the Audit Committee have reviewed and discussed the audited financial
statements with the management of the Company and have discussed matters
required to be discussed by SAS61 (Codification of Statements on Auditing
Standards, AU Section 380) with PricewaterhouseCoopers LLP, the Company's
independent auditors for the fiscal year ended December 31, 2000. The Audit
Committee has received the written disclosures and the letter from
PricewaterhouseCoopers LLP, as required by the Independent Standards Board
Standard No. 1, and have
15
recommended that the audited financial statements be included in the Company's
annual report for the fiscal year ended December 31, 2000.
The Company also has a Human Resources Committee which makes
recommendations to the Board of Directors on matters concerning salaries and
incentive compensation, such as stock options, for employees of and consultants
to the Company. For the fiscal year ended December 31, 2000, the members of
Human Resources Committee were Andre Telmosse and Steve Saviuk. Both members of
the Human Resources Committee were present in the meeting of the committee
during the fiscal year ended December 31, 2000.
The Company presently does not have a nominating committee, the
customary function of this committee being performed by the entire Board of
Directors.
OTHER EXECUTIVE OFFICERS
MICHAEL CLAYTON holds a Bachelor of Commerce in Accounting from
Concordia University and a Graduate Diploma in Public Accounting from McGill
University. From 1996 to 2000 he was Chief Financial Officer at Almec Leisure
Group, a sporting goods distributor. From 1989 to 1996, he was the Chief
Financial Officer of Syprotec Inc., a manufacturer of analytical instruments,
where he was active in the restructuring of this company before its sale to
General Electric in 1999. From 1985 to 1989, Mr. Clayton was with Ernst &
Young LLP, an international accounting and consulting firm.
DAVID PEREZ has been employed as general counsel to Intasys since
February 2000. From 1999 to January 2000 and from 1995 to 1999, respectively,
Mr. Perez held positions as an associate lawyer in the corporate and commercial
law departments of Heenan Blaikie and Lafleur Brown, Montreal law firms. Mr.
Perez is a member of the Quebec Bar and holds Bachelor of Arts degrees in Civil
Law and Common Law and a Bachelor of Science degree in Biology from McGill
University.
YVES PAYETTE is an engineering graduate of Ecole Polytechnique,
Montreal. In 1990, he co-founded Systeme M3I Inc. a software company selling
distribution management systems to the utility market. From 1996 until 1998, he
was Chief Executive Officer of TUNE1000 Corp., a software company in the
entertainment industry. From 1998 until 2000, he was President of Solutions QYP
Inc., a consulting company in the information technology industry. Mr. Payette
has served as the Company's Chief Technology Officer since December 2000.
BOARD OF DIRECTORS COMPENSATION
The members of the Board of Directors currently are not paid any
directors fee for their services on the Board of Directors. Directors are
reimbursed for their expenses incurred in attending meetings of the Board of
Directors. Under the terms of the Plan, directors are eligible for the grant of
options. The Compensation Committee of the Board of Directors will determine the
remuneration of the Company's directors and officers during the current and
subsequent fiscal years.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE ELECTION OF EACH OF THE NOMINEES
17
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVES
The following table sets forth, for the periods indicated, all
compensation awarded to, earned by or paid to the Chief Executive Officer of the
Company. No other executive officers of the Company or TEC.com received annual
compensation in excess of US $100,000 during the periods indicated. All amounts
presented in this Proxy Statement are in U.S. currency unless otherwise
specified.
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation (Awards):
-------------------- ---------------------
Securities
Name and Position Fiscal Year Salary Bonus(2) Underlying Options (#)
----------------- ----------- ------ -------- ----------------------
Andre Telmosse 2000 $31,557(1) $0 400,000(3)
Chief Executive Officer
- ----------------
(1) Mr. Telmosse joined the Company on November 16, 2000. His salary has
been set at $250,000 per year.
(2) Certain of the executive officers of the Company routinely receive
other benefits from the Company, the amounts of which are customary
in the Company's industry. The Company has concluded, after
reasonable inquiry, that the aggregate amounts of such benefits
during each of the periods reflected in the table above did not
exceed the lesser of US$50,000 or 10% of the compensation set forth
above for any named individual in respect of any such period.
(3) Represents 400,000 Exchangeable Shares that were issued in exchange
for 800,000 shares of common stock of TEC.com issued to Mr. Telmosse
upon his exercise of options prior to the Share Exchange
Transactions.
OPTION GRANTS
The option to acquire 800,000 shares of TEC.com at an exercise price
of $0.25 per share was granted to Mr. Telmosse in the fiscal year ended December
31, 2000. The Company has never granted any stock appreciation rights.
AGGREGATED FISCAL YEAR-END OPTION EXERCISES AND OPTION VALUES
Mr. Telmosse held no unexercised stock options as of December 31,
2000. Mr. Telmosse exercised options to purchase 800,000 shares of TEC.com on
October 20, 2000, 200,000 shares of which were exchanged by Mr. Telmosse for
100,000 Exchangeable Shares on October 20, 2000 pursuant to the terms of the
Canadian Offer as described in Proposal 1.
OTHER COMPENSATION PLANS
The Company has no other long term incentive plans for its executive
officers or directors, except as described under "Employment Arrangement."
18
EMPLOYMENT ARRANGEMENT
Andre Telmosse, the President and Chief Executive Officer of the
Company, entered the Company's employ on November 16, 2000. He receives a base
salary of $250,000, which amount is to be annually reviewed and may be increased
by the board of directors, and a minimum guaranteed annual bonus of $25,000 per
year. Mr. Telmosse will also receive short term incentive compensation for each
fiscal year during the term of his employment equal to 75% of his base salary
upon obtaining a predetermined "target" level of performance with a minimum
compensation of 50% of his base salary guaranteed in the first year, and up to
125% of his base salary for performance above the "target" level. Mr. Telmosse
also receives long term incentives in the form of options to purchase 1,240,000
shares of Common Stock granted on February 22, 2001 at an exercise price of
US$.75 per share, with 365,000 options having vested as of the date of grant,
and the remainder vesting at the rate of 125,000 options each quarter starting
on May 15, 2001.
Mr. Telmosse's employment is for an indefinite term. If he is
terminated other than for "cause" (as defined), within 18 months after the date
of employment, and he executes a prescribed form of confidentiality agreement,
he is to continue to receive the base salary, annual bonus and short term
incentive compensation to which he is presently entitled for a period (the
"Severance Period") of two years. If Mr. Telmosse is terminated other than for
"cause" more than 18 months after the date of his employment, and he executes
such confidentiality agreement, the Severance Period will be 1 1/2 years and the
same compensation terms will apply. If he is terminated other than for "cause"
either within or after 18 months of the date of employment, relocation expenses
of up to $15,000 could be reimbursed by the Company, and all shares subject to
previously granted options that would have vested during the Severance Period
vest upon termination and will be exercisable by Mr. Telmosse within one year
after such termination.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors
and executive officers and persons who beneficially own more than 10% of the
Company's Common Stock to file with the Commission reports of ownership of
Common Stock and other equity securities of the Company. Officers, directors and
greater than 10% stockholders are required to furnish the Company with copies of
all Section 16(a) reports they file. To the Company's knowledge, based solely on
a review of copies of such reports furnished to the Company in respect of the
fiscal year ended December 31, 2000, all required Section 16(a) filings were
timely made.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
EXCHANGE AGREEMENTS
Reference is made to the summary of the Share Exchange Transactions
in Proposal 1 contained in this proxy statement.
19
PROPOSAL 4
ADOPTION OF THE COMPANY'S 2001 STOCK OPTION PLAN
The Board of Directors has unanimously approved for submission to a
vote of the stockholders a proposal to approve the Company's 2001 Stock Option
Plan as set forth in Annex V to this Proxy Statement (the "Plan"). This
discussion is qualified in its entirety by reference to Annex V.
The purposes of the Plan are to enable the Company to attract and
retain persons of ability as directors, officers and key employees with
managerial, professional or supervisory responsibilities, to retain able
consultants and advisors, and to motivate such persons to use their best efforts
on behalf of the Company, by providing them with an equity participation in the
Company. The Board of Directors believes that it is in the best interests of the
Company and its stockholders to approve the Plan, because it provides the
Company with greater ability to attract and retain key personnel.
The Plan is intended to meet the requirements of Rule 16b-3 under
the Exchange Act, as well as to satisfy the performance-based compensation
exception to the limitation on deductions imposed by Section 162(m) of the
United States Internal Revenue Code of 1986, as amended (the "Code").
THE PLAN
THE PARTICIPANTS
Options to purchase shares of Common Stock (the "Options") may be
granted to directors, officers and other full-time salaried employees of the
Company and consultants and advisors to the Company. There are 27 employees and
directors who are eligible to be granted Options under the Plan.
THE SHARES
Under the Plan, options to purchase up to an aggregate of 3,000,000
shares of Common Stock may be granted. There were outstanding at March 31, 2001
options to purchase an aggregate of 2,005,000 shares at an exercise price of
$0.75.
ADMINISTRATION OF THE PLAN
The Plan is administered by the Board of Directors. The Board of
Directors has created a Human Resources Committee which recommends to the Board
of Directors, subject to the terms and conditions of the Plan, the persons to
whom options are granted, the number of shares covered by options granted to
each optionee, and the terms and conditions of options (which need not be
identical). The aggregate number of shares underlying options that may be
granted in any calendar year to any one person is 1,250,000.
The Plan may be amended, suspended, reinstated or terminated by the
Board of Directors; provided; however, that without approval of affected
optionees, no amendment may be made that adversely affects the benefits accruing
to optionees under the Plan.
20
OPTION PRICE
Options may be granted at an exercise price established by the Board
of Directors, which in no event may be lower than the fair market value of the
Common Stock on the date of grant.
TERMS OF OPTIONS
Options granted under the Plan may be "incentive options" within the
meaning of Section 422 of the Code or nonqualified options. Options may be
granted for terms of up to 10 years. The Plan provides that if an Option, or
portion thereof, expires, lapses without being exercised or is terminated,
canceled or surrendered for any reason without being exercised in full, the
unpurchased shares of Common Stock that were subject to such Option or portion
thereof shall be available for future grants of stock options.
Options granted under the Plan are not assignable or transferable,
except by will or the laws of intestate succession. Options granted under the
Plan may be exercised by the optionee (or the optionee's legal representative)
only while the optionee is employed by the Company, or within one year after
termination of employment due to a permanent disability, or within 90 days after
termination of employment due to retirement. The executor or administrator of a
deceased optionee's estate or the person or persons to whom the deceased
optionee's rights thereunder have passed by will or by the laws of descent and
distribution shall be entitled to exercise the Option within one year after the
decedent's death. Options expire immediately in the event an optionee is
terminated with cause or resigns. All of the aforementioned exercise periods are
subject to the further limitation that an option will not, in any case, be
exercisable beyond its stated expiration date.
The Board of Directors has the discretion at any time to accelerate
the vesting of all or any portion of an Option. In addition, in the event of a
change of control (as defined), the Board of Directors may determine that
Options shall terminate at a specified time after notice to optionees, with each
optionee to receive an amount in cash equal to the fair market value of the
shares of Common Stock underlying the Options held by him over the aggregate
exercise price of such Options.
The exercise price and the number and kind of shares that may be
purchased upon exercise of Options and the number of shares subject to Options
are subject to adjustment in certain events, including stock splits,
recapitalizations, mergers and reorganizations. Upon a change of control, in the
event that the Board of Directors does not terminate outstanding Options as
provided in the preceding paragraph, any surviving or acquiring corporation is
to assume outstanding Options or substitute similar options, failing which the
vesting of all outstanding Options will be accelerated in full and the Options
will terminate if not exercised prior to the change of control.
OPTIONS GRANTED UNDER THE PLAN
During the fiscal year ended December 31, 2000 and through the
Record Date, options to purchase shares of Common Stock have been granted
pursuant to the Plan to (i) the Chairman of the Board and President, (ii) the
Chief Executive Officer, (iii) each Director nominee, (iv) each officer of the
Company (v) all current executive officers as a group and (vi) all employees,
including all current officers who are not executive officers, as a group as
follows.
Name Number of Options #(1)(2)
---- -------------------------
Claude E. Forget 175,000
Chairman of the Board
21
Andre Telmosse 1,240,000
Director and Chief Executive Officer
Louis Lu 50,000
Director
Steve Saviuk 50,000
Director
Guy Faure 75,000
Director
Philip Roizin 75,000
Director
Yves Payette 300,000
Chief Technology Officer
Michael Clayton 50,000 (3)
Chief Financial Officer
All Executive Officers as a Group (2 1,580,000
persons)
All non-Executive Officers as a 265,000
Group (26 persons)
All non-employee Directors as a 425,000
Group (5 persons)]
(1) On the Record Date, the last reported sale price of the Common Stock
as reported on the Over the Counter Bulletin Board was $0.405
per share.
(2) Information contained in this table is duplicative of information
contained in "Executive Compensation" and does not signify
additional grants of options to purchase shares of Common Stock.
(3) Includes options to purchase the equivalent of 10,000 shares of
Common Stock originally granted under the TEC.com stock option plan.
REGISTRATION OF SHARES
The Company intends to file a registration statement under the
Securities Act of 1933, as amended, with respect to the Common Stock issuable
pursuant to the Plan, if the Plan is approved by the Company's stockholders.
REQUIRED VOTE
The affirmative vote of a majority of the votes cast is required for
approval of the adoption of the Plan.
22
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE APPROVAL OF THE ADOPTION OF THE STOCK OPTION INCENTIVE PLAN
OF THE COMPANY
PROPOSAL 5
RATIFICATION OF SELECTION OF AUDITORS OF THE COMPANY
Prior to the Share Exchange Transactions described in Proposal 1,
the independent auditors of the Company were Hawkins Accounting of Salinas,
California and the independent auditors of TEC.com were PricewaterhouseCoopers
LLP. As a result of the Share Exchange Transactions, PricewaterhouseCoopers LLP
has become the Company's independent auditors. The Company had no disagreement
with Hawkins Accounting.
The Board of Directors has appointed PricewaterhouseCoopers LLP as
the Company's independent auditors for the fiscal year ending December 31, 2001.
Although the selection of auditors does not require ratification, the Board of
Directors has directed that the appointment of PricewaterhouseCoopers LLP be
submitted to stockholders for ratification due to the significance to the
Company of such appointment. If stockholders do not ratify the appointment of
PricewaterhouseCoopers LLP, the Board of Directors will consider the appointment
of other certified public accountants.
The Company's auditors for the fiscal year ended December 31, 2000
were Pricewaterhouse-Coopers LLP. The fees paid to PricewaterhouseCoopers LLP
for the fiscal year ended December 31, 2000 are as follows:
Audit Fees: The aggregate fees billed for professional services
rendered by Pricewaterhouse-Coopers LLP for the audit of the Company's annual
financial statements for the fiscal year ended December 31, 2000 was CDN$50,000.
Financial Information Systems Design And Implementation Fees: No
fees were billed for professional services rendered by PricewaterhouseCoopers
LLP for financial information systems design and implementation services for the
fiscal year ended December 31, 2000.
All Other Fees: The aggregate fees billed for services rendered by
PricewaterhouseCoopers LLP, other than the services referred to above, for the
fiscal year ended December 31, 2000 were approximately CDN$100,000.
The Audit Committee has considered whether the provision by
PricewaterhouseCoopers LLP of the services covered by the fees other than the
audit fees is compatible with maintaining PricewaterhouseCoopers's independence
and has determined that it is compatible.
PricewaterhouseCoopers LLP has advised the Company that a
representative will be present at the Annual Meeting, at which time he will
respond to appropriate questions submitted by stockholders and will make such
statements as he may desire.
23
REQUIRED VOTE
The approval of the proposal to ratify the appointment of
PricewaterhouseCoopers LLP requires the affirmative vote of a majority of the
votes cast.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP
STOCKHOLDER PROPOSALS
Stockholder proposals made in accordance with Rule 14a-8 under the
Exchange Act and intended to be presented at the Company's 2002 Annual Meeting
of Stockholders must be received by the Company at its principal office in
Montreal, Quebec, Canada no later than January 14, 2002 for inclusion in the
proxy statement for that meeting.
In addition, Rule 14a-4 under the Exchange Act requires that a
stockholder give advance notice to the Company of other matters that the
stockholder wishes to present for action at an annual meeting of stockholders.
Such stockholder's notice must be given in writing, include the information
required by the Bylaws of the Company, and be delivered or mailed by first class
United States mail, postage prepaid, to the Secretary of the Company at its
principal offices. The Company must receive such notice not less than 45 days
prior to the date in the current year that corresponds to the date in the prior
year on which the Company first mailed its proxy materials for the prior year's
annual meeting of stockholders. While the Company has not yet set the date of
its 2002 Annual Meeting of Stockholders, if it were held on June 21, 2002 (the
date that corresponds to the date on which the Annual Meeting is being held),
notice of a director nomination or stockholder proposal made otherwise than in
accordance with Rule 14a-8 would be required to be given to the Company no later
than May 6, 2002.
ANNUAL REPORT
All stockholders of record as of the Record Date have been sent, or
are concurrently herewith being sent, a copy of the Company's Annual Report on
Form 10-KSB for the fiscal year ended December 31, 2000, which contains
certified financial statements of the Company for the fiscal year ended December
31, 2000.
OTHER MATTERS
The Board of Directors knows of no other business that will be
presented to the Annual Meeting. If any other business is properly brought
before the Annual Meeting, it is intended that proxies in the enclosed form will
be voted with respect to any such matters in accordance with the judgment of the
persons voting the proxies.
By Order of the Board of Directors,
David Perez
Secretary
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Annex I
SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT (the "Agreement") is made and entered into as of
October 10, 2000, by and between Tece Inc, formerly Internet Food Co. Inc., a
company incorporated under the laws of the State of Nevada ("IFCO"), 3786137
Canada Inc. ("Teccan"), a corporation incorporated under the laws of Canada, Tec
Technologyvaluation.com Corporation ("Tec"), a corporation incorporated under
the laws of Canada, and Manitex Capital Inc. a corporation incorporated under
the laws of Canada and the Tec Shareholders who have signed Exhibit A
(collectively "Manitex").
RECITALS
A. The Boards of Directors of IFCO, Tec and Teccan deem it advisable and
in the best interests of such corporations, and their respective
shareholders, that Tec become a subsidiary of IFCO.
B. Pursuant to this Share Exchange, all of the shareholders of Tec will be
proposed to exchange their Tec Common Shares for Exchangeable Shares of
Teccan, which shall be exchangeable into shares of IFCO's Common Stock
in accordance with the terms and conditions of this Agreement.
C. The Share Exchange is being undertaken by the parties in order to
facilitate the aggregate investment of a minimum of US$ 4,000,000 in
IFCO and Tec by private investors (colletively referred to as the
"Investors").
D. In order to facilitate the Share Exchange, IFCO has agreed to enter
into the Exchange and Voting Agreement and the Support Agreement to
guarantee certain rights to the holders of Exchangeable Shares,
including the right to receive shares of IFCO Common Stock in exchange
for their Exchangeable Shares.
E. In order to facilitate the Share Exchange, Manitex has agreed to
transfer to Teccan, contemporaneously with the signing of this
Agreement, the Tec Common Shares listed in Exhibit A, in exchange for
Exchangeable Shares, thereby giving effective control of Tec to Teccan.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
promises set forth in this Agreement, the parties agree as follows:
ARTICLE I
DEFINITIONS
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When used in this agreement, or any Exhibit or Schedule in which terms are not
otherwise defined, each of the following terms will have the meaning ascribed to
it in this Article I.
1.1 ACT means the Canada Business Corporations Act.
1.2 AGREEMENT means this Share Exchange Agreement, including all Exhibits.
1.3 CLOSING DATE means the date of closing for the Share Exchange pursuant
to the Offer. The parties have targeted and agree to a closing date at
the latest within a maximum delay of 60 days of the Effective Date,
unless otherwise agreed to by both parties in writing.
1.4 EFFECTIVE DATE means the date on which this Agreement becomes effective
in accordance with Article II, which will be 5:00 p.m., Montreal time,
on the date of signing of this Agreement, or such other date and time
as the parties may agree in writing.
1.5 EXCHANGE AND VOTING AGREEMENT means the Agreement reproduced in Exhibit
1.5, with such changes therein as the parties thereto mutually agree
under the procedures set forth in that Agreement.
1.6 EXCHANGE RIGHTS means the right of holders of Exchangeable Shares to
exchange their Exchangeable Shares for IFCO's Common Stock in
accordance with the Exchange and voting Agreement.
1.7 EXCHANGEABLE SHARES means Class A preferred shares of Teccan having the
rights and privileges specified in Exhibit 1.7.
1.8 IFCO'S COMMON STOCK means shares of IFCO's common stock.
1.9 INVESTORS means the investors who will acquire Units in IFCO on or
before the Effective Date
1.10 OFFER means the offer to complete the Share Exchange which will be made
to the Tec shareholders by Teccan in accordance with this Agreement and
the provisions of the Act.
1.11 QSA means the Securites Act (Quebec).
1.12 SHARE EXCHANGE means the exchange of shares of Tec's Common Stock by
the Tec's Shareholders for Exchangeable Shares of Teccan pursuant to
the Offer.
1.13 SUPPORT AGREEMENT means the Agreement reproduced in Exhibit 1.13, with
such changes therein as the parties thereto mutually agree under the
procedures set forth in that Agreement.
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1.14 TEC COMMON SHARES means common shares with no par value of Tec and
includes for greater certainty all instruments convertible into common
shares of Tec, on the assumption that they are converted in accordance
with their terms and conditions.
1.15 TEC SHAREHOLDERS means the holders of Tec Common Shares.
1.16 TRANSACTIONS means the transactions contemplated in Article II of this
Agreement.
1.17 TRUSTEE has the meaning set forth in the Exchange and Voting Agreement.
1.18 UNITS means the 1,000,000 units of IFCO which will be sold to the
Investors, at a price of US $4.00, each Unit being comprised of one
common share of IFCO and one common share purchase warrant entitling
the holder thereof to subscribe to one additional common share of IFCO
at a price of US $5.00.
All of the Exhibits forming part of this Agreement are listed at the end of this
Agreement.
ARTICLE II
EFFECTIVE DATE
For good and valuable consideration, the sufficiency of which is acknowledged,
the parties agree that subject to the terms and conditions of this Agreement, on
the Effective Date, or as soon as practical following the Effective Date, they
will take all necessary steps to cause the following to occur:
2.1 Manitex will transfer to Teccan the Tec Common Shares listed in Exhibit
A, and Teccan will issue to Manitex, as sole consideration for the said
transfer, Exchangeable Shares on the basis of one Exchangeable Share
for each two Tec Common Shares transferred (assuming the conversion of
the convertible debentures of Tec held by Manitex into Tec Common
Shares in accordance with their terms and conditions);
2.2 Teccan shall make the Offer to the shareholders of Tec, in accordance
with the applicable provisions of the Act and the QSA, to acquire all
of the outstanding Tec Common Shares in exchange for Exchangeable
Shares, on the basis of one Exchangeable Share for each two Tec Common
Shares held;
2.3 The existing Board of Directors of IFCO will be replaced by a board of
5 members consisting of Steve Saviuk and Claude Forget;
2.4 The existing Board of Directors of Teccan will be replaced by a board
of 3 members consisting of Steve Saviuk and Claude Forget;
I-4
2.5 IFCO and Teccan shall execute the Support Agreement and the Exchange
and Voting Agreement in order to grant the Exchange Rights to the
holders of Exchangeable Shares;
2.6 IFCO will complete the private placement of Units with the Investors
and will advance the net proceeds to Teccan as non-interest bearing
demand loan; and
2.7 Teccan and IFCO agree that if, at any time after the Effective Time,
Teccan or IFCO, considers or is advised that any further agreements,
deeds, assignments, or assurances are necessary or desirable to carry
out the purpose of this Agreement, Teccan and IFCO and their proper
officers and directors shall execute and deliver all such proper
agreements, deeds, assignments, and assurances and do all other things
necessary or desirable to carry out the purpose of this Agreement,
including the filing of all application or documentation necessary
under the Act or the QSA.
ARTICLE III
EXCHANGE OF SHARES
At the Closing Date and subject to the terms and conditions of this Agreement
and the Offer,
3.1 Teccan shall acquire, from the Tec Shareholders who will have tendered
their Tec Common Shares, all of the Tec Common Shares so tendered, in
accordance with the applicable provisions of the Act and the QSA, and
will issue one Exchangeable Share for each two Tec Common Shares so
tendered.
3.2 Teccan will file the prescribed joint election form under section 85(1)
of the Income tax Act (Canada) so that the Tec Common Shares are deemed
to be disposed of for income tax purposes at their cost amount.
3.3 Each Tec Shareholder owning shares of Tec Common Shares will execute
and deliver to the trustee an "Acceptance of Exchange Offer" in the
form attached hereto as Exhibit 3.3.
3.4 IFCO will establish a Stock Option Plan for the purpose of providing
incentive compensation to management and key employees in all of the
Tec companies. The grant of options will be made by the Board of
Directors of IFCO.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TECCAN
Teccan hereby represents and warrants to IFCO and Manitex as follows, with "to
the best knowledge
I-5
of Teccan" meaning that Teccan does not know, after having made all relevant
inquiries, and it has no reasonable basis to believe, that such statement is
false;
4.1 ORGANIZATION, STANDING, AND POWER. Teccan is a corporation duly
organized, validly existing and in good standing under the laws of
Canada and is qualified and in good standing in all jurisdictions in
which the failure so to be qualified would have a material adverse
effect upon its business. Teccan has the corporate power and corporate
authority to hold, own, operate, and lease its properties and otherwise
carry on its business as presently conducted, to execute and deliver
this Agreement, and to carry out the transactions contemplated in this
Agreement.
4.2 AUTHORITY. The execution, delivery and performance of this Agreement
and all other agreements contemplated in this Agreement and the
consummation of the Share Exchange have been duly and validly
authorized by the Board of Directors of Teccan. and, assuming due
authorization, execution, and delivery by the parties, this Agreement
will constitute a legal, valid, and binding agreement of Teccan,
enforceable against Teccan in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium, and similar laws
affecting creditors' rights to enforce remedies generally and to
equitable principles limiting the availability of the remedy of
specific performance.
4.3 NO CONFLICTS. The execution, delivery, and performance by Teccan of
this Agreement and any other agreement executed by Teccan in connection
with the consummation of the Share Exchange, (a) have not violated and
will not violate, conflict with, or breach any provision of the
Articles of Incorporation or the By-laws of Teccan or any presently
existing order, writ, injunction, judgment, decree, law, ordinance,
rule, or regulation applicable to Teccan or any of its properties, or
(b) after a lapse of time, due notice or otherwise, will not violate,
require consent under, conflict with, breach, cause a default, or
provide grounds for termination, cancellation, or acceleration of
performance in respect of, or result in the creation or imposition of a
lien or other encumbrance pursuant to, any agreement or understanding
to which Teccan is a party or to which it or any of its properties may
be subject.
4.4 NO UNDISCLOSED LIABILITIES. Teccan has no material liabilities or
obligations, secured or unsecured, whether accrued, absolute,
contingent, or otherwise.
4.5 CAPITALIZATION. The authorized capital stock of Teccan is comprised of
an unlimited number of common Shares and an unlimited number of
Exchangeable Shares of which only one hundred common shares are
presently issued and outstanding. All such outstanding shares of Teccan
have been validly issued as fully paid and non-assessable to IFCO.
Except as provided for under this Agreement, there are no outstanding
warrants, options, rights, agreements, convertible securities, or other
commitments pursuant to which Teccan is or may be obligated to issue
any securities. There are no outstanding agreements, arrangements,
commitments, or understandings of any kind affecting or relating to the
voting, issuance,
I-6
purchase, redemption, repurchase, or transfer of Teccan's securities,
except as contemplated in this Agreement. No shares of Teccan have been
issued in violation of any securities laws, agreements binding on
Teccan, or preemptive or similar right.
4.6 LITIGATION. Teccan is not a party to, nor are any of the properties or
assets of Teccan subject to, any pending or, to the best knowledge of
Teccan, threatened actions, claims, suits, proceedings, arbitration,
investigations, or other litigation, whether instituted by or against
Teccan or any such person or entity, and Teccan knows of no basis for
any such action.
4.7 TAXES. All federal, state, local, foreign, and other tax returns and
reports which Teccan has been required to file have been duly filed,
and all such returns and reports are true and correct.
4.8 COMPLIANCE. Teccan has complied, or prior to the Closing Date will have
complied, and is or will be at the Closing Date in compliance in all
material respects, with all material laws, ordinances, regulations, and
rules, and all orders, writs, injunctions, awards, judgments, and
decrees applicable to it or to the assets, properties, and business of
Teccan.
4.9 FULL DISCLOSURE. The representations and warranties of Teccan contained
in this Agreement do not contain any untrue statement of a material
fact or omit any material fact necessary to make any such statement or
omission not misleading in view of the circumstances under which the
were made.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF IFCO
IFCO hereby represents and warrants to Teccan as follows, except as set forth in
the IFCO Schedule of Exceptions attached hereto as Exhibit 5.0 with "to the best
knowledge of IFCO" meaning that IFCO does not know, after having made all
relevant inquiries, and it has no reasonable basis to believe, that such
statement is false:
5.1 ORGANIZATION, STANDING, AND POWER. IFCO is a company duly organized,
validly existing and in good standing under the laws of the State of
Nevada, and is qualified and in good standing in all jurisdictions in
which the failure so to be qualified would have a material adverse
effect upon its business. IFCO has the corporate power and corporate
authority to hold, own, operate, and lease its properties and otherwise
carry on its business as presently conducted, to execute and deliver
this Agreement, and to carry out the transactions contemplated in this
Agreement.
5.2 CAPITALIZATION. The authorized capital stock of IFCO is comprised of
100,000,000 shares of Common Stock, of which only 9,475,000 shares are
presently issued and outstanding. All
I-7
such outstanding shares of IFCO Common Stock have been validly issued
and fully paid and non-assessable. Except as provided for under this
Agreement or in the IFCO Financial Statements, there are no outstanding
warrants, options, rights, agreements, convertible securities, or other
commitments pursuant to which IFCO is or may be obligated to issue any
securities. There are no outstanding agreements, arrangements,
commitments, or understandings of any kind affecting or relating to the
voting, issuance, purchase, redemption, repurchase, or transfer of
IFCO's Common Stock or any other securities of IFCO, except as
contemplated in this Agreement. No IFCO Common Stock has been issued in
violation of any securities laws, agreements binding on IFCO, or
preemptive or similar right.The shares of IFCO's Common Stock to be
issued pursuant to the Exchange and Voting Agreement will, when issued,
be fully paid and non-assessable.
5.3 AUTHORITY. IFCO has the requisite corporate power and authority to
enter into this Agreement and to perform its obligations hereunder. The
execution, delivery and performance of this Agreement and all other
agreements contemplated in this Agreement have been duly and validly
authorized by the Board of Directors of IFCO and, assuming due
authorization, execution, and delivery by the parties, this Agreement
will constitute a legal, valid, and binding agreement of IFCO,
enforceable against IFCO in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium, and similar laws
affecting creditors' rights to enforce remedies generally and to
equitable principles limiting the availability of the remedy of
specific performance.
5.4 NO CONFLICTS. The execution, delivery, and performance by IFCO of this
Agreement and any other agreement executed by IFCO in connection with
the consummation of the Share Exchange, (a) have not violated and will
not violate, conflict with, or breach any provision of the Articles of
Incorporation or the By-laws of IFCO or any presently existing order,
writ, injunction, judgment, decree, law, ordinance, rule, or regulation
applicable to IFCO or any of its properties, or (b) after a lapse of
time, due notice or otherwise, will not violate, require consent under,
conflict with, breach, cause a default, or provide grounds for
termination, cancellation, or acceleration of performance in respect
of, or result in the creation or imposition of a right of first
refusal, lien or other encumbrance pursuant to, any agreement or
understanding to which IFCO is a party or to which it or any of its
properties may be subject.
5.5 FINANCIAL STATEMENTS. A copy of IFCO's audited financial statements for
the period ended December 31, 1999 ("IFCO Financial Statements"), which
financials have been approved by Teccan is reproduced as Exhibit 5.5.
Such financial statements (a) agree with IFCO's books and records, (b)
have been prepared in accordance with generally accepted accounting
principles consistently applied, and (c) are complete and accurate in
all material respects, and present fairly the financial position of
IFCO as of the dates indicated and the results of operations and
changes in financial position for the periods indicated.
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5.6 NO UNDISCLOSED LIABILITIES. Except to the extent accrued for or
disclosed in the IFCO Financial Statements, IFCO has no material
liabilities or obligations, secured or unsecured, whether accrued,
absolute, contingent, or otherwise.
5.7 ABSENCE OF MATERIAL ADVERSE CHANGE. Since December 31, 1999, there has
been no material adverse change in the business, condition, operations,
assets, properties, or commitments of IFCO, and IFCO currently is not
aware of any fact or condition which might cause such adverse change in
the future. Since such date, except as set forth in the exhibits
attached to this Agreement, IFCO has consummated only such transactions
as are in the ordinary course of business, and IFCO has not (a)
declared or made payment of, or set aside for payment, any dividends or
distributions of any assets of any kind whatsoever, or purchased,
redeemed, or otherwise acquired any of its capital stock, any
securities convertible into capital stock, or any other securities; (b)
written down the value of any assets or properties or written off as
uncollectible any notes or accounts receivable, except write- downs and
write-offs in the ordinary course of business, none of which,
individually or in the aggregate, are material to it; (c) made capital
expenditures or entered into commitments for capital expenditures,
aggregating more than $10,000.00; or, (d) made any material change in
any method of accounting or application of accounting practice.
5.8 LITIGATION. IFCO is not a party to, nor are any of the properties or
assets of IFCO subject to, any pending or, to the best knowledge of
IFCO, threatened actions, claims, suits, proceedings, arbitration,
investigations, or other litigation, whether instituted by or against
IFCO or any such person or entity, and IFCO knows of no basis for any
such action.
5.9 TAXES. All federal, state, local, foreign, and other tax returns and
reports which IFCO has been required to file have been duly filed, and
all such returns and reports are true and correct.
5.10 COMPLIANCE. IFCO has complied and is in compliance in all material
respects, with all material laws, ordinances, regulations, and rules,
and all orders, writs, injunctions, awards, judgments, and decrees
applicable to it or to the assets, properties, and business of IFCO,
including for greater certainty all applicable rules of the NASDN.
5.11 REPORTING. IFCO has complied and is in compliance in all material
respects, with all material laws, regulations and rules of regulatory
authorities having jurisdiction over the issuance and the trading of
its securities; the shares of common stock of IFCO are admitted for
trading on the Over the Counter Bulletin Board ("OTCBB") in the United
States and the shares of IFCO's common stock to be issued on the
exchange of the Exchangeable Shares will be admissible for trading on
the OTCBB, subject to any applicable hold periods under US securities
laws and to compliance with the rules and regulations of the NASDN.
I-9
5.12 MINUTE BOOKS. The minute books of IFCO are complete and correct in all
material respects and contain the minutes of all meetings and all
resolutions of the directors and shareholders thereof;
5.13 CEASE TRADE ORDERS. No securities commission or similar regulatory
authority has issued any order preventing or suspending trading in any
securities of IFCO and there is currently no reasonable basis for such
order;
5.14 FULL DISCLOSURE. The representations and warranties of IFCO contained
in this Agreement and other documents delivered by or on behalf of IFCO
pursuant to this Agreement, do not contain any untrue statement of a
material fact or omit any material fact necessary to make any such
statement or omission not misleading in view of the circumstances under
which the were made.
5.15 BROKERS AND FINDERS. IFCO has not incurred any liability for brokerage
fees, commissions, or finders' fees, in connection with the
transactions contemplated in this Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF MANITEX
Manitex hereby represents and warrants to Teccan as follows with "to the best
knowledge of Manitex" meaning that Manitex does not know, after having made all
relevant inquiries, and it has no reasonable basis to believe, that such
statement is false:
6.1 ORGANIZATION, STANDING, AND POWER. Manitex is a corporation duly
organized, validly existing and in good standing under the laws of
Canada, and is qualified and in good standing in all jurisdictions in
which the failure so to be qualified would have a material adverse
effect upon its business. Manitex has the corporate power and corporate
authority to hold, own, operate, and lease its properties and otherwise
carry on its business as presently conducted, to execute and deliver
this Agreement, and to carry out the transactions contemplated in this
Agreement.
6.2 AUTHORITY. The execution, delivery and performance of this Agreement
and all other agreements contemplated in this Agreement have been duly
and validly authorized by the Board of Directors of Manitex. This
Agreement will have been duly and validly authorized by all necessary
corporate action on the part of Manitex and, assuming due
authorization, execution, and delivery by the parties, this Agreement
will constitute a legal, valid, and binding agreement of Manitex,
enforceable against Manitex in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium, and similar laws
affecting creditors' rights to enforce remedies generally and to
equitable principles limiting the availability of the remedy of
specific performance.
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6.3 TITLE. Manitex has good title to its shares of Tec and has full power
to transfer said shares to Teccan and Teccan will acquire good title to
such shares, free and clear of liens, encumbrances and adverse claims.
6.4 NO CONFLICTS. The execution, delivery, and performance by Manitex of
this Agreement and any other agreement executed by Manitex in
connection with consummation of the Share Exchange, (a) have not
violated and will not violate, conflict with, or breach any provision
of the Articles of Incorporation or the By-laws of Manitex or any
presently existing order, writ, injunction, judgment, decree, law,
ordinance, rule, or regulation applicable to Manitex or any of its
properties, or (b) after a lapse of time, due notice or otherwise, will
not violate, require consent under, conflict with, breach, cause a
default, or provide grounds for termination, cancellation, or
acceleration of performance in respect of, or result in the creation or
imposition of a lien or other encumbrance pursuant to, any agreement or
understanding to which Manitex is a party or to which it or any of its
properties may be subject.
ARTICLE VII
CONDITIONS TO PRECEDENT
7.1 CLOSING DATE. Subject to the fulfilment or waiver by all parties of
conditions set forth below, the Effective Date will take place as soon
as possible after the date of the signing of this Agreement.
7.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF TECCAN. The obligations of
Teccan and Manitex to consummate the Transactions are subject to the
satisfaction of each of the following, on or prior to the Effective
Date, except as otherwise waived in writing by them:
7.2.1 Authorization. All necessary action will have been taken to
authorize the execution, delivery and performance by IFCO of
this Agreement and the Transactions.
7.2.2 Capital Contribution by the Investors. The Investors will have
acquired and paid for a minimum of 1,000,000 Units .
7.2.3 Representations, Warranties and Performance. Each of the
representations and warranties of IFCO set forth in this
Agreement will be true and correct in all material respects as
of the Effective, except as permitted by this Agreement. IFCO
will have performed in all material respects each covenant and
agreement contained in this Agreement to be performed by it
prior to the Effective Date.
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7.2.4 Consents and Approvals. All contractual and non-contractual
authorizations, consents and approvals, including those
required under any applicable securities laws, if any, of any
local, state, federal or government agency, regulatory body,
official or any person or entity necessary for the valid
consummation of the Transactions in accordance with this
Agreement will have been obtained and will be in full force
and effect.
7.2.5 Litigation. No suit, action, proceeding, arbitration or other
litigation will have been commenced or threatened to be
commenced against Teccan or IFCO which, in the opinion of
Teccan or Manitex, would pose a material restriction on or
impair consummation of the Transactions, performance of this
Agreement, or create a risk of subjecting Manitex or its
shareholders, officers, directors or agents to material
damages, costs, liabilities or other relief in connection with
the Share Exchange or this Agreement.
7.2.6 Opinion of Counsel to IFCO. Manitex will have received a
written opinion dated as of the Effective Date from IFCO
Counsel, substantially to the effect set forth in Exhibit
7.2.6.
7.2.7 No Material Adverse Change. There will not have occurred any
material loss or destruction or any material adverse change in
the financial condition or properties, business or operations
of IFCO from that shown in the IFCO Financial Statements.
7.2.8 Officer Certificate. Manitex will have received a certificate
dated as of the Effective Date from a senior officer of IFCO,
substantially in the form set forth in Exhibit 7.2.8.
7.3 CONSENTS. IFCO and Teccan will use their commercial best efforts,
within reasonable costs, to obtain all such consents and approvals and
to take all such actions, including those required under any applicable
securities law, as may be necessary or appropriate to consummate the
transactions contemplated in this Agreement. IFCO and Teccan will take
all actions and execute all documents, and will use their best efforts
to have their respective shareholders take all actions and execute all
documents, that either party reasonably requests in order to obtain all
such consents and approvals.
7.4 PRESS RELEASES. All press releases or other announcements by the
parties, to their employees or vendors or otherwise, as to the
transactions contemplated by this Agreement will be in a form mutually
agreeable to IFCO and Teccan.
7.5 REASONS FOR TERMINATION. The Offer will be terminated and the Share
Exchange abandoned at any time prior to the Closing as follows:
(a) By action of the Boards of Directors of IFCO and Teccan;
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(b) By Teccan, if any of the conditions precedent to its
obligations set forth above have not been satisfied in all
material respects on or before the Closing Date;
(c) By IFCO, if any of the conditions precedent to its obligations
set forth above have not been satisfied in all material
respects on or before the Closing Date; and
(d) By either IFCO or Teccan, if the Share Exchange has not become
effective for any reason by no later than 60 days after the
Effective Date.
7.6 SURVIVAL OF REPRESENTATIONS. All representations, warranties and
covenants of Teccan and IFCO contained in this Agreement will remain
operative and in full force and effect, regardless of any investigation
made by or on behalf of the parties to this Agreement, until the
earlier of the termination of this Agreement or the Closing Date,
whereupon such representations, warranties and covenants will expire.
ARTICLE VIII
MISCELLANEOUS
8.1 WAIVER AND AMENDMENT. This Agreement may be amended by action of the
Boards of Directors of all of the parties without action by the
shareholders of such parties; any right granted by this Agreement may
be waived by the party or on behalf of the shareholders for whose
benefit such right was granted. The waiver of any such right must be in
writing and signed by the party electing to exercise its right of
waiver.
8.2 ENTIRE AGREEMENT; REFERENCES. This Agreement, including all Exhibits
hereto, each of which is incorporated herein by reference, constitutes
the entire agreement between the parties with respect to the
Transactions and the Share Exchange and supersedes all prior or
concurrent arrangements, letters of intent or understandings relating
thereto. Unless otherwise specified herein, references to "Sections"
and "Exhibits" are to Sections of and Exhibits to this Agreement.
8.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be an original, but all of which when
taken together will constitute one and the same agreement. This
Agreement will become effective when one or more counterparts has been
signed by each of the parties and delivered to each of the other
parties.
8.4 EFFECT OF HEADINGS. The headings in this Agreement have been inserted
for reference purposes only and will not affect the meaning or
construction of any provision of this Agreement.
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8.5 NOTICES. Any notice or other communication required or permitted to be
given under this Agreement will be in writing, will be delivered
personally or by registered or certified mail, postage prepaid and will
be deemed given upon delivery, if delivered personally, or three days
after deposit in the mail, if mailed, to the following addresses:
(i) if to IFCO :
1555 West Fourteen Mile Road
Suite 212
Farmington Hills, MI 48334
Attention: Mr. David H. Jarvis
with a copy to :
De Grandpre Chaurette Levesque
2000, McGill College Avenue, Suite 1600
Montreal (Quebec)
H3A 3H3
Attention: Pierre Barnard
(ii) if to Teccan:
De Grandpre Chaurette Levesque
2000, McGill College Avenue, Suite 1600
Montreal (Quebec)
H3A 3H3
Attention: Pierre Barnard
(iii) if to Manitex:
5, Place Ville Marie
Suite 1234
Montreal (Quebec)
H3B 2G2
Attention: David Perez
or to such other address as a party may have furnished to the other
parties in writing pursuant to this Section 8.5.
8.6 NO WAIVER. No waiver by any party of any condition, or the breach of
any term, covenant, agreement, representation or warranty contained in
this Agreement, in any one or more instances, will be deemed to be a
further or continuing waiver of any such condition or
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breach of any other term, covenant, agreement, representation or
warranty contained in this Agreement.
8.7 SUCCESSORS AND ASSIGNS. No party may assign any of its rights or
obligations under this Agreement without the prior written consent of
the other parties. This Agreement will be binding upon and enure to the
benefit of the parties to this Agreement and their respective
successors, personal representatives and permitted assigns.
8.8 GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the substantive laws of the Province of Quebec
excluding that body of law pertaining to conflicts of law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written, subject to acceptance and initialling of each of the
exhibits hereto.
MANITEX CAPITAL INC.
/s/ Steve Saviuk
------------------------
STEVE SAVIUK, PRESIDENT
3786137 CANADA INC.
/s/ Pierre Barnard
-------------------------
PIERRE BARNARD, PRESIDENT
TECE INC.
/s/ Pierre Barnard
- --------------------------
PIERRE BARNARD, ATTORNEY
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LIST OF EXHIBITS
to the Share Exchange Agreement Entered into as of October 10, 2000 between Tece
Inc., formerly Internet Food Co, 3786137 Canada Inc, Tec
TechnologyEvaluation.com Corporation and Manitex Capital Inc.
Acceptance of Exchange......................................................A
Exchange and voting Agreement.............................................1.5
Exchangeable shares of Teccan.............................................1.7
Support Agreement........................................................1.13
Acceptance of Exchange Offer............................................. 3.3
IFCO's Schedule of Exceptions............................................ 5.0
IFCO's Financial Statements.............................................. 5.5
Opinion of IFCO's Counsel to Manitex....................................7.2.6
Officer's Certificate of IFCO to Manitex................................7.2.8
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EXHIBIT A
to the Share Exchange Agreement entered into as of October 10, 2000 between Tece
Inc, formerly Internet Food Co, 3786137 Canada Inc, Tec TechnologyEvaluation.com
Corporation and Manitex Capital Inc. (the "Exchange Agreement")
ACCEPTANCE OF EXCHANGE
TO: Teccan Inc.
AND TO: Pierre Barnard, as trustee under the Exchange and Voting Agreement
RE: TECCAN CORPORATION
Gentlemen:
The undersigned hereby irrevocably accept and agree to sell to Teccan all of
their Tec Common Shares held as of this date and to receive as sole
consideration Exchangeable Shares of Teccan, which are exchangeable subject to
certain terms and conditions into shares of common stock of Tece Inc as
described and under the terms of the Exchange Agreement, receipt of a copy of
which is hereby acknowledged.
Each of the undersigned is delivering this Acceptance which constitutes the
undersigned's instructions to you to effect the Exchange with respect to all of
the Tec shares held by the undersigned for shares of IFCO subject to the terms
and conditions of the Exchange Agreement.
Each of the undersigned hereby represents and warrants to Teccan and IFCO that
he has good title to the Tec Common Shares and has full power to transfer said
shares to Teccan and Teccan will acquire good title free and clear of liens,
encumbrances and adverse claims. Each of the undersigned covenants that he will,
upon request, execute any additional documents, necessary or desirable to
complete the transfer and exchange of the Teccan Common Shares.
Each of the undersigned, as holder of Exchangeable Shares, whether of record or
beneficial, acknowledges becoming and being a party to the Exchange and Voting
Agreement, acknowledges and accepts the Insolvency Exchange Right, the Automatic
Exchange Rights and the Voting Rights granted to the holders of Exchangeable
Shares by IFCO. As consideration for the granting of such rights, the
undersigned hereby grants to IFCO the Call Rights described in the Exchange and
Voting Agreement and acknowledges the overriding nature thereof in connection
with the retraction of Exchangeable Shares, as the case may be, and accepts to
be bound thereby in favour of IFCO, Inc in accordance with the terms and
conditions of the priviledges attached to the Exchangeable Shares.
The undersigned each agree to the provisions of the Exchange Agreement and
hereby irrevocably appoint Pierre Barnard of the law firm De Grandpre Chaurette
Levesque as his, her or its
I-17
representative and attorney to (i) effect the Exchange; (ii) to endorse for
transfer to Teccan the undersigned's certificate evidencing the Tec Common
Shares being exchanged; and (iii) to sign any other document necessary or useful
for the purpose of implementing the Exchange and in accordance with the Exchange
and Voting Agreement, such power of attorney not being invalidated by the death
or the incapacity of the undersigned.
Dated: , 2000
SIGNATURE : TEC COMMON SHARES TRANSFERRED Number of
- --------- ----------------------------- ---------
Exchangeable
Shares issued
Manitex Capital Inc. per: - 6,560,812 Common Shares
- CAN $75,000 convertible
/s/ Illegible debenture with accrued interest 4,284,441
- ------------------------ - US $375,000 convertible
debenture with accrued interest
Intasys Corporation per: - One Common Share
- US $2,625,000 convertible
/s/ Illegible debenture with accrued interest 6,522,710
- ------------------------
/s/ Don Lobley - 2,211,977 Common Shares 1,105,989
- ------------------------
Don Lobley
- ------------------------------------------ ------------------------------------------------ -------------------------
TOTAL: 11,913,140
- ------------------------------------------ ------------------------------------------------ -------------------------
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EXHIBIT 1.5
to the Share Exchange Agreement Entered into as of October 10, 2000 between Tece
Inc., formerly Internet Food Co, 3786137 Canada Inc, Tec
TechnologyEvaluation.com Corporation and Manitex Capital Inc.
EXCHANGE AND VOTING AGREEMENT
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EXHIBIT 1.7
to the Share Exchange Agreement Entered into as of October 10, 2000 between Tece
Inc., formerly Internet Food Co, 3786137 Canada Inc, Tec
TechnologyEvaluation.com Corporation and Manitex Capital Inc.
EXCHANGEABLE SHARES OF TECCAN
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EXHIBIT 1.13
to the Share Exchange Agreement Entered into as of October 10, 2000 between Tece
Inc., formerly Internet Food Co, 3786137 Canada Inc, Tec
TechnologyEvaluation.com Corporation and Manitex Capital Inc.
SUPPORT AGREEMENT
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EXHIBIT 3.3
to the Share Exchange Agreement entered into as of October 10, 2000 between Tece
Inc, formerly Internet Food Co, 3786137 Canada Inc, Tec TechnologyEvaluation.com
Corporation and Manitex Capital Inc.
SHAREHOLDER ACCEPTANCE OF EXCHANGE OFFER
TO: Teccan Inc.
AND TO: Montreal Trust Company of Canada
Montreal, Quebec
RE: TECCAN CORPORATION
Gentlemen:
The undersigned hereby irrevocably accepts and agrees to exchange (the
"Exchange") all of his, her or its shares held as of this date in Tec
TechnologyEvaluation.com Corporation ("Tec"), for Class A Preferred Shares (the
"Exchangeable Shares") of 3786137 Canada Inc. ("Teccan"), which are exchangeable
subject to certain terms and conditions into shares of common stock of Tece Inc,
a Nevada Corporation formerly known as Internet Food Co. ("IFCO"), as described
and under the terms of that certain Share Exchange Agreement (the "Exchange
Agreement") between Teccan and IFCO, receipt of a copy of which is hereby
acknowledged.
The undersigned is delivering this Acceptance which constitutes the
undersigned's instructions to you to effect the Exchange with respect to all of
the Teccan shares held by the undersigned for shares of IFCO and subject to the
terms of the Exchange Agreement.
If the transactions contemplated by the Exchange as described in the Exchange
Agreement are completed, then you are to deliver certificates of stock
representing the number of Exchangeable Shares to the undersigned issued in the
name and at the address given below.
The undersigned hereby represents and warrants to Teccan and IFCO that the
undersigned has good title to his Tec Common Shares and has full power to accept
the Exchange and to transfer said shares to Teccan and Teccan will acquire good
title free and clear of liens, encumbrances and adverse claims. The undersigned
will, upon request, execute any additional documents, necessary or desirable to
complete the transfer and exchange of the Teccan Common Shares.
The undersigned, as holder of Exchangeable Shares, whether of record or
beneficial, by virtue of having accepted the Offer, acknowledges becoming and
being a party to the Exchange and Voting Agreement, acknowledges and accepts the
Insolvency Exchange Right, the Automatic Exchange Rights and the Voting Rights
granted to the holders of Exchangeable Shares by IFCO. As consideration for
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the granting of such rights, the undersigned hereby grants to IFCO the Call
Rights described in the Exchange and Voting Agreement and acknowledges the
overriding nature thereof in connection with the retraction of Exchangeable
Shares, as the case may be, and accepts to be bound thereby in favour of IFCO,
Inc in accordance with the terms and conditions of the priviledges attached to
the Exchangeable Shares.
The undersigned each agree to the provisions of the Exchange Agreement and
hereby irrevocably appoint Pierre Barnard of the law firm De Grandpre Chaurette
Levesque as his, her or its representative and attorney to (i) effect the
Exchange; (ii) to endorse for transfer to Teccan the undersigned's certificate
evidencing the Tec Common Shares being exchanged; and (iii) to sign any other
document necessary or useful for the purpose of implementing the Exchange and in
accordance with the Exchange and Voting Agreement, such power of attorney not
being invalidated by the death or the incapacity of the undersigned.
Dated: , 2000
- --------------------------------------------
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EXHIBIT 5.0
to the Share Exchange Agreement Entered into as of October 10, 2000 between Tece
Inc., formerly Internet Food Co, 3786137 Canada Inc, Tec
TechnologyEvaluation.com Corporation and Manitex Capital Inc.
IFCO'S SCHEDULE OF EXCEPTIONS
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EXHIBIT 5.5
to the Share Exchange Agreement Entered into as of October 10, 2000 between Tece
Inc., formerly Internet Food Co, 3786137 Canada Inc, Tec
TechnologyEvaluation.com Corporation and Manitex Capital Inc.
IFCO'S FINANCIAL STATEMENTS
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EXHIBIT 7.2.6
to the Share Exchange Agreement Entered into as of October 10, 2000 between Tece
Inc, formerly Internet Food Co, 3786137 Canada Inc, Tec TechnologyEvaluation.com
Corporation and Manitex Capital Inc.
IFCO'S COUNSEL'S OPINION
Mr. Pierre Barnard
De Grandpre Chaurette Levesque
2000, McGill College
Suite 1600
Montreal (Quebec)
H3A 3H3
Manitex Capital Inc
1, Place Ville-Marie
Suite 2001
Montreal (Quebec)
H3B 4M4
Gentlemen:
We have acted as general counsel for Tece Inc. ("Tece") and, as such capacities,
we are pleased to render the following opinion.
1) Tece has been duly incorporated, organized and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation, with corporate power and authority to own, lease and
operate its property and assets, to conduct its business
2) Tece has an authorized capital stock of 50,000,000 shares of common
stock of which the only issued and outstanding shares are o shares of
common stock, all of which have been duly authorized and validly issued
and are fully paid and non-assessable,
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3) o shares of IFCO's common stock have been validly and legally reserved
for issuance to the shareholders of 3786137 Canada Inc upon the
exchange of the Class A preferred Shares of 3786137 Canada Inc held by
them and upon suh issuance the said shares of common stock will be
issued as fully paid and non assessable;
4) IFCO is not in violation of its constating documents, by-laws or
resolutions of its directors or shareholders
5) There are no legal or governmental proceedings pending to which IFCO is
a party and no such proceedings are, to the best of counsel's
knowledge, after having made all inquiries and verifications deemed
appropriate, threatened (implicitly or otherwise) or contemplated by
governmental authorities or any other parties.
6) IFCO is not in violation of any law, ordinance, administrative or
governmental rule or regulation or court decree applicable to it, nor
is it in default of complying with any term or condition of, nor has it
failed to obtain, any licence, permit, franchise or administrative or
governmental authorization necessary to the ownership of its property
or to the conduct of its business
7) Except as a result of the Exchange Agreement, there are no outstanding
(a) securities or obligations of IFCO convertible into or exchangeable
for any shares of the capital stock of IFCO, (b) warrants, rights or
options to subscribe for or purchase from IFCO any such shares of the
capital stock of IFCO or any other securities of IFCO or any such
convertible or exchangeable securities or obligations, or (c)
obligations for IFCO to issue, purchase or redeem such shares, other
securities, any such convertible or exchangeable securities or
obligations, or any such warrants, rights, options or obligations.
8) all relevant documents have been filed with the regulatory authorities
having jurisdiction and all steps necessary have been taken in order to
permit the issuance of the shares of IFCO to shareholders of 3786137
Canada, as part of the Share Exchange;
9) the certificates for the Common Stock of IFCO are in due and proper
form under the laws governing IFCO, including applicable securities
laws and the rules and regulations of the NASDN;
10) no order preventing or suspending the trading of the securities of IFCO
has been issued by a securities commission or similar regulatory
authority and counsel is unaware of any justification for such an order
to be issued;
11) The documents filed with the regulatry authorities in connection with
the Share Exchange conform to the requirements of applicable
securities laws and all regulations thereunder;
12) The following persons are the only directors and officers of IFCO and
they have been validly appointed or elected in accordance with the
by-laws of IFCO:
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13) to the best of counsel's knowledge, after having made all inquiries and
verifications deemed appropriate, there are no material contract or
obligation to which IFCO was a party as of o, 2000 other than the Share
Exchange.
14) The Share Exchange and the performance of the transactions described
therein does not breach the laws of the State of Nevada, the laws of
the United States of America and the rules and regulations of the NASDN
or of any other regulatory authority having jurisdiction over the
affairs or the trading in the securities of IFCO;
15) The shares of IFCO issued to the shareholders of 3786137 Canada under
the Share Exchange will be free from any trading restrictions under the
laws of the State of Nevada, the laws of the United States of America
and the rules and regulations of the NASDN and of any other regulatory
authority having jurisdiction over the affairs or the trading in the
securities of IFCO, with the exception that such shares constitute
"Restricted Securities" within the meaning of Regulation 144 under the
Securities Act;
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EXHIBIT 7.2.8
to the Share Exchange Agreement Entered into as of October 10, 2000 between Tece
Inc, formerly Internet Food Co, 3786137 Canada Inc, Tec TechnologyEvaluation.com
Corporation and Manitex Capital Inc.
OFFICER'S CERTIFICATE OF IFCO TO MANITEX
I-29
SUPPORT AGREEMENT
MEMORANDUM OF AGREEMENT made as of the day of the 10th day of October 2000
AMONG:
TECE INC., (FORMERLY INTERNET FOOD CO. INC.), a
company incorporated under the laws of the State
of Nevada;
(hereinafter referred to as the "Parent")
AND: 3786137 CANADA INC., a corporation incorporated
under the laws of Canada;
(hereinafter referred to as the "Purchaser"),
AND: TEC TECHNOLOGYEVALUATION.COM CORPORATION, a
corporation incorporated under the laws of
Canada;
(hereinafter referred to as the "Tec")
WHEREAS in connection with a share exchange agreement (the "Share Exchange
Agreement") made as of between Parent and Purchaser, Purchaser is to issue
Exchangeable Non-Voting Preferred Shares (the Exchangeable Shares") to the
shareholders of Tec.
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 hereto
covenant and agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 Defined Terms
Each term denoted herein by initial capital letters and not otherwise defined
herein shall have the meaning ascribed thereto in the rights, privileges,
restrictions and conditions (collectively, the "Share Provisions") attaching to
the Exchangeable Shares attached as Appendix 1 hereto, unless the context
requires otherwise.
I-30
1.2 Interpretation Not Affected by Headings
The division of this agreement into Articles, sections and other portions and
the insertion of headings are for convenience of reference only and shall not
affect the construction or interpretation of this agreement. Unless otherwise
indicated, all references to an "Article" or "section" followed by a number
and/or a letter refer to the specified Article or section of this agreement. The
terms "this Agreement", "hereof", "herein" and "hereunder" and similar
expressions refer to this agreement and not to any particular Article, section
or other portion hereof and include any agreement or instrument supplementary or
ancillary hereto.
1.3 Number, Gender
Words importing the singular number only shall include the plural and vice
versa. Words importing 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. For the purposes of this agreement, a "Business Day"
means any day on which commercial banks are open for business in Montreal other
than a Saturday, a Sunday or a day observed as a holiday in Montreal, under the
laws of the Province of Quebec or the federal laws of Canada.
ARTICLE 2
COVENANTS OF PARENT AND PURCHASER
2.1 Covenants Regarding Exchangeable Shares
So long as any Exchangeable Shares not owned by Parent or its Affiliates are
outstanding, Parent covenants that it will:
(a) not declare or pay any dividend on the Parent Common Shares
unless (i) Purchaser shall simultaneously declare or pay, as
the case may be, an equivalent dividend (as provided for in
the Share Provisions) on the Exchangeable Shares and (ii)
Purchaser shall have sufficient money or other assets or
authorized but unissued securities available to enable the due
declaration and the due and punctual payment, in accordance
with applicable law, of any such dividend on the Exchangeable
Shares;
(b) advise Purchaser sufficiently in advance of the declaration by
Parent of any dividend on Parent Common Shares and take all
such other actions as are reasonably necessary, in
co-operation with Purchaser, to ensure that the
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respective declaration date, record date and payment date for
a dividend on the Exchangeable Shares shall be the same as the
declaration date, record date and payment date for the
corresponding dividend on the Parent Common Shares;
(c) ensure that the record date for any dividend declared on
Parent Common Shares is not less than 10 Business Days after
the declaration date of such dividend;
(d) take all such actions and do all such things as are reasonably
necessary or desirable to enable and permit Purchaser, in
accordance with applicable law, to pay and otherwise perform
its obligations with respect to the satisfaction of the
Liquidation Amount, the Retraction Price or the Redemption
Price in respect of each issued and outstanding Exchangeable
Share (other than Exchangeable Shares owned by Parent or its
Affiliates) upon the liquidation, dissolution or winding-up of
Purchaser, the delivery of a Retraction Request by a holder of
Exchangeable Shares or a redemption of Exchangeable Shares by
Purchaser, as the case may be, including without limitation
all such actions and all such things as are necessary or
desirable to enable and permit Purchaser to cause to be
delivered Parent Common Shares to the holders of Exchangeable
Shares in accordance with the provisions of Article 5, 6 or 7,
as the case may be, of the Share Provisions; and
(e) take all such actions and do all such things as are reasonably
necessary or desirable to enable and permit Parent, in
accordance with applicable law, to perform its obligations
arising upon the exercise by it of the Call Rights, including
without limitation all such actions and all such things as are
necessary or desirable to enable and permit Parent to cause to
be delivered Parent Common Shares to the holders of
Exchangeable Shares in accordance with the provisions of the
Call Rights.
2.2 Segregation of Funds
Parent further covenants that it will cause Purchaser to deposit a sufficient
amount of funds in a separate account of Purchaser and segregate a sufficient
amount of such other assets and property, as is necessary to enable Purchaser to
pay dividends when due and to pay or otherwise satisfy its obligations under
Article 5, 6 or 7 of the Share Provisions, as applicable.
2.3 Reservation of Parent Common Shares
Parent hereby represents, warrants and covenants in favour of Purchaser and Tec
that Parent has reserved for issuance and will, at all times while any
Exchangeable Shares (other than Exchangeable Shares held by Parent or its
Affiliates) are outstanding, keep available, free from pre-emptive and other
rights, out of its authorized and unissued capital stock such number of Parent
Common Shares (or other shares or securities into which Parent Common Shares may
be reclassified or changed as contemplated by section 2.7 hereof) (a) as is
equal to the sum of
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(i) the number of Exchangeable Shares issued and outstanding from time to time
and (ii) the number of Exchangeable Shares issuable upon the exercise of all
rights to acquire Exchangeable Shares outstanding from time to time and (b) as
are now and may hereafter be required to enable and permit Parent to meet its
obligations under the Voting and Exchange Trust Agreement and under any other
security or commitment pursuant to which Parent may now or hereafter be required
to issue Parent Common Shares, to enable and permit Parent to meet its
obligations under the Call Rights and to enable and permit Purchaser to meet its
respective obligations hereunder and under the Share Provisions.
2.4 Notification of Certain Events
In order to assist Parent to comply with its obligations hereunder and to permit
Parent to exercise the Call Rights, Purchaser will notify Parent of each of the
following events at the time set forth below:
(a) in the event of any determination by the Board of Directors of
Purchaser to institute voluntary liquidation, dissolution or
winding-up proceedings with respect to Purchaser or to effect
any other distribution of the assets of Purchaser among its
shareholders for the purpose of winding up its affairs, at
least 60 days prior to the proposed effective date of such
liquidation, dissolution, winding-up or other distribution;
(b) promptly, upon the earlier of receipt by Purchaser of notice
of and Purchaser 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 Purchaser or to effect any other distribution of
the assets of Purchaser among its shareholders for the purpose
of winding up its affairs;
(c) immediately, upon receipt by Purchaser of a Retraction
Request;
(d) on the same date on which notice of redemption is given to
holders of Exchangeable Shares, upon the determination of a
Redemption Date in accordance with the Share Provisions; and
(e) as soon as practicable upon the issuance by Purchaser of any
Exchangeable Shares or rights to acquire Exchangeable Shares
(other than the issuance of Exchangeable Shares and rights to
acquire Exchangeable Shares in exchange for outstanding
Teccommon shares pursuant to the Amalgamation).
2.5 Delivery of Common Shares to Purchaser
In furtherance of its obligations under sections 2.1(d) and (e) hereof, upon
notice from Purchaser of any event that requires Purchaser to cause to be
delivered Parent Common Shares to any holder of Exchangeable Shares, Parent
shall forthwith cause to be delivered to Purchaser
I-33
the requisite number of Parent Common Shares to be received by, and issued to or
to the order of, the former holder of the surrendered Exchangeable Shares, as
Purchaser shall direct. All such Parent Common Shares shall be duly authorized
and validly issued as fully paid and non- assessable and shall be free and clear
of any lien, claim or encumbrance. In consideration of the issuance and delivery
of each such Parent Common Share, Purchaser shall pay a cash purchase price
equal to the fair market value of such Parent Common Shares.
2.6 Intentionnaly Deleted
2.7 Economic Equivalence
So long as any Exchangeable Shares not owned by Parent or its Affiliates are
outstanding:
(a) Parent will not without prior approval of Purchaser and the
prior approval of the holders of the Exchangeable Shares given
in accordance with section 10.2 of the Share Provisions:
(i) issue or distribute Parent Common Shares (or
securities exchangeable for or convertible into or
carrying rights to acquire Parent Common Shares) to
the holders of all or substantially all of the then
outstanding Parent Common Shares by way of stock
dividend or other distribution, other than an issue of
Parent Common Shares (or securities exchangeable for
or convertible into or carrying rights to acquire
Parent Common Shares) to holders of Parent Common
Shares who exercise an option to receive dividends in
Parent Common Shares (or securities exchangeable for
or convertible into or carrying rights to acquire
Parent Common Shares) in lieu of receiving cash
dividends; or
(ii) issue or distribute rights, options or warrants to the
holders of all or substantially all of the then
outstanding Parent Common Shares entitling them to
subscribe for or to purchase Parent Common Shares (or
securities exchangeable for or convertible into or
carrying rights to acquire Parent Common Shares); or
(iii) issue or distribute to the holders of all or
substantially all of the then outstanding Parent
Common Shares (A) shares or securities of Parent of
any class other than Parent Common Shares (other than
shares convertible into or exchangeable for or
carrying rights to acquire Parent Common Shares), (B)
rights, options or warrants other than those referred
to in section 2.7(a)(ii) above, (C) evidences of
indebtedness of Parent or (D) assets of Parent,
unless the economic equivalent on a per share basis of such rights,
options, securities, shares, evidences of indebtedness or other assets
is issued or distributed simultaneously
I-34
to holders of the Exchangeable Shares; provided that, for greater
certainty, the above restrictions shall not apply to any securities
issued or distributed by Parent in order to give effect to and to
consummate the transactions contemplated by, and in accordance with,
the Amalgamation Agreement.
(b) Parent will not without the prior approval of Purchaser and
the prior approval of the holders of the Exchangeable Shares
given in accordance with section 10.2 of the Share Provisions:
(i) subdivide, redivide or change the then outstanding
Parent Common Shares into a greater number of Parent
Common Shares; or
(ii) reduce, combine, consolidate or change the then
outstanding Parent Common Shares into a lesser number
of Parent Common Shares; or
(iii) reclassify or otherwise change Parent Common Shares or
effect an amalgamation, merger, reorganization or
other transaction affecting Parent Common Shares,
unless the same or an economically equivalent change
shall simultaneously be made to, or in the rights of
the holders of, the Exchangeable Shares.
(c) Parent will ensure that the record date for any event referred
to in section 2.7(a) or 2.7(b) above, or (if no record date is
applicable for such event) the effective date for any such
event, is not less than five Business Days after the date on
which such event is declared or announced by Parent (with
contemporaneous notification thereof by Parent to Purchaser).
(d) The Board of Directors of Purchaser shall determine, in good
faith and in its sole discretion, economic equivalence for the
purposes of any event referred to in section 2.7(a) or 2.7(b)
above and each such determination shall be conclusive and
binding on Parent. In making each such determination, the
following factors shall, without excluding other factors
determined by the Board of Directors of Purchaser to be
relevant, be considered by the Board of Directors of
Purchaser:
(i) in the case of any stock dividend or other
distribution payable in Parent Common Shares, the
number of such shares issued in proportion to the
number of Parent Common Shares previously outstanding;
(ii) in the case of the issuance or distribution of any
rights, options or warrants to subscribe for or
purchase Parent Common Shares (or securities
exchangeable for or convertible into or carrying
rights to
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acquire Parent Common Shares), the relationship
between the exercise price of each such right, option
or warrant and the Current Market Price;
(iii) in the case of the issuance or distribution of any
other form of property (including without limitation
any shares or securities of Parent of any class other
than Parent Common Shares, any rights, options or
warrants other than those referred to in section 2.7
(d) (ii) above, any evidences of indebtedness of
Parent or any assets of Parent), the relationship
between the fair market value (as determined by the
Board of Directors of Purchaser in the manner above
contemplated) of such property to be issued or
distributed with respect to each outstanding Parent
Common Share and the Current Market Price;
(iv) in the case of any subdivision, redivision or change
of the then outstanding Parent Common Shares into a
greater number of Parent Common Shares or the
reduction, combination, consolidation or change of the
then outstanding Parent Common Shares into a lesser
number of Parent Common Shares or any amalgamation,
merger, reorganization or other transaction affecting
Parent Common Shares, the effect thereof upon the then
outstanding Parent Common Shares; and
(v) in all such cases, the general taxation consequences
of the relevant event to holders of Exchangeable
Shares to the extent that such consequences may differ
from the taxation consequences to holders of Parent
Common Shares as a result of differences between
taxation laws of Canada and the United States (except
for any differing consequences arising as a result of
differing marginal taxation rates and without regard
to the individual circumstances of holders of
Exchangeable Shares).
e) Purchaser agrees that, to the extent required, upon due notice
from Parent, Purchaser will use its best efforts to take or
cause to be taken such steps as may be necessary for the
purposes of ensuring that appropriate dividends are paid or
other distributions are made by Purchaser, or subdivisions,
redivisions or changes are made to the Exchangeable Shares, in
order to implement the required economic equivalent with
respect to the Parent Common Shares and Exchangeable Shares as
provided for in this section 2.7.
2.8 Tender Offers
In the event that a tender offer, share exchange offer, issuer bid, take-over
bid or similar transaction with respect to Parent Common Shares (an "Offer") is
proposed by Parent or is proposed to Parent or its shareholders and is
recommended by the Board of Directors of Parent, or is otherwise effected or to
be effected with the consent or approval of the Board of Directors of Parent,
and the Exchangeable Shares are not redeemed by Purchaser or purchased
I-36
by Parent pursuant to the Call Rights, Parent will use its reasonable efforts
expeditiously and in good faith to take all such actions and do all such things
as are necessary or desirable to enable and permit holders of Exchangeable
Shares (other than Parent and its Affiliates) to participate in such Offer to
the same extent and on an economically equivalent basis as the holders of Parent
Common Shares, without discrimination. Without limiting the generality of the
foregoing, Parent will use its reasonable efforts expeditiously and in good
faith to ensure that holders of Exchangeable Shares may participate in each such
Offer without being required to retract Exchangeable Shares as against Purchaser
(or, if so required, to ensure that any such retraction, shall be effective only
upon, and shall be conditional upon, the closing of such Offer and only to the
extent necessary to tender or deposit to the Offer). Nothing herein shall affect
the rights of Purchaser to redeem (or Parent to purchase pursuant to the Call
Rights) Exchangeable Shares, as applicable, in the event of a Parent Control
Transaction.
2.9 Ownership of Outstanding Shares
Without the prior approval of Purchaser and the prior approval of the holders of
the Exchangeable Shares given in accordance with section 10.2 of the Share
Provisions, Parent covenants and agrees in favour of Purchaser that, as long as
any outstanding Exchangeable Shares are owned by any Person other than Parent or
any of its Affiliates, Parent will be and remain the direct or indirect
beneficial owner of all issued and outstanding voting shares in the capital of
Purchaser.
2.10 Parent and Affiliates Not to Vote Exchangeable Shares
Parent covenants and agrees that it will appoint and cause to be appointed
proxyholders with respect to all Exchangeable Shares held by it and its
Affiliates for the sole purpose of attending each meeting of holders of
Exchangeable Shares in order to be counted as part of the quorum for each such
meeting. Parent further covenants and agrees that it will not, and will cause
its Affiliates not to, exercise any voting rights which may be exercisable by
holders of Exchangeable Shares from time to time pursuant to the Share
Provisions or pursuant to the provisions of the Act (or any successor or other
corporate statute by which Purchaser may in the future be governed) with respect
to any Exchangeable Shares held by it or by its Affiliates in respect of any
matter considered at any meeting of holders of Exchangeable Shares.
2.11 Rule 10b-18 Purchases
For certainty, nothing contained in this Agreement, including without limitation
the obligations of Parent contained in section 2.8 hereof, shall limit the
ability of Parent or Purchaser to make a "Rule 10b-18 Purchase" of Parent Common
Shares pursuant to Rule 10b-18 of the United States Securities Exchange Act of
1934, as amended.
ARTICLE 3
PARENT SUCCESSORS
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3.1 Certain Requirements in Respect of Combination, etc.
Parent shall not consummate any transaction (whether by way of reconstruction,
reorganization, consolidation, merger, transfer, sale, lease or other-wise)
whereby all or substantially all of its undertaking, property and assets would
become the property of any other Person or, in the case of a merger, of the
continuing corporation resulting therefrom unless, but may do so if:
f) such other Person or continuing corporation (the "Parent
Successor") by operation of law, becomes, without more, bound
by the terms and provisions of this Agreement or, if not so
bound, executes, prior to or contemporaneously with the
consummation of such transaction, an agreement supplemental
hereto and such other instruments (if any) as are reasonably
necessary or advisable to evidence the assumption by the
Parent Successor of liability for all moneys payable and
property deliverable hereunder and the covenant of such Parent
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 Parent under this Agreement; and
g) such transaction shall be upon such terms and conditions as
substantially to preserve and not to impair in any material
respect any of the rights, duties, powers and authorities of
the other parties hereunder.
3.2 Vesting of Powers in Successor
Whenever the conditions of section 3.1 have been duly observed and performed,
the parties, if required by section 3.1, shall execute and deliver the
supplemental agreement provided for in section 3.1(a) and thereupon the Parent
Successor shall possess and from time to time may exercise each and every right
and power of Parent under this Agreement in the name of Parent or otherwise and
any act or proceeding by any provision of this Agreement required to be done or
performed by the Board of Directors of Parent or any officers of Parent may be
done and performed with like force and effect by the directors or officers of
such Parent Successor.
3.3 Wholly-Owned Subsidiaries
Nothing herein shall be construed as preventing the amalgamation or merger of
any wholly- owned direct or indirect subsidiary of Parent with or into Parent or
the winding-up, liquidation or dissolution of any wholly-owned subsidiary of
Parent provided that all of the assets of such subsidiary are transferred to
Parent or another wholly-owned direct or indirect subsidiary of Parent and any
such transactions are expressly permitted by this Article 3.
ARTICLE 4
GENERAL
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4.1 Term
This Agreement shall come into force and be effective as of the date hereof and
shall terminate and be of no further force and effect at such time as no
Exchangeable Shares (or securities or rights convertible into or exchangeable
for or carrying rights to acquire Exchangeable Shares) are held by any Person
other than Parent and any of its Affiliates.
4.2 Changes in Capital of Parent and Purchaser
At all times after the occurrence of any event contemplated pursuant to sections
2.7 and 2.8 hereof or otherwise, as a result of which either Parent Common
Shares 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 Parent Common Shares or the Exchangeable Shares or both are so changed and
the parties hereto shall execute and deliver an agreement in writing giving
effect to and evidencing such necessary amendments and modifications.
4.3 Severability
If any provision of this Agreement is held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the remainder of this
Agreement shall not in any way be affected or impaired thereby and this
Agreement shall be carried out as nearly as possible in accordance with its
original terms and conditions.
4.4 Amendments, Modifications
This Agreement may not be amended or modified except by an agreement in writing
executed by Purchaser and Parent and approved by the holders of the Exchangeable
Shares in accordance with section 10.2 of the Share Provisions.
4.5 Ministerial Amendments
Notwithstanding the provisions of section 4.4, the parties to this Agreement may
in writing at any time and from time to time, without the approval of the
holders of the Exchangeable Shares, amend or modify this Agreement for the
purposes of:
(a) adding to the covenants of any or all parties provided that
the Board of Directors of each of Purchaser and Parent shall
be of the good faith opinion that such additions will not be
prejudicial to the rights or interests of the holders of the
Exchangeable Shares;
(b) making such amendments or modifications not inconsistent with
this Agreement as may be necessary or desirable with respect
to matters or questions
I-39
which, in the good faith opinion of the Board of Directors of
each of Purchaser and Parent, it may be expedient to make,
provided that each such Board of Directors shall be of the
good faith opinion that such amendments or modifications will
not be prejudicial to the rights or interests of the holders
of the Exchangeable Shares; or
(c) making such changes or corrections which, on the advice of
counsel to Purchaser and Parent, are required for the purpose
of curing or correcting any ambiguity or defect or
inconsistent provision or clerical omission or mistake or
manifest error, provided that the Boards of Directors of each
of Purchaser and Parent shall be of the good faith opinion
that such changes or corrections will not be prejudicial to
the rights or interests of the holders of the Exchangeable
Shares.
4.6 Meeting to Consider Amendments
Purchaser, at the request of Parent, shall call a meeting or meetings of the
holders of the Exchangeable Shares for the purpose of considering any proposed
amendment or modification requiring approval pursuant to section 4.4 hereof. Any
such meeting or meetings shall be called and held in accordance with the bylaws
of Purchaser, the Share Provisions and all applicable laws.
4.7 Amendments Only in Writing
No amendment to or modification or waiver of any of the provisions of this
Agreement otherwise permitted hereunder shall be effective unless made in
writing and signed by all of the parties hereto.
4.8 Enurement
This Agreement shall be binding upon and enure to the benefit of the Parties
hereto and their respective successors and assigns.
4.9 Notices to Parties
All notices and other communications between the parties to this Agreement hall
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 any such party as shall be specified in like notice):
I-40
Tec Technology Valuation.com Corporation:
Mr. Steve Saviuk
President
Manitex Capital Inc.
1 Place Ville-Marie, Suite 2001
Montreal (Quebec) H3B 2C4
with a copy to: Mr. David Perez
Manitex Capital Inc.
1 Place Ville-Marie, Suite 2001
Montreal (Quebec) H3B 2C4
Telecopier No.: 514-875-9751
with a copy to:
De Grandpre Chaurette Levesque
2000 McGill College Avenue
Suite 1600
Montreal (Quebec) H3B 3H3
Attention: Mr. Pierre Barnard
Telecopier No.: (514) 499-0469
and:
Tece Inc.
2000 McGil College Avenue
Suite 1600
Montreal (Quebec) H3B 3H3
Attention: Mr. Pierre Barnard
Telecopier no. (514) 499-0469
and:
3786137 Canada Inc.
2000 McGill College Avenue
Suite 1600
Montreal (Quebec) H3B 3H3
Any notice or other communication given personally shall be deemed to have been
given and received upon delivery thereof and if given by telecopy shall be
deemed to have been given and received on the date of confirmed receipt thereof
unless such day is not a Business Day in which case it shall be deemed to have
been given and received upon the immediately following Business Day.
I-41
4.10 Counterparts
This Agreement may be executed in counterparts, each of which shall be deemed an
original, and all of which taken together shall constitute one and the same
instrument.
4.11 Jurisdiction
This Agreement shall be construed and enforced in accordance with the laws of
the Province of Quebec and the laws of Canada applicable therein.
4.12 Attornment
Each of the parties hereto agrees that any action or proceeding arising out of
or relating to this Agreement may be instituted in the courts of the Province of
Quebec, waives any objection which it may have now or hereafter to the venue of
any such action or proceeding, irrevocably submits to the jurisdiction of the
said courts in any such action or proceeding, agrees to be bound by any judgment
of the said courts and not to seek, and hereby waives, any review of the merits
of any such judgment by the courts of any other jurisdiction and Parent hereby
appoints Purchaser at its registered office in the Province of Quebec as
attorney for service of process.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
TECE INC., (FORMERLY INTERNET FOOD CO. INC.)
By: /s/ Pierre Barnard
---------------------
Name: Pierre Barnard
Title: Attorney
3786137 CANADA INC.
By: /s/ Pierre Barnard
---------------------
Name: Pierre Barnard
Title: President
I-42
TEC TECHNOLOGY VALUATION.COM CORPORATION
By: /s/ Illegible
---------------------
Name:
Title:
I-43
EXCHANGE AND VOTING AGREEMENT
MEMORANDUM OF AGREEMENT made as of the 10th day of October 2000.
AMONG:
TECE INC. (FORMERLY INTERNET FOOD CO. INC.), a
corporation subsisting under the laws of the
State of Nevada;
(hereinafter referred to as the "Parent")
AND:
3786137 CANADA INC., a corporation incorporated
under the laws of Canada;
(hereinafter referred to as the "Purchaser"),
AND:
PIERRE BARNARD, attorney, having a business
address at De Grandpre Chaurette Levesque, 2000
McGill College Avenue, suite 1600, Montreal,
Quebec H3B 3H3
(hereinafter referred to as the "Trustee").
AND:
TEC TECHNOLOGYVALUATION.COM CORPORATION, a
corporation incorporated under the laws of the
Province of Quebec;
(hereinafter referred to as the "Tec")
W H E R E A S:
A. The Purchaser is a subsidiary of the Parent;
B. Pursuant to the Share Exchange Agreement, the Purchaser agreed to
acquire Tec Common Shares in consideration of among other things: (i)
the Shareholders of Tec receiving one Exchangeable Non-Voting Share (as
herein defined) of Purchaser for each two Tec Common Share held by them
immediately before the Share Exchange and (ii) the Parent, granting to
each Shareholder Voting Rights (as herein defined) in the Parent on the
basis of each Shareholder having an equivalent number of votes in the
Parent as the number of Exchangeable Shares held by such Shareholder;
C. As security for the Parent's covenant to exchange common shares in its
capital stock for Exchangeable Shares, Parent agreed to issue a number
of shares of its Common Stock (as herein defined as the "Parent Common
Shares") to the Trustee corresponding to the number
I-44
of issued and outstanding Exchangeable Shares;
D. In accordance with the Share Exchange Agreement and the Exchangeable
Share Provisions, this Agreement stipulates the means by which: (i) the
Shareholders have voting rights in the Parent; ii) the Trustee holds
Parent Common Shares for the Shareholders; (iii) the Shareholders
exercise their rights of exchange of the Exchangeable Shares; and (iv)
the Parent exercises its Call Right.
E. As consideration for the grant by the Parent of the above rights to the
Shareholders, the Shareholders who have intervened to this Agreement
have granted to the Parent a right to acquire the Exchangeable Shares
tendered by them for Retraction (the "Call Right");
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
DEFINITIONS. In this Agreement, the following terms shall have the following
meanings:
"AFFILIATE" of any person means any other person directly or indirectly
controlled by, or under common 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 Parent to
effect the automatic exchange of Exchangeable Shares for Parent Common Shares
pursuant to Section 4.11 hereof.
"BOARD OF DIRECTORS" means the Board of Directors of Purchaser.
"BUSINESS DAY" means a day other than a Saturday, Sunday or a day when banks are
not open for business in Quebec;
"CALL RIGHT" means the right of the Parent to acquire in certain circumstances
described in the statutes of Purchaser, Exchangeable Shares from the holders
thereof who have intervened to this Agreement, on the basis of one Parent Common
Share for each Exchangeable Share so tendered.
"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
I-45
Foreign Currency Amount by (b) the exchange rate on such date for such foreign
currency expressed in Canadian dollars as reported in The Wall Street Journal
under "Currency Trading; Exchange Rates" or, in the event such 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 Parent Common Share on any date,
the Canadian Dollar Equivalent of closing price of Parent Common Shares on the
day before such date, on such stock exchange or automated quotation system on
which the Parent 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 there is no public distribution or trading activity of Parent Common Shares
during such period, then the Current Market Price of a Parent 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 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.
"EXCHANGEABLE SHARES" means the Exchangeable Shares without par value in the
capital stock of Purchaser issuable under the Share Exchange Agreement.
"EXCHANGEABLE SHARE PROVISIONS" means the rights, privileges, restrictions and
conditions attached to the Exchangeable Shares as set forth in the Share
Exchange Agreement.
"INSOLVENCY EVENT" means the institution by Purchaser of any proceeding to be
adjudicated bankrupt or insolvent or to be dissolved or wound up, or the consent
of Purchaser 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 Purchaser to contest in good faith any such proceedings commenced in
respect of Purchaser within fifteen (15) days of becoming aware thereof, or the
consent by Purchaser to the filing of any such petition or to the appointment of
a receiver, or the making by Purchaser of a general assignment for the benefit
of creditors, or the admission in writing by Purchaser of its inability to pay
its debts generally as they become due, or Purchaser not being permitted,
pursuant to solvency requirements of applicable law, to redeem any Retracted
Shares pursuant to section 6 of the Exchangeable Share Provisions.
"INSOLVENCY EXCHANGE RIGHT" has the meaning ascribed thereto in Section 4.1.
"LIQUIDATION EVENT" has the meaning ascribed thereto in Section 4.11.
"LIQUIDATION EVENT EFFECTIVE DATE" has the meaning ascribed thereto in Section
4.11(c).
I-46
"LIST" has the meaning ascribed thereto in Section 3.8.
"OFFICER'S CERTIFICATE" means, with respect to the Parent or Purchaser, 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
officer of the Parent or Purchaser, as the case may be.
"PARENT COMMON SHARES" means the shares of common stock of the Parent having
voting rights of one vote per share, and any other securities into which such
shares may be changed.
"PARENT CONSENT" has the meaning ascribed thereto in Section 3.2.
"PARENT MEETING" has the meaning ascribed in Section 3.2.
"PARENT SUCCESSOR" has the meaning ascribed thereto in Section 11.1(a).
"PERSON" includes an individual, partnership, corporation, company,
unincorporated syndicate or organization, trust, trustee, executor,
administrator and other legal representative.
"RETRACTED SHARES" has the meaning ascribed thereto in Section 4.6.
"SHARE EXCHANGE AGREEMENT" means the Agreement dated October 10, 2000 between
the Parent, the Purchaser and Tec, as amended and restated on the date hereof.
"SHAREHOLDERS" means the registered holders from time to time of Exchangeable
Shares, other than the Parent and its Affiliates.
"SHAREHOLDER VOTES" has the meaning ascribed thereto in Section 3.2.
"SUPPORT AGREEMENT" means that certain support agreement made as of the same
date hereof between Purchaser and Parent.
"TRUST" means the trust created by this Agreement.
"TRUST ESTATE" means the Trust Shares and any other securities, money or other
property which may be held by the Trustee from time to time pursuant to this
Agreement.
"TRUST SHARES" has the meaning ascribed thereto in Section 2.2.
"VOTING RIGHTS" has the meaning ascribed thereto in Section 3.1.
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.
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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.
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.
ARTICLE 2
TRUST SHARES
2.1 ESTABLISHMENT OF TRUST. The Parent hereby establishes a Trust for the
benefit of the Shareholders, as herein provided. The Trustee will hold
the Parent Common Shares acquired pursuant to the Share Exchange
Agreement, Exchangeable Share Provisions, Support Agreement and this
Agreement both to support the Parent's and Purchaser's obligations
thereunder in the event of default and to provide a mechanism for
Shareholders of Exchangeable Shares to direct the voting of a
corresponding number of Parent Common Share held by the Trustee.
2.2 ISSUE AND OWNERSHIP OF THE PARENT COMMON SHARES. Upon execution of this
Agreement and thereafter from time to time, the Parent shall issue in
the name of the Trustee a number of Parent Common Shares equal to the
number of Exchangeable Shares issued to Shareholders such shares to be
hereafter held of record by the Trustee as trustee for and on behalf
of, and for the use and benefit of, the Shareholders and in accordance
with the provisions of this Agreement. All Parent Common Shares so
issued by the Parent to the Trustee pursuant to this Section 3.1 shall
hereafter be referred to as the "Trust Shares". The Parent hereby
acknowledges receipt from the Trustee as trustee for and on behalf of
the Shareholders of good and valuable consideration (and the adequacy
thereof) for the issuance of the Trust Shares by the Parent 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 Trust Shares and, subject to the terms
hereof, shall be entitled to exercise all of the rights and powers of
an owner with respect to the Trust Shares, provided that the Trustee
shall:
(a) hold the Trust Shares and the rights associated therewith as
conveyed by this Agreement as trustee solely for the use and
benefit of the Shareholders 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 Trust Shares and the Trust Shares shall not be
used or disposed of by the Trustee for any purpose other than
the purposes for which this Trust is created pursuant to this
Agreement.
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ARTICLE 3
VOTING
3.1 VOTING RIGHTS. The Parent and the Trustee will grant to the
Shareholders the right for each Shareholder to receive notice and
attend each Parent Meeting and to consent to or to vote in person or by
proxy, on any matter, question or proposition whatsoever that may
properly come before the stockholders of the Parent at a Parent Meeting
or in connection with a Parent Consent (in each case, as hereinafter
defined) (the "Voting Rights") on the basis of one Voting Right for
every one Exchangeable Non-Voting Share held by a Shareholder, as if
and to the same extent and effect as if the Shareholder held an
equivalent number of Parent Common Shares. The Voting Rights shall be
and remain vested in and exercised by the Shareholders.
3.2 NUMBER OF VOTES. With respect to all meetings of stockholders of the
Parent at which holders of shares of Parent Common Shares are entitled
to vote (a "Parent Meeting") and with respect to all written consents
sought by the Parent from its stockholders including the holders of
shares of Parent Common Shares (a "Parent Consent"), each Shareholder
shall be entitled to cast and exercise, in the manner instructed, the
Voting Rights ordinarily attributable to one Parent Common Share for
each Exchangeable Share owned of record by such Shareholder on the
record date established by the Parent or by applicable law for such
Parent Meeting or Parent Consent, as the case may be (the "Shareholder
Votes") in respect of each matter, question or proposition to be voted
on at such Parent Meeting or to be consented to in connection with such
Parent Consent.
3.3 LEGENDED SHARES CERTIFICATES. Purchaser will cause each certificate
representing Exchangeable Shares to bear an appropriate legend
notifying the Shareholders of their right to a number of votes in the
Parent as is equal to the number of shares represented by the
Exchangeable Share certificates.
3.4 SAFEKEEPING OF CERTIFICATES. The certificate(s) representing the Trust
Shares shall at all times be held in safe keeping by the Trustee or its
agent.
3.5 MAILINGS TO SHAREHOLDERS OF EXCHANGEABLE SHARES. With respect to each
Parent Meeting and Parent Consent, the Parent will mail or cause to be
mailed (or otherwise communicate in the same manner as the Parent
utilizes in communications to holders of Parent Common Shares, to each
of the Shareholders named in the List (as defined below) on the same
day as the initial mailing or notice (or other communication) with
respect thereto is given by the Parent to its stockholders:
(a) a copy of such notice, together with any proxy or information
statement and related materials to be provided to stockholders
of the Parent;
(b) a statement that such Shareholder is entitled to the exercise
of the Shareholder Votes with respect to such Parent Meeting
or Parent Consent, as the case may be,
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and to attend such Parent Meeting and to exercise personally
the Shareholder Votes thereat;
(c) a statement as to the manner in which to give a proxy to the
Trustee or a designated agent or other representative of the
management of the Parent to exercise such Shareholder Votes;
and
(d) a statement of (i) the time and date by which such must be
received by the Parent in order to be binding upon it, which
in the case of a Parent Meeting shall not be earlier than the
close of business on the second Business Day prior to such
meeting, and (ii) the method for revoking or amending such
proxies.
For the purpose of determining Shareholder Votes to which a Shareholder is
entitled in respect of any such Parent Meeting or Parent Consent, the number of
Exchangeable Shares owned of record by the Shareholder shall be determined at
the close of business on the record date established by the Parent or by
applicable law for purposes of determining stockholders entitled to vote at such
Parent Meeting or to give written consent in connection with such Parent
Consent.
3.6 COPIES OF STOCKHOLDER INFORMATION. The Parent will deliver to the
Shareholders copies of all proxy materials (including notices of Parent
Meetings), 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 Parent Common Shares.
3.7 OTHER MATERIALS. Immediately after receipt by the Parent or any
stockholder of the Parent of any material sent or given generally to
the holders of Parent 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), the Parent shall use
its best efforts to obtain and deliver copies thereof to each
Shareholder as soon as possible thereafter.
3.8 LIST OF PERSONS ENTITLED TO VOTE. Purchaser shall (a) prior to each
annual, general and special Parent Meeting or the seeking of any Parent
Consents and (b) forthwith upon each request made at any time by the
Trustee or the Parent in writing, prepare or cause to be prepared a
list (a "List") of the names and addresses of the Shareholders arranged
in alphabetical order and showing the number of Exchangeable Shares
held of record by each such Shareholder, 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 Parent Meeting or a
Parent Consent, at the close of business on the record date established
by the Parent or pursuant to applicable law for determining the holders
of Parent Common Shares entitled to receive notice of and/or to vote at
such Parent Meeting or to give consent in connection with such Parent
Consent. Each such List shall be delivered to the Parent promptly after
receipt by Purchaser 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 Parent
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to perform its obligations under this Agreement. The Parent agrees to
give Purchaser written notice (with a copy to the Trustee) of the
calling of any Parent Meeting or the seeking of any Parent 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 Purchaser to perform its obligations under this Section 3.8.
3.9 DISTRIBUTION OF WRITTEN MATERIALS. Any written materials to be
distributed by the Parent to the Shareholders pursuant to this
Agreement shall be delivered or sent by mail (or otherwise communicated
in the same manner as the Parent utilizes in communications to holders
of Parent Common Shares) to each Shareholder at its address as shown on
the books of Purchaser. Purchaser shall provide or cause to be provided
to the Parent for this purpose, on a timely basis and without charge or
other expense current lists of the Shareholders.
3.10 TERMINATION OF VOTING RIGHTS. All of the rights of a Shareholder with
respect to the Shareholder Vote exercisable in respect of each
Exchangeable Non-Voting Share held by such Shareholder shall be deemed
to be surrendered by the Shareholder to the Parent and such Shareholder
Votes and the Voting Rights represented thereby shall cease immediately
upon the exchange, retraction or redemption of the Exchangeable Shares
by or from the Shareholder.
3.11 ALTERNATIVE VOTING RIGHTS. The Trustee shall exercise the Voting Rights
only on the basis of instructions received from Shareholders entitled
to instruct the Trustee as to the voting thereof at the time at which
the Parent Consent is sought or the Parent Meeting is held. To the
extent that no instructions are received from a Shareholder with
respect to the Voting Rights to which such Shareholder is entitled, the
Trustee shall not exercise or permit the exercise of such Shareholder's
Voting Rights and shall not otherwise exercise the Voting Rights
attached to the Trust Shares.
Any Shareholder named in a List prepared in connection with any Parent
Meeting or any Parent Consent will be entitled (a) to instruct the
Trustee with respect to the exercise of the Shareholder Votes to which
such Shareholder 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 Shareholder Votes to
which such Shareholder is entitled except, in each case, to the extent
that such Shareholder has transferred the ownership of any Exchangeable
Shares in respect of which such Shareholder is entitled to Shareholder
Votes after the close of business on the record date for such meeting
or seeking of consent.
In connection with each Parent Meeting and Parent Consent, the Trustee
shall exercise, either in person or by proxy, in accordance with the
instructions received from a Shareholder , the Shareholder Votes as to
which such Shareholder is entitled to direct the Voting Rights (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 Shareholder prior to the time and date fixed by it for
receipt of such instructions in the
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notice given by the Trustee to the Shareholder.
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 Parent Meeting. Upon submission by a Shareholder (or its
designee) of identification satisfactory to the Trustee's
representatives, and at the Shareholder's request, such representatives
shall sign and deliver to such Shareholder (or its designee) a proxy to
exercise personally the Shareholder Votes as to which such Shareholder
is otherwise entitled hereunder to direct the vote, if such Shareholder
either (i) has not previously given the Trustee instructions in respect
of such meeting, or (ii) submits to the Trustee's representatives
written revocation of any such previous instructions. At such meeting,
the Shareholder exercising such Shareholder 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.
ARTICLE 4
EXCHANGE RIGHT AND AUTOMATIC EXCHANGE
4.1 GRANT AND OWNERSHIP OF THE EXCHANGE RIGHT. The Parent hereby grants to
the Shareholders the right, upon the occurrence and during the
continuance of an Insolvency Event, to require the Parent to purchase
from each or any Shareholder all or any part of the Exchangeable Shares
held by the Shareholder in accordance with the provisions of this
Agreement (the "Insolvency Exchange Right"). The Parent hereby
acknowledges receipt from the Shareholders of good and valuable
consideration (and the adequacy thereof) for the issuance of the
Insolvency Exchange Right to them.
4.2 LEGENDED SHARE CERTIFICATES. Purchaser will cause each certificate
representing Exchangeable Shares to bear an appropriate legend
notifying the Shareholders of:
(a) their right with respect to the exercise of the Insolvency
Exchange Right in respect of the Exchangeable Shares held by a
Shareholder; and
(b) the Automatic Exchange Rights.
4.3 PURCHASE PRICE. The purchase price payable by the Parent for each
Exchangeable Non-Voting Share to be purchased by the Parent under the
Insolvency Exchange Right shall be an amount per share equal to (a) the
Current Market Price of a Parent Common Share on the last Business Day
prior to the day of closing of the purchase and sale of such
Exchangeable Non-Voting Share under the Insolvency Exchange Right plus
(b) an additional amount equivalent to the full amount of all dividends
declared and unpaid on each such Exchangeable Non-Voting Share and all
dividends declared on Parent Common Shares which have not been declared
on such Exchangeable Shares in accordance with the
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Exchangeable Share Provisions (provided that if the record date for any
such declared and unpaid dividends occurs on or after the day of
closing of such purchase and sale the purchase price shall not include
such additional amount equivalent to such declared and unpaid
dividends). In connection with each exercise of the Insolvency Exchange
Right, the Parent will provide to the shareholders an Officer's
Certificate setting forth the calculation of the purchase price for
each Exchangeable Non-Voting Share. The purchase price for each such
Exchangeable Non-Voting Share so purchased may be satisfied only by
delivering or causing the Trustee to deliver out of the Trust Shares to
the relevant Shareholder, one Parent Common Share and a check for the
balance, if any, of the purchase price without interest.
4.4 EXERCISE INSTRUCTIONS. Subject to the terms and conditions set forth
herein, a Shareholder shall be entitled, upon the occurrence and during
the continuance of an Insolvency Event, to exercise the Insolvency
Exchange Right with respect to all or any part of the Exchangeable
Shares registered in the name of such Shareholder on the books of
Purchaser. To cause the exercise of the Insolvency Exchange Right, the
Shareholder shall deliver to the Parent, in person or by certified or
registered mail the certificates representing the Exchangeable Shares
which such Shareholder desires the Parent to purchase, duly endorsed in
blank, and accompanied by such other documents and instruments as may
be required to effect a transfer of Exchangeable Shares under the Act,
and the articles of Purchaser and such additional documents and
instruments as the Parent may reasonably require together with (a) a
duly completed form of notice of exercise of the Insolvency Exchange
Right, contained on the reverse of or attached to the Exchangeable
Non-Voting Share certificates, stating (i) that the Shareholder elects
to exercise the Insolvency Exchange Right so as to require the Parent
to purchase from the Shareholder the number of Exchangeable Shares
specified therein, (ii) that such Shareholder has good title to and
owns all such Exchangeable Shares to be acquired by Parent free and
clear of all liens, claims and encumbrances, (iii) the name in which
the certificates representing Parent Common Shares deliverable in
connection with the exercise of the Insolvency Exchange Right are to be
issued and (iv) the names and addresses of the persons to whom such new
certificates should be delivered, and (b) payment (or evidence
satisfactory to Purchaser and the Parent of payment) of the taxes (if
any) payable as contemplated by Section 4.7 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 the Parent
under the Insolvency Exchange Right, a new certificate for the balance
of such Exchangeable Shares shall be issued to the Shareholder at the
expense of Purchaser.
4.5 DELIVERY OF PARENT COMMON SHARES; EFFECT OF EXERCISE. Promptly, and as
soon as reasonably practicable after receipt of the certificates
representing the Exchangeable Shares which the Shareholder desires the
Parent to purchase under the Insolvency Exchange Right, together with
such documents and instruments of transfer and a duly completed form of
notice of exercise of the Insolvency Exchange Right (and payment of
taxes, if any, or evidence thereof), duly endorsed for transfer to the
Parent, the Parent shall immediately thereafter upon receipt of such
notice deliver or cause the Trustee
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to deliver out of the Trust Shares, to the Shareholder of such
Exchangeable Shares (or to such other persons, if any, properly
designated by such Shareholder), the certificates for the number of
Parent Common Shares deliverable in connection with the exercise of the
Insolvency Exchange Right, which shares shall be duly issued as fully
paid and non- assessable and shall be free and clear of any lien, claim
or encumbrance, and checks for the balance, if any, of the total
purchase price therefor. The Parent shall, immediately upon receipt of
such certificates representing the Exchangeable Shares from the
Shareholder, deliver the certificates to the registered office of
Purchaser for cancellation. Immediately upon the giving of notice by
the Shareholder to the Parent of the exercise of the Insolvency
Exchange Right, as provided in this Section 4.5, the closing of the
transaction of purchase and sale contemplated by the Insolvency
Exchange Right shall be deemed to have occurred, and the Shareholder of
such Exchangeable Shares shall be deemed to have transferred to the
Parent its right, title and interest in and to such Exchangeable Shares
and shall cease to be a Shareholder of such Exchangeable Shares and
shall not be entitled to exercise any of the rights of a Shareholder in
respect thereof, other than the right to receive his proportionate part
of the total purchase price therefor, unless the requisite number of
Parent Common Shares (together with a check for the balance, if any, of
the total purchase price therefor) is not allotted, issued and
delivered to such Shareholder (or to such other persons, if any,
properly designated by such Shareholder), within five (5) Business Days
of the date of the giving of such notice by the Shareholder, in which
case the rights of the Shareholder shall remain unaffected until such
Parent Common Shares are so allotted, issued and delivered by the
Parent and any such check is so delivered and paid. Concurrently with
such Shareholder ceasing to be a Shareholder of Exchangeable Shares,
the Shareholder shall be considered and deemed for all purposes to be
the holder of Parent Common Shares delivered to it pursuant to the
Insolvency Exchange Right.
4.6 EXERCISE OF INSOLVENCY EXCHANGE RIGHT SUBSEQUENT TO RETRACTION. In the
event that a Shareholder has exercised its right under Article 6 of the
Exchangeable Share Provisions to require Purchaser to redeem any or all
of the Exchangeable Shares held by the Shareholder (the "Retracted
Shares") and is notified by Purchaser pursuant to section 6.6 of the
Exchangeable Share Provisions that Purchaser will not be permitted as a
result of solvency requirements of applicable law to redeem all such
Retracted Shares, and the Shareholder has not revoked the retraction
request delivered by the Shareholder to Purchaser pursuant to section
6.7 of the Exchangeable Share Provisions, the retraction request will
constitute and will be deemed to constitute notice from the Shareholder
to the Parent to exercise the Insolvency Exchange Right with respect to
those Retracted Shares which Purchaser is unable to redeem. In any such
event, Purchaser hereby agrees with the Shareholder immediately to
notify the Parent of such prohibition against Purchaser redeeming all
of the Retracted Shares and immediately to forward or cause to be
forwarded to the Parent all relevant materials delivered by the
Shareholder to Purchaser 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 Parent will
thereupon exercise the Insolvency Exchange Right with respect to the
Retracted Shares that Purchaser is not
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permitted to redeem and will purchase such shares in accordance with
the provisions of this Article 4.
4.7 STAMP OR OTHER TRANSFER TAXES. Upon any sale of Exchangeable Shares to
the Parent pursuant to the Insolvency Exchange Right or the Automatic
Exchange Rights, the share certificate or certificates representing
Parent Common Shares to be delivered in connection with the payment of
the total purchase price therefor shall be issued in the name of the
Shareholder of the Exchangeable Shares so sold without charge to the
Shareholder of the Exchangeable Shares so sold; provided, however that
such Shareholder (a) shall pay (and neither the Parent, Purchaser nor
the Trustee shall be required to pay) any documentary, stamp, transfer,
withholding or other 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 Shareholder, or (b) shall have established to
the satisfaction of the Trustee, the Parent and Purchaser that such
taxes, if any, have been paid.
4.8 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, Purchaser and the
Parent shall give written notice thereof to the Trustee and the
Shareholders, which notice shall contain a brief statement of the right
of the Shareholders with respect to the Insolvency Exchange Right.
4.9 QUALIFICATION OF PARENT COMMON SHARES. The Parent represents and
warrants that it has taken all actions and done all things as are
necessary under any United States or Canadian federal, provincial or
state law or regulation or pursuant to the rules and regulations of any
regulatory authority or the fulfilment of any other legal requirement
(collectively, the "Applicable Laws") as they exist on the date hereof
and will in good faith expeditiously take all such actions and do all
such things as are necessary under Applicable Laws as they may exist in
the future to cause the Parent Common Shares to be issued and delivered
pursuant to the Exchangeable Share Provisions, the Insolvency Exchange
Right or the Automatic Exchange Rights; provided that all Parent Common
Shares will be subject to such resale restrictions as imposed by
applicable securities legislation.
4.10 RESERVATION OF PARENT COMMON SHARES. The Parent hereby represents,
warrants and covenants that it has irrevocably reserved for issuance
and will at all times keep available, free from preemptive and other
rights, out of its authorized and unissued capital stock such number of
Parent Common Shares (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 Exchangeable Shares issuable upon the exercise of all
rights to acquire Exchangeable Shares outstanding from time to time and
(b) as are now and may hereafter be required to enable and permit
Purchaser and the Parent to meet their respective obligations
hereunder, under the Support Agreement, under the Exchangeable Share
Provisions and under any other security or commitment pursuant to which
the Parent may now or hereafter be required to issue Parent Common
Shares. To the extent permitted under Applicable Laws, the Trust Shares
may be used to satisfy the Parent's obligations
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under this Section 4.10.
4.11 AUTOMATIC EXCHANGE ON LIQUIDATION OF THE PARENT
(a) The Parent will give the Trustee and the Shareholders notice
of each of the following events (each a "Liquidation Event")
at the time set forth below:
(i) in the event of any determination by the board of
directors of the Parent to institute voluntary
liquidation, dissolution or winding-up proceedings
with respect to the Parent or to effect any other
distribution of assets of the Parent among its
shareholders for the purpose of winding up its
affairs, at least sixty (60) days prior to the
proposed effective date of such liquidation,
dissolution, winding-up or other distribution; or
(ii) immediately, upon the earlier of (A) receipt by the
Parent of notice of or (B) the Parent 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 the Parent or to effect any other distribution of
assets of the Parent notifying its shareholders for
the purpose of winding up its affairs.
(b) Such notice shall include a brief description of the automatic
exchange of Exchangeable Shares for Parent Common Shares
provided for in Section 4.11(c) and the ability of a
Shareholder not to participate in such automatic exchange.
(c) In order that the Shareholders will be able to participate on
a pro rata basis with the holders of Parent Common Shares in
the distribution of assets of the Parent in connection with a
Liquidation Event, on the fifth Business Day prior to the
effective date of a Liquidation Event (the "Liquidation Event
Effective Date") all of the then outstanding Exchangeable
Shares shall be automatically exchanged for Parent Common
Shares. To effect such automatic exchange the Parent shall
purchase each Exchangeable Non-Voting Share outstanding on the
fifth Business Day prior to the Liquidation Event Effective
Date and held by Shareholders, and each Shareholder shall sell
the Exchangeable Shares held by it at such time, for a
purchase price per share equal to (a) the Current Market Price
of one (1) Parent Common Share on the fifth Business Day prior
to the Liquidation Event Effective Date, which shall be
satisfied in full by the Parent delivering or causing the
Trustee to deliver out of the Trust Shares to the Shareholder
one Parent Common Share, plus (b) an additional amount
equivalent to the full amount of all dividends declared and
unpaid on each such Exchangeable Non-Voting Share and all
dividends declared on Parent Common Shares which have not been
declared on such Exchangeable Shares in accordance with
section 3 of the Exchangeable Share Provisions (provided that
if the record date for any such declared and unpaid dividends
occurs on or after the day of closing of such purchase and
sale the purchase price shall not include such
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additional amount equivalent to such declared and unpaid
dividends). In connection with such automatic exchange, the
Parent will provide to the Shareholders an Officer's
Certificate setting forth the calculation of the purchase
price for each Exchangeable Non-Voting Share, together with a
notice of the anticipated Liquidation Event Effective Date.
(d) On the fifth Business Day prior to the Liquidation Event
Effective Date, the closing of the transaction of purchase and
sale contemplated by the automatic exchange of Exchangeable
Shares for Parent Common Shares shall be deemed to have
occurred, and each Shareholder shall be deemed to have
transferred to the Parent all of the Shareholder's right,
title and interest in and to its Exchangeable Shares and shall
cease to be a Shareholder of such Exchangeable Shares and the
Parent shall deliver or cause the Trustee to deliver out of
the Trust Shares to the Shareholder Parent Common Shares
deliverable upon the automatic exchange of Exchangeable Shares
for Parent Common Shares and shall deliver to the Shareholder
a check for the balance, if any, of the total purchase price
for such Exchangeable Shares. Concurrently with such
Shareholder ceasing to be a Shareholder, the Shareholder shall
be considered and deemed for all purposes to be the holder of
Parent Common Shares issued to it pursuant to the automatic
exchange of Exchangeable Shares for Parent Common Shares and
the certificates held by the Shareholder previously
representing the Exchangeable Shares exchanged by the
Shareholder with the Parent pursuant to such automatic
exchange shall thereafter be deemed to represent Parent Common
Shares delivered to the Shareholder by the Parent pursuant to
such automatic exchange prior to the surrender by the
Shareholder of the Exchangeable Non-Voting Share certificates.
Upon the request of a Shareholder and the surrender by the
Shareholder of Exchangeable Non-Voting Share certificates
deemed to represent Parent Common Shares, duly endorsed in
blank and accompanied by such instruments of transfer as the
Parent may reasonably require, the Parent shall deliver or
cause to be delivered to the Shareholder certificates
representing Parent Common Shares of which the Shareholder is
the holder.
4.12 WITHHOLDING RIGHTS. The Parent will retain tax counsel to advise the
Parent and the Trustee on all income tax and withholding obligations of
the Parent, the Trust and the Trustee. The Parent and the Trustee shall
be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any Shareholder such amounts as
the Parent or the Trustee is required or permitted to deduct and
withhold with respect to the making of such payment under the United
States Internal Revenue Code of 1986 as amended (the "Code"), the
Income Tax Act (Canada) or any provision of state, local, provincial or
foreign tax law. To the extent that amounts are so withheld, such
withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the Shareholder of the shares in respect of which
such deduction and withholding was made, provided that such withheld
amounts are actually remitted to the appropriate taxing authority. To
the extent that the amount so required or permitted to be deducted or
withheld from any payment to a Shareholder exceeds the cash portion of
the consideration
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otherwise payable to the Shareholder, the Parent or the Trustee is
hereby authorized to sell or otherwise dispose of at fair market value
such portion of the consideration as is necessary to provide sufficient
funds to the Parent or the Trustee, as the case may be, in order to
enable it to comply with such deduction or withholding requirement and
shall account to the relevant Shareholder for any balance of such sale
proceeds.
ARTICLE 5
DIVIDENDS
5.1 The holders of Exchangeable Shares will be entitled to participate in
all dividends declared by Purchaser, in accordance with the provisions
of the Exchangeable Share Provisions and the Support Agreement.
5.2 The Trustee hereby expressly waives, for and on its own behalf and on
behalf of all Shareholders, all rights to receive dividends of every
nature as may be payable to it as holder of the Trust Shares, and the
parties acknowledge that the Parent need not include the Trust Shares
in its calculations for purposes of determining the payment of
dividends, and need not pay or distribute any dividends (either in
cash, shares or otherwise) to the Trustee as holder of the Trust
Shares, provided however that such waiver may be rescinded by the
Trustee upon receipt of notice from a Shareholder that Purchaser has
omitted to pay any dividends otherwise payable or that either the
Parent or Purchaser contests the right of the holders of Exchangeable
Shares to receive dividends, or the right to receive dividends on the
Exchangeable Shares that are otherwise in doubt whereupon the Parent
will pay and the Trustee shall collect all dividends paid on the Trust
Shares from time to time until the Trustee receives an Officer's
Certificate from Purchaser certifying that Purchaser is in compliance
with its obligations to pay dividends in accordance with the
Exchangeable Share Provisions. Any dividends received by the Trustee on
the Trust Shares shall be paid to the Shareholders in the same manner
as dividends would have been paid by Purchaser to the holders of
Exchangeable Shares.
5.3 For clarity, the Voting Rights and exchange rights granted by the
Parent to the Shareholders hereunder do not in any manner confer any
additional rights to the Shareholders, including, but subject to the
provisions of the Support Agreement, any rights to receive or
participate in dividends declared or paid by the Parent.
ARTICLE 6
SUPPORT PROVISIONS
6.1 USE OF TRUST SHARES IN CONNECTION WITH SUPPORT AGREEMENT. Pursuant
to section 2.11 of the Support Agreement, the Trust Shares provide
additional security for the Parent's and Purchaser's obligations under
the Share Exchange Agreement, the Exchangeable Share Provisions and the
Support Agreement. In the event that Purchaser and the Parent both
default on their obligations to acquire the Exchangeable Shares
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pursuant to the Exchangeable Share Provisions, the Support Agreement,
or Article 4 of this Agreement, a Shareholder may provide written
notice to the Parent, Purchaser and the Trustee of such default. If
such default is not cured within ten (10) Business Days, the
Shareholder may provide written notice to the Trustee of such failure
to cure. The Trustee shall then use the Trust Shares to satisfy the
Parent's obligation to acquire the Exchangeable Shares as if the Parent
had instructed the Trustee to use the Trust Shares for such purpose
pursuant to this Agreement. The Exchangeable Shares acquired by the
Trustee in such transaction shall be distributed to the Parent. In the
event that the Trustee uses the Trust Shares to so acquire Exchangeable
Shares, and if the Parent is obligated to pay any declared but unpaid
dividends (or dividends declared on Parent Common Shares which have not
been declared on such Exchangeable Shares in accordance with section 3
of the Exchangeable Share Provisions), the Parent shall remain
obligated to pay such amount to the Shareholder.
6.2 APPLICATION OF TRUST SHARES. At such time as either Purchaser or Parent
acquires Exchangeable Shares from a Shareholder, it shall provide the
Trustee with an Officer's Certificate specifying (i) the former
Shareholder, (ii) the number of Exchangeable Shares acquired, (iii) the
form of the acquisition, designated by the provision of the applicable
agreement (Exchangeable Share Provisions, Support Agreement or this
Agreement) and (iv) the date of such acquisition. If such certification
is made, the Trustee shall distribute to the Parent a number of Trust
Shares equal to the number of Exchangeable Shares so acquired by the
Parent (or, if so requested by the Parent, distribute such Parent
Common Shares to the former Shareholder on behalf of the Parent).
ARTICLE 7
CONCERNING THE TRUSTEE
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) receiving and depositing the Trust Shares from the Parent as
trustee for and on behalf of the Shareholders in accordance
with the provisions of this Agreement;
(b) distributing materials to Shareholders as provided in this
Agreement;
(c) holding title to the Trust Estate;
(d) investing any moneys forming, from time to time, a part of the
Trust Estate as provided in this Agreement; and
(e) taking such other actions and doing such other things as are
specifically provided in this Agreement.
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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 or appropriate 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. Notwithstanding anything to the contrary
herein, the Trustee shall have no obligation to exercise any discretion
in the performance of its obligations hereunder and shall only be
required to act upon the express written instructions of the Parent,
Purchaser or the Shareholders. 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 and in accordance with
its fiduciary duties to the Shareholders and shall exercise the care,
diligence and skill that a reasonably prudent trustee would exercise in
comparable circumstances. The Trustee shall not 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 notice 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 the Purchaser and
the Parent 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 ninety (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 9.
7.3 DEALINGS WITH THIRD PARTIES. The Purchaser and the Parent irrevocably
authorize the Trustee, from time to time, to:
(a) consult, communicate and otherwise deal with any respective
registrars, transfer agents, payment agents or any other
person or entity appointed from time to time by the Parent in
connection with any matter relating to the Exchangeable Shares
and Parent Common Shares; and
(b) requisition, from time to time, (i) from any such registrar,
transfer agent payment agent or other person or entity,
appointed from time to time by the Parent, as applicable, 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 Purchaser, the holder of Parent Common Shares, and
any subsequent holder or agent of such shares, the share
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certificates issuable upon the exercise from time to time of
the Insolvency Exchange Right and pursuant to the Automatic
Exchange Rights in the manner specified in Article 4 hereof.
The Purchaser and the Parent irrevocably authorize their
respective payment agent, or any other authorized agent
appointed from time to time by the Parent to comply with all
such requests.
7.4 BOOKS AND RECORDS. The Trustee shall keep available for inspection,
during normal business hours, by the Parent and Purchaser, at the
Trustee's principal office, 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 Shareholders.
7.5 INCOME TAX RETURNS AND REPORTS. The Trustee will allocate and
distribute all income and losses of the Trust to the Shareholders in
each year such that the Trust is not in a position to pay any tax or
file any tax returns. Shareholders will be individually and personally
responsible for all income and losses incurred by the Trust. In this
regard, the Parent will retain tax counsel on behalf of the Trust, and
agrees to prepare and distribute to each Shareholder all necessary tax
forms for them to complete their United States and Canadian tax
returns. The Shareholders may obtain the advice and assistance of such
experts as they may consider necessary or advisable.
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
Shareholder upon such Shareholder 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.
The Trustee shall not be required to expend any of its own funds or
otherwise incur any financial liability in the exercise of any of its
rights, powers, duties or authorities, but instead shall be entitled to
be fully funded, given security and indemnity in advance as aforesaid.
7.7 ACTIONS BY SHAREHOLDERS. Shareholders shall be entitled to take
proceedings in any court of competent jurisdiction to enforce any of
their rights hereunder as against Purchaser and the Parent.
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.
7.9 EVIDENCE AND AUTHORITY TO TRUSTEE. Purchaser and the Parent shall
furnish
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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 Purchaser and/or the Parent for the Trustee under this
Agreement or as a result of any obligation imposed under this Agreement
including, without limitation, in respect of the Insolvency 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 Purchaser and the Parent 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 Purchaser and/or the
Parent 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 Purchaser
and/or the Parent, 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, the Insolvency Exchange Right or the Automatic Exchange Rights
and, except as otherwise specifically provided herein, such evidence
may consist of a report or opinion of any solicitor, auditor,
accountant, appraiser, valuer, engineer or other expert or any other
person whose qualifications give authority to a statement made by him,
provided that if such report or opinion is furnished by a director,
officer or employee of Purchaser and/or the Parent shall be in the form
of an Officer's Certificate or a statutory declaration.
Each statutory declaration, certificate, opinion, report or other paper
or document 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:
(a) declaring that he has read and understands the provisions of
this Agreement relating to the condition in question;
(b) describing the nature and scope of the examination or
investigation upon which he based the statutory declaration,
certificate, statement or opinion; and
(c) declaring that he has made such examination or investigation
as he believes is necessary to enable him to make the
statements or give the opinions contained or expressed
therein.
7.10 EXPERTS, ADVISORS AND AGENTS. The Trustee may:
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(a) in relation to these presents, act and rely on the opinion or
advice of or information obtained from any solicitor, auditor,
accountant, appraiser, valuer, engineer or other expert,
whether retained by the Trustee or by Purchaser and/or the
Parent or otherwise, and may employ such assistants as may be
necessary to the proper 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 without taxation for costs and fees;
and
(b) employ such agents and other assistants as it may reasonably
require for the proper 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 discharge of its duties hereunder and in the management of
the Trust without taxation for costs and fees, which
compensation reimbursement may be requested to be received in
advance prior to undertaking any actions hereunder.
7.11 INVESTMENT OF MONEYS HELD BY THE 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 State of
Pennsylvania, trustees are authorized to invest trust moneys, provided
that such securities are stated to mature within two (2) years after
their purchase by the Trustee, and the Trustee shall so invest such
moneys on the written direction of Purchaser. Pending the investment of
any moneys as hereinbefore provided, such moneys may be deposited in
the name of the Trustee in any bank, loan or trust company authorized
to accept deposits under the laws of the United States, Canada or any
state or 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 CORPORATION'S REQUEST. Except as in this
Agreement or otherwise specifically provided, the Trustee shall not be
bound to act in accordance with any direction or request of Purchaser
and/or the Parent or 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
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respect to any interest of any Shareholder 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 Shareholder in any Exchangeable Shares resulting in conflicting
claims or demands being made in connection with such interest, then the
Trustee shall be entitled, at its sole discretion, to refuse to
recognize or to comply with any such claim or demand. In so refusing,
the Trustee may elect not to exercise any Insolvency 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
Insolvency 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 Insolvency 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 set forth herein 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 Shareholders, subject to
all the terms and conditions set forth herein.
7.16 VALIDITY OF CERTIFICATES. If at any time in the performance of its
duties under this Agreement, it shall be necessary for the Trustee to
receive, accept, act or rely upon any certificate, notice, request,
waiver, consent, receipt, direction, affidavit or other paper, writing
or document furnished to it and purporting to have been executed or
issued by Purchaser, the Parent or the Shareholders or their authorized
officers or attorneys, the Trustee shall be entitled to rely and act
upon the genuineness and authenticity of any such writing submitted to
it. It shall not be necessary for the Trustee to ascertain whether or
not the persons who have executed, signed or otherwise issued,
authenticated or receipted such papers, writings or documents have
authority to do so or that they are the same persons named therein or
otherwise to pass upon any requirement of such papers, writing or
documents that may be essential for their validity or effectiveness or
upon the truth and acceptability of any information contained therein
which the Trustee in good faith believes to be genuine.
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ARTICLE 8
COMPENSATION
8.1 FEES AND EXPENSES OF THE TRUSTEE. The Parent, Purchaser and the
Shareholders jointly and severally agree to pay to the Trustee
reasonable compensation for all of the services rendered by it under
this Agreement and will reimburse the Trustee for all reasonable
expenses and disbursements, including, without limitation, legal fees
and expenses and the reasonable compensation and disbursements all
other advisors, agents and assistants not regularly in its employ and
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 the Parent and Purchaser 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 fraudulently or in bad faith or
with gross negligence or willful misconduct. The Trustee shall be
obliged to provide only one account or invoice to the Parent from time
to time during this Agreement in connection with any services rendered
by it under this Agreement on behalf of any of the parties.
ARTICLE 9
INDEMNIFICATION AND LIMITATION OF LIABILITY
9.1 INDEMNIFICATION OF THE TRUSTEE. The Parent, Purchaser and the
Shareholders jointly and severally agree to indemnify and hold harmless
the Trustee and each of its directors, officers, partners, 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, gross 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 the Parent or Purchaser pursuant hereto.
Subject to (ii), below, the Parent and Purchaser shall be entitled to
participate at their own expense in the defence and, if the Parent and
Purchaser so elect at any time after receipt of such notice, either of
them may assume the defence of any suit brought to enforce any such
claim. In the event the Parent and/or Purchaser assume the defence of
the Trustee, no settlement of any claim shall be entered into without
the prior approval of the Trustee; and the Trustee shall have the right
to re-assume the defence of any suit if the Parent or Purchaser fail to
actively continue such defence so assumed. The Trustee shall have the
right to employ separate counsel in any such suit and participate in
the defence 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 the Parent or Purchaser; or (ii) the
named parties to any such suit include both the Trustee and the Parent;
or (iii) Purchaser
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and the Trustee shall have been advised by counsel acceptable to the
Parent or Purchaser that there may be one or more legal defences
available to the Trustee which are different from or in addition to
those available to the Parent or Purchaser (in which case Purchaser
shall not have the right to assume the defence of such suit on behalf
of the Trustee but shall be liable to pay the reasonable fees and
expenses of counsel for the Trustee).
9.2 LIMITATION OF LIABILITY. The Trustee shall not be liable for any act or
omission by it except where such act or omission occurs as a result of
the Trustee's gross negligence or willful misconduct. The Trustee shall
not be liable for any losses or damages due to the acts or omissions of
third parties, including without limitation, the failure by the Parent
and/or Purchaser to comply with its obligations under this Agreement,
as the case may be. Under no circumstances shall the Trustee be liable
for any special, indirect or consequential losses or damages (including
without limitation loss of profits and penalties) whether caused by the
Trustee's negligence or that of its employees, agents or otherwise. 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, gross
negligence, willful misconduct or bad faith on the part of the Trustee.
ARTICLE 10
CHANGE OF TRUSTEE
10.1 RESIGNATION. The Trustee, or any trustee hereafter appointed, may at
any time resign by giving written notice of such resignation to the
Parent and Purchaser specifying the date on which it desires to resign,
provided that such notice shall never be given less than thirty (30)
days before such desired resignation date unless the Parent and
Purchaser 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, the Parent and
Purchaser 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.
10.2 REMOVAL. The Trustee, or any trustee hereafter appointed at any time on
thirty (30) days' prior notice by written instrument executed by the
Parent and Purchaser, in duplicate, one copy of which shall be
delivered to the trustee so removed and one copy to the successor
trustee. Any successor trustee to be appointed upon the removal of the
Trustee shall be appointed in accordance with the provisions as
provided under Section 10.3 of this Agreement.
10.3 SUCCESSOR TRUSTEE. Any successor trustee appointed as provided under
this Agreement shall execute, acknowledge and deliver to the Parent and
Purchaser and to its predecessor trustee an instrument accepting such
appointment. Thereupon the resignation
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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
the Parent and Purchaser 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 of the rights and powers of
the trustee so ceasing to act. Upon the request of any such successor
trustee, the Parent and Purchaser 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 the Parent and Purchaser shall
cause to be mailed notice of the succession of such trustee hereunder
to each Shareholder at the address of such Shareholder shown on the
register of Shareholders of Exchangeable Shares. If the Parent or
Purchaser shall fail to cause such notice to be mailed within ten (10)
days after acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be mailed at the expense
of the Parent and Purchaser.
ARTICLE 11
THE PARENT SUCCESSORS
11.1 CERTAIN REQUIREMENTS IN RESPECT OF COMBINATION, ETC. The Parent shall
not enter into any transaction (whether by way of reconstruction,
reorganization, consolidation, merger, transfer, sale, lease or
otherwise) whereby all or substantially all of its undertaking,
property and assets would become the property of any other person or,
in the case of a merger, of the continuing corporation resulting
therefrom unless:
(a) such other person or continuing corporation is a corporation
(herein called the "Parent Successor") incorporated under the
laws of any state of the United States or the laws of Canada
or any province thereof; and
(b) the Parent Successor, by operation of law, becomes, without
more, bound by the terms and provisions of this Agreement or,
if not so bound, executes, prior to or contemporaneously with
the consummation of such transaction a 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 Parent Successor of liability for all moneys payable
and property deliverable hereunder and the covenant of such
Parent Successor to pay and deliver or cause to be delivered
the same and its agreement to observe and perform all of the
covenants and obligations of the Parent under this
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Agreement.
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 Parent Successor and Purchaser shall
execute and deliver the supplemental Agreement provided for in Article
12 and thereupon the Parent Successor shall possess and from time to
time may exercise each and every right and power of the Parent under
this Agreement in the name of the Parent or otherwise and any act or
proceeding by any provision of this Agreement required to be done or
performed by the board of directors of Parent or any officers of the
Parent may be done and performed with like force and effect by the
directors or officers of such the Parent Successor.
11.3 WHOLLY-OWNED SUBSIDIARIES. Nothing herein shall be construed as
preventing the share exchange, merger or sale of any wholly-owned
subsidiary of the Parent with or into the Parent, the winding-up or
merger of any wholly-owned subsidiary of the Parent with or into the
Parent, or the winding-up, liquidation or dissolution of any
wholly-owned subsidiary of the Parent, and nothing herein shall
prohibit the Parent in any manner whatsoever from selling, transferring
or otherwise disposing of any and all of the assets of the Parent
including, without limitation, any and all of the assets of such
subsidiary provided that all of the assets of such subsidiary are
transferred to the Parent or another wholly-owned subsidiary of the
Parent.
ARTICLE 12
AMENDMENTS AND SUPPLEMENTAL TRUST AGREEMENTS
12.1 AMENDMENTS, MODIFICATIONS, ETC. This Agreement may not be amended or
modified except by an agreement in writing executed by Purchaser and
the Parent.
12.2 MEETING TO CONSIDER AMENDMENTS. Purchaser, at the request of the Parent
shall call a meeting or meetings of the Shareholders 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 Purchaser, the Exchangeable Share
Provisions and all applicable laws.
12.3 CHANGES IN CAPITAL OF PARENT OR Purchaser. At all times after the
occurrence of any event effected pursuant to section 2.7 or 2.8 of the
Support Agreement, as a result of which either Parent Common Shares 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 Parent Common Shares or the Exchangeable Shares
or both are so changed and the parties hereto shall execute and deliver
a supplemental Agreement giving effect to and
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evidencing such necessary amendments and modifications.
12.4 EXECUTION OF SUPPLEMENTAL AGREEMENTS. No amendment to or modification
or waiver of any of the provisions of this Agreement otherwise than as
permitted hereunder shall be effective unless made in writing and
signed by all of the parties hereto. From time to time the parties 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 Parent Successors to the Parent
and the covenants of and obligations assumed by each such
Parent 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 Insolvency Exchange Right
or the Automatic Exchange Rights which, in the opinion of the
Parent and its counsel, will not be prejudicial to the
interests of the Shareholders as a whole or are in the opinion
of counsel to the Parent necessary or advisable in order to
incorporate, reflect or comply with any legislation the
provisions of which apply to the parties or this Agreement;
and
(c) 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
Parent and its counsel, the rights of the Trustee and the
Shareholders as a whole will not be prejudiced thereby.
ARTICLE 13
TERMINATION
13.1 TERM. The Trust created by this Agreement shall continue until the
earliest to occur of the following events:
(a) no outstanding Exchangeable Shares are held by any
Shareholder;
(b) each of Purchaser and the Parent acts in writing to terminate
the Trust and such termination is approved by the Shareholders
of the Exchangeable Shares in accordance with section 10 of
the Exchangeable Share Provisions; and
(c) December 31, 2098.
13.2 SURVIVAL OF AGREEMENT. Subject to the provisions of Section 13.1(b)
hereof, this
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Agreement shall survive any termination of the Trust and shall continue
until there are no Exchangeable Shares outstanding held by any
Shareholder; and for clarity, that the provisions of Articles 8 and 9
shall survive any such termination of the Trust or this Agreement.
ARTICLE 14
GENERAL
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 endure to the
benefit of the parties hereto and their respective successors and
permitted assigns and to the benefit of the Shareholders.
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 facsimile to the parties
at the following addresses (or at such other address for such party as
shall be specified in like notice):
if to the Parent or Purchaser:
Mr. Steve Saviuk
President
Manitex Capital Inc.
1 Place Ville-Marie, Suite 2001
Montreal (Quebec) H3B 2C4
with a copy to: Mr. David Perez
Manitex Capital Inc.
1 Place Ville-Marie, Suite 2001
Montreal (Quebec) H3B 2C4
if to the Trustee: Mr. Pierre Barnard
De Grandpre Chaurette Levesque
2000 McGill College Avenue
Suite 1600
Montreal (Quebec) H3B 3H3
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
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which case it shall be deemed to have been given and received upon the
immediately following Business Day.
14.4 NOTICE OF SHAREHOLDERS. Any and all notices to be given and any
documents to be sent to any Shareholders may be given or sent to the
address of such Shareholder shown on the register of Shareholders in
any manner permitted by the by-laws of Purchaser from time to time in
force in respect of notices to shareholders and shall be deemed to be
received (if given or sent in such manner) at the time specified in
such by-laws, the provisions of which by-laws shall apply mutatis
mutandis to notices or documents as aforesaid sent to such
Shareholders.
14.5 RISK OF PAYMENTS BY MAIL. Whenever payments are to be made or documents
are to be sent to any Shareholder by the Trustee or by Purchaser, or by
such Shareholder to the Trustee or to the Parent or Purchaser, the
making of such payment or sending of such document sent through the
mail shall be at the risk of Purchaser, in the case of payments made or
documents sent by the Trustee or Purchaser, and the Shareholder, in the
case of payments made or documents sent by the Shareholder.
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 Quebec and the laws of
Canada applicable therein.
14.8 ATTORNMENT. The Parent and the Purchaser each agree that any action or
proceeding arising out of or relating to this Agreement may be
instituted in the courts of the Province of Quebec, each waives any
objection which it may have now or hereafter to the venue of any such
action or proceeding, irrevocably submits to the non-exclusive
jurisdiction of the said courts in any such action or proceeding,
agrees to be bound by any judgment of the said courts and not to seek,
and hereby waives, any review of the merits of any such judgment by the
courts of any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
TECE INC.
By: /s/ Pierre Barnard
---------------------
Name: Pierre Barnard
Title: Attorney
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3786137 CANADA INC.
By: /s/ Pierre Barnard
---------------------
Name: Pierre Barnard
Title: President
/s/ Pierre Barnard
---------------------
PIERRE BARNARD
TEC TECHNOLOGYVALUATON.COM CORPORATION
By: /s/ Illegible
---------------------
Name:
Title:
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SCHEDULE A
The Corporation shall be authorized to issue an unlimited number of
COMMON AND EXCHANGEABLE SHARES, without par value, having the following rights,
privileges, restrictions and conditions:
3.1 COMMON SHARES
3.1.1 The Common shares shall confer the following rights upon holders
thereof, namely:
a) the right to vote at all meetings of shareholders, each
shareholder being entitled to one vote for each Common share
held by him;
b) the right to receive all dividends declared by the board of
directors on the Common shares;
c) the right to share in the remaining assets of the Corporation
upon its voluntary or forced winding-up or liquidation.
3.1.2 The board of directors shall be entitled to declare a dividend in
respect of the Common shares, without in any manner whatsoever being
required to declare or pay a dividend to holders of other classes of
shares.
3.2 EXCHANGEABLE SHARES
3.2.1 The Exchangeable shares shall have the following rights, privileges,
restrictions and conditions:
ARTICLE 1
INTERPRETATION
For the purposes of these share provisions:
"ACT" means the Canada Business Corporations Act, as amended;
"AFFILIATE" has the meaning ascribed thereto in the Act;
"BOARD OF DIRECTORS" means the Board of Directors of the Corporation;
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"BUSINESS DAY" means any day on which commercial banks are generally open for
business in Montreal, Quebec, other than a Saturday, a Sunday or a day observed
as a holiday in Montreal, Quebec under the laws of the Province of Quebec or the
federal laws of Canada;
"CALL RIGHT" has the meaning ascribed thereto in the Exchange and Voting
Agreement;
"CANADIAN DOLLAR EQUIVALENT" means in respect of an amount expressed in a
currency other than Canadian dollars (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 spot 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;
"COMMON SHARES" means the common shares in the capital of the Corporation;
"CURRENT MARKET PRICE" means, in respect of a Parent Common Share on any date,
the Canadian Dollar Equivalent of the average of the closing bid and asked
prices of Parent Common Shares during a period of 10 consecutive trading days
ending not more than three trading days before such date on Nasdaq, or, if the
Parent Common Shares are not then quoted on Nasdaq, on such other stock exchange
or automated quotation system on which the Parent 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 Parent Common Shares
during such period does not create a market which reflects the fair market value
of a Parent Common Share, then the Current Market Price of a Parent Common Share
shall be determined by the Board of Directors, in good faith and in its sole
discretion, and provided further that any such selection, opinion or
determination by the Board of Directors shall be conclusive and binding;
"DIVIDEND AMOUNT" means the amount of all declared and unpaid dividends on an
Exchangeable Share held by a holder on any dividend record date which occurred
prior to the date of purchase or redemption of such shares by the Corporation or
Parent from such holder;
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"EFFECTIVE DATE" means the date of the certificate of incorporation of the
Corporation;
"EXCHANGE AND VOTING AGREEMENT" means the agreement dated October 10, 2000
between Parent, the Corporation, the Holders of Exchangeable Shares and the
Trustee;
"EXCHANGEABLE SHARES" means the non-voting exchangeable shares in the capital of
the Corporation, having the rights, priileges, restrictions and conditions set
forth herein;
"GOVERNMENTAL ENTITY" means any (a) multinational, federal, provincial, state,
regional, municipal, local or other government, governmental or public
department, central bank, court, tribunal, arbitral body, commission, board,
bureau or agency, domestic or foreign, (b) any subdivision, agent, commission,
board, or authority of any of the foregoing, or (c) any quasi-governmental or
private body exercising any regulatory, expropriation or taxing authority under
or for the account of any of the foregoing;
"HOLDER" means, when used with reference to the Exchangeable Shares, the holders
of Exchangeable Shares shown from time to time in the register maintained by or
on behalf of the Corporation in respect of the Exchangeable Shares;
"LIQUIDATION AMOUNT" has the meaning ascribed thereto in Section 5.1 of these
share provisions;
"LIQUIDATION DATE" has the meaning ascribed thereto in Section 5.1 of these
share provisions;
"NASDAQ" means the National Association of Securities Dealers Automated
Quotation System;
"PARENT" means Tece Inc. (formerly Internet Food Co. Inc.) a Nevada Corporation;
"PARENT COMMON SHARES" mean the shares of common stock in the capital of Parent
and any other securities into which such shares may be changed;
"PARENT CONTROL TRANSACTION" means any merger, amalgamation, tender offer,
material sale of shares or rights or interests therein or thereto or similar
transactions involving Parent, or any proposal to do so;
"PARENT DIVIDEND DECLARATION DATE" means the date on which the Board of
Directors of Parent declares any dividend on the Parent Common Shares;
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"PARENT CALL NOTICE" has the meaning ascribed thereto in Section 6.3 of these
share provisions;
"PERSON" includes any individual, firm, partnership, joint venture, venture
capital fund, limited liability Corporation, unlimited liability Corporation,
association, trust, trustee, executor, administrator, legal personal
representative, estate, group, body corporate, corporation, unincorporated
association or organization, Governmental Entity, syndicate or other entity,
whether or not having legal status;
"PURCHASE PRICE" has the meaning ascribed thereto in Section 6.3 of these share
provisions;
"REDEMPTION DATE" means the date, if any, established by the Board of Directors
for the redemption by the Corporation of all but not less than all of the
outstanding Exchangeable Shares pursuant to Article 7 of these share provisions,
which date shall be no earlier than December 31, 2004, unless:
(a) there are fewer than 1,000,000 Exchangeable Shares outstanding
(other than Exchangeable Shares held by Parent and its
affiliates, 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 issue or distribution of rights to
acquire Exchangeable Shares or securities exchangeable for or
convertible into Exchangeable Shares, any issue or
distribution of other securities or rights or evidences of
indebtedness or assets; or
(b) any other capital reorganization or other transaction
affecting the Exchangeable Shares), in which case the Board of
Directors may accelerate such redemption date to such date
prior to December 31, 2004 as it may determine, upon at least
60 days' prior written notice to the registered holders of the
Exchangeable Shares and the Trustee;
(c) a Parent Control Transaction occurs, in which case, provided
that the Board of Directors determines, in good faith and in
its sole discretion, that it is not reasonably practicable to
substantially replicate the terms and conditions of the
Exchangeable Shares in connection with such Parent Control
Transaction and that the redemption of all but not less than
all of the outstanding Exchangeable Shares is necessary to
enable the completion of such Parent Control Transaction in
accordance with its terms, the Board of Directors may
accelerate such redemption date to such date prior to December
31,
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2004 as it may determine, upon such number of days' prior
written notice to the registered holders of the Exchangeable
Shares and the Trustee as the Board of Directors may determine
to be reasonably practicable in such circumstances;
provided, however, that the accidental failure or omission to give any notice of
redemption under clauses (a) or (b) above to less than 10% of such holders of
Exchangeable Shares shall not affect the validity of any such redemption;
"REDEMPTION PRICE" has the meaning ascribed thereto in Section 7.1 of these
share provisions;
"RETRACTED SHARES" has the meaning ascribed thereto in Section 6.1(a) of these
share provisions;
"RETRACTION DATE" has the meaning ascribed thereto in Section 6.1(b) of these
share provisions;
"RETRACTION PRICE" has the meaning ascribed thereto in Section 6.1 of these
share provisions;
"RETRACTION REQUEST" has the meaning ascribed thereto in Section 6.1 of these
share provisions;
"SECURITIES ACT" means the Securities Act (Quebec) and the rules, regulations
and policies made thereunder, as now in effect and as they may be amended from
time to time prior to the Effective Date;
"SUPPORT AGREEMENT" means the agreement dated October 10, 2000 made among
Parent, Tec and 3786137 Canada Inc.;
"TEC" means Tec Technologyvaluation.com Corporation, a Corporation incorporated
under the Act;
"TEC COMMON SHARES" means the common shares of Tec as constituted immediately
prior to the Effective Date;
"TEC OPTIONS" means the options to purchase Tec Common Shares issued from time
to time prior to the date hereof pursuant to the Tec Stock Option Plan;
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"TRANSFER AGENT" means the transfer agent for the Exchangeable Shares;
"TRUSTEE" means the trustee under the Exchange and Voting Agreement;
ARTICLE 2
RANKING OF EXCHANGEABLE SHARES
2.1 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.
ARTICLE 3
DIVIDENDS
3.1 A holder of an Exchangeable Share shall be entitled to receive and the Board
of Directors shall, subject to applicable law, on each Parent Dividend
Declaration Date, declare a dividend on each Exchangeable Share:
(a) in the case of a cash dividend declared on the Parent Common
Shares, in an amount in cash for each Exchangeable Share in
U.S. dollars, or the Canadian Dollar Equivalent thereof on the
Parent Dividend Declaration Date, in each case, corresponding
to the cash dividend declared on each Parent Common Share;
(b) in the case of a stock dividend declared on the Parent Common
Shares to be paid in Parent Common Shares by the issue or
transfer by the Corporation of such number of Exchangeable
Shares for each Exchangeable Share as is equal to the number
of Parent Common Shares to be paid on each Parent Common
Share; or
(c) in the case of a dividend declared on the Parent Common Shares
in property other than cash or Parent Common Shares, in such
type and amount of property for each Exchangeable Share as is
the same as or economically equivalent to (to be determined by
the Board of Directors as contemplated by
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Section 3.5 hereof) the type and amount of property declared
as a dividend on each Parent Common Share.
3.2 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, as applicable.
3.3 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
Section 3.1 (a) hereof and the sending of such a cheque to each holder of an
Exchangeable Share shall satisfy the cash dividend 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 Section 3.1 (b) hereof and the
sending of such a certificate to each holder of an Exchangeable Share shall
satisfy the stock dividend represented thereby. Such other type and amount of
property in respect of any dividends contemplated by Section 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. No holder of an Exchangeable Share shall be entitled to
recover by action or other legal process against the Corporation any dividend
that is represented by a cheque that has not been duly presented to the
Corporation's bankers for payment or that otherwise remains unclaimed for a
period of six years from the date on which such dividend was payable.
3.4 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 Parent Common Shares.
3.5 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 that remain unpaid
shall be paid on a subsequent date or dates determined by the Board of Directors
on which the Corporation shall have sufficient money, assets or property
properly applicable to the payment of such dividends.
3.6 The Board of Directors shall determine, in good faith and in its sole
discretion, economic equivalence for the purposes of Section 3.1 hereof, and
each such determination shall be conclusive and binding on the Corporation and
its shareholders. In making each such determination, the following factors
shall, without excluding other factors determined by the Board of Directors to
be relevant, be considered by the Board of Directors:
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(a) in the case of any stock dividend or other distribution
payable in Parent Common Shares, the number of such shares
issued in proportion to the number of Parent Common Shares
previously outstanding;
(b) in the case of the issuance or distribution of any rights,
options or warrants to subscribe for or purchase Parent Common
Shares (or securities exchangeable for or convertible into or
carrying rights to acquire Parent Common Shares), the
relationship between the exercise price of each such right,
option or warrant and the Current Market Price;
(c) in the case of the issuance or distribution of any other form
of property (including without limitation any shares or
securities of Parent of any class other than Parent Common
Shares, any rights, options or warrants other than those
referred to in Section 3.5(b) above, any evidences of
indebtedness of or any assets of Parent) the relationship
between the fair market value (as determined by the Board of
Directors in the manner above contemplated) of such property
to be issued or distributed with respect to each outstanding
Parent Common Share and the Current Market Price; and
d) in all such cases, the general taxation consequences of the
relevant event to holders of Exchangeable Shares to the extent
that such consequences may differ from the taxation
consequences to holders of Parent Common Shares as a result of
differences between taxation laws of Canada and the United
States (except for any differing consequences arising as a
result of differing marginal taxation rates and without regard
to the individual circumstances of holders of Exchangeable
Shares).
ARTICLE 4
CERTAIN RESTRICTIONS
4.1 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 Section 10.2 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 Common Shares or any such other shares
ranking junior to the Exchangeable Shares, as the case may be;
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(b) redeem or purchase or make any capital distribution in respect
of Common Shares or any other shares ranking junior to the
Exchangeable Shares;
(c) redeem or purchase any other shares of the Corporation ranking
equally with the Exchangeable Shares with respect to the
payment of dividends or on any liquidation distribution; or
(d) except pursuant to and in accordance with the terms of Bio
Syntech Options, issue any Exchangeable Shares or any other
shares of the Corporation ranking equally with, or superior
to, the Exchangeable Shares other than by way of stock
dividends to the holders of such Exchangeable Shares.
4.2 The restrictions in Sections 4.1(a), (b), (c) and (d) above shall not apply
if all dividends on the outstanding Exchangeable Shares corresponding to
dividends declared and paid to date on the Parent Common Shares shall have been
declared and paid on the Exchangeable Shares.
ARTICLE 5
DISTRIBUTION ON LIQUIDATION
5.1 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, 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 (the "Liquidation Date") of such liquidation, dissolution or
winding-up, before any distribution of any part of the assets of the Corporation
among the holders of the Common Shares or any other shares ranking junior to the
Exchangeable Shares, an amount per share (the "Liquidation Amount") equal to the
Current Market Price of a Parent Common Share on the last Business Day prior to
the Liquidation Date, which shall be satisfied in full by the Corporation
causing to be delivered to such holder one Parent Common Share, plus the
Dividend Amount.
5.2 On or promptly after the Liquidation Date, and subject to the exercise by
Parent of the 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
the Act and the Articles of the Corporation and such
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additional documents and instruments as the Transfer Agent and the Corporation
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 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 register of members 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 by notice to the holders of Exchangeable
Shares, on behalf of the Corporation of certificates representing Parent Common
Shares (which shares shall be duly issued as fully paid and non-assessable and
shall be free and clear of any lien, claim or encumbrance) and a cheque of the
Corporation payable at par at any branch of the bankers of the Corporation in
respect of the remaining portion, if any, of the total Liquidation Amount (in
each case less any amounts withheld on account of tax required to be deducted
and withheld therefrom). 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 after the Liquidation Date to deposit or cause to be
deposited the total Liquidation Amount 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 with any chartered
bank or trust Corporation 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 (in each case
less any amounts withheld on account of tax required to be deducted and withheld
therefrom) 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 the total
Liquidation Amount, the holders of the Exchangeable Shares shall thereafter be
considered and deemed for all purposes to be holders of the Parent Common Shares
delivered to them or the custodian on their behalf.
5.3 After the Corporation has satisfied its obligations to pay the holders of
the Exchangeable Shares the Liquidation Amount per Exchangeable Share pursuant
to Section 5.1 of these share provisions, such holders shall not be entitled to
share in any further distribution of the assets of the Corporation.
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ARTICLE 6
RETRACTION OF EXCHANGEABLE SHARES BY HOLDER
6.1 A holder of Exchangeable Shares shall be entitled at any time, subject to
the exercise by Parent of the Call Right 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 per
share equal to the Current Market Price of a Parent Common Share on the last
Business Day prior to the Retraction Date (the "Retraction Price"), which shall
be satisfied in full by the Corporation causing to be delivered to such holder
one Parent Common Share for each Exchangeable Share presented and surrendered by
the holder. 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 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 the Act and the Articles of the Corporation and such
additional documents and instruments as the Transfer Agent and the Corporation
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 10 Business Days nor more than 15 Business Days after the
date on which the Retraction Request is received by 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 15th
Business Day after the date on which the Retraction Request is
received by the Corporation; and
(c) acknowledging, as the case may be, the overriding right (the
"Call Right") of Parent 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 to Parent in
accordance with the Call Right on the terms and conditions set
out in Section 6.3 below.
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6.2 Subject to the exercise by Parent of the Call Right, upon receipt by the
Corporation or the Transfer Agent in the manner specified in Section 6.1 hereof
of a certificate or certificates representing the number of Retracted Shares,
together with a Retraction Request, and provided that the Retraction Request is
not revoked by the holder in the manner specified in Section 6.7, 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. If only a part of the Exchangeable Shares represented by any
certificate is redeemed (or purchased by Parent pursuant to the Call Right), a
new certificate for the balance of such Exchangeable Shares shall be issued to
the holder at the expense of the Corporation.
6.3 Upon receipt by the Corporation of a Retraction Request, the Corporation
shall immediately notify Parent thereof and shall provide to Parent a copy of
the Retraction Request. In order to exercise the Call Right, Parent must notify
the Corporation of its determination to do so (the "Parent Call Notice") within
five Business Days of notification to Parent by the Corporation of the receipt
by the Corporation of the Retraction Request. If Parent does not so notify the
Corporation within such five Business Day period, the Corporation will notify
the holder as soon as possible thereafter that Parent will not exercise the Call
Right. If Parent delivers the Parent Call Notice within such five Business Day
period, and provided that the Retraction Request is not revoked by the holder in
the manner specified in Section 6.7, the Retraction Request shall thereupon be
considered only to be an offer by the holder to sell the Retracted Shares to
Parent in accordance with the Call Right. In such event, the Corporation shall
not redeem the Retracted Shares and Parent shall purchase from such holder and
such holder shall sell to Parent on the Retraction Date the Retracted Shares for
a purchase price (the "Purchase Price") per share equal to the Retraction Price
per share, plus on the designated payment date therefor, to the extent not paid
by the Corporation on the designated payment date therefor, any Dividend Amount.
To the extent that Parent pays the Dividend Amount in respect of the Retracted
Shares, the Corporation shall no longer be obligated to pay any declared and
unpaid dividends on such Retracted Shares. Provided that Parent has complied
with Section 6.4, the closing of the purchase and sale of the Retracted Shares
pursuant to the 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 Parent does not deliver a Parent Call Notice within such five
Business Day period, and provided that the Retraction Request is not revoked by
the holder in the manner specified in Section 6.7, the Corporation shall redeem
the Retracted Shares on the Retraction Date and in the manner otherwise
contemplated in this Article 6.
6.4 The Corporation or Parent, as the case may be, shall deliver or cause the
Trustee to deliver to the relevant holder, at the address of the holder recorded
in the register of
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members 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 by notice to the holders
of Exchangeable Shares, certificates representing the Parent Common Shares
(which shares shall be duly issued as fully paid and non-assessable and shall be
free and clear of any lien, claim or encumbrance) registered in the name of the
holder or in such other name as the holder may request, and, if applicable and
on or before the payment date therefor, a cheque payable at par at any branch of
the bankers of the Corporation or Parent, as applicable, representing the
aggregate Dividend Amount, in payment of the total Retraction Price or the total
Purchase Price, as the case may be, in each case, less any amounts withheld on
account of tax required to be deducted and withheld therefrom, and such delivery
of such certificates and cheques on behalf of the Corporation or by Parent, as
the case may be, or by 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, to the extent that the same is
represented by such share certificates and cheques (plus any tax deducted and
withheld therefrom and remitted to the proper tax authority).
6.5 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 his 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 as provided in Section 6.4, in which case the rights of such
holder shall remain unaffected until 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 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 Parent shall thereafter be
considered and deemed for all purposes to be a holder of the Parent Common
Shares delivered to it.
6.6 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 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 Parent shall not have exercised the Call Right
with respect to the Retracted Shares, the Corporation shall only be obligated to
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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 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 6.7, the holder of any such Retracted
Shares not redeemed by the Corporation pursuant to Section 6.2 of these share
provisions as a result of solvency requirements or other provisions of
applicable law shall be deemed by giving the Retraction Request to require
Parent to purchase such Retracted Shares from such holder on the Retraction Date
or as soon as practicable thereafter on payment by Parent to such holder of the
Purchase Price for each such Retracted Share, all as more specifically provided
in the Exchange and Voting Agreement.
6.7 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 Parent shall be deemed to have been revoked.
ARTICLE 7
REDEMPTION OF EXCHANGEABLE SHARES BY THE CORPORATION
7.1 Subject to applicable law, and provided Parent has not exercised the Call
Right, the Corporation shall on the Redemption Date redeem all but not less than
all of the then outstanding Exchangeable Shares for an amount per share equal to
the Current Market Price of a Parent Common Share on the last Business Day prior
to the Redemption Date (the "Redemption Price"), which shall be satisfied in
full by the Corporation causing to be delivered to each holder of Exchangeable
Shares one Parent Common Share for each Exchangeable Share held by such holder,
together with the Dividend Amount.
7.2 In any case of a redemption of Exchangeable Shares under this Article 7, the
Corporation shall, at least 60 days before the Redemption Date (other than a
Redemption Date established in connection with a Parent Control Transaction,
send or cause to be sent
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to each holder of Exchangeable Shares a notice in writing of the redemption by
the Corporation or the purchase by Parent under the Call Right, as the case may
be, of the Exchangeable Shares held by such holder. In the case of a Redemption
Date established in connection with a Parent Control Transaction, the written
notice of redemption by the Corporation or the purchase by Parent under the Call
Right will be sent on or before the Redemption Date, on as many days prior
written notice as may be determined by the Board of Directors of the Corporation
to be reasonably practicable in the circumstances. In any such case, such notice
shall set out the formula for determining the Redemption Price or the Call
Purchase Price, as the case may be, the Redemption Date and, if applicable,
particulars of the Call Right.
7.3 On or after the Redemption Date and subject to the exercise by Parent of the
Call Right, the Corporation shall cause to be delivered to the holders of the
Exchangeable Shares to be redeemed the Redemption Price for each such
Exchangeable Share, together with the Dividend Amount upon presentation and
surrender at the registered office of the Corporation or at any office of the
Trustee 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 the Act and the Articles of the Corporation and such
additional documents and instruments as the Transfer Agent and the Corporation
may reasonably require. Payment of the total Redemption Price for such
Exchangeable Shares, together with payment of the Dividend Amount, shall be made
by delivery to each holder, at the address of the holder recorded in the
register of members of the Corporation 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 such notice, on behalf of the
Corporation of certificates representing Parent Common Shares (which shares
shall be duly issued as fully paid and non- assessable and shall be free and
clear of any lien, claim or encumbrance) and, if applicable, a cheque of the
Corporation payable at par at any branch of the bankers of the Corporation in
payment of any Dividend Amounts, in each case, less any amounts withheld on
account of tax required to be deducted and withheld therefrom. On and after the
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 total Redemption Price and any
Dividend Amount, unless payment of the total Redemption Price and any Dividend
Amount 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 total
Redemption Price and any Dividend Amount shall have 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
I-87
be deposited the total Redemption Price for and the full amount of the Dividend
Amount on (except as otherwise provided in this Section 7.3) 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 with any chartered bank or trust Corporation in Canada named
in such notice, less any amounts withheld on account of tax required to be
deducted and withheld therefrom. Upon the later of such deposit being made and
the 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 Redemption Date, as the case may be, shall be limited to
receiving their proportionate part of the total Redemption Price and the
Dividend 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 the total
Redemption Price and the full Dividend Amount, the holders of the Exchangeable
Shares shall thereafter be considered and deemed for all purposes to be holders
of the Parent Common Shares delivered to them or the custodian on their behalf.
ARTICLE 8
PURCHASE FOR CANCELLATION
8.1 Subject to applicable law, the Corporation may at any time and from time to
time purchase for cancellation all or any part of the outstanding Exchangeable
Shares at any price by tender to all the holders of record of Exchangeable
Shares then outstanding or through the facilities of any stock exchange on which
the Exchangeable Shares are listed or quoted at any price per share. If in
response to an invitation for tenders under the provisions of this Section 8.1,
more Exchangeable Shares are tendered at a price or prices acceptable to the
Corporation than the Corporation is prepared to purchase, the Exchangeable
Shares to be purchased by the Corporation shall be purchased as nearly as may be
pro rata according to the number of shares tendered by each holder who submits a
tender to the Corporation, provided that when shares are tendered at different
prices, the pro rating shall be effected (disregarding fractions) only with
respect to the shares tendered at the price at which more shares were tendered
than the Corporation is prepared to purchase after the Corporation has purchased
all the shares tendered at lower prices. If part only of the Exchangeable Shares
represented by any certificate shall be purchased, a new certificate for the
balance of such shares shall be issued at the expense of the Corporation.
I-88
ARTICLE 9
VOTING RIGHTS
9.1 Except as required by applicable law and by Article 10 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.
ARTICLE 10
AMENDMENT AND APPROVAL
10.1 The rights, privileges, restrictions and conditions attaching to the
Exchangeable Shares may be added to, changed or removed but only with the
approval of the holders of the Exchangeable Shares given as hereinafter
specified.
10.2 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 two-thirds of the votes cast on such resolution at a meeting of
holders of Exchangeable Shares duly called and held at which the holders of at
least 10% of the outstanding Exchangeable Shares at that time are present or
represented by proxy; provided that if at any such meeting the holders of at
least 10% 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 five
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 two-thirds of the votes cast on such resolution at such
meeting shall constitute the approval or consent of the holders of the
Exchangeable Shares.
ARTICLE 11
ACTIONS BY THE CORPORATION UNDER SUPPORT AGREEMENT
11.1 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 Parent and the Corporation with all provisions of the Support
Agreement
I-89
applicable to Parent and the Corporation, 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 to such agreement.
11.2 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 without the approval of the holders of the Exchangeable Shares
given in accordance with Section 10.2 of these share provisions other than such
amendments, waivers and/or forgiveness as may be necessary or advisable for the
purposes of:
(a) adding to the covenants of the other parties to such agreement
for the protection of the Corporation or the holders of the
Exchangeable Shares thereunder;
(b) making such provisions or modifications not inconsistent with
such agreement as may be necessary or desirable with respect
to matters or questions arising thereunder which, in the good
faith opinion of the Board of Directors, it may be expedient
to make, provided that the Board of Directors shall be of the
good faith 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 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 good faith opinion, after
consultation with counsel, that such changes or corrections
will not be prejudicial to the interests of the holders of the
Exchangeable Shares.
I-90
ARTICLE 12
LEGEND; CALL RIGHTS; WITHHOLDING RIGHTS
12.1 The certificates evidencing the Exchangeable Shares held by Shareholders
who have intervened to the Exchange and Voting Agreement 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 Call Rights and the
Exchange and Voting Agreement (including the provisions with respect to the
voting rights, exchange right and automatic exchange thereunder).
12.2 The Corporation, Parent and the Trustee shall be entitled to deduct and
withhold from any dividend or consideration otherwise payable to any holder of
Exchangeable Shares such amounts as the Corporation, Parent 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. To the extent that amounts are so withheld, such withheld amounts shall
be treated for all purposes hereof as having been paid to the holder of the
shares in respect of which such deduction and withholding was made, provided
that such withheld amounts are actually remitted to the appropriate taxing
authority. 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 of the
consideration otherwise payable to the holder, the Corporation, Parent 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 the
Corporation, Parent or the Trustee, as the case may be, to enable it to comply
with such deduction or withholding requirement and the Corporation, Parent or
the Trustee shall notify the holder thereof and remit any unapplied balance of
the net proceeds of such sale.
ARTICLE 13
NOTICES
13.1 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 of the Corporation. 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.
I-91
13.2 Any presentation and surrender by a holder of Exchangeable Shares to the
Corporation or the Trustee of certificates representing Exchangeable Shares in
connection with the liquidation, dissolution or winding-up of the Corporation or
the retraction or redemption of Exchangeable Shares shall be made by registered
mail (postage prepaid) or by delivery to the registered office of the
Corporation or to such office of the Trustee as may be specified by the
Corporation, in each case, 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
Corporation or the Trustee, as the case may be. Any such presentation and
surrender of certificates made by registered mail shall be at the sole risk of
the holder mailing the same.
13.3 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 register of members of the
Corporation or, in the event of the address of any such holder not being so
recorded, then at the last known address of such holder. Any such notice,
request or other communication, if given by mail, shall be deemed to have been
given and received on the third 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 taken by
the Corporation pursuant thereto.
I-92
SCHEDULE A
TO PROVISIONS ATTACHING TO THE
EXCHANGEABLE SHARES
RETRACTION REQUEST
To 3786137 Canada Inc. (the "Corporation") and Tece Inc. ("Tece")
This notice is given pursuant to Article 6 of the provisions (the "Share
Provisions") attaching to the Exchangeable Shares of the Corporation represented
by this certificate and all capitalized words and expressions used in this
notice that are defined in the Share Provisions have the meanings ascribed to
such words and expressions in such Share Provisions.
The undersigned hereby notifies the Corporation that, subject to the Call Right
referred to below, the undersigned desires to have the Corporation redeem in
accordance with Article 6 of the Share Provisions:
all share(s) represented by this certificate; or
share(s) only represented by this certificate.
- ---------------------------------
The undersigned hereby notifies the Company that the Retraction Date shall be
__________________
NOTE: The Retraction Date must be a Business Day and must not be less than 10
Business Days nor more than 15 Business Days after the date upon which this
notice is received by the Corporation. If no such Business Day is specified
above, the Retraction Date shall be deemed to be the 15th Business Day after the
date on which this notice is received by the Corporation.
The undersigned acknowledges the overriding Call Right of Tece Inc. to purchase
all but not less than all the Retracted Shares from the undersigned and that
this notice is and shall be deemed to be a revocable offer by the undersigned to
sell the Retracted Shares to Tece Inc. in accordance with the Call Right on the
Retraction Date for the Purchase Price and on the other terms and conditions set
out in Section 6.3 of the Share Provisions. This Retraction Request, and this
offer to sell the Retracted Shares to Tece Inc., may be revoked and withdrawn by
the undersigned only by notice in writing given to the Corporation at any
I-93
time before the close of business on the Business Day immediately preceding the
Retraction Date.
The undersigned acknowledges that if, as a result of solvency provisions of
applicable law, the Corporation is unable to redeem all Retracted Shares, the
undersigned will be deemed to have exercised the Insolvency Exchange Right (as
defined in the Exchange and Voting Agreement) so as to require the Corporation
to purchase the unredeemed Retracted Shares.
The undersigned hereby represents and warrants to the Corporation and Tece Inc.
that the undersigned:
/ / is
(select one)
/ / is not
a non-resident of Canada for purposes of the Income Tax Act (Canada). The
undersigned acknowledges that in the absence of an indication that the
undersigned is not a non-resident of Canada, withholding on account of Canadian
tax may be made from amounts payable to the undersigned on the redemption or
purchase of the Retracted Shares.
The undersigned hereby represents and warrants to the Corporation and Bio
Syntech that the undersigned has good title to, and owns, the share(s)
represented by this certificate to be acquired by the Corporation or Tece Inc.,
as the case may be, free and clear of all liens, claims and encumbrances.
------ ------------------------ -----------------------
(Date) (Signature of Shareholder) (Guarantee of Signature)
Please check box if the securities and any cheque(s) resulting from the
retraction or purchase of the Retracted Shares are to be held for pick-up by the
shareholder from the trustee under the Exchange and Voting Agreement (the
"Trustee"), failing which the securities and any cheque(s) will be mailed to the
last address of the shareholder as it appears on the register.
NOTE: This panel must be completed and this certificate, together with such
additional documents as the Trustee may require, must be deposited with the
Trustee. The securities and any cheque(s) resulting from the retraction or
purchase of the Retracted Shares will be
I-94
issued and registered in, and made payable to, respectively, the name of the
shareholder as it appears on the register of the Corporation and the securities
and any cheque(s) resulting from such retraction or purchase will be delivered
to such shareholder as indicated above, unless the form appearing immediately
below is duly completed.
THE SHARES OF COMMON STOCK OF TECE INC., A NEVADA CORPORATION, TO BE ISSUED IN
EXCHANGE FOR THE EXCHANGEABLE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE SOLD OR OTHERWISE TRANSFERRED UNLESS A COMPLIANCE WITH THE REGISTRATION
PROVISIONS OF SUCH ACT HAS BEEN MADE OR UNLESS AVAILABILITY OF AN EXEMPTION FROM
SUCH REGISTRATION PROVISIONS HAS BEEN ESTABLISHED, OR UNLESS SOLD PURSUANT TO
RULE 144 UNDER THE SECURITIES ACT OF 1933.
Date:____________________
Name of Person in Whose Name Securities or Cheque(s)Are to be Registered, Issued
or Delivered:
______________________________
Street Address or P.O. Box: ______________________________
Signature of Shareholder: ______________________________
City, Province and Postal Code: ______________________________
Signature Guaranteed by: ______________________________
NOTE: If this Retraction Request is for less than all of the shares represented
by this certificate, a certificate representing the remaining share(s) of the
Corporation represented by this certificate will be issued and registered in the
name of the shareholder as it appears on the register of the Corporation, unless
the Share Transfer Power on the share certificate is duly completed in respect
of such share(s).
Annex II
TECE, INC.
Pro Forma Consolidated Balance Sheet
As at September 30, 2000
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)
TECE, INC.
(FORMERLY
TEC.COM INTERNET FOOD
CONSOLIDATED COMPANY, INC.) ADJUSTMENTS PRO FORMA
$ $ $ $
(unaudited) (unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents 38,788 1,353 3,491,444 2 f) 3,531,585
Accounts receivable 281,775 1,418 (1,418)2 g) 281,775
Tax credits receivable 207,004 - - 207,004
Prepaid expenses 69,086 - - 69,086
---------------------------------------------------------------------------------
596,653 2,771 3,490,026 4,089,450
FIXED ASSETS 165,319 475 (475)2 g) 165,319
OTHER ASSETS 8,087 6,050 (6,050)2 g) 8,087
---------------------------------------------------------------------------------
770,059 9,296 3,483,501 4,262,856
---------------------------------------------------------------------------------
LIABILITIES
CURRENT LIABILITIES
Bank indebtedness 507,203 - (507,203)2 f) -
Accounts payable and accrued liabilities 877,899 - - 877,899
Notes payable 630,000 34,221 (34,221)2 g) 630,000
Deferred revenue 141,167 - - 141,167
Current portion of long-term debt 15,427 - - 15,427
---------------------------------------------------------------------------------
2,171,696 34,221 (541,424) 1,664,493
---------------------------------------------------------------------------------
LONG-TERM DEBT 156,443 - - 156,443
ADVANCES FROM MANITEX CAPITAL INC. 910,165 - - 910,165
CONVERTIBLE DEBENTURES 4,985,263 - - 4,985,263
---------------------------------------------------------------------------------
6,051,871 - - 6,051,871
---------------------------------------------------------------------------------
REDEEMABLE PREFERRED SHARES 2,046,508 - - 2,046,508
---------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY (DEFICIENCY)
EXCESS OF DEFICIT OVER SHARE CAPITAL
Capital stock (31,184,346 common shares
issued and outstanding) 2,906,703 126,250 4,112,000 2 f) h) 7,144,953
Deferred stock-based compensation (103,437) - - (103,437)
Additional paid-in capital 2,819,679 - 2,819,679
Accumulated other comprehensive income 145,245 - - 145,245
Accumulated deficit (15,268,206) (151,175) (87,075)2 g) h) (15,506,456)
---------------------------------------------------------------------------------
(9,500,016) (24,925) 4,024,925 (5,500,016)
---------------------------------------------------------------------------------
770,059 9,296 3,483,501 4,262,856
---------------------------------------------------------------------------------
II-1
TECE, INC.
Pro Forma Consolidated Statement of Operations and Deficit
For the nine-month period ended September 30, 2000
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)
TECE, INC.
(FORMERLY
TEC.COM INTERNET FOOD
CONSOLIDATED COMPANY, INC.) ADJUSTMENTS PRO FORMA
$ $ $ $
(unaudited) (unaudited)
REVENUE
Consulting fees 421,045 - - 421,045
Licensing revenue from software sales - - - -
Web advertising revenue 170,384 - - 170,384
Product sales - 3,194 - 3,194
-----------------------------------------------------------------------------------
591,429 3,194 - 594,623
-----------------------------------------------------------------------------------
EXPENSES
Selling and administrative (including
recovery of stock-based
compensation expense of $957,450) 3,087,142 14,418 87,075 2 g) h) 3,188,635
Research and development, net of tax
credit 50,913 - - 50,913
Amortization of other assets 7,682 - - 7,682
Depreciation of fixed assets 51,055 75 - 51,130
-----------------------------------------------------------------------------------
3,196,792 14,493 (87,075) 3,298,360
-----------------------------------------------------------------------------------
OPERATING LOSS (2,605,363) (11,299) (87,075) (2,703,737)
-----------------------------------------------------------------------------------
OTHER INCOME (EXPENSES)
Interest income 2,750 - - 2,750
Finance fee expense (1,852) - - (1,852)
Interest expense (including accretion on
convertible debentures of
$2,571,429 (note 2 b)) (2,897,585) - - (2,897,585)
Foreign exchange gain (loss) (155,368) - - (155,368)
-----------------------------------------------------------------------------------
(3,052,055) - - (3,052,055)
-----------------------------------------------------------------------------------
NET LOSS BEFORE INCOME TAXES (5,657,418) (11,299) (87,075) (5,755,792)
INCOME TAX EXPENSE - (800) - (800)
-----------------------------------------------------------------------------------
NET LOSS FOR THE PERIOD (5,657,418) (12,099) (87,075) (5,756,592)
-----------------------------------------------------------------------------------
NET LOSS PER COMMON SHARE, BASIC AND
DILUTED (0.33) - - (0.18)
-----------------------------------------------------------------------------------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES 16,926,470 31,184,346
-----------------------------------------------------------------------------------
II-2
TECE, INC.
Pro Forma Consolidated Statement of Operations and Deficit
For the year ended December 31, 1999
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)
TECE, INC.
(FORMERLY
TEC.COM INTERNET FOOD
CONSOLIDATED COMPANY, INC.) ADJUSTMENTS PRO FORMA
$ $ $ $
REVENUE
Consulting fees 357,845 - - 357,845
Licencing revenue from software sales 13,424 - - 13,424
Product sales - 16,991 - 16,991
---------------------------------------------------------------------------------
371,269 16,991 - 388,260
---------------------------------------------------------------------------------
EXPENSES
Selling and administrative (including
stock-based compensation expense of
$2,533,040) 5,786,624 77,076 121,338 2 g) h) 5,985,038
Research and development, net of tax credits 29,004 - - 29,004
Amortization of other assets 9,899 - - 9,899
Depreciation of fixed assets 19,361 150 - 19,511
---------------------------------------------------------------------------------
5,844,888 77,226 121,338 6,043,452
---------------------------------------------------------------------------------
OPERATING LOSS (5,473,619) (60,235) (121,338) (5,655,192)
---------------------------------------------------------------------------------
OTHER INCOME (EXPENSE)
Interest income 40,367 - - 40,367
Finance fee expense (96,011) - - (96,011)
Interest expense (220,650) (1,829) (2,571,429)2 b) (2,793,908)
Foreign exchange gain 60,387 - - 60,387
---------------------------------------------------------------------------------
(215,907) (1,829) (2,571,429) (2,789,165)
---------------------------------------------------------------------------------
LOSS FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES (5,689,526) (62,064) (2,692,767) (8,444,357)
INCOME TAX RECOVERY (EXPENSE) 61,381 (800) - 60,581
---------------------------------------------------------------------------------
NET LOSS FOR THE YEAR FROM CONTINUING
OPERATIONS BEFORE EXTRAORDINARY GAIN (5,628,145) (62,864) (2,692,767) (8,383,776)
EXTRAORDINARY GAIN ON SETTLEMENT OF DEBT,
net of tax of $7,811 15,161 - - 15,161
---------------------------------------------------------------------------------
NET LOSS FOR THE YEAR (5,612,984) (62,864) (2,692,767) (8,368,615)
---------------------------------------------------------------------------------
LOSS PER COMMON SHARE, BASIC AND
DILUTED FROM
Continuing operations and extraordinary gain (0.30) - (0.09) (0.27)
---------------------------------------------------------------------------------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 18,485,762 31,184,346
---------------------------------------------------------------------------------
II-3
TECE, INC.
Notes to Pro Forma Consolidated Financial Statements
September 30, 2000
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)
1. BASIS OF PRESENTATION
As of October 10, 2000, a Share Exchange Agreement (the "Exchange
Agreement") was entered into among TECE, Inc., a Nevada corporation listed
on the OTC BB in the United States under the symbol TENC and formerly
called Internet Food Company, Inc. ("TECE"), its wholly owned subsidiary,
3786137 Canada Inc. ("3786137"), TEC TechnologyEvaluation.com Corporation
("TEC.com") Manitex Capital Inc. ("Manitex"), Intasys Corporation
("Intasys") and Mr. Don Lobley ("Lobley"), (Manitex, Lobley and Intasys
are collectively referred to as the "Majority TEC.com Shareholders").
Effective November 9, 2000, pursuant to this Exchange Agreement, TECE,
through its wholly owned subsidiary, 3786137, has taken a majority
controlling interest in TEC.com.
This transaction was accounted for in accordance with the guidelines
established by the Securities and Exchange Commission (SEC), as more fully
explained in note 2, for reverse takeovers since after the transaction the
shareholders of TEC.com exercise effective control of the combined entity.
The unaudited pro forma consolidated financial statements should be read
in conjunction with the historical financial statements of the various
companies involved in the transactions described in note 2.
The accompanying unaudited pro forma consolidated financial statements as
at September 30, 2000 and December 31, 1999 of TECE have been prepared by
management to reflect the transactions described in note 2 as if they had
all occurred as of September 30, 2000 with respect to the unaudited
consolidated pro forma balance sheet, and as of January 1, 1999 with
respect to the unaudited consolidated pro forma statement of operations
and deficit. These transactions are described in detail in the 8K filed by
TECE on November 9, 2000.
These accompanying unaudited pro forma consolidated financial statements
of TECE have been prepared by management in accordance with accounting
principles generally accepted in the United States and the pro forma
assumptions described in note 2.
The unaudited pro forma consolidated financial statements have been
prepared from the following:
a) the audited consolidated statement of operations of TEC.com for the
year ended December 31, 1999 and the unaudited consolidated interim
financial statements of TEC.com for the nine months ended September
30, 2000 prepared under United States generally accepted accounting
principles (U.S. GAAP);
b) the audited financial statements of Internet Food Company, Inc. for
the year ended December 31, 1999 and the unaudited interim financial
statements of Internet Food Company, Inc. for the nine months ended
September 30, 2000.
II-4
TECE, INC.
Notes to Pro Forma Consolidated Financial Statements
September 30, 2000
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)
The unaudited pro forma consolidated statement of earnings is not
necessarily indicative of the results of operations that would have
occurred in the periods referred to above had the transaction described in
note 2 been effected at the beginning of the year, nor is necessarily
indicative of future results. In preparation of the unaudited pro forma
consolidated financial statements, management has made certain estimates
and assumptions that affect the amounts reported in the unaudited pro
forma consolidated financial statements. Actual amounts recorded upon
consummation of the transactions may differ from these estimates.
The accounting policies used in the preparation of the unaudited pro forma
consolidated financial statements are in accordance with those disclosed
in the TEC.com audited consolidated financial statements for the year
ended December 31, 1999.
2 PRO FORMA ASSUMPTIONS AND ADJUSTMENTS
The unaudited pro forma consolidated balance sheet as at September 30,
2000 gives effect to the November 9, 2000 transaction as if it had taken
place as at September 30, 2000. The unaudited pro forma consolidated
statement of operations and deficit for the year ended December 31, 1999
and the nine months ended September 30, 2000 give effect to the
transaction as if it had taken place as at January 1, 1999.
The acquisition of TEC.com by TECE is considered, in substance, to be a
recapitalization of TEC.com rather than a business combination. The
significance of this is that the shares of common stock held by TECE's
shareholders are treated as an issuance of new equity by TEC.com,
accompanied by a recapitalization, and therefore, is accounted for as a
change in capital structure.
The basic structure and terms of the reverse acquisition and related
events are accounted for in the unaudited pro forma consolidated financial
statements as follows:
c) On March 30, 2000, TEC.com raised $3,000,000 through a private
placement of 6% secured debentures, convertible at a price of
US$0.21 per share into common shares of TEC.com. This transaction
with related parties was completed on realization of the following:
An exchange of notes payable due to Intasys Corporation $ 1,000,000
An exchange of advances due to Manitex Capital Inc. 375,000
-------------------
Total consideration on exchange of existing debt 1,375,000
Cash from Intasys Corporation 1,625,000
-------------------
Convertible debentures issued $ 3,000,000
-------------------
Subsequently, the $3,000,000 convertible debentures were converted at
US$0.21 per share into 14,285,714 common shares of TEC.com.
II-5
TECE, INC.
Notes to Pro Forma Consolidated Financial Statements
September 30, 2000
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)
b) The conversion of the $3,000,000 convertible debentures resulted in
a beneficial conversion feature and $2,571,429 of interest expense
being recorded.
c) A $48,701 convertible debenture was converted at US$0.50 per share
into 97,403 shares of TEC.com.
d) Pro forma adjustment to record the acquisition of TECE by TEC.com.
In accordance with the Exchange Agreement, the Majority TEC.com
Shareholders transferred to 3786137, on a two-for-one basis, all of
the shares and convertible debentures of TEC.com held by them,
equivalent to a total of 23,826,280 common shares of TEC.com, for an
aggregate of 11,913,140 exchangeable preferred shares of 3786137
(the "Exchangeable Shares"). The Exchangeable Shares are
exchangeable on a share-for-share basis at the option of their
holder into an aggregate of 11,913,140 shares of common stock,
US$0.001 par value, of TECE.
e) In accordance with the Exchange Agreement dated October 10, 2000,
the 11,913,140 Exchangeable Shares in 3786137 are considered in
substance to be equal to TECE common shares and consequently, are
included in the calculation of the total issued and outstanding
shares of TECE, as that number is used for earnings per share and
shareholders' equity presentation.
f) Pro forma adjustment to record a private placement completed by TECE
subsequent to the reverse acquisition yielding gross proceeds of
$4,000,000 in which it issued an aggregate of 1,000,000 units each
consisting of one share of TECE common stock and one warrant. Each
warrant entitles its holder to acquire one share of TECE common
stock at a price of US$5.00 on or before September 30, 2002. The pro
forma adjustment assumes the repayment of bank indebtedness with the
proceeds of this private placement.
g) Pro forma adjustment to write off the net assets of Internet Food
Company, Inc. as management considers them to have no value to
TECE's future operations. The adjustment also eliminates TECE's
accumulated deficit.
h) Subsequent to September 30, 2000, TEC.com issued 800,000 common
shares for cash consideration of $200,000. The fair value of these
shares was US$0.39 each. As a result, the pro forma adjustment
records a stock-based compensation expense of $112,000.
II-6
Annex III
AMENDED AND RESTATED ARTICLES OF INCOPORATION
OF
TECE, INC.
ARTICLE I
The name of this corporation is TECE, Inc. (the "Corporation").
ARTICLE II
The nature of its business is to engage in any lawful activity.
ARTICLE III
The capital stock of the Corporation shall consist of
100,000,000 shares of common stock, $0.001 par value; and 5,000,000
shares of preferred stock, $.001 par value (the "Preferred Stock").
The Board of Directors is expressly authorized to
provide for the issuance of all or any shares of the Preferred
Stock, in one or more series, and to fix for each such series such
voting powers, full or limited, or no voting powers, and such
designations, preferences and relative, participating, optional or
other special rights and such qualifications, limitations or
restrictions thereof as shall be stated and expressed in the
resolution or resolutions adopted by the Board of Directors
providing for the issue of such series (a "Preferred Stock
Designation") and as may be permitted by the General Corporation Law
of Nevada (the "NGCL"). The number of authorized shares of Preferred
Stock may be increased or decreased (but not below the number of
shares thereof then outstanding) by the affirmative vote of the
holders of a majority of the voting power of all of the then
outstanding shares of capital stock of the Corporation, voting
together as a single class, without a separate vote of the holders
of the Preferred Stock, or any series thereof, unless a vote of any
such holders is required pursuant to the NGCL or any Preferred Stock
Designation.
ARTICLE IV
A. The Board of Directors shall have the power to
determine by resolution the number of directors who shall constitute
the full Board of Directors of the Corporation from time to time;
provided, however, that the number of directors shall not be less
than three and shall not be more than 15, unless otherwise
determined by the stockholders of
III-1
the Corporation. Directors shall be elected by a plurality of votes
cast. Their term of office shall expire at the next succeeding
annual meeting of stockholders of the Corporation after their
election and when their respective successors are elected and
qualify.
B. Newly created directorships resulting from any
increase in the authorized number of directors or any vacancies on
the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause
(other than a vacancy resulting from removal by the stockholders, in
which case such vacancy shall be filled by the stockholders) may be
filled by a majority vote of the directors then in office (unless
otherwise required by the NGCL), though less than a quorum, and a
director so chosen shall hold office until his successor is elected
and qualifies. No decrease in the number of authorized directors
constituting the whole Board of Directors shall shorten the term of
any incumbent director.
C. Except as otherwise provided in the NGCL, any
director or the entire Board of Directors may be removed by
stockholders only for cause, and the affirmative vote of the holders
of at least two-thirds of the voting power of all the then
outstanding shares of stock, voting together as a single class,
shall be required to effect such removal.
ARTICLE V
This Corporation shall have perpetual existence.
ARTICLE VI
The capital stock of the Corporation, after the fixed
consideration therefor has been paid or performed, shall not be
subject to assessment, and the holders thereof shall not be
individually liable for the debts and liabilities of the
Corporation.
ARTICLE VII
No director or officer of the Corporation shall be
personally liable to the Corporation of any of its stockholders for
damages for breach of fiduciary duty as a director or officer
involving any act or omission of any such director or officer;
provided, however, that the foregoing provision shall not eliminate
or limit the liability of a director or officer for acts or omission
that involve intentional misconduct, fraud or a knowing violation of
law, or the payment of dividends in violation of Section 78.300 of
the NGCL. Any repeal or modification of this Article by the
stockholders of the Corporation shall only be prospective, and shall
not adversely affect any limitation on the personal liability of a
director of the Corporation for acts or omissions prior to such
repeal or modification.
ARTICLE VIII
The Corporation shall, to the fullest extent permitted
by the provisions of the NGCL, as the same may be amended and
supplemented, indemnify each person who is or was a director or
officer of the Corporation and may indemnify any and all other
persons whom it shall have power to indemnify under the NGCL from
and against any and all of the expenses, liabilities, or other
matters referred to in or covered by the
III-2
NGCL, and the indemnification provided for herein shall not be
deemed exclusive of any other rights to which those indemnified may
be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to acting in such
person's official capacity and as to acting in another capacity
while holding such office, and shall continue as to a person who has
ceased to be a director or officer and shall inure to the benefit of
the heirs, executors, and administrators of such a person.
The Board of Directors shall have power to provide for
indemnification of all persons whom the Corporation is authorized by
these Amended and Restated Articles of Incorporation, or by
applicable law, to indemnify, and may provide for such
indemnification in the Bylaws of the Corporation and/or by separate
agreement providing for such indemnification. It shall not be a
defense to the enforcement of any such indemnification provided for
in the Bylaws of the Corporation or in any such separate agreement
that the scope or extent of the indemnification provided for exceeds
indemnification expressly provided for either in the NGCL, or
otherwise by law in the State of Nevada, provided that the scope and
extent of such indemnification shall not exceed the Corporation's
power of indemnification under applicable law.
No repeal or modification of this Article VIII shall
adversely affect any right or protection afforded to a director or
officer prior to such repeal or modification.
I, the undersigned, being the President of the
Corporation, pursuant to the General Corporation Law of the State of
Nevada, do make and file these Amended and Restated Articles of
Incorporation, hereby declaring and certifying that the facts stated
within are true, and accordingly have hereunto set my hand this ___
day of June, 2001.
-----------------------------------
Andre Telmosse
740 St. Maurice, Suite 410
Montreal, Quebec, Canada H3C 1L5
III-3
Annex IV
AUDIT COMMITTEE CHARTER
- --------------------------------------------------------------------------------
ORGANIZATION
The Audit Committee shall be comprised of a majority of independent directors as
determined by the Board, and free from any relationship that, in the opinion of
the Board, would interfere with the exercise of his or her independent judgement
as a member of the Committee.
Members of the audit committee shall be considered independent if they have no
relationship to the corporation that may interfere with the exercise of their
independence from management and the corporation. Examples of such relationships
include:
o A director being employed by the corporation or any of its
affiliates for the current year or any of the past three years;
o A director accepting any compensation from the corporation or any
of its affiliates other than compensation for board service or
benefits under a tax-qualified retirement plan;
o A director being a member of the immediate family of an
individual who is, or has been in any of the past three years,
employed by the corporation or any of its affiliates as an
executive officer;
o A director being a partner in, or a controlling shareholder or an
executive officer of, any for-profit business organisation to
which the corporation made, or from which the corporation
received, payments that are or have been significant to the
corporation or business organisation in any of the past three
years;
o A director being employed as an executive of another company
where any of the corporation's executive serves on that
company's, compensation committee.
All members of the Committee shall have a working familiarity with basic finance
and accounting practices, and at least one member of the Committee shall have
accounting or related financial management expertise.
- --------------------------------------------------------------------------------
STATEMENT OF POLICY
The audit committee shall provide assistance to the directors in fulfilling
their responsibility to the shareholders, potential shareholders, and investment
community relating to corporate accounting, reporting practices of the company,
and the quality and integrity of financial reports of the company. In so doing,
it is the responsibility of the audit committee to maintain free and open
communication between the directors, the independent auditors and the financial
management of the company.
RESPONSIBILITY
In carrying out its responsibilities, the audit committee believes its policies
and procedures should remain flexible, in order to best react to changing
conditions and to ensure to the directors and shareholders that the corporate
accounting and reporting practices of the company are in accordance with all
requirements and are of the highest quality.
In carrying out these responsibilities, the audit committee will:
o Review and recommend to the directors the independent auditors to
be selected to audit the financial statements of the company and
its divisions and subsidiaries;
o Review the nature and scope of other professional services
provided to the company by the independent auditors and consider
the relationship to the auditors' independence.
o Meet with the independent auditors and financial management of
the Company to review the scope of the proposed audit for the
current year and the audit procedures to be utilised, the
adequacy of the independent auditor's compensation, and at the
conclusion thereof review such audit, including any comments or
recommendations of the independent auditors.
o Review with the independent auditors and financial and accounting
personnel, the adequacy and effectiveness of the accounting and
financial controls of the company, and elicit any recommendations
for the improvement of such internal controls or particular areas
where new or more detailed controls or procedures are desirable.
Particular emphasis should be given to the adequacy of internal
controls to expose any payments, transactions, or procedures that
might be deemed illegal or otherwise improper. Further, the
committee periodically should review company policy statements to
determine their adherence to the code of conduct.
IV-2
Tece, Inc. 2 of 4
Audit Committee
(o)
o Review the financial statements contained in the annual report to
shareholders with management and the independent auditors to
determine that the independent auditors are satisfied with the
disclosure and content of the financial statement to be presented
to the shareholders. Any changes in accounting principles should
be reviewed.
o Review with financial management and the independent auditors the
results of their timely analysis of significant financial
reporting issues and practices, including changes in, or
adoptions of, accounting principles and disclosure practices.
Also review with financial management and the independent
auditors their qualitative judgement about the appropriateness,
not just acceptability, of accounting principles and financial
disclosure practices used or proposed to be used, and
particularly, the degree of aggressiveness or conservatism of the
organisation's accounting principles and underlying estimates.
o Provide sufficient opportunity for the independent auditors to
meet with the members of the audit committee without members of
management present. Among the items to be discussed in these
meetings are the independent auditors' evaluation of the
company's financial, accounting, and auditing personnel, and the
co-operation that the independent auditors received during the
course of audit.
o Review accounting and financial human resources and succession
planning within the Company.
o Report the results of the annual audit to the board of directors.
If requested by the board, invite the independent auditors to
attend the full board of directors meeting to assist in reporting
the results of the annual audit or to answer other directors'
questions (alternatively, the other directors, particularly the
other independent directors, may be invited to attend the audit
committee meeting during which the results of the annual audit
are reviewed).
o Submit the minutes of all meeting of the audit committee to, or
discuss the matters discussed at each committee meting with, the
board of directors.
o Review filings with Securities Commissions and other published
documents containing the company's financial statements and
consider whether the information contained in these documents is
consistent with the information contained in the financial
statements.
o Review policies and procedures with respect to officers' expense
accounts and perquisites, including their use of corporate
assets, and consider the results of any review of these areas by
the internal auditor or the independent accountant.
IV-3
Tece, Inc. 3 of 4
Audit Committee
(o)
o Review transaction (other than transactions which are reviewed by
any other independent committee of the Board of Directors)
between the Company and (1) any affiliates (other than entities
controlled by the Company); and (ii) any entity affiliated with a
member of senior management. Such review will be conducted in
order to ensure that such transactions are on a basis at least as
favourable to the Company as could be obtained from an
unaffiliated third party.
o The audit committee shall have the power to conduct or authorize
investigations into any matter within the committee's scope of
responsibilities. The committee shall be empowered to retain
independent counsel, accountants, or others to assist it in the
conduct of any investigation.
o The committee shall meet at least four times per year or more
frequently as circumstances require. The committee may ask
members of management or others to attend the meeting and provide
pertinent information as necessary.
IV-4
Tece, Inc. 4 of 4
Audit Committee
(o)
The Nasdaq Stock Market Listing Requirements
On December 14, 1999, the SEC approved amendments to Nasdaq's independent
director and audit committee listing standards, which Nasdaq proposed in
September following the recommendations of The Blue Ribbon Committee on
Improving the Effectiveness of Corporate Audit Committees.
The purpose of these rule changes is to strengthen the independence and
effectiveness of corporate audit committees, and to provide for accountability
among the company's audit committee, outside directors, and management. These
rules changes apply to companies listed on the Nasdaq National Market and the
SmallCap Market. A summary of the new rules follows:
INDEPENDENT DIRECTORS
The new rules specify the relationships that disqualify a director from being
considered "independent" for purposes of serving as a member of an issuer's
audit committee. A director will not be considered "independent" if, among other
things, he or she has:
o been employed by the corporation or its affiliates in the current or
past three years;
o accepted any compensation from the corporation or its affiliates in
excess of $60,000 during the previous fiscal year (except for board
service, retirement plan benefits, or non- discretionary compensation);
o an immediate family member who is, or has been in the past three years,
employed by the corporation or its affiliates as an executive officer;
o been a partner, controlling shareholder or an executive officer of any
for-profit business to which the corporation made, or from which it
received, payments (other than those which arise solely from
investments in the corporation's securities) that exceed five percent
of the organization's consolidated gross revenues for that year, or
$200,000, whichever is more, in any of the past three years; or
o been employed as an executive of another entity where any of the
company's executives serve on that entity's compensation committee.
AUDIT COMMITTEE - CHARTER REQUIREMENTS
Companies will be required to adopt a formal written charter that specifies the
scope of its responsibilities and the means by which it carries out those
responsibilities; the outside auditor's accountability to the board and audit
committee; and the audit committee's responsibility to ensure the independence
of the outside auditor.
IV-5
AUDIT COMMITTEE - STRUCTURE AND MEMBERSHIP REQUIREMENTS
The new rules require that audit committees have a minimum of three members and
be comprised of independent directors only. All directors must be able to read
and understand fundamental financial statements, including a company's balance
sheet, income statement, and cash flow statement. At least one director must
have past employment experience in finance or accounting, requisite professional
certification in accounting, or other comparable experience or background,
including a current or past position as a chief executive or financial officer
or other senior officer with financial oversight responsibilities. Under
exceptional and limited circumstances, however, the new rules allow ONE
non-independent director to serve on the audit committee, provided that the
board determines it to be in the best interests of the corporation and its
shareholders, and the board discloses the reasons for the determination in the
company's next annual proxy statement. Current employees or officers, or their
immediate family members, however, are not able to serve on the audit committee
under this exception. Note: Companies which are small business filers under SEC
rules are exempt from these structure and composition changes. Instead, such
companies are required to maintain an audit committee that is composed of a
majority of independent directors. Small business filers, however, must comply
with the new definition of "independent directors."
COMPLIANCE
Companies listed on Nasdaq as of December 14, 1999, and companies that applied
for listing on or before that date, will be provided until June 14, 2000 to
adopt a formal written audit committee charter and until June 14, 2001 to meet
the new audit committee structure and membership requirements. In addition,
issuers that transfer to Nasdaq from another exchange will be afforded the same
grace periods they would have received under their previous market's
implementation schedule. All other companies must meet the new rules upon their
listing on Nasdaq.
QUESTIONS
For more information on these rule changes, please contact your Nasdaq Director,
or contact David Compton, Listing Qualifications Regulatory Policy, at (301)
978-8026, or John Nachmann, Office of General Counsel, at (202) 728-8466. To
view the complete rule filing, approval, and related materials, visit
WWW.NASDAQNEWS.COM. Under "Key Reports," click on "Improving the Effectiveness
of Corporate Audit Committees."
IV-6
Annex V
TECE, INC.
2001 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN.
This 2001 Stock Option Plan (the "Plan") is intended as an
incentive, to retain in the employ of and as directors, consultants and advisors
to TECE, Inc., a Nevada corporation (the "Company") and any Subsidiary of the
Company, within the meaning of Section 424(f) of the United States Internal
Revenue Code of 1986, as amended (the "Code"), persons of training, experience
and ability, to attract new employees, directors, consultants and advisors whose
services are considered valuable, to encourage the sense of proprietorship and
to stimulate the active interest of such persons in the development and
financial success of the Company and its Subsidiaries.
It is further intended that certain options granted pursuant
to the Plan shall constitute incentive stock options within the meaning of
Section 422 of the Code (the "Incentive Options") while certain other options
granted pursuant to the Plan shall be nonqualified stock options (the
"Nonqualified Options"). Incentive Options and Nonqualified Options are
hereinafter referred to collectively as "Options."
The Company intends that the Plan meet the requirements of
Rule 16b-3 ("Rule 16b-3") promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act") and that transactions of the type specified in
subparagraphs (c) to (f) inclusive of Rule 16b-3 by officers and directors of
the Company pursuant to the Plan be exempt from the operation of Section 16(b)
of the Exchange Act. Further, the Plan is intended to satisfy the
performance-based compensation exception to the limitation on the Company's tax
deductions imposed by Section 162(m) of the Code. In all cases, the terms,
provisions, conditions and limitations of the Plan shall be construed and
interpreted consistent with the Company's intent as stated in this Section 1.
2. ADMINISTRATION OF THE PLAN.
The Board of Directors of the Company (the "Board") may
appoint and maintain as administrator of the Plan a Committee (the "Committee")
consisting of two or more directors who are "Non-Employee Directors" (as such
term is defined in Rule 16b-3) and "Outside Directors" (as such term is defined
in Section 162(m) of the Code), which shall serve at the pleasure of the Board.
The Committee, subject to Sections 3 and 5 hereof, shall have full power and
authority to designate recipients of Options, to determine the terms and
conditions of respective Option agreements (which need not be identical) and to
interpret the provisions and supervise the administration of the Plan. The
Committee shall have the authority, without limitation, to designate which
Options granted under the Plan shall be Incentive Options and which shall be
Nonqualified Options. To the extent
any Option does not qualify as an Incentive Option, it shall constitute a
separate Nonqualified Option.
Subject to the provisions of the Plan, the Committee shall
interpret the Plan and all Options granted under the Plan, shall make such rules
as it deems necessary for the proper administration of the Plan, shall make all
other determinations necessary or advisable for the administration of the Plan
and shall correct any defects or supply any omission or reconcile any
inconsistency in the Plan or in any Options granted under the Plan in the manner
and to the extent that the Committee deems desirable to carry into effect the
Plan or any Options. The act or determination of a majority of the Committee
shall be the act or determination of the Committee and any decision reduced to
writing and signed by all of the members of the Committee shall be fully
effective as if it had been made by a majority at a meeting duly held. Subject
to the provisions of the Plan, any action taken or determination made by the
Committee pursuant to this and the other Sections of the Plan shall be
conclusive on all parties.
In the event that for any reason the Committee is unable to
act or if the Committee at the time of any grant, award or other acquisition
under the Plan of Options or Stock as hereinafter defined does not consist of
two or more Non-Employee Directors, or if there shall be no such Committee, then
the Plan shall be administered by the Board, and references herein to the
Committee (except in the proviso to this sentence) shall be deemed to be
references to the Board, and any such grant, award or other acquisition may be
approved or ratified in any other manner contemplated by subparagraph (d) of
Rule 16b-3; provided, however, that options granted to the Company's Chief
Executive Officer or to any of the Company's other four most highly compensated
officers that are intended to qualify as performance-based compensation under
Section 162(m) of the Code may only be granted by the Committee.
3. DESIGNATION OF OPTIONEES.
The persons eligible for participation in the Plan as
recipients of Options (the "Optionees") shall include employees, officers and
directors of, and consultants and advisors to, the Company or any Subsidiary;
provided that Incentive Options may only be granted to employees of the Company
and the Subsidiaries. In selecting Optionees, and in determining the number of
shares to be covered by each Option granted to Optionees, the Committee may
consider the office or position held by the Optionee or the Optionee's
relationship to the Company, the Optionee's degree of responsibility for and
contribution to the growth and success of the Company or any Subsidiary, the
Optionee's length of service, age, promotions, potential and any other factors
that the Committee may consider relevant. An Optionee who has been granted an
Option hereunder may be granted an additional Option or Options, if the
Committee shall so determine.
V-2
4. STOCK RESERVED FOR THE PLAN.
Subject to adjustment as provided in Section 7 hereof, a total
of 3,000,000 shares of the Company's Common Stock, $0.001 par value per share
(the "Stock"), shall be subject to the Plan. The maximum number of shares of
Stock that may be subject to options granted under the Plan to any individual in
any calendar year shall not exceed 1,250,000, and the method of counting such
shares shall conform to any requirements applicable to performance-based
compensation under Section 162(m) of the Code. The shares of Stock subject to
the Plan shall consist of unissued shares or previously issued shares held in
the Company's treasury, and such amount of shares of Stock shall be and is
hereby reserved for such purpose. Any of such shares of Stock that may remain
unsold and that are not subject to outstanding Options at the termination of the
Plan shall cease to be reserved for the purposes of the Plan, but until
termination of the Plan, the Company shall at all times reserve a sufficient
number of shares of Stock to meet the requirements of the Plan. Should any
Option expire or be canceled prior to its exercise in full or should the number
of shares of Stock to be delivered upon the exercise in full of an Option be
reduced for any reason, the shares of Stock theretofore subject to such Option
may be subject to future Options under the Plan, except where such reissuance is
inconsistent with the provisions of Section 162(m) of the Code.
5. TERMS AND CONDITIONS OF OPTIONS.
Options granted under the Plan shall be subject to the
following conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable:
(a) Option Price. The purchase price of each share of Stock
purchasable under an Option shall be determined by the Committee at the time of
grant, but shall not be less than 100% of the Fair Market Value (as defined
below) of such share of Stock on the date the Option is granted; provided,
however, that with respect to an Optionee who, at the time an Incentive Option
is granted, owns (within the meaning of Section 424(d) of the Code) more than
10% of the total combined voting power of all classes of stock of the Company or
of any Subsidiary, the purchase price per share of Stock purchasable under an
Incentive Option shall be at least 110% of the Fair Market Value per share of
Stock on the date of grant. The exercise price for each Option shall be subject
to adjustment as provided in Section 7 below. "Fair Market Value" means the
closing price of publicly traded shares of Stock on the principal securities
exchange on which shares of Stock are listed (if the shares of Stock are so
listed), or on the Nasdaq Stock Market (if the shares of Stock are regularly
quoted on the Nasdaq Stock Market), or, if not so listed or regularly quoted,
the mean between the closing bid and asked prices of publicly traded shares of
Stock in the over-the-counter market, or, if such bid and asked prices shall not
be available, as reported by any nationally recognized quotation service
selected by the Company, or as determined by the Committee in a manner
consistent with the provisions of the Code. Anything in this Section 5(a) to the
contrary notwithstanding, in no event shall the purchase price of a share of
Stock be less than the minimum price permitted under the rules and policies of
any national securities exchange on which the shares of Stock are listed.
V-3
(b) Option Term. The term of each Option shall be fixed by the
Committee, but no Option shall be exercisable more than ten years after the date
such Option is granted and in the case of an Incentive Option granted to an
Optionee who, at the time such Incentive Option is granted, owns (within the
meaning of Section 424(d) of the Code) more than 10% of the total combined
voting power of all classes of stock of the Company or of any Subsidiary, no
such Incentive Option shall be exercisable more than five years after the date
such Incentive Option is granted.
(c) Exercisability. Subject to Section 5(j) hereof, Options
shall be exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee at the time of grant.
The Committee shall have the power to accelerate the time at
which any Option may first be exercised or the time during which any Option or
any part thereof will vest in accordance with the Plan, notwithstanding the
provisions in the Option agreement stating the time at which it may first be
exercised or the time during which it will vest. In its sole discretion, the
Committee may also determine that, in the event of a "Change of Control" (as
hereinafter defined), each outstanding Option shall terminate within a specified
number of days after notice to the Optionee thereunder, and each such Optionee
shall receive, with respect to each share of Company Stock subject to such
Option, an amount equal to the excess of the Fair Market Value of such shares
immediately prior to such Change of Control over the exercise price per share of
such Option; such amount shall be payable in cash, in one or more kinds of
property (including the property, if any, payable in the transaction) or a
combination thereof, as the Committee shall determine in its sole discretion.
For purposes of the Plan, a Change of Control shall be deemed
to have occurred if:
(i) a tender offer (or series of related offers)
shall be made and consummated for the ownership of 50% or more
of the outstanding voting securities of the Company, unless as
a result of such tender offer more than 50% of the outstanding
voting securities of the surviving or resulting corporation
shall be owned in the aggregate by the shareholders of the
Company (as of the time immediately prior to the commencement
of such offer), any employee benefit plan of the Company or
its subsidiaries, and their affiliates;
(ii) the Company shall be merged or consolidated with
another corporation, unless as a result of such merger or
consolidation more than 50% of the outstanding voting
securities of the surviving or resulting corporation shall be
owned in the aggregate by the shareholders of the Company (as
of the time immediately prior to such transaction), any
employee benefit plan of the Company or its subsidiaries, and
their affiliates;
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(iii) the Company shall sell substantially all of its
assets to another corporation that is not wholly owned by the
Company, unless as a result of such sale more than 50% of such
assets shall be owned in the aggregate by the shareholders of
the Company (as of the time immediately prior to such
transaction), any employee benefit plan of the Company or its
subsidiaries and their affiliates; or
(iv) a Person (as defined below) shall acquire 50% or
more of the outstanding voting securities of the Company
(whether directly, indirectly, beneficially or of record),
unless as a result of such acquisition more than 50% of the
outstanding voting securities of the surviving or resulting
corporation shall be owned in the aggregate by the
shareholders of the Company (as of the time immediately prior
to the first acquisition of such securities by such Person),
any employee benefit plan of the Company or its subsidiaries,
and their affiliates.
For purposes of this Section 5(c), ownership of
voting securities shall take into account and shall include ownership as
determined by applying the provisions of Rule 13d-3(d)(I)(i) (as in effect on
the date hereof) under the Exchange Act. In addition, for such purposes,
"Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 13(d) and 14(d) thereof; however, a Person shall
not include (A) the Company or any of its subsidiaries; (B) a trustee or other
fiduciary holding securities under an employee benefit plan of the Company or
any of its subsidiaries; (C) an underwriter temporarily holding securities
pursuant to an offering of such securities; or (D) a corporation owned, directly
or indirectly, by the shareholders of the Company in substantially the same
proportion as their ownership of stock of the Company.
(d) Method of Exercise. Options to the extent then exercisable
may be exercised in whole or in part at any time during the option period, by
giving written notice to the Company specifying the number of shares of Stock to
be purchased, accompanied by payment in full of the purchase price, in cash, or
by check or such other instrument as may be acceptable to the Committee. As
determined by the Committee, in its sole discretion, at or after grant, payment
in full or in part may be made at the election of the Optionee (i) in the form
of Stock owned by the Optionee (based on the Fair Market Value of the Stock on
the trading day before the Option is exercised) that is not the subject of any
pledge or security interest, (ii) in the form of shares of Stock withheld by the
Company from the shares of Stock otherwise to be received with such withheld
shares of Stock having a Fair Market Value on the date of exercise equal to the
exercise price of the Option, or (iii) by a combination of the foregoing,
provided that the combined value of all cash and cash equivalents and the Fair
Market Value of any shares surrendered to the Company is at least equal to such
exercise price and except with respect to (ii) above, such method of payment
will not cause a disqualifying disposition of all or a portion of the Stock
received upon exercise of an Incentive Option. An Optionee shall have the right
to dividends and other rights of a stockholder with respect
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to shares of Stock purchased upon exercise of an Option at such time as the
Optionee has given written notice of exercise and has paid in full for such
shares and (ii) has satisfied such conditions that may be imposed by the Company
with respect to the withholding of taxes.
(e) Non-transferability of Options. Options are not
transferable and may be exercised solely by the Optionee during his lifetime or
after his death by the person or persons entitled thereto under his will or the
laws of descent and distribution. The Committee, in its sole discretion, may
permit a transfer of a Nonqualified Option to (i) a trust for the benefit of the
Optionee or (ii) a member of the Optionee's immediate family (or a trust for his
or her benefit). Any attempt to transfer, assign, pledge or otherwise dispose
of, or to subject to execution, attachment or similar process, any Option
contrary to the provisions hereof shall be void and ineffective and shall give
no right to the purported transferee.
(f) Termination by Death. Unless otherwise determined by the
Committee at grant, if any Optionee's employment with or service to the Company
or any Subsidiary terminates by reason of death, the Option may thereafter be
exercised, to the extent then exercisable (or on such accelerated basis as the
Committee shall determine at or after grant), by the legal representative of the
estate or by the legatee of the Optionee under the will of the Optionee, for a
period of one year after the date of such death or until the expiration of the
stated term of such Option as provided under the Plan, whichever period is
shorter.
(g) Termination by Reason of Disability. Unless otherwise
determined by the Committee at grant, if any Optionee's employment with or
service to the Company or any Subsidiary terminates by reason of total and
permanent disability, any Option held by such Optionee may thereafter be
exercised, to the extent it was exercisable at the time of termination due to
Disability (or on such accelerated basis as the Committee shall determine at or
after grant), but may not be exercised after one year after the date of such
termination of employment or service or the expiration of the stated term of
such Option, whichever period is shorter; provided, however, that, if the
Optionee dies within such one year period, any unexercised Option held by such
Optionee shall thereafter be exercisable to the extent to which it was
exercisable at the time of death for a period of one year after the date of such
death or for the stated term of such Option, whichever period is shorter.
(h) Termination by Reason of Retirement. Unless otherwise
determined by the Committee at grant, if any Optionee's employment with or
service to the Company or any Subsidiary terminates by reason of Normal or Early
Retirement (as such terms are defined below), any Option held by such Optionee
may thereafter be exercised to the extent it was exercisable at the time of such
Retirement (or on such accelerated basis as the Committee shall determine at or
after grant), but may not be exercised after three months after the date of such
termination of employment or service or the expiration of the stated term of
such Option, whichever period is shorter; provided, however, that, if the
Optionee dies within such three-month period, any unexercised Option held by
such Optionee shall thereafter be exercisable, to the extent to which it was
exercisable at the time of death,
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for a period of one year after the date of such death or for the stated term of
such Option, whichever period is shorter.
For purposes of this paragraph (h), "Normal Retirement" shall
mean retirement from active employment with the Company or any Subsidiary on or
after the normal retirement date specified in the applicable Company or
Subsidiary pension plan or if no such pension plan, age 65, and "Early
Retirement" shall mean retirement from active employment with the Company or any
Subsidiary pursuant to the early retirement provisions of the applicable Company
or Subsidiary pension plan or if no such pension plan, age 55.
(i) Other Termination. Unless otherwise determined by the
Committee at grant, if any Optionee's employment with or service to the Company
or any Subsidiary terminates for any reason other than death, Disability or
Normal or Early Retirement, the Option shall thereupon terminate, except that
the portion of any Option that was exercisable on the date of such termination
of employment or service may be exercised for the lesser of three months after
the date of termination or the balance of such Option's term if the Optionee's
employment or service with the Company or any Subsidiary is terminated by the
Company or such Subsidiary without cause (the determination as to whether
termination was for cause to be made by the Committee). In the event that an
Optionee's employment is terminated for cause, such Optionee's Options shall
immediately terminate. The transfer of an Optionee from the employ of or service
to the Company to the employ of or service to a Subsidiary, or vice versa, or
from one Subsidiary to another, shall not be deemed to constitute a termination
of employment or service for purposes of the Plan.
(j) Limit on Value of Incentive Option. The aggregate Fair
Market Value, determined as of the date the Incentive Option is granted, of
Stock for which Incentive Options are exercisable for the first time by any
Optionee during any calendar year under the Plan (and/or any other stock option
plans of the Company or any Subsidiary) shall not exceed $100,000.
(k) Transfer of Incentive Option Shares. The stock option
agreement evidencing any Incentive Options granted under this Plan shall provide
that if the Optionee makes a disposition, within the meaning of Section 424(c)
of the Code and regulations promulgated thereunder, of any share or shares of
Stock issued to him upon exercise of an Incentive Option granted under the Plan
within the two-year period commencing on the day after the date of the grant of
such Incentive Option or within a one-year period commencing on the day after
the date of transfer of the share or shares to him pursuant to the exercise of
such Incentive Option, he shall, within 10 days after such disposition, notify
the Company thereof and immediately deliver to the Company any amount of United
States federal, state and local income tax withholding required by law.
6. TERM OF PLAN.
No Option shall be granted pursuant to the Plan on or after
January __, 2010, but Options theretofore granted may extend beyond that date.
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7. CAPITAL CHANGE OF THE COMPANY.
(A) CAPITALIZATION ADJUSTMENTS. In the event of any merger,
reorganization, consolidation, recapitalization, stock dividend, or other change
in corporate structure affecting the Stock, the Committee shall make an
appropriate and equitable adjustment in the number and kind of shares reserved
for issuance under the Plan and in the number and option price of shares subject
to outstanding Options granted under the Plan, to the end that after such event
each Optionee's proportionate interest shall be maintained as immediately before
the occurrence of such event.
(B) DISSOLUTION OR LIQUIDATION. In the event of a dissolution or
liquidation of the Company, then all outstanding Options shall terminate
immediately prior to such event.
(C) CHANGE OF CONTROL. In the event of a Change of Control, then any
surviving corporation or acquiring corporation shall assume any Options
outstanding under the Plan or shall substitute similar Options (including an
award to acquire the same consideration paid to the stockholders of the Company
in the transaction for those outstanding under the Plan). In the event any
surviving corporation or acquiring corporation refuses to assume such Options or
to substitute similar Options for those outstanding under the Plan, then with
respect to Options held by employees whose employment has not been terminated,
the vesting of such Options (and, if applicable, the time during which such
Options may be exercised) shall be accelerated in full, and the Options shall
terminate if not exercised (if applicable) at or prior to the Change of Control.
With respect to any other Options outstanding under the Plan, such Options shall
terminate if not exercised (if applicable) prior to the Change of Control.
8. PURCHASE FOR INVESTMENT.
Unless the Options and shares covered by the Plan have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
or the Company has determined that such registration is unnecessary, each person
exercising an Option under the Plan may be required by the Company to give a
representation in writing that he is acquiring the shares for his own account
for investment and not with a view to, or for sale in connection with, the
distribution of any part thereof.
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9. TAXES.
The Company may make such provisions as it may deem
appropriate, consistent with applicable law, in connection with any Options
granted under the Plan with respect to the withholding of any taxes or any other
tax matters.
10. EFFECTIVE DATE OF PLAN.
The Plan shall be effective on January ____, 2001, provided,
however, that the Plan shall subsequently be approved by majority vote of the
Company's stockholders not later than January __, 2002.
11. AMENDMENT AND TERMINATION.
The Board may amend, suspend, or terminate the Plan, except
that no amendment shall be made that would impair the rights of any Optionee
under any Option theretofore granted without the Optionee's consent, and except
that no amendment shall be made which, without the approval of the stockholders
of the Company would:
(a) materially increase the number of shares that may be
issued under the Plan, except as is provided in Section 7;
(b) materially increase the benefits accruing to the Optionees
under the Plan;
(c) materially modify the requirements as to eligibility for
participation in the Plan;
(d) decrease the exercise price of an Incentive Option to less
than 100% of the Fair Market Value per share of Stock on the date of grant
thereof or the exercise price of a Nonqualified Option to less than 80% of the
Fair Market Value per share of Stock on the date of grant thereof; or
(e) extend the term of any Option beyond that provided for in
Section 5(b).
The Committee may amend the terms of any Option theretofore
granted, prospectively or retroactively, but no such amendment shall impair the
rights of any Optionee without the Optionee's consent. The Committee may also
substitute new Options for previously granted Options, including options granted
under other plans applicable to the participant and previously granted Options
having higher option prices, upon such terms as the Committee may deem
appropriate.
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12. GOVERNMENT REGULATIONS.
The Plan, and the grant and exercise of Options hereunder, and
the obligation of the Company to sell and deliver shares under such Options,
shall be subject to all applicable laws, rules and regulations, and to such
approvals by any governmental agencies, national securities exchanges and
interdealer quotation systems as may be required.
13. GENERAL PROVISIONS.
(a) Certificates. All certificates for shares of Stock
delivered under the Plan shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations
and other requirements of the Securities and Exchange Commission, or other
securities commission having jurisdiction, any applicable Federal or state
securities law, any stock exchange or interdealer quotation system upon which
the Stock is then listed or traded and the Committee may cause a legend or
legends to be placed on any such certificates to make appropriate reference to
such restrictions.
(b) Employment Matters. The adoption of the Plan shall not
confer upon any Optionee of the Company or any Subsidiary any right to continued
employment or, in the case of an Optionee who is a director, continued service
as a director, with the Company or a Subsidiary, as the case may be, nor shall
it interfere in any way with the right of the Company or any Subsidiary to
terminate the employment of any of its employees, the service of any of its
directors or the retention of any of its consultants or advisors at any time.
(c) Limitation of Liability. No member of the Board or the
Committee, or any officer or employee of the Company acting on behalf of the
Board or the Committee, shall be personally liable for any action, determination
or interpretation taken or made in good faith with respect to the Plan, and all
members of the Board or the Committee and each and any officer or employee of
the Company acting on their behalf shall, to the fullest extent permitted by
law, be fully indemnified and protected by the Company in respect of any such
action, determination or interpretation.
(d) Registration of Stock. Notwithstanding any other provision
in the Plan, no Option may be exercised unless and until the Stock to be issued
upon the exercise thereof has been registered under the Securities Act and
applicable state securities laws, or are, in the opinion of counsel to the
Company, exempt from such registration in the United States. The Company shall
not be under any obligation to register under applicable federal or state
securities laws any Stock to be issued upon the exercise of an Option granted
hereunder in order to permit the exercise of an Option and the issuance and sale
of the Stock subject to such Option, although the Company may in its sole
discretion register such Stock at such time as the Company shall determine. If
the Company chooses to comply with such an exemption from registration, the
Stock issued under the Plan may, at the direction of the Committee, bear an
appropriate restrictive legend restricting the
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transfer or pledge of the Stock represented thereby, and the Committee may also
give appropriate stop transfer instructions with respect to such Stock to the
Company's transfer agent.
14. GOVERNING LAW
The law of the State of Nevada shall govern all questions
concerning the construction, validity and interpretation of this Plan, without
regard to such state's conflict of laws rules.
TECE, Inc.
January __, 2001
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