SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
PLANET411.COM INC.
(Exact Name of Registrant as Specified in its charter)
DELAWARE 88-0258277
(State or other jurisdiction of (IRS Employer Identification)
incorporation or organization)
Planet 411
440 Rene Levesque West
Suite 401
Montreal, Quebec Canada H2Z 1V7
(Address of principal offices) (zip code)
(514) 866-4638
(Registrant's telephone number, including area code)
Securities to be registered under Section 12(b) of the Act:
NONE
Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $0.001 per share
(Title of class)
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TABLE OF CONTENTS
ITEM 1. BUSINESS
ITEM 2. FINANCIAL INFORMATION
ITEM 3. PROPERTIES
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
ITEM 6. EXECUTIVE COMPENSATION
ITEM 7. CERAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 8. LEGAL PROCEEDINGS
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
ITEM 11. DESCRIPTION OF SECURITIES TO BE REGISTERED
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
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ITEM 1. BUSINESS.
Forward Looking Statements
This document contains forward-looking statements. Please review the information
in light of the cautionary statements identifying important factors that could
cause actual results to differ materially from those in the forward-looking
statements. The descriptions of any agreements contained in this document are
subject in their entireties to the actual text of the agreements that are
attached hereto and made a part hereof.
General
Planet411.com Inc. provides merchants developing their internet business with
the following bundled services and features: store and catalogue creation, web
site hosting, Visa and MasterCard merchant numbers, e-commerce application
software, on-line transaction processing, shipping arrangements and branding.
Management believes that these services and features, when properly integrated,
enable e-merchants to efficiently market their products and process transactions
without the higher costs and long delays frequently associated with either
starting up a business or commencing sales operations via the Internet.
References to the "Company" shall be deemed to mean (a) Planet411.com
Corporation, a Nevada corporation, and its predecessors in interest (as
described in the next sentence) for all periods prior to October 6, 1999, and
(b) Planet411.com Inc., a Delaware corporation, after such date. From 1992 to
1998, the Company was known as (and the aforementioned predecessors include)
Noble Financing Group Inc., which the Company's management believes was a
company seeking investment opportunities. In 1998, the Company's name was
changed to Newman Energy Technologies Incorporated as a show of good faith while
its then current management was negotiating a technology deal (which deal was
never consummated). In 1998, as World Star Asia, Inc., the Company was in the
business of selling franchises to make and distribute mini trucks, until a third
party backed out of a material transaction related to such activities.
(Management does not believe any material transactions were ever consummated by
the Company as World Star.) After the Company's 1998 name change to Comgen
Corp., the Company was seeking (but to the knowledge of the Company's current
management never consummated any) potential investments.
The Company operates its business entirely through 9066-4871 Quebec Inc.
("9066"), which was organized in July 1998. All descriptions of a commercial
nature contained herein relate to the business as conducted by 9066. Two of the
Company's subsidiaries, 3560309 Canada Inc., a corporation existing under the
laws of Canada ("Canco"), and Planet 411 (Nova Scotia) Company, a Nova Scotia
unlimited liability company ("Novaco"), were created in connection with the
reverse takeover through which the shareholders of 9066 acquired a controlling
interest in the Company. These entities do not conduct any material business,
but exist to hold the equity interests in the Company's subsidiaries and to
participate in the Voting and Combination Agreements described herein. See Item
7, "Certain Relationships and Related Transactions." A third subsidiary, Egress
Technologies Inc., no longer conducts any material business.
The Company is nearing the conclusion of the test phase for its products and
services, during which it has continued to refine the combined product offered.
The Company is concluding testing with sample stores and has not yet commenced
full scale commercial operations, but anticipates doing so by Spring 2000. The
Company is not yet offering services to third parties, has no clients at this
time (although the principals have spoken with a number of potential end-users
regarding the process) and has derived no revenues from sales or services
provided. The business of the Company as set forth herein is a description of
the goals that the Company has established for itself. Because the Company will
require additional capital within the next two months to remain viable, there
can be no assurance that it will be able to achieve these goals. The Company
also believes that it will have greater access to capital and/or bank financing
once its shares are once again eligible for listing on the Over the Counter
Bulletin Board. There is no assurance that the
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shares will become eligible or that if the Company's goals are achieved, the
business reflected herein will be commercially viable. There is also no
assurance that the Company will have the capacity to create an effective and
efficient service department within the next few months. Delays in the
commencement of full scale commercial operations could reduce what the Company's
management believes is its lead time over certain of its competitors and would
likely result in a smaller-than-expected market share once such operations are
commenced.
Products and Services
Products and Services
The Company's core focus is to be an e-business service provider to small and
medium-sized businesses. The Company plans to offer a package of services to
e-merchants that will facilitate the process by which small and medium-sized
businesses establish their virtual stores for on-line transactions. The first
phase of that process is to set up the e-merchant's on-line store. By bundling
store and catalogue creation, web site hosting, the provision of Visa and
MasterCard merchant numbers to its customers, e-commerce application software,
on-line transaction processing, shipping arrangements and branding, the Company
believes it will be able to attract customers looking for an efficient,
broad-based means of engaging in e-commerce. The Company will utilize the
products and services made available through the arrangements described below in
establishing the e-merchant's store.
The second phase of the services provided by the Company will be for the Company
to arrange to have these virtual stores placed in high-traffic portals, shopping
websites and other content providers, so that internet users will be able to
visit the e-merchants stores without specifically knowing about them prior to
going online to make their purchases.
The Company has divided its services into three components: strategy, marketing
and performance analysis.
o Strategy: This comprises the first phase of the Company's services, as
described above. The strategy component consists of assisting with the
set-up and implementation of the e-merchant's on-line business model;
determining how much volume the merchant's store is equipped to
handle; identifying opportunities and suggesting new markets for its
e-merchants to pursue; assisting e-merchants with their relationships
with suppliers and other business counterparts.
o Marketing: This comprises the second phase of the Company's services.
This component consists of working with e-merchants to define a
marketing strategy and identifying the best marketing tools for the
virtual store; coordinating traditional and/or on-line marketing
techniques; identifying the best communication channels and
determining placement and position of the e-merchant's products and
website on the internet, including which portal(s) would be most
cost-efficient to bring about an increase in sales; determining how
much to spend on having the store's content on which particular
portal; and managing publicity and promotional budget requested by
merchants.
o Performance Analysis: The Company will assist in extracting pertinent
data about sales generally, and e-merchant visitors and buyers in
particular; analyze results, perform trend analysis and rate store's
performance; and re-orient the on-line store to enhance on-line
traffic and sales volume.
These services can be provided via the internet or at business centers that the
Company is in the process of establishing, which the Company envisions as a
place to "bridge" the real and virtual worlds. Qualified Company personnel will
work face-to-face with e-merchants and create a solution implementing the method
described above. The Company believes that this personal contact and mixing of
traditional and
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online marketing techniques will attract those who are less familiar or
comfortable with the Internet. See "-- Sales and Marketing."
The Company will also offer 24 hour, seven day customer service to customers of
the Company's e-merchants, which the Company believes will create greater
consumer confidence in the part of the e-merchants' on-line purchasers and
encourage subsequent purchases, all of which should ultimately increase revenues
to the Company.
Third Party Providers
The Company has entered into a number of arrangements with third-party providers
to place itself in a position in which it can provide its e-merchants with all
of these services. The Company has an agreement with Open Market Inc. permitting
the Company's e-merchants to use that company's catalogue creation software and
back-end commerce application software (ShopSite(TM) and Transact4 ,
respectively), which will assist the Company's customers in developing marketing
strategies for their products and tracking and invoicing their products.
Transact4 also contains automated tax and shipping calculations as well as fraud
detection technology. The Company's rights to these Open Market products were
granted pursuant to a perpetual license. The Company needs to pay its final
installation for the license granted under this agreement. The Company has
continuing obligations for support services under the agreement. In addition to
the foregoing costs incurred in installing and servicing the Open Market
products, the Company will also incur variable fees per month per e-merchant
that is using the Open Market software, computed on a sliding scale based upon
each respective e-merchant's revenues. The Company may terminate the agreement
without cause at any time on or after March 18, 2001 upon 90 days written notice
to Open Market. Each of the parties may also terminate for cause if the cause
remains after a 30 day cure period.
The Company has entered into an Internet Services Agreement with EMC2
Corporation ("EMC") to monitor the servers on which the Company hosts its
customers' websites, to prevent disruptions in service and to make repairs, so
as to maintain the host services and availability of the websites for the
Company's e-merchants. The EMC contract requires the Company to make monthly
payments expected to be in excess of $20,000 through May 15, 2001, exclusive of
any amounts agreed upon for additional services thereunder. The EMC contract
renews automatically for one-year periods unless terminated by either party (a)
at least 90 days prior to the end of the then-current term or (b) upon a
material breach by the other party, subject to a 30-day cure period for such
cause.
The Company is finalizing arrangements with The Toronto-Dominion Bank and the
National Bank of Canada that will allow the Company to provide its customers
with Visa and MasterCard merchant numbers, respectively, within three days, as
opposed to a potential six-to-eight week delay, without the typical upfront
security deposit (for chargebacks) of approximately $3,200 to $13,000. The
Company expects it will ultimately be responsible for the e-merchants'
chargebacks. Instead of requiring a security deposit from e-merchants for
chargebacks, the Company intends to hold "rolling" security for these Visa or
MasterCard merchants, in accordance with an industry-based risk analysis to be
provided by the respective bank. In addition to holding back of a percentage of
sales volume for the immediately preceding six months (the rolling security),
the Company will also protect against e-merchant fraud by not paying them until
the Company receives confirmation of delivery of the goods by UPS. The Company
believes that these security measures will foster consumer confidence, leading
to increased sales revenues for the Company's e-merchants and, as a result, the
Company. There is no assurance that these agreements will be finalized with
either bank or that the Company's expectations in connection therewith will be
met.
The Company has entered into an agreement with UPS that allows the Company's
e-merchants to benefit from discounted shipping rates. Under the terms of the
UPS agreement, the Company's e-merchants benefit from price incentives granted
through the Company, as UPS's fees will be based upon the aggregate of all of
the Company's merchants' shipments. The Company is ultimately responsible to UPS
for all amounts owed by its merchants. The Company has agreed to pay for all
shipments in full within 90 days of the invoice date. As part of the agreement,
the Company has agreed to endorse UPS as the
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recommended delivery company for the Company and all of the Company's related
divisions, subsidiaries and affiliates. In return, UPS has agreed to support
and/or endorse marketing and or promotional initiative aimed at promoting the
Company's services in which the UPS registered trademark and/or logo appears.
Revenues
The Company's revenues will be based upon the gross sales of its e-merchants.
The Company plans to charge e-merchants an industry-dependent fee expected to
average four percent (4%) of gross sales and to require that its merchants pay
at least $200 for additional marketing services (whether or not provided by the
Company).
The Company has received over 50 unsolicited offers for franchises in other
jurisdictions. Should the Company decide that it wishes to derive revenues from
franchising its concept (including through having third parties operate its
business centers in cities outside of Canada), it will extensively review these
and any other offers it may receive prior to engaging in such franchising
activities. The Company has not determined under what circumstances, if any, it
will engage in franchising or in joint ventures and no terms or contracts have
been presented to the Company in which it is interested.
Employees
The Company is establishing its base of operations in Montreal. The Company is
in the process of evaluating potential sites for its business center and expects
to open same in April 2000. This facility will be staffed seven days a week
during regular business hours by qualified representatives and customer service
personnel. The Company currently employs 37 people full-time. The Company's
relationship with its employees is good. None of the Company's employees is a
member of a labor union.
The Company is in the process of bolstering its management team by adding senior
executives with a track record in the information technology industry,
e-commerce, and/or transaction processing. The Company also plans to employ 15
regional sales managers, one new sales executive and ten administrative staff
members for the processing of e-commerce merchant applications. On the technical
side, the Company plans to hire two people for each of its technical support and
administrative support staffs. Over the next three years, the Company plans to
open business centers in Toronto, Vancouver, Calgary and Ottawa, where its
qualified representatives and customer service personnel will help the Company's
e-merchants in connection with their getting on and conducting e-commerce on the
Internet. The Company believes that each business center will be staffed by
approximately 35 people, including graphic designers, strategy agents, marketing
agents, performance analysts and computer-security-related personnel. In support
of these centers, the Company believes it will be required to hire an estimated
additional 25 people annually for a three years to perform general and
administrative tasks. There is no assurance that these estimates will reflect
the actual growth of the Company's business, however.
Market
The Internet began as a source of free information. It is now growing into a
medium for online commerce as well. Estimates vary greatly as to anticipated
Internet-generated revenues in even the near future, but would appear to be a
relatively untapped market. Research cited by the chief executive officer of a
well-known computer industry company forecasts that e-commerce transactions will
acount for $2 trillion, or about 10 percent of the U.S. gross domestic product
by 2002. According to a report by the Retail Council of Canada and IBM published
in June 1999 entitled "The Race is on: Who Will Win Canada's Internet Shoppers,"
the Canadian e-retail market (business to consumers) was estimated to be $450
million in June 1998 and to be $8.5 billion in 2003 (based on a conversion rate
of Cdn.$1.00=US$0.662). Vice President Gore noted in a White House report dated
June 21, 1999 that growth in e-commerce has far outpaced even the most
optimistic projections, citing early 1998 expert estimates that Internet
retailing would reach $7 billion by year 2000 and later statistics indicating
that by late 1998, online sales had already reached
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between $7 billion and $15 billion. Moreover, a study from the Boston Consulting
Group published in Shop.org in July 1999 states that in 1998, the number of
e-commerce transactions increased by 200%.
For Internet use to grow, consumers must be confident in the security measures
taken by providers. According to an article in InternetNews.com, the concern of
Internet users about credit card fraud while shopping online has fallen to 21%
which is about half of what it was in 1997. The Company has addressed the
security issues by utilizing the Transact4 software, which contains antifraud
technology.
Each day new websites are launched that are easier than ever to use and have
increased sophistication and appeal. These websites offer an increasing array of
goods and services including computer hardware and software, travel planning
services, entertainment, financial services, and education. In order to sell
these goods and services successfully, e-merchants must accept and be able to
process transactions on widely held credit cards such as MasterCard and Visa,
have the capability to ship their goods economically (but reliably), and have
the ability to market their products and services and obtain information and
generate reports and invoices from their sales. The Company believes that few
new e-merchants are in a position to establish all of these capabilities
efficiently, and believes that its providing e-merchants with one integrated
source for all of these functions will be more attractive to the Company's
intended market.
The Company believes that primary market for the Company's products and
services, and the companies to which the aforementioned products and services
offer the greatest benefit, are small and medium-sized businesses that are
already established as "brick and mortar" physical locations that can handle a
sharp increase in volume. The Company will initially focus its sales efforts in
Montreal, then direct its efforts to other larger cities in Canada: Toronto,
Vancouver, Calgary and Ottawa. The Company has long-term plans to export its
concept to Europe, the United States, Asia and South America. There is no
assurance, however, that such expansion will take place, in light of the
Company's need for immediate capital. The Company will not be focusing on any
particular industry or product; however, management believes that stores selling
moderately to higher priced and easily and inexpensively shipped goods (for
example, perfume) would be good candidates to become e-merchants utilizing the
Company's services.
The Company also believes that large merchants may also be a viable market,
although the Company will market its products and services in a different manner
to such companies. See "Sales and Marketing."
Sales and Marketing
The Company intends to launch a direct selling strategy intended to secure a
strong position in the market place. The marketing campaign will focus on
established, small and medium-sized businesses with the potential for sharp
increases in sales.
In Montreal, the Company has engaged CPM Cartier Promotion Marketing ("CPM") to
help develop the marketing strategy of the Company. CPM also assisted in
planning and producing the required communication tools for the launch campaign
of the Company's e-business solution. CPM relies on the following
multi-disciplinary team of marketing and communication companies to assist in
generating the Company's marketing strategy:
o Leger & Leger for it marketing research;
o Serge Bujold and Associates; and
o Morin des Roberts to plan and manage its public and investor
relations.
An advertising, promotion and public relations campaign was launched in November
1999 and will extend into early 2000. CPM has set up a multi-media marketing
campaign that will be monitored with assistance from and Leger & Leger, who will
also help CPM in gauging and adjusting the marketing strategy with the
perception and attitude of the targeted markets toward the Company's e-business
solution.
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Integral to all of these strategies is the hiring of experienced business
development and sales professionals. The Company commenced hiring sales
professionals in August 1999. The sales team will be divided in three sub-teams.
One team will be a "ground force" that will visit potential merchants. A second
team will be located in a call center, as some agents will be responsible for
telemarketing. Initially the Company plans that the sales team will be composed
of 15 representatives, some of whom will focus on particular industries.
The third team, initially staffed by five to ten sales people, will be located
in the Montreal business center, and will direct its efforts at those
e-merchants within the Company's target market that are not computer or Internet
familiar. The Company believes these e-merchants will be attracted by these
"bricks and mortar" business centers, which are also staffed with support
personnel to assist the Company's e-merchants in a "face-to-face" setting. At
these business centers, the Company will work with e-merchants to create a
business development strategy and a marketing plan. Performance analysis is also
offered at these centers after the strategies are implemented. Additionally, the
Company plans to have graphic design and other personnel available so that the
e-merchant and the Company together can generate the integrated product that the
Company is promoting. The Company's first business center will be in Montreal,
with other centers planned for Toronto, Vancouver, Calgary and Ottawa within the
next three years. Long-term goals include marketing efforts and business centers
in Europe, the United States, Asia and South America.
The Company's management will address large merchants with respect to the
Company's products and services. The Company believes that this change in
methodology is appropriate because of the following factors:
o their technological sophistication and internal marketing and Internet
expertise;
o a brand name that they might not want consumers to confuse with
Planet411.com; and
o the greater likelihood of existing processes and/or technology that
would require the Company to focus on integration with external
factors.
Competition
The market for small and medium-sized e-merchants who are looking to set up
stores on the Internet is becoming highly competitive, with no substantial
barriers to entry, and the Company expects that competition will continue to
intensify. The market for the Company's products and services aimed at these
merchants has only recently begun to develop, is rapidly evolving and is likely
to be characterized by an increasing number of market entrants with competing
products and services. Although the Company believes that the diversity of the
Internet market may provide opportunities for more than one provider of products
and services comparable to the Company's, it is possible that one or a few
providers may in the future dominate one or more market sectors. Management does
not believe that there are any companies that dominate the market for products
and services comparable to the Company's, although to the extent that the
Company competes with portals, the portals would dominate based on name
recognition alone. The Company expects that the number of competitors will grow
as e-commerce grows. Management believes that the Company's products and
services, once implemented, will compare favorably to other companies' products
and services with respect to the competitive factors listed below, but there is
no assurance that e-merchants in the Company's target market will make a similar
assessment.
The Company believes that the primary competitive factors for companies seeking
to provide comparable products and services to e-merchants are
o the integration and completeness of the products and services provided
- whether all products and services can be obtained from or through
one provider. These include credit card access, delivery services for
the products sold, ease-of-use of software used to set up store and
transaction-processing software;
o the ability of the provider to customize the products and services
sought;
o marketing and performance analysis assistance;
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o fees and fee structure - the percentage of the merchant's sales the
provider receives, if any; the up-front fees (and related financial
risk to the e-merchant) and subsequent transaction costs;
o customer support, particularly technical support; and
o ability of the provider to establish its own brand recognition and to
assist merchants in establishing their own brand recognition.
The Company classifies its competition as follows:
o local suppliers of Internet services;
o consulting firms and manufacturers of computer equipment; and
o suppliers of integrated e-business solutions.
Local Suppliers of Internet Services
Local suppliers of Internet services specialize in the development of Web sites.
A few of them offer e-commerce tools such as "shopping cart" software, hosting
and transaction processing However, the Company believes that none of these
companies offers either an e-business solution that is as complete, integrated
or scalable as the Company's or the service in terms of e-commerce strategy and
marketing offered by the Company (whereas the Company's business model is based
on the selling of technological tools and consulting services). Canadian
companies falling into this category include Performance Net, Business Dynamics,
Digital Commerce SWL, Strategic Profit, IBG Internet Broker Group, Hyper
Connect, Shadez and IrDesign.
Management believes that the main advantage of these companies is that they are
close to their clientele, but that the Company's products and services offer the
following advantages (in addition to that noted in the preceding paragraph):
o the Company provides its merchants with credit card merchant numbers;
o the Company provides customer service, both in the business centers
and the 24-hour seven-day phone answering service;
o the Company has made shipping arrangements for its e-merchants;
o the Company offers assistance in terms of e-commerce strategy and
marketing; and
o the Company's e-business solution integrates all of the foregoing
components and others that the Company believes are needed to do
e-business.
Consulting Firms and Manufacturers of Computer Equipment
These companies offer their clients a customized e-business solution. These
kinds of solutions are of good quality but they are expensive and, the Company
believes, are oriented towards large companies and not targeted nor readily
applicable to small and medium-sized businesses. Competitors fitting into this
group are Dell, DMR-Metalink, BCE Emergis and Bellamy Jordan.
The main advantage of such companies is their ability to develop e-business
solutions that address the specific needs of their clients and that can be
integrated in their current business processes. However, relative to the
integrated solution being offered by the Company, management believes that these
types of e-business solutions involve relatively high development costs and
significant operational costs, while lacking the overall consulting relationship
fostered by the Company.
Suppliers of Integrated E-Business Solutions
These competitors of the Company offer merchants who want to start an online
business integrated e-business solutions that comprise many of the fundamental
components required to do e-commerce. Their business model usually involves a
monthly fee and transaction costs or a free base service and certain fees for
additional services. In the United-States, companies like Yahoo Stores, i-mall,
Lycos, Big Step, Econgo
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and FreeMerchant are involved in such activities, and have the greatest name
recognition among the Company's competitors. In Canada, Canada Shop, Clic Shop
and nGage are illustrative of this kind of competitor.
One competitive disadvantage with respect to these larger and more established
competitors is that they offer e-merchants the benefit of increased exposure,
with reasonable pricing plus a search engine and a location on a portal. The
Company believes that the focus of such companies has not been on e-commerce in
the same way that the Company has put together a fully-integrated package of
products and services for its e-merchants, which (in addition to the mixing of
traditional and online marketing tools and physical locations for face-to-face
conducting of business) management believes is the way that the Company will
distinguish itself from the majority of these companies. In Canada, the Company
believes that its competitive advantages against these companies are its
providing of customer service, shipping arrangements, assistance in terms of
e-commerce strategy and marketing, and a physical business centre for
e-merchants.
The Company also competes to a limited extent with traditional forms of media,
such as newspapers, magazines, radio and television, insofar as advertising
through these media can be viewed as an alternative to a merchant operating a
website. The traditional media companies are likely to have greater capacity
than the Company to invest in or to otherwise acquire the Company's competition.
The Company believes that the principal competitive factors in attracting
merchants to use its products and services instead of traditional media are
o the ease-of-use of the Company's products and services;
o the extent to which the Company can assist the merchant in becoming
comfortable with the internet, including ongoing support;
o the ability of the consumer to execute transactions directly through
the system; and
o the cost-efficiency of the Company's products and services in reaching
and attracting potential consumers, as compared to traditional media
providers.
The Company's existing competition in the internet sector, by virtue of their
already being operational and revenue-generating, all have greater name
recognition, established customer bases and greater financial, technical and
marketing resources than the Company. Traditional media companies have
significantly greater resources. Such competitors are able to undertake more
extensive marketing campaigns for their products and services, and may be able
to adopt more aggressive advertising pricing policies and make more attractive
offers to potential employees, agents and third parties. There can be no
assurance that the package of products and services provided by the Company will
be found to be less useful or cost-efficient than those provided by other
companies. Nor can there can be any assurance that the Company's competitors and
potential competitors will not develop products and services that are equal or
superior to the Company's. There is also no assurance that the third party
providers with which the Company has established strategic arrangements will not
sever or elect to renew these arrangements upon the respective termination dates
thereof, whether due to perceived benefits from other sources or other currently
unknown reasons.
Intellectual Property
The Company does not have any registered patents, trademarks, licenses,
franchises or concessions. The Company may in the future attempt to obtain all
or any of the foregoing. The Company is not currently exploring the viability of
franchising or licensing out its intellectual property interests, and is neither
a franchisee or licensee under any material agreements, other than its
arrangements with Open Market, pursuant to which the Company is granted rights
in the software that it makes accessible to e-merchants to conduct business over
the Internet.
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Research and Development
The Company is a development stage company. Management believes that
substantially all of the operating and administrative expenses are attributable
to the researching and developing the concept described in this registration
statement. The Company is not aware whether and to what extent its predecessors
spent funds on research and development during the years prior to July 1998.
However, as none of the Company's predecessors was engaged in a business
resembling that described herein, any amounts spent by such predecessors were
not used to fund research and development for the operations of the Company as
currently operated.
The Company
Planet411.com Corporation, the Company's predecessor, was incorporated on April
23, 1990, in the State of Nevada in the United States, as Investor Club of the
United States. The name was changed to Noble Financing Group Inc. (in 1992),
then to Newman Energy Technologies Incorporated (1998), then World Star Asia,
Inc. (1998), Comgen Corp. (1998) and then to Planet411.com Corporation on
February 11, 1999 to reflect its current business objectives. Planet411.com Inc.
was incorporated on July 13, 1999. Planet411.com Corporation was merged with and
into Planet411.com Inc. on October 6, 1999 for the sole purpose of changing the
Company's jurisdiction of incorporation to Delaware.
The Company's headquarters are presently located at 440 Rene Levesque West,
Suite 401, Montreal, Quebec Canada.
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ITEM 2. FINANCIAL INFORMATION
Selected Financial Data
The following selected financial data as of June 30, 1999 and for the 11-month
period ended June 30, 1999, are derived from and qualified by the audited
consolidated financial statements of the Company that are included elsewhere in
this registration statement. The following selected financial data as of
September 30, 1999 and for the two month period ended September 30, 1998 and the
three month period ended September 30, 1999 are derived from and qualified by
the unaudited financial statements of the Company that are included elsewhere in
this registration statement. The data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", the audited financial statements, related notes and the other
financial information included elsewhere in this registration statement.
Statement of Consolidated Operations Data
Operating and administration expenses
<TABLE>
<CAPTION>
11 Months ended 2 months ended 3 months ended
June 30, 1999 Sept. 30, 1998 Sept. 30, 1999
------------- -------------- --------------
<S> <C> <C> <C>
Salaries $ 246,733 $ 6,751 $ 180,374
Rent 52,472 7,165 23,355
Internet connection 58,856 4,646 6,396
Advertising 47,950 -0- 18,934
Promotion 26,702 628 4,592
Professional fees 213,362 6,596 69,973
Travel 29,993 -0- 7,387
Service Contracts 65,679 -0- -0-
Interest expense 3,051 548 565
Other expenses 239,748 8,587 115,138
--------- --------- ---------
Net loss for the period $(984,546) $ (34,921) $(426,714)
--------- --------- ---------
</TABLE>
Consolidated Balance Sheet Data June 30, 1999 Sept. 30, 1999
- ------------------------------- ------------- --------------
Current Assets $ 144,833 $ 150,605
Capital Assets 968,591 950,466
Total Assets 1,127,119 1,101,071
Current Liabilities 348,371 404,626
Total Liabilities 640,616 699,903
Management's Discussion and Analysis of Financial Position
and Results of Operations
General
The Company's only material financial transactions have been capital raising,
paying costs of forming the Company and establishing relationships and/or
entering into contracts with marketing and public relations firms, financial
institutions and the various other service providers described herein. The
Company is a corporation with a limited operating history. It (through its
current subsidiary 9066) commenced its present operations on July 31, 1998. It
is a development stage company with no operating revenues to date. The Company's
revenues will be an industry-based percentage of the gross sales of its
e-merchants, which the Company estimates will average four percent (4%). The
Company has insufficient operating
12
<PAGE>
history on which to base an evaluation of its business and prospects. Any such
evaluation must be made in light of the risks frequently encountered by
companies in their early stages of development, particularly for companies in
the rapidly evolving sector related to the Internet. Among the risks faced by
the Company are the absence of an established customer base, lack of a
significant presence in the marketplace, untested operating capacity, an
unproven business model and the immediate and long-term needs for additional
capital. There is no assurance that the Company will be successful in addressing
these risks and if it fails to do so its financial condition and results of
operations would be materially adversely affected.
Results of Operations.
Because the Company's date of inception (for accounting purposes) was July 31,
1998, no period to period comparison of operations is available other than for
the two- and three-month periods ended September 30, 1998 and 1999,
respectively. The Company (through its predecessors) did not conduct any
business that would yield a meaningful analysis of results of operations prior
to July 31, 1998, because these businesses were completely unrelated to that
described in Item 1 of this registration statement. For example, from 1992 to
1998, the Company was known as Noble Financing Group Inc., which the Company's
management believes was a company seeking investment opportunities. In 1998, the
Company's name was changed to Newman Energy Technologies Incorporated as a show
of good faith while its then current management was negotiating a technology
deal (which deal was never consummated). In 1998, as World Star Asia, Inc., the
Company was in the business of selling franchises to make and distribute mini
trucks, until a third party backed out of a material transaction related to such
activities. (Management does not believe any material transactions were ever
consummated by the Company as World Star.) After the 1998 name change to Comgen
Corp., the Company was seeking (but to the knowledge of the Company's current
management never consummated any) potential investments.
Operating and administrative expenses incurred through June 30, 1999 and for the
three months ended September 30, 1999 were $984,546 and $426,714, respectively,
and represent the cost of forming the Company, building its infrastructure,
hiring and paying employees, and advertising and marketing. For the two month
period ended September 30, 1998, the Company incurred operating and
administrative expenses of only $34,921. The increases in the September 1999
figures over the September 1998 figures reflect the following:
o the Company had more employees, and those employees were earning
higher salaries;
o increased professional fees were incurred, primarily in connection
with the Company's year end audit, the preparation of securities
documents and the Company's efforts to obtain bank financing;
o increased advertising and promotion costs were incurred, as the
Company had not yet begun to concentrate on marketing its initial
business plan during its infancy in 1998; and
o increased miscellaneous other costs, commensurate with the Company's
increased activities.
As of September 30, 1999, the Company had an accumulated deficit of $1,411,260,
compared with $34,921 as of September 30, 1998.
Liquidity and Capital Resources.
On September 17, 1999, the Company issued 107,800 Units in consideration of an
aggregate of $539,000. Such consideration had previously been received by the
Company as an advance in respect of such private placement. Each of such Units
consisted of (a) one share of common stock, par value $0.001 ("Common Stock"),
and (b) one warrant to purchase another share of common stock at a strike price
of $5.00.
On October 15, 1999, the Company received a subscription for 233,340 Units at a
price of $1.50 per Unit. Each Unit consisted of (a) one share of Common Stock
and (b) one warrant to purchase another share of common stock at a strike price
of $1.50. The aggregate consideration of $350,010 had previously been advanced
to the Company in respect of such private placement. The shares were issued in
December 1999.
13
<PAGE>
A second subscription for 333,340 of such Units (at the same price of $1.50 per
Unit) was received and accepted by the Company in December 1999. The
consideration for such Units has been received by the Company and the Company
expects to issue the securities comprising such latter Units prior to the end of
December 1999.
The Company has had no other financings. These Units represent the sole source
of the Company's working capital.
On September 30, 1999, the Company had $15,239 in cash available to fund
operations. The Company will require additional financing of $800,000 through
sales of Units or other securities within two months to continue operations
through April 2000, at which time the Company believes it will begin generating
positive cash flow. The Company also has recently begun looking for alternative
sources of credit, in light of its having terminated its arrangements with a
surety and a reinsurance company when (after all appropriate documentation and
financial support in the form of pledges of shares were delivered by the
Company) reinsurance certificates were never delivered to a commercial lender
who was relying on same for its collateral. The Company is considering what, if
any action, it has available to it in connection with such agreements. In
addition to seeking a new credit facility, the Company is also attempting to
raise approximately $23 million through private transactions involving debt
and/or equity, which amount it believes will be sufficient to fund its
operations through the next 24 months, including the promotion of the Company's
products and services, the establishment of new business centers throughout
Canada (estimated at $673,000 per business center) and the completion of the
Company's required infrastructure in terms of additional equipment and
personnel. The failure to obtain a credit line or additional financing within
the next two months would have a material adverse effect on the financial
position and results of operation of the Company. There is no assurance that the
Company will be able to raise any more working capital through equity financings
or that such credit line is available at commercially reasonable rates. Any such
financing may be at terms that are dilutive to the Company's existing
shareholders.
Market Risk
Credit Risk
Financial instruments that potentially subject the Company to concentrations of
risk consist primarily of capital leases, a term deposit and advances to
directors and shareholders. The cash is held by a high-credit quality financial
institution. The term deposit was purchased from a high-credit quality financial
institution.
Interest Rate Risk
The Company's exposure to interest rate risk is as follows:
Cash Non-interest bearing
Term deposit Fixed interest rate (3.75%)
Receivables from directors and shareholders Non-interest bearing
Accounts payable and accrued liabilities Non-interest bearing
Short-term Investments
Short term investments consist of the following:
Sept. 30, 1999
Term deposit, 3.75%, maturing April 19, 2000 $ 10,080
14
<PAGE>
Long-term debt
Long term debt consists of the following:
<TABLE>
<CAPTION>
June 30, 1999 Sept. 30, 1999
------------- --------------
<S> <C> <C>
Obligations under capital leases, 16% payable in
monthly installments of $883, capital and interest, $14,949 $12,725
maturing in February 2001
Installments due within one year 8,834 9,088
------- -------
$ 6,115 $ 3,637
------- -------
As of June 30, 1999, the installments on
long-term debt for the next
years are as follows:
2000 $10,595
2001 6,460
-------
Total minimum lease payments 17,055
Interest included in minimum lease payments 2,106
-------
$14,949
-------
</TABLE>
Fair Value
Due to their short-term maturity, the carrying values of cash, the term deposit
and the accounts receivable and payable and accrued liabilities are reasonable
estimates of their fair values. Based upon the interest rate, the maturity and
current discount rates, the estimated value of the Company's long-term debt is
approximately equal to its carrying value.
Year 2000 Issues.
Many currently installed computer systems are not capable of distinguishing 21st
century dates from 20th century dates. As a result, beginning on January 1,
2000, computer systems and software may produce erroneous results or fail unless
they have been modified or upgraded to process date information correctly.
Significant uncertainty exists in the software, internet and other industries
concerning the scope and magnitude of problems associated with the century
change. The Company recognizes the need to ensure that its operations will not
be adversely affected by Year 2000 software problems.
The Company has completed its assessment of the Year 2000 issues in the software
contained in its internal systems and those provided by Open Market Inc. and has
determined that the software and hardware material to the Company's business are
Year 2000 compliant. Based on this assessment, the Company has determined that
the consequences of the Year 2000 issues with respect to it will not have a
material effect on its business, results of operation or financial condition.
The assessment of the Company's internal harware and software was completed by
Coss N Crew, a company owned by Varujan Tasci, the Chief Technical Officer of
9066. See Item 7. The assessment of the software and hardware used by Open
Market Inc. was performed by The Toronto-Dominion Bank as part of its due
diligence in connection with establishing the credit card arrangements. See
"Business - Products and Services." The Toronto-Dominion Bank attributed no
incremental costs to the Year 2000 readiness analysis. The amount paid to Mr.
Tasci was under $6,000. All software and systems installed hereafter will be
tested and verified for Year 2000 readiness at the time of installation at
minimal additional cost.
There are many third parties that have not been identified by the Company whose
Year 2000 problems would have a material adverse affect on the Company. For
example, the Company's proposed business depends on the smooth operation of the
Internet. Should Year 2000 problems experienced by any third party materially
impede the operation of the Internet, the Company will be materially adversely
affected. As a result of the foregoing, the Company cannot determine whether it
will be materially adversely affected by the Year 2000 problems of third
parties.
15
<PAGE>
The reasonable worst case Year 2000 scenario for the Company would include the
substantial or complete shutdown of the Internet or the banks which provide it
with credit and processing services or the major credit card companies. This
eventuality would cause the Company to cease operations until the Year 2000
problems were corrected. The Company has no contingency plan for dealing with
this scenario and is not planning to develop one.
Item 3. PROPERTIES.
The Company does not own any real property. In December 1999, it increased its
total leased office space by approximately 8,000 square feet, to an aggregate of
17,100 square feet, all of which is at the address of the Company's headquarters
in Montreal. The Company's two existing real property leases covering the
initial 9,100 square feet leased were amended to expire concurrently on May 31,
2003. Aggregate payments under the three real property leases are expected to be
$553,691 through such expiration date, with minimum lease payments for the next
four years (the duration of the leases) of $162,056 in 2000, 2001 and 2002, and
$67,523 in 2003. (All of the foregoing amounts assume a conversion rate of
Cdn.$1.00=US$0.673.) The Company has the right to renew the leases for all of
its office space through May 2006. The Company believes that its present
facilities as so increased are adequate to meet its current and foreseeable
business requirements. The Company also believes that suitable facilities will
be available at commercially reasonable rates for its business centers in other
Canadian cities at such time as the Company is prepared to commence operations
outside of Montreal.
Item 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth the beneficial ownership of the Company's Common
Stock by (i) each person known by the Company to beneficially own five percent
or more of the Company's outstanding Common Stock, (ii) each of the Company's
executive officers, directors and director nominees and (iii) all of the
Company's executive officers and directors as a group. Except as otherwise
indicated, all shares of Common Stock are beneficially owned, and investment and
voting power is held, by the person named as owner.
Name and Address of Number of Shares Percentage Ownership
Beneficial Owner Beneficially Owned
Bank August Roth AG 15,682,401 66.5%
Bellariastrasse 23
Zurich, Switzerland
Joseph Farag 11,873,814(1)(2) 33.1
Stephane Chouinard 11,873,814(1)(2) 33.1
Johnson Joseph 6,079,754(1)(3) 20.3
9064-2448 Quebec Inc. 6,079,754(1)(3) 20.3
Ec-Assiste Inc. 3,300,000 13.9
Varujan Tasci 1,519,939(1) 6.0
Jonathan Levinson 250,800(1)(5) 1.0
Executive Officer and Directors 22,436,185 48.5
As a group (4)(5 Total)
(1) Other than 800 shares of Common Stock owned by Jonathan Levinson, all of
such shares are Exchangeable Shares in 3560309 Canada Inc., which are
currently exchangeable into shares of Common Stock. Voting rights with
respect to such shares (embodied in one issued and outstanding share of
Special Voting Stock) are jointly held by Joseph Farag, Stephane Chouinard
and Johnson Joseph, as mandataries under the Voting Agreement described
below, which requires the mandataries to adhere to voting instructions
received from those for whom the mandataries hold such voting rights.
16
<PAGE>
(2) Includes (a) 2,200,000 Exchangeable Shares owned personally by each such
beneficial owner, (b) 9,673,814 Exchangeable Shares owned by a holding
company, the equity and control of which is shared equally by such
beneficial owners, and (c) 511,878 Exchangeable Shares owned by a company
in which Messrs. Chouinard and Farag serve as dire ctors and own all of the
voting shares. Each of Messrs. Farag and Chouinard disclaim beneficial
ownership of one-half of the Exchangeable Shares described in clause (b)
and all of the Exchangeable Shares described in clause (c) of the preceding
sentence.
(3) All of such Exchangeable Shares are beneficially owned by 9064-2448 Quebec
Inc., a company that is one-quarter owned by Mr. Joseph and in which he
serves as one of four directors. Mr. Joseph holds legal title to such
Exchangeable Shares as a nominee of such company. Mr. Joseph disclaims
beneficial ownership of all but 1,462,938 of such Exchangeable Shares.
(4) All parties other than Bank August Roth AG, have an address identical to
that of the Company. (ec-Assiste Inc. is owned and controlled by a
non-management employee of the Company and Mr. Joseph is a principal of
9064-2448 Quebec Inc.) Beneficial ownership is disclaimed as to 5,128,694
of such Exchangeable Shares.
(5) Includes 250,000 Exchangeable Shares and 800 shares of Common Stock.
Item 5. DIRECTORS AND EXECUTIVE OFFICERS
The names, ages, and offices of directors and executive officers of the Company
are set forth below:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY
- ---- --- ---------------------
<S> <C> <C>
Joseph Farag 30 President, Director
Stephane Chouinard 29 Vice President, Corporate Development; Secretary; Director
Johnson Joseph 27 Vice President, Product Development; Treasurer; Director
Jonathan R. Levinson 30 Vice President and Legal Counsel (effective January 1, 2000)
Varujan Tasci 37 Chief Technical Officer of the company's operating
subsidiary
</TABLE>
All offices and directorships are held for a term of one year or until a
successor is duly elected and qualified.
Joseph Farag is a co-founder of the Company and has been President and a
Director of the Company since July 1998. From 1997 through 1998 Mr. Farag was a
director and executive officer of 3415783 Canada Inc. (doing business as
"CorporationNet"), which was in the business of commercializing an electronic
cash "Smartcard" known as the C.S.I. Vigil. From 1994 to 1997, Mr. Farag served
as a consultant to businesses catering to Montreal's nightlife. Specifically, he
was President of Club Crescent from March 1994 to November 1997 and also Manager
of Operations of Catacombs and "K" from April 1996 to June 1996.
Stephane Chouinard is a co-founder of the Company and has been Secretary and
Vice President, Corporate Development for the Company since July 1998. From 1997
through 1998, Mr. Chouinard was a director and executive officer of 3415783
Canada Inc. (doing business as "CorporationNet"), for whom he negotiated the
exclusive worldwide rights related to the C.S.I. Virgil Smartcard. Between 1995
and 1997, he was an independent marketing/ communication consultant for large
adult movie distributors. From 1994 to 1995, Mr. Chouinard was a sales
representative for a Sauturn/Saab/Isuzu automobile dealership. From 1993 to
1994, Mr. Chouinard was a sales manager for Les Boulangeries St. Augustin, a
major Canadian producer and distributor of baked goods.
Johnson Joseph has been Vice President, Product Development and Treasurer of the
Company since July 1998. Since April 1998, Mr. Joseph has been a director and
executive officer of 9064-2448 Quebec Inc. (which did business as CorporationNet
Web Development), which was intended to be the Web Development division of
CorporationNet, but which now functions as a holding company for the
Exchangeable Shares owned by Mr. Joseph and others. From 1997 through April
1998, he was Development Counselor of an Internet hub called "CityView". From
1996 through 1997, Mr. Joseph
17
<PAGE>
was a wide receiver for the Ottawa Roughriders of the Canadian Football League.
From 1993 through 1996, Mr. Joseph attended Texas Tech University, where he
studied business administration and finance.
Jonathan R. Levinson has served as outside counsel to the Company since its
inception in July 1998 and, effective January 1, 2000, will be joining the
Company as a Vice President and in-house Legal Counsel. From 1997 through 1999,
Mr. Levinson has been a practicing attorney in Montreal. From 1995 through 1996
he was employed at Mendelsohn, Rosentzveig Shacter, a law firm in Montreal. From
prior to 1994 through 1995, when he graduated, Mr. Levinson was a law student at
McGill University in Montreal, from which he received Bachelor of Laws and
Bachelor of Civil Law degrees. Mr. Levinson has been admitted to the bar of New
York State, Massachusetts and the Province of Quebec.
Varujan Tasci has been with the Company as Chief Technical Officer of 9066 (the
Company's operating subsidiary) since July 1998. He is the founder of COSS'N
CREW Corp., a computer consulting firm, which he owns and for which he has
served as President and Director for over five years prior to joining the
Company.
Item 6. EXECUTIVE COMPENSATION.
Directors will not be paid for their attendance at meetings, nor receive a
stated salary as a director over and above their executive salaries.
The Company paid no executive officer more than $100,000 in 1998. Mr. Farag's
salary (paid by 9066) was $993 in 1998 and is $67,300 in 1999. The foregoing
figures are based on a weighted average conversion rate of US$0.662 = Cdn.1.00
for 1998 and a weighted average conversion rate of US$0.673 = Cdn.$1.00 in 1999.
Item 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Merger Agreement
The Company, pursuant to a merger agreement dated as of September 30, 1999, is
the surviving company of the merger of Planet411.com Corporation, a Nevada
corporation ("Mergeco"), with and into Planet411.com Inc., a Delaware
corporation. Pursuant to the merger agreement, the separate legal existence of
Mergeco ceased on October 6, 1999, the effective date of the merger. The total
assets and liabilities of the Company upon the effectiveness of the merger
equalled those of Mergeco immediately prior to the merger. The articles of the
Company are substantially similar to that of Mergeco, with the primary
exceptions being that (a) there are 69,999,999 shares of Common Stock, par value
$0.001 authorized, not 300,000,000 shares, and (b) certain provisions of
Mergeco's articles have been conformed to reflect the Delaware General
Corporation Law. The Company was capitalized upon the consummation of the merger
agreement: each of Mergeco's holders of common stock received one share of
Common Stock in the Company pursuant to the merger agreement for each share of
common stock of Mergeco owned by such stockholder immediately prior to the
merger, and the share of Special Voting Stock issued by Mergeco was exchanged
for one share of Special Voting Stock in the Company. Mergeco's obligations
under outstanding warrants were assumed by the Company. The exchangeable shares
(the "Exchangeable Shares") of 3560309 Canada Inc. ("Canco") formerly
exchangeable into shares of Mergeco common stock are now exchangeable into
shares of the Company's Common Stock.
Combination Agreement and Voting, Support and Exchange Trust Agreement
Pursuant to a Combination Agreement entered into as of April 20, 1999 among
Mergeco, Planet 411 (Nova Scotia) Company (Mergeco's wholly-owned subsidiary,
hereinafter "Novaco"), Canco, 9066-4871 Quebec Inc. ("9066") and the
shareholders of 9066, Canco acquired all of the issued and outstanding shares of
9066 in consideration for the issuance to the former shareholders of 9066 of
25,094,996 Exchangeable
<PAGE>
Shares and 8,400 Preferred Shares of Canco. The Preferred Shares of Canco are
convertible into Canco Exchangeable Shares on the basis of one Preferred Share
and Cdn.$5.00 ($3.37 based on a weighted average exchange rate for 1999 of
US$0.673 = Cdn.$1.00) for one Exchangeable Share. Pursuant to the Combination
Agreement, the Company has also issued one share of Special Voting Stock, which
is held for the benefit of the holders of the Exchangeable Shares of Canco. The
share of Special Voting Stock entitles the holder to such number of votes as is
equal to the number of Exchangeable Shares outstanding from time to time that
are not owned by the Company or its subsidiaries. This agreement has been
assigned to and assumed by the Company, pursuant to the aforementioned merger
agreement and an assignment and assumption agreement.
On May 13, 1999, Mergeco, Canco, 9066, Novaco and the Company's three directors,
in their capacities as mandataries for Mergeco's shareholders, entered into a
Voting, Support and Exchange Trust Agreement (the "Voting Agreement"), as
required under the Combination Agreement. This agreement also has been assigned
to and assumed by the Company, pursuant to the merger agreement and the
aforementioned assignment and assumption agreement. In addition to the rights
with respect to the exchange of the Exchangeable Shares in Canco for shares in
the Company described in the paragraphs below, the Voting Agreement and Canco's
articles each provides that dividends and/or distributions of any kind may not
be paid on or with respect to the Company's Common Stock unless Canco pays the
same amount of dividends and/or distributions, as applicable (or otherwise
distributes the economic equivalent of same), to the holders of Exchangeable
Shares. Record and payment dates for all dividends and distributions by the
Company and Canco are to be identical. Furthermore, the Voting Agreement and
Canco's articles each provide that the Company may not effect (a) any
subdivisions, consolidations or reclassifications of the Company's Common Stock
or (b) any merger of the Company (or other similar corporate event) affecting
the Company's Common Stock, without the prior approval of the holders of the
Exchangeable Shares if such action would cause an economic change in the rights
of the holders of the Exchangeable Shares.
For purposes of the preceding discussion, the three trustees under the Voting
Agreement, Messrs. Farag, Chouinard and Joseph, are acting as mandataries under
a special mandate executed by 9066 and its shareholders. The mandataries'
purposes thereunder are to sell, directly or indirectly, all of the 9066 shares
to the Company, to hold all of the Exchangeable Shares, to hold the share of the
Company's Special Voting Stock (including the exercising the voting rights
attaching thereto), and to exercise the retraction rights attaching to the
Exchangeable Shares. The Voting Agreement provides the mechanisms for carrying
out and administering these purposes.
Canco Exchangeable Shares
In addition to the rights appurtenant to the Exchangeable Shares of Canco
described in the preceding discussion of the Voting Agreement, the Exchangeable
Shares of Canco effectively may be exchanged at any time by their holders, on a
share-for-share basis, for shares of Common Stock of the Company, as follows:
(a) The Exchangeable Shares are redeemable at the option of the holder thereof
in consideration for shares of the Company's Common Stock plus accrued and
unpaid dividends thereon. (b) Alternatively, under the terms of the Voting
Agreement, the Company granted to the Trustee thereunder (as mandatary) for and
on behalf of, and for the use and benefit of, the beneficial owners of
Exchangeable Shares (other than subsidiaries of the Company) the right (the
"Exchange Right"), upon the occurrence and during the continuance of an
insolvency or liquidation event such as a bankruptcy or comparable event, to
require the Company to purchase from each or any of such beneficial owners all
or any part of the Exchangeable Shares held by such beneficial owner, all in
accordance with the provisions of the Voting Agreement. (c) The rights of the
beneficial holders are subject to the right of Novaco to acquire such
Exchangeable Shares from the owner thereof, for generally the same consideration
by virtue of Novaco's call right with respect to the Exchangeable Shares. The
purchase price payable by the Company for each Exchangeable Share to be
purchased by the Company shall be an amount per share equal to (a) the current
price of a share of the Company's common stock on the last business day prior to
the day of closing of the purchase and sale of such Exchangeable Share, which
shall be satisfied in full by causing to be delivered to such holder one share
of the Company's common stock, plus (b) accrued and unpaid dividends, if any.
The purchase price for each such
<PAGE>
Exchangeable Share so purchased may be satisfied only by the Company delivering
or causing to be delivered to the Trustee, on behalf of the relevant beneficial
owner, one share of the Company's common stock and a check for the balance, if
any, of the purchase price. To cause the exercise of the Exchange Right by the
Trustee, the aforementioned beneficial owners shall deliver to the Trustee, in
person or by certified or registered mail, the certificates representing the
Exchangeable Shares which such owner desires the Company 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 Canada
Business Corporations Act and such additional documents and instruments as the
Trustee or the Corporation may reasonably require together with (a) a duly
completed form of notice of exercise of the Exchange Right (along with the
Exchangeable Share certificates), stating, inter alia, (i) that such owner is
instructing the Trustee to exercise the Exchange Right so as to require the
Company to purchase from such owner the number of Exchangeable Shares specified
therein, (ii) the names in which the new certificates evidencing the Company's
common stock are to be issued and (iii) the names and addresses of the persons
to whom such new certificates should be delivered and (b) payment of the taxes
(if any) payable as contemplated by the Voting Agreement.
Additional provisions in Canco's articles related to the Exchangeable Shares
include the following:
Restrictions on Canco's Payments of Dividends and Distributions. Without
the consent of the holders of the Exchangeable Shares, for so long as any
Exchangeable Shares are outstanding (unless the conditions set forth in the
preceding discussion of the Voting Agreement are met):
o Canco shall pay no dividends (other than stock dividends paid in such
shares) on, redeem, make capital contributions with respect to, or
purchase junior shares shares ranking junior to the Exchangeable
Shares;
o Canco shall not issue any shares ranking superior to the Exchangeable
Shares;
o Canco shall neither redeem nor purchase other shares of Canco ranking
equally with the Exchangeable Shares with respect to dividends or
liquidation distributions.
Liquidation Preference. Upon the liquidation or dissolution of Canco,
holders of Exchangeable Shares shall be entitled to receive an amount per
share equal to (a) the current price of a share of the Company's common
stock on the last business day prior to the day of closing of the purchase
and sale of such Exchangeable Share, which shall be satisfied in full by
causing to be delivered to such holder one share of the Company's common
stock, plus (b) accrued and unpaid dividends, if any.
Voting Rights. Holders of Exchangeable Shares are only entitled to notice
of and to vote at meetings of Canco's shareholders to the extent that same
relate to the dissolution of Canco or the sale, lease or exchange of all or
substantially all of Canco's property other than in the ordinary course of
business.
Other Related Party Transactions
In addition to the foregoing, Mergeco also entered into the following related
party transactions:
Professional fees of $22,487 for the 11 months ended June 30, 1999
(including $3,913 for the two months ended September 30, 1998) and $15,739
for the three months ended September 30, 1999 were paid to Jonathan
Levinson for legal work performed on behalf of the Company, including
document review and negotiating agreements. Mr. Levinson is a shareholder
of the Company.
Subcontracting fees for support services amounting to $5,293 for the 11
months ended June 30, 1999 (which did not include any amounts for the two
month period ended September 30, 1998) and $2,912 for the three months
ended September 30, 1999 were paid to a company controlled by Varujan
Tasci, an officer of the Company's operating subsidiary and a shareholder
of the Company. See Item 4.
20
<PAGE>
Item 8. LEGAL PROCEEDINGS.
At the date of this registration statement, the Company is not involved in any
litigation and does not have any pending claims against it. The Company's
management is not aware of any threatened claims or the basis therefor.
Item 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
The Company's Common Stock (including for purposes hereof the Common Stock of
Mergeco) was quoted on the OTC Bulletin Board under the symbol "PFOO" prior to
becoming ineligible for quotation (see below). Since October, 1999, the Company
has been quoted on the "pink sheets." The following table sets forth the high
and low closing prices for the Common Stock for the periods indicated.
High Low
(U.S. Dollars)
1999
Fourth Quarter $2.5625 $1.50
(through December 20th)
Third Quarter 3.50 1.7812
Second Quarter 4.0625 3.25
First Quarter 5.00 3.4531
1998
Fourth Quarter 4.375 3.75
On October 7, 1999, pursuant to NASD Rule 6530, the Common Stock became
ineligible for the OTC Bulleting Board because the Company was not required to
file reports under the Securities Exchange Act of 1934, as amended. The Company
is filing this Registration Statement so that the Common Stock will be eligible
for inclusion on the OTC bulleting board. Once the Company's registration
statement becomes effective, the Company's Common Stock will become eligible for
listing after a market maker submits a Form 211 or a 15c2-11 Exemption Form and
clearance has been given to such market maker to quote the issue on the
Over-the-Counter Bulletin Board. In the 30 days immediately following the
granting of clearance to a market maker, other market makers wishing to quote
the Company's common Stock must also submit a Form 211. If the market maker
initially granted clearance publishes quotes on at least 12 days during the
preceding 30 days, with not more than four consecutive days without quotations
(meaning the issue is "active" for OTC BB purposes), other broker-dealers may
quote the issue without registering on Form 211.
On December 20, 1999, there were 47 holders of record of the Company's
23,825,455 issued and outstanding shares of Common Stock. On December 20, 1999,
the last published trading price for the Company's Common Stock was was $1.75
per share.
The Company has not paid any cash dividends on its Common Stock and does not
presently intend to do so. Future dividend policy will be determined by its
Board of Directors on the basis of its earnings, capital requirements, financial
condition and other factors deemed relevant. The Voting Agreement also imposes
certain restrictions on the Company's ability to pay dividends and to make
distributions to the holders of Common Stock. See Item 7, "Certain Relationships
and Related Transactions."
The transfer agent and registrar of the Company's Common Stock is Nevada Agency
and Trust Company.
21
<PAGE>
Item 10. RECENT SALES OF UNREGISTERED SECURITIES.
On March 12, 1998, the Company purchased all of the outstanding equity of Egress
Technologies Inc. in a reverse takeover. In consideration therefor, the Company
issued 11,811,528 shares of Common Stock to the Egress shareholders. The Company
relied on the exemption from registration provided in Regulation D with respect
to this transaction. (These shares were subject to a 40:1 reverse split and a
3:1 share split.)
On June 5, 1998, the Company issued 2,500,000 units for $125,000 in cash. Each
unit consisted of one share of common stock and warrants to purchase two
additional shares. The Company relied on the exemption from registration
provided in Regulation S with respect to this transaction. These securities were
subject to a 3:1 share split.
In August 1998, the Company acquired all the issued and outstanding shares of
CBN World Star Incorporated ("CBN"), a Phillipines company, and a mold plant
license from World Transport Authority Inc. ("WT"), a Nevada company. This
transaction involved the issuance of 1,000,000 common shares to the stockholders
of CBN in exchange for all outstanding shares of CBN. The Company also issued
1,000,000 common shares to WT to indefinitely extend the term of the Master
Lease granted by WT to CBN. The Company also issued an additional 500,000 shares
to WT on grant of the license to build a mold building factory in the
Phillippines. The Company relied on the exemption from registration provided in
Regulation D of the Securities Act with respect to these issuances of
securities. (The 2,500,000 shares were subsequently repurchased for $34,400 upon
the unwinding of this transaction.)
Pursuant to the April 20, 1999 Combination Agreement, the Company (through
Canco) acquired 9066 in a reverse takeover. In connection therewith, the Company
issued one share of Special Voting Stock to be held for the benefit of the
holders of the Exchangeable Shares of Canco in consideration for one dollar
($1.00). See Item 11, "Description of Securities" and Item 7, "Certain
Relationships and Related Transactions." The Company relied on the exemption
from registration provided in Regulations D and S with respect to this
transaction.
In June 1999, the Company's warrantholders (from the June 5, 1998 unit issuance)
exercised their outstanding warrants and purchased a net amount of 15,000,000
shares of Common Stock for $875,000 (after giving effect to the return of
600,000 improperly issued shares for $35,000). The Company relied on the
exemption from registration provided in Regulations D and S with respect to this
share issuance.
On September 17, 1999, the Company issued 107,800 Units in consideration of an
aggregate of $539,000. Such consideration had previously been received by the
Company prior to July 1999 as an advance in respect of such private placement.
Each of such Units consisted of (a) one share of Common Stock, and (b) one
warrant to purchase another share of common stock at a strike price of $5.00.
The Warrant expires August 30, 2000. The Company relied on the exemption from
registration provided in Regulation S with respect to this security issuance.
On October 15, 1999, the Company received a subscription for 233,340 Units at a
price of $1.50 per Unit. Each Unit consisted of (a) one share of Common Stock
and (b) one warrant to purchase another share of common stock at a strike price
of $1.50. The $350,010 had previously been advanced to the Company in respect of
such private placement. The 233,340 Units were issued in December 1999. In
December 1999, an additional 333,340 of such Units (at the same price of $1.50
per Unit) were issued by the Company to the same subscriber. The Company relied
on the exemption from registration provided in Regulation S with respect to each
of these security issuances.
22
<PAGE>
Item 11. DESCRIPTION OF SECURITIES TO BE REGISTERED
The authorized Common Stock of the Company consists of 69,999,999 shares, par
value $0.001 per share. A total of 23,825,455 shares of Common Stock are
presently issued and outstanding. Also outstanding are warrants held by third
parties to purchase an aggregate of 676,480 shares of Common Stock and
25,094,996 Exchangeable Shares in Canco that enable the respective holders
thereof to exchange each such Exchangeable Share for one share of the Company's
Common Stock. See Item 7, "Certain Relationships and Related Transactions" and
Item 1, "Business - The Company" (with respect to the merger into a Delaware
corporation).
Holders of Common Stock are each entitled to one vote for each share standing in
his or her name in the books of the Company on all matters submitted to a vote
of shareholders. The holders of Common Stock may receive cash dividends as
declared by the Board of Directors out of funds legally available therefor. Each
share of Common Stock is entitled to participate pro rata in distribution upon
liquidation. Holders of the Common Stock and Special Voting Stock are entitled
to elect all Directors. The outstanding shares of Common Stock are fully paid
and non-assessable. Holders of the Common Stock do not have subscription,
redemption, conversion or preemptive rights. The holders of the Common Stock do
not have cumulative voting rights, which means that the holders of more than
half of the shares voting form the election of Directors can elect all of the
Directors and the remaining holders will not be able to elect any Directors. The
rights of the holders of Common Stock will also be subject to the rights and
preferences of holders of the Company's shares of preferred stock, par value
$0.001, if and when such rights and preferences are designated by the Board of
Directors.
The voting rights of the holders of Common Stock are subject to the voting
rights appurtenant to the share of Special Voting Stock, issued pursuant to the
aforementioned Combination and Voting Agreements. The Trustee (as defined in the
Voting Agreement) has the right to one vote for each Exchangeable Share of
Canco, the Company's subsidiary, held from time to time by parties other than
the Company and its subsidiaries, with respect to each matter on which holders
of Common Stock are entitled to vote. The share of Special Voting Stock does not
participate in any other operations, dividends or distributions of the Company;
however, pursuant to the Voting Agreement the Company may not declare or pay
dividends and/or distributions to the holders of its Common Stock unless Canco
pays economically equivalent dividends and/or distributions, as applicable, to
the holders of its Exchangeable Shares. See Item 7.
Item 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The personal liability of a director or officer of the Company to the Company or
the stockholders for damages for breach of fiduciary duty as a director or
officer is limited under the Company's articles to acts or omissions which
involve intentional misconduct, fraud or a knowing violation of law, to the
extent permissible under the Delaware General Corporation Law (the "GCL").
The articles also provide that each director and officer of the Company and
other persons permitted under the GCL may be indemnified by the Company, in
connection with a threatened, pending or completed action, suit or proceeding
brought against such person by reason of the fact that he is or was a director,
officer, employee or agent of the Company, against expenses (including attorneys
fees), judgments, fines and amounts paid in settlement, and/or amounts actually
and reasonably incurred by him in connection therewith, if he acted in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interest of the Company, and with respect to any criminal action or
proceeding, if he had no reasonable cause to believe his conduct was unlawful.
In connection with actions by or against the Company or brought in the Company's
name, indemnification may not be made for any claim, issue or matter as to which
such a person has been adjudged to be liable to the Company or for amounts paid
in settlement to the Company, unless and only to the extent that the court in
which the action or suit was brought or other court of competent jurisdiction
determines upon application that in view of all the circumstances
23
<PAGE>
of the case the person is fairly and reasonably entitled to indemnity for such
expenses as the court deems proper.
To the extent that a director, officer, employee or agent of the Company has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to above, or in defense of any claim, issue or matter
herein, he must be indemnified by the Company against expenses, including
attorney's fees actually and reasonably incurred by him in connection with the
defense.
Expenses of officers and directors incurred in defending a civil or criminal
action, suit or proceeding must be paid by the Company as they are incurred and
in advance of the final disposition of the action, suit or proceeding, upon
receipt of an undertaking by or on behalf of the director or officer to repay
the amount if it is ultimately determined by a court of competent jurisdiction
that he is not entitled to be indemnified by the Company.
The right to indemnification continues for a person who has ceased to be a
director, officer, employee, or agent and inures to the benefit of the heirs,
executors and administrators of such a person.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers or third parties controlling the
Company pursuant to Delaware law, the Company has been informed that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
Item 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See attached financial statements beginning on page F-1
Item 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
None
Item 15. FINANCIAL STATEMENTS AND EXHIBITS.
(a) See Index to Financial Statements on page F-1
(b) Exhibits
3.1 Articles of Incorporation (including Certificate of Merger)
3.2 By-laws
4.1 Specimen stock certificate
4.2 Form of Warrant
9.1 Voting, Support and Exchange Trust Agreement
9.2 Assignment and Assumption Agreement
10.1 Internet Services Agreement with EMC Corporation
10.2 Transact Software Order Form with Terms and Conditions (Open
Market)*
10.3 UPS Contract
21 Subsidiaries
27 Financial Data Schedule
* = Portions of this document are subject to a confidentiality request.
24
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act or
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
PLANET411.COM INC.
By: /S/ JOSEPH FARAG
------------------------------
Joseph Farag, President
Dated: December 23, 1999
25
<PAGE>
Planet 411.com Corporation
(A Development Stage Company)
Consolidated Financial Statements
Auditors' Report 2
Financial Statements
Consolidated Operations 3
Consolidated Deficit 3
Consolidated Cash Flows 4
Consolidated Balance Sheets 5
Notes to Consolidated Financial Statements 6 to 16
<PAGE>
16-12-1999
Auditors' Report
To the Directors of
Planet 411.com Corporation
(A Development Stage Company)
We have audited the consolidated balance sheet of Planet 411.com Corporation (A
Development Stage Company) as of June 30, 1999 and the consolidated statements
of operations, deficit and cash flows for the period July 31, 1998 (inception)
through June 30, 1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
in Canada. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of June 30, 1999 and
the results of its operations and its cash flows for the period then ended in
accordance with generally accepted accounting principles in Canada.
/s/ Raymond Chabot Grant Thornton
General Partnership Chartered Accountants
Montreal, Canada
September 9, 1999
(Except as to Note 15 c), which is as of December 2, 1999)
<PAGE>
Planet 411.com Corporation
(A Development Stage Company)
Consolidated Operations
Consolidated Deficit
(In U.S. dollars)
<TABLE>
<CAPTION>
Unaudited Unaudited
For the period For the period For the period
1998-07-31 1998-07-31 1998-07-31
(inception) (inception) Three-months (inception)
through through ended through
1998-09-30 1999-06-30 1999-09-30 1999-09-30
$ $ $ $
<S> <C> <C> <C> <C>
CONSOLIDATED OPERATIONS
Revenue -- -- -- --
----------- ----------- ----------- -----------
Operating and administrative expenses
Salaries 6,751 246,733 180,374 427,107
Fringe benefits 1,962 29,130 18,297 47,427
Subcontracts 215 10,805 5,569 16,374
Training 24,392 1,432 25,824
Advertising 47,950 18,934 66,884
Transportation 30 1,654 896 2,550
Promotion 628 26,702 4,592 31,294
Rent 7,165 52,472 23,355 75,827
Internet connection 4,646 58,856 6,396 65,252
Equipment rental 535 2,977 2,977
Maintenance and repairs 98 4,688 333 5,021
Taxes and permits 11,300 4,492 15,792
Insurance 2,469 2,142 4,611
Office supplies and courier 2,440 52,353 11,806 64,159
Communications 1,072 15,553 8,269 23,822
Professional fees 6,596 213,362 69,973 283,335
Bank charges 109 1,606 3,645 5,251
Interest on long-term debt 548 3,051 565 3,616
Service contracts 65,679 65,679
Travel 29,993 7,387 37,380
Foreign exchange (30,104) 4,932 (25,172)
Amortization of capital assets 2,126 112,925 53,325 166,250
34,921 984,546 426,714 1,411,260
Net loss 34,921 984,546 426,714 1,411,260
Basic loss per share -- 0.04 0.01 0.04
Weighted average number of outstanding
shares of common stock (the special
voting stock considered as 25,094,996 shares of
common stock) 25,094,996 27,942,964 49,000,042 32,479,852
CONSOLIDATED DEFICIT
Deficit, beginning of period 984,546
Net loss 34,921 984,546 426,714 1,411,260
Deficit accumulated during the development
stage, end of period 34,921 984,546 1,411,260 1,411,260
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
Planet 411.com Corporation
(A Development Stage Company)
Consolidated Cash Flows
(In U.S. dollars)
<TABLE>
<CAPTION>
Unaudited Unaudited
For the period For the period For the period
1998-07-31 1998-07-31 1998-07-31
(inception) (inception) Three-months (inception)
through through ended through
1998-09-30 1999-06-30 1999-09-30 1999-09-30
$ $ $ $
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss (34,921) (984,546) (426,714) (1,411,260)
Non-cash item
Amortization of capital assets 2,126 112,925 53,325 166,250
Changes in non-cash working capital items
Sales taxes receivable (6,207) (37,782) 11,709 (26,073)
Prepaid expenses (2,555) (31,212) (65,364) (96,576)
Accounts payable 2,994 20,655 15,546 36,201
Accrued liabilities 1,352 103,790 40,455 144,245
Cash flows from operating activities (37,211) (816,170) (371,043) (1,187,213)
---------- ---------- ---------- ----------
INVESTING ACTIVITIES
Cash position of acquired company 2F(Note 3) 263 263
Term deposit (10,196) (10,196)
Advances to directors and shareholders (142) (3,127) (3,127)
Other advances (4,154) (13,695) 13,695
Capital assets 2F(Note 4) (17,519) (859,091) (33,808) (892,899)
Effect of exchange rate changes (2) 3,079 (1,240) 1,839
Cash flows from investing activities (21,817) (882,767) (21,353) (904,120)
---------- ---------- ---------- ----------
FINANCING ACTIVITIES
Advances from (to) related companies 8,418 (44,242) (44,242)
Advance from a director 656 5,510 6,166
Repayment of long-term debt (1,134) (6,953) (2,224) (9,177)
Issuance of preferred shares of a subsidiary
company - non-controlling interest 285,474 285,474
Issuance of capital stock 38,979 1,014,444 1,014,444
Cancellation of capital stock (35,000) (35,000)
Advance payment on capital stock units 539,000 350,010 889,010
Effect of exchange rate changes 206 (26,472) 26,369 (103)
Cash flows from financing activities 46,469 1,761,907 344,665 2,106,572
Net increase (decrease) in cash and
cash equivalents (12,559) 62,970 (47,731) 15,239
Cash and cash equivalents, beginning of
period 62,970
Cash and cash equivalents, end of period (12,559) 62,970 15,239 15,239
SUPPLEMENTAL DATA
Cash paid during the period for interest 375 3,051 565 3,616
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
Planet 411.com Corporation
(A Development Stage Company)
Consolidated Balance Sheets
(In U.S. dollars)
<TABLE>
<CAPTION>
Unaudited
1999-06-30 1999-09-30
$ $
<S> <C> <C>
ASSETS
Current assets
Cash 62,970 15,239
Term deposit, 3.75%, maturing on April 19, 2000 10,196 10,080
Sales taxes receivable 37,782 26,073
Advances to directors and shareholders, without interest 2,673 2,637
Prepaid expenses 31,212 96,576
144,833 150,605
Other advances, without interest or repayment terms 13,695
Capital assets 2F(Note 4) 968,591 950,466
1,127,119 1,101,071
LIABILITIES
Current liabilities
Accounts payable 235,747 251,293
Accrued liabilities 103,790 144,245
Instalments on long-term debt 8,834 9,088
348,371 404,626
Advances from directors, without interest or repayment terms 656 6,166
Long-term debt 2F(Note 5) 6,115 3,637
Non-controlling interest 2F(Note 6) 285,474 285,474
640,616 699,903
---------- ----------
SHAREHOLDERS' EQUITY
Capital stock 2F(Note 7)
Special voting stock, having a par value of $0.001, holding a number of
votes equal to the number of exchangeable shares of 3560309 Canada Inc.
outstanding other than those held directly or indirectly by the Company, 1
share authorized; 1 share June 30, 1999 and
September 30, 1999 issued and outstanding -- --
Preferred stock, having a par value of $0.001, 10,000,000 shares authorized; none issued -- --
Common stock, having a par value of $0.001, 69,999,999 shares authorized; 24,084,315
(June 30,1999) and 23,592,115 (September 30, 1999) issued and outstanding 24,084 23,592
Contributed surplus 2F (Note 7) 934,437 1,438,929
Advance payment on capital stock units 2F (Note 8) 539,000 350,010
Cumulative translation adjustments 2F (Note 9) (26,472) (103)
Deficit accumulated during the development stage (984,546) (1,411,260)
486,503 401,168
1,127,119 1,101,071
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
Planet 411.com Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(In U.S. dollars; information for the three-month period ended September 30,
1999 and for the period July 31, 1998 (inception) through September 30, 1999 is
unaudited)
1 - INCORPORATION AND NATURE OF OPERATIONS
The Company was formed on April 23, 1990 in the State of Nevada, USA, as
Investor Club of the United States. The Company changed its name to Noble
Financing Group Inc. in 1992, and then changed its name to Newman Energy
Technologies Incorporated on April 21, 1998, to World Star Asia, Inc. on June
15, 1998, to Comgen Corp. on November 16, 1998 and to Planet 411.com Corporation
on February 11, 1999 to reflect its current business interest.
On November 9, 1998, the Company increased its authorized capital from
100,000,000 shares of common stock having a par value of $0.001 to 300,000,000
shares of common stock having a par value of $0.001.
On March 30, 1999, the Company authorized one share of special voting stock
having a par value of $0.001.
Pursuant to a combination agreement entered into as of April 20, 1999 among the
Company, the Company's wholly-owned subsidiary, Planet 411 (Nova Scotia)
Company, the Company's indirect wholly-owned subsidiary, 3560309 Canada Inc.,
9066-4871 Quebec Inc. and the shareholders of 9066-4871 Quebec Inc., 3560309
Canada Inc. acquired all of the issued and outstanding shares of 9066-4871
Quebec Inc. in exchange for 25,094,996 exchangeable shares and 8,400 preferred
shares of 3560309 Canada Inc. The preferred shares of 3560309 Canada Inc. may be
converted into exchangeable shares of that corporation on the basis of one
preferred share and CDN$5 for one exchangeable share. The exchangeable shares of
3560309 Canada Inc. may be exchanged at any time by their holders, on a
share-for-share basis, for shares of common stock of the Company. Pursuant to
the combination agreement, the Company has also issued one share of special
voting stock which is held for the benefit of the holders of the exchangeable
shares of 3560309 Canada Inc. The share of special voting stock entitles the
holder to such number of votes as is equal to the number of exchangeable shares
outstanding from time to time.
Since the shareholders of 9066-4871 Quebec Inc. controlled the Company
thereafter, 9066-4871 Quebec Inc. was considered to be the acquirer. As result
of the reverse takeover, the consolidated financial statements are a
continuation of the financial statements of 9066-4871 Quebec Inc. There are no
comparative figures since 9066-4871 Quebec Inc. was incorporated on July 31,
1998.
The Company is a publicly traded company trading on the over the counter
bulletin board with stock symbol PFOO.
The Company, in its development stage, is involved in the e-business industry.
It provides end-to-end quality e-business solutions to businesses interested in
doing e-tailing (selling of retail goods on the Internet).
2 - ACCOUNTING POLICIES
Financial statements
The financial statements have been prepared in accordance with generally
accepted accounting principles in Canada and conform in all material respects
with the generally accepted accounting principles in the United States.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles
<PAGE>
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Principles of consolidation
These financial statements include the accounts of the Company and all its
wholly-owned subsidiary companies.
Reporting currency and translation of foreign currencies
The Company has adopted the United States dollar as its reporting currency. The
Company's financial statements have been translated from their functional
currency, the Canadian dollar, into the reporting currency as follows: assets
and liabilities have been translated at the exchange rate in effect at the end
of the period and revenues and expenses have been translated at the weighted
average exchange rate for the period. All cumulative translation gains or losses
from the translation into the Company's reporting currency have been included as
a separate component of shareholders' equity in the balance sheet. The changes
in the cumulative translation adjustments account, from period to period, result
solely from the application of this translation method.
Transactions concluded in currencies other than the functional currency have
been translated as follows: monetary assets and liabilities are translated at
the exchange rate in effect at the end of the period, non-monetary assets and
liabilities are translated at rates in effect on the dates of the related
transactions and revenues and expenses have been translated at the weighted
average exchange rate for the period. Exchange gains and losses arising from
such transactions have been included in the statement of operations.
Revenue recognition
The Company recognizes revenue from fixed fees when they are billed and from
services when they are used by customers. Additionally, the Company recognizes
revenue, from contracts, based on the terms of the contracts.
2 - ACCOUNTING POLICIES (Continued)
Amortization
Capital assets are amortized on a straight-line basis over their estimated
useful lives as follows:
Office equipement, furniture and fixtures 5 years
Office equipment, furniture and fixtures
under capital leases 5 years
Computer equipment and software 3 years
Licenses 3 years
Management periodically reviews the carrying value of capital assets through an
assessment of estimated undiscounted future cash flows from the assets. In the
period that an impairment in value occurs, the capital assets are written down
to their net recoverable amounts.
Financial instruments
The estimated fair value of cash, term deposit, accounts payable and accrued
liabilities approximates their carrying value due to their short-term maturity.
The estimated fair value of other advances, determined by discounting future
cash flows at current rates, is approximately $11,000 as of June 30, 1999.
<PAGE>
Cash and cash equivalents
The Company's policy is to present cash, bank overdrafts and temporary
investments having a term of three month or less from the acquisition date as
cash and cash equivalents.
Unaudited interim financial statements
The unaudited financial information included herein as of September 30, 1999,
for the three-month period ended September 30, 1999 and for the period from July
31, 1998 (inception) through September 30, 1999, have been prepared in
accordance with generally accepted accounting principles for interim financial
statements. In the opinion of the Company, these unaudited financial statements,
reflect all adjustments necessary, consisting of normal recurring adjustments,
for a fair presentation of such data on a basis consistent with that of the
audited data presented herein. The results of operations for interim periods are
not necessarily indicative of the results expected for a full year.
3 - BUSINESS ACQUISITION
On April 20, 1999, the Company executed a combination agreement (see Note 1). As
a result, the shareholders of 9066-4871 Quebec Inc. controlled Planet 411.com
Corporation after the share for share exchange and 9066-4871 Quebec Inc. was
considered to be the acquirer. Consequently, the operations of the Company are
included in earnings from the date of acquisition.
3 - BUSINESS ACQUISITION (Continued)
As at the date of acquisition, the fair value of net assets acquired were
accounted for as follows:
$
Cash 263
Loans payable to shareholders (454)
Accounts payable (55,732)
Excess of liabilities over assets acquired (55,923)
Consideration:
8,484,315 common shares, at par value 8,484
Contributed surplus (64,407)
4 - CAPITAL ASSETS
<TABLE>
<CAPTION>
1999-06-30
Cost Amortization Net
$ $ $
<S> <C> <C> <C>
Office equipment, furniture and fixtures 59,366 8,030 51,336
Office equipment, furniture and fixtures under
capital leases 38,894 7,413 31,481
Computer equipment 207,777 34,831 172,946
Computer software 288,467 24,889 263,578
Licenses 490,091 40,841 449,250
1,084,595 116,004 968,591
Unaudited
1999-09-30
Cost Amortization Net
$ $ $
Office equipment, furniture and fixtures 76,299 11,665 64,634
Office equipment, furniture and fixtures under
capital leases 38,453 9,252 29,201
Computer equipment 214,443 47,369 167,074
Computer software 304,668 39,084 265,584
Licenses 484,540 60,567 423,973
1,118,403 167,937 950,466
</TABLE>
<PAGE>
4 - CAPITAL ASSETS (Continued)
During the period July 31, 1998 (inception) through June 30, 1999, capital
assets were acquired at an aggregate cost of $1,084,595 of which $44,242 were
acquired by means of advances from related companies and $21,902 by means of
long-term debt, and of which $159,360 still remain in accounts payable. Cash
payments of $859,091 were made to purchase capital assets.
One of the Company's licenses allows customers to use third-party software in
developing marketing strategies for their products and tracking and invoicing
their products. Another licence provides a host for the Company's Web sites.
5 - LONG-TERM DEBT
<TABLE>
<CAPTION>
Unaudited
1999-06-30 1999-09-30
$ $
<S> <C> <C>
Obligations under capital leases, 16%, payable in monthly
instalments of $883, capital and interest, maturing in February 2001 14,949 12,725
Instalments due within one year 8,834 9,088
6,115 3,637
As of June 30, 1999, the instalments on long-term debt for
the next years are as follows:
$
2000 10,595
2001 6,460
Total minimum lease payments 17,055
Interest included in minimum lease payments 2,106
14,949
</TABLE>
The estimated fair value of the Company's long-term debt, determined by
discounting future cash flows at current rates, is approximately equal to its
carrying value.
6 - NON-CONTROLLING INTEREST
Non-controlling interest of $285,474 consists of 8,400 preferred shares issued
by a subsidiary company, non-voting, non-participating, non-cumulative
preferential dividend of 80% of the prime rate on commercial loan charges by the
financial institution of the Company, redeemable at a price equal to the fair
market value of the consideration received upon issuance, issued for cash. The
holders of the preferred shares have been granted an option to convert one
preferred share for one exchangeable share (exchangeable for shares of the
Company) at CDN$5 per share. No preferred dividends have been declared.
<PAGE>
7 - CAPITAL STOCK AND CONTRIBUTED SURPLUS
<TABLE>
<CAPTION>
Special Common Contributed
voting stock stock surplus
Number of Number of
shares Amount shares Amount
$ $ $
<S> <C> <C> <C> <C> <C>
Special voting stock
(25,094,996 votes) 1 104,444
Balance outstanding on
April 20, 1999, date of
reverse takeover 2F(Note 3) 8,484,315 8,484 (64,407)
June 1999 - exercise of
warrants 2F(Note 15) 15,600,000 15,600 894,400
Balance June 30, 1999 1 -- 24,084,315 24,084 934,437
August 1999, cancellation of
common stock 2F(Note 15) (600,000) (600) (34,400)
September 1999, capital
stock units issued 2F(Note 8) 107,800 108 538,892
Balance September 30, 1999 1 -- 23,592,115 23,592 1,438,929
</TABLE>
Transactions during the period July 31, 1998 (inception) through June 30, 1999,
and the three-month period ended September 30, 1999
Special voting stock
Pursuant to the combination agreement (see Note 1), the Company issued one
share of special voting stock.
7 - CAPITAL STOCK AND CONTRIBUTED SURPLUS (Continued)
Common stock
On July 31, 1998, there were 2,828,105 issued and outstanding shares of
common stock of the Company.
In August 1998, the Company acquired all the issued and outstanding shares
of CBN World Star Incorporated ("CBN"), a Philippines company, and a mold
plant license from World Transport Authority Inc. ("World Transport"), a
Nevada Company. This transaction involved the issuance of 1,000,000 shares
of common stock to the stockholders of CBN in exchange for all outstanding
shares of CBN. The Company also issued 1,000,000 shares of common stock to
World Transport, to indefinitely extend the term of the Master License
granted by World Transport to CBN. The Company also issued an additional
500,000 shares of common stock to World Transport on grant of the license to
build a mold building factory in the Philippines.
In October 1998, the August 1998 transaction was reversed, the Company
repurchased from CBN and World Transport the 2,500,000 shares of common
stock for $34,400 and returned all the issued and outstanding shares of CBN,
the indefinite extension of the term of the Master License granted by World
Transport to CBN and the grant of the license to build a mold building
factory in the Philippines.
In November 1998, the outstanding 2,828,105 shares of common stock were
split 3 for 1 resulting in 8,484,315 shares of common stock outstanding.
Pursuant to the combination agreement (see Note 1), the Company acquired
9066-4871 Quebec Inc. (see Note 3), which resulted in a reverse takeover. At
the date of the reverse takeover, the shareholders of the Company owned
8,484,315 shares of common stock and the fair value of the net assets
amounted to ($55,923) (see Note 3).
In June 1999, shareholders exercised their outstanding warrants and
purchased 15,600,000 shares of common stock for $910,000 cash. In August
1999, the Company cancelled 600,000 shares of common stock and $35,000 cash
was returned to the original investors.
<PAGE>
In September 1999, 107,800 capital stock units were issued (Note 8).
At September 30, 1999, warrants to purchase 107,800 shares of common stock
for $5, are outstanding. The warrants expire August 30, 2000.
8 - ADVANCE PAYMENT ON CAPITAL STOCK UNITS
During the period July 31, 1998 (inception) to June 30, 1999, the Company
received $539,000 with respect to a private placement for 107,800 units at $5,00
per unit. Each unit consists of one share of common stock and one share purchase
warrant. Each warrant will entitle the holder to purchase one additional share
of common stock of the Company for $5.00 within one year from the date of
closing of the offer, August 30, 1999. The units were issued September 1999.
During the three-month period ended September 30, 1999, the Company received
$350,010 with respect to a private placement for 233,340 units at $1.50 per
unit. Each unit consists of one share of common stock and one share purchase
warrant. Each warrant will entitle the holder to purchase one additional share
of common stock of the Company for $1.50 within one year from the date of
closing of the offer, October 15, 1999. As of September 30, 1999, no shares of
common stock have been issued with respect to this private placement.
9 - CUMULATIVE TRANSLATION ADJUSTMENTS
Unaudited
1999-06-30 1999-09-30
$ $
Balance, beginning of period (26,472)
Effect of exchange rate changes (26,472) 26,369
Balance, end of period (26,472) (103)
10 - RELATED PARTY TRANSACTIONS
During the period, the Company entered into the following related party
transactions concluded in the normal course of operations, at exchange value:
<TABLE>
<CAPTION>
Unaudited Unaudited
For the period For the period For the period
1998-07-31 1998-07-31 1998-07-31
(inception) (inception) Three-months (inception)
through through ended through
1998-09-30 1999-06-30 1999-09-30 1999-09-30
$ $ $ $
<S> <C> <C> <C> <C>
Professionnal fees for legal services
were paid to a shareholder of the
Company 3,913 22,487 15,739 38,226
Subcontracting fees for computer
support services were paid to a
company controlled by a shareholder of
the Company -- 5,293 2,912 8,205
</TABLE>
The estimated fair value of advances to directors and shareholders approximates
the carrying value due to their short-term maturity.
The estimated fair value of advances from directors, determined by discounting
future cash flows at
<PAGE>
current rates, is approximately equal to the carrying value.
The advances to directors and shareholders and advances from directors are for
items purchased for use in the business net of cash advances. These advances
will be repaid in the year 2000.
11 - INCOME TAXES
a) The tax benefits arising from operating losses and capital assets
amortization for income tax purposes of approximately $1,050,000 (June 30,
1999) and $1,470,000 (September 30, 1999) are not recorded in the financial
statements. The operating loss carry-forwards for income tax purposes of
$937,000 (June 30, 1999) and $1,302,000 (September 30, 1999) expire in 2006
and 2007.
11 - INCOME TAXES (Continued)
b) The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets are as follows:
<TABLE>
<CAPTION>
Unaudited
1999-06-30 1999-09-30
$ $
<S> <C> <C>
Operating loss carry-forwards 365,430 494,760
Capital assets, due to amortization taken for accounting purposes 44,070 63,800
409,500 558,560
Valuation allowance (409,500) (558,560)
Net deferred tax assets -- --
</TABLE>
12 - COMMITMENTS
The Company has entered into long-term lease agreements expiring on February 28,
2003 and August 31, 2003 which call for lease payments of $256,717 for the
rental of office space. Minimum lease payments for the next five years are
$32,812 in 1999, $65,625 in 2000, 2001 and 2002, and $27,030 in 2003.
The Company has entered into service contracts aggregating $660,688 for support
services, maintenance, and hosting services for its main Website, which expire
March 31, 2000 and April 30, 2001. Minimum payments for the next years are
$442,688 in 2000 and $218,000 in 2001.
13 - INTERNET PORTAL
On January 28, 1999, the Company entered into an agreement to design, create,
maintain and commercialize a state-of-the art Internet portal, for the health
and high-technology industry, to be the electronic reference for information as
well as for the commercialization, sale and purchase of products and to provide
a regularly updated periodical providing the latest news, developments and
research. This portal will facilitate real-time communication between health
professionals all over the world, assist emerging health related companies in
obtaining financing and provide access not only to biomedical information but
also to published documents. The contract will generate revenues of $1,193,961
over the next 20 months. As at June 30, 1999, construction of the Internet
portal is in progress (See Note 15 c)).
14 - UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other
<PAGE>
than a date. The effects of the Year 2000 Issue may be experienced before, on,
or after January 1, 2000, and if not addressed, the impact on operations and
financial reporting may range from minor errors to significant systems failure
which could affect an entity's ability to conduct normal business operations. It
is not possible to be certain that all aspects of the Year 2000 Issue affecting
the Company, including those related to the efforts of customers, suppliers or
other third parties, will be fully resolved.
15 - SUBSEQUENT EVENTS
a) Subsequent to June 30, 1999, the Company entered into a merger agreement to
which the Company will be merged with Planet 411.com Inc., a Delaware
Corporation and shall cease to exist. The surviving company, whose total
assets and liabilities will equal those of the Company prior to the merger,
will issue shares to the shareholders of the Company in the ratios provided
within the agreement.
b) Subsequent to June 30, 1999, the Company discovered that 600,000 shares of
common stock on exercise of 15,600,000 warrants, as disclosed in Note 7,
were issued in error. The Company has cancelled the 600,000 shares of
common stock and returned $35,000 to the original investors.
c) The agreement described in Note 13 has been rescinded. All costs incurred
by the Company relating to this agreement have been included in the
statement of operations. In management's opinion, no other revenues or
expenses are expected fom this agreement.
CERTIFICATE OF INCORPORATION
OF
PLANET411.COM INC.
ARTICLE I - NAME: The name of the Corporation is:
Planet411.com Inc.
ARTICLE II -REGISTERED OFFICE; REGISTERED AGENT:
The address of its registered office in the State of Delaware is Corporation
Trust Center, 1209 Orange Street, in the City of Wilmington, County of New
Castle. The name of its registered agent at such address is The Corporation
Trust Company.
ARTICLE III - DURATION: The Corporation shall have perpetual existence.
ARTICLE IV - PURPOSES: The purpose, object and nature of the business for which
this Corporation is organized are (a) to engage in any lawful activity permitted
by a Delaware corporation; (b) to carry on such business as may be necessary,
convenient, or desirable to accomplish the above purposes, and to do all other
things incidental thereto which are not forbidden by law or by this Certificate
of Incorporation.
ARTICLE V - POWERS: The powers of the Corporation shall be all of those powers
granted by the Delaware General Corporation Law (the "GCL"), under which the
Corporation is formed. In addition, the Corporation shall have the following
specific powers:
(a) To elect or appoint officers and agents of the Corporation and to fix their
compensation; (b) To act as an agent for any individual, association,
partnership, corporation or other legal entity; (c) To receive, acquire,
hold, exercise rights arising out of the ownership or possession thereof,
sell, or otherwise dispose of, shares or other interests in, or obligations
of, individuals, associations, partnerships, corporations, or governments;
(d) To receive, acquire, hold, pledge, transfer, or otherwise dispose of
shares of the Corporation, but such shares may only be purchased, directly
or indirectly, out of earned surplus; (e) To make gifts or contributions
for the public welfare or for charitable, scientific or educational
purposes, and in time of war, to make donations in aid of way activities.
ARTICLE VI - CAPITAL STOCK:
The amount of the total authorized capital stock of the Corporation, and
the number and par value of the shares of which it is to consist, is
80,000,000 shares, divided into classes as follows:
<PAGE>
10,000,000 shares shall be Preferred Stock, $0.001 par value per share
("Preferred Stock");
69,999,999 shares shall be Common Stock, $0.001 par value per share
("Common Stock"); and
One share shall be Special Voting Stock, $0.001 par value ("Special Voting
Stock").
Shares of any class of stock of the Corporation may be issued for such
consideration and for each corporate purpose as the Board of Directors may
from time to time determine. No capital stock, after the amount of the
subscription price (which shall not be less than the par value thereof) has
been paid in, shall be subject to assessments.
The following is a description of the different classes and a statement of
the relative rights of the holder of the Preferred Stock, the Common Stock
and the Special Voting Stock.
PREFERRED STOCK
The Board of Directors of the Corporation is authorized at any time and
from time to time to provide for the issuance of shares of Preferred Stock
of the Corporation in one or more series with such voting power, full or
limited, or without voting powers, and with such designations, preferences
and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof as are stated and
expressed in this Certificate of Incorporation, and to the extent not to
stated or expressed, as may be stated and expressed in a resolution or
resolutions establishing such series and providing for the issuance thereof
adopted by the Board of Directors pursuant to the authority to do so which
is hereby expressly vested in it, including, without limiting the
generality of the foregoing, the following:
1. the designation and number of shares of each such series;
2. the dividend rate of each such series, the conditions and dates upon
which such dividends shall be payable, the preferences or relation of
such dividends to dividends payable on any other class or classes of
capital stock of the Corporation, and whether such dividends shall be
cumulative or non-cumulative;
3. whether the shares of each such series shall be subject to redemption
by the Corporation, and, if made subject to such redemption, the
times, prices, rates, adjustments and other terms and conditions of
such redemption;
4. the terms and amount of any sinking or similar fund provided for the
purchase or redemption of the shares of each such series;
<PAGE>
5. whether the shares of each such series shall be convertible into or
exchangeable for shares of capital stock or other securities of the
Corporation or of any other corporation, and, if provision be made for
conversion or exchange, the times, prices, rates, adjustments and
other terms and conditions of such conversion or exchange;
6. the extent, if any, to which the holders of the shares of any series
shall be entitled to vote as a class or otherwise with respect to the
election of directors or otherwise;
7. the restrictions and conditions, if any, upon the issue or release of
any additional Preferred Stock ranking on a parity with or prior to
such shares as to dividends or upon dissolution;
8. the rights of the holders of the shares of such series upon the
dissolution of, or upon the distribution of assets of, the
Corporation, which rights may be different in the case of voluntary
dissolution that the case of involuntary dissolution; and
9. any other relative rights, preferences or limitations of shares of
such series consistent with this Article VI and applicable law.
The powers, preferences and relative, participating, optional and other
special rights of each series of Preferred Stock of the Corporation, and
the qualifications, limitations or restrictions thereof, if any, may differ
from those of any and all other series at any time outstanding. All shares
of any one series of Preferred Stock of the Corporation shall be identical
in all respects with all other shares of such series, except that shares of
any one series issued at different times may differ as to the dates from
which dividends thereon shall accrue or shall be cumulative. Except as may
otherwise be required by law or this Certificate of Incorporation, the
terms of any series of Preferred Stock may be amended without consent of
the holders of any other series of Preferred Stock or of any class of
capital stock of the Corporation.
COMMON STOCK and SPECIAL VOTING STOCK
Voting Rights
(a) Each share of Common Stock shall entitle the holder thereof to one
vote for each share held and the holder of the share of Special Voting
Stock shall have a number of votes equal to the number of Exchangeable
Shares ("Exchangeable Shares") of 3560309 Canada Inc., a Canada
corporation ("Canco"), outstanding from time to time that are not
owned by the Corporation or any of its direct or indirect
subsidiaries. Except as otherwise required by law or this Certificate
of Incorporation, the Common Stock and the Special Voting Stock shall
vote together as a single class in the election of directors and on
all matters submitted to vote of stockholders of the Corporation.
<PAGE>
(b) No holder of Common Stock or Special Voting Stock shall have the right
to cumulate votes in the election of Directors of the Corporation or
for any other purpose.
Dividends.
Subject to the rights of holders of Preferred Stock of the Corporation, the
holders of Common Stock shall be entitled to share, on a pro rata basis, in
any and all dividends, payable in cash or otherwise, as may be declared in
respect of their holdings by the Board of Directors from time to time out
of assets or funds of the Corporation legally available therefor, and the
holders of Special Voting Stock shall not be entitled to receive any such
dividends.
Provisions Regarding Special Voting Stock.
(a) The holder of the share of Special Voting Stock is entitled to
exercise the voting rights attendant thereto in such manner as
such holder desires.
(b) At such times as the Special Voting Stock has no votes attached
to it because there are no Exchangeable Shares of Canco
outstanding that are not owned by the Corporation or any of its
direct or indirect subsidiaries, and there are no shares of
stock, debt, options or other agreements of Canco to any other
person (other than the Corporation or a direct or indirect
subsidiary of the Corporation), the Special Voting Stock shall be
cancelled (regardless of whether or not surrendered to the
Corporation).
Provisions Applicable to All Classes
Liquidation Rights.
In the event of any dissolution, liquidation or winding up of the affairs
of the Corporation, whether voluntary or involuntary, after payment or
provision for payment of the debts and other liabilities of the
Corporation, the holders of each series of Preferred Stock shall be
entitled to receive, out of the net assets of the Corporation, an amount
for each share of Preferred Stock equal to the amount fixed and determined
in accordance with the respective rights and priorities established by the
Board of Directors in any resolution or resolutions providing for the
issuance of any particular series of Preferred Stock before any of the
assets of the Corporation shall be distributed or paid over to holders of
Common Stock. After payment in full of said amounts to the holders of
Preferred Stock of all series, any remaining assets shall be distributed to
the holders of Common Stock. The holders of Special Voting Stock shall not
be entitled to receive any such assets. A merger or consolidation of the
Corporation with or into any other corporation or a sale or conveyance of
all or any material part of the assets of the Corporation (that does not in
fact result in the liquidation of the Corporation and the distribution of
assets to stockholders) shall not be deemed to be a voluntary or
<PAGE>
involuntary liquidation or dissolution or winding up of the Corporation
within the meaning of this paragraph.
Pre-emptive Rights.
No stockholder of the Corporation, by reason of his holding any shares of
any class of the Corporation, shall have any pre-emptive or preferential
right to acquire or subscribe for any treasury or unissued shares of any
class of the Corporation now or hereafter to be authorized, or any notes,
debentures, bonds, or other securities convertible into or carrying any
right, option or warrant to subscribe for or acquire shares of any class of
the Corporation now or hereafter to be authorized, whether or not the
issuance of any such shares, or such notes, debentures, bonds or other
securities would adversely affect the dividends or voting rights of such
stockholder, and the Board of Directors of the Corporation may issue shares
of any class of this Corporation, or any notes, debentures, bonds or other
securities convertible into or carrying rights, options or warrants to
subscribe for or acquire shares of any class of the Corporation, without
offering any such shares of any class of the Corporation, either in whole
or in part, to the existing stockholders of any class of the Corporation.
Consideration for Shares.
The Common Stock, Preferred Stock or Special Voting Stock shall be issued
for such consideration as shall be fixed from time to time by the Board of
Directors. In the absence of fraud, the judgment of the Directors as to the
value of any consideration for shares shall be conclusive. When such shares
are issued upon payment of the consideration fixed by the Board of
Directors, such shares shall be taken to be fully paid stock and shall be
non-assessable. This provision shall not be amended in this particular.
Stock Rights and Options.
The Corporation shall have the power to create and issue rights, warrants
or options entitling the holders thereof to purchase from the Corporation
any shares of its capital stock of any class or classes upon such terms and
conditions and at such times and places as the Board of Directors may
provide, which terms and conditions shall be incorporated in an instrument
or instruments evidencing such rights. In the absence of fraud, the
judgment of the Board of Directors as to the adequacy of consideration for
the issuance of such rights or options and the sufficiency thereof shall be
conclusive.
ARTICLE VII - ASSESSMENT OF STOCK: No capital stock of this Corporation, after
the amount of the subscription price (which shall not be less than the par value
thereof) has been fully paid in, shall be assessable for any purpose, and no
stock issued as fully paid up shall ever be assessable or assessed. The holders
of such stock shall not be individually responsible for the debts, contracts, or
liabilities of the Corporation and shall not be liable for assessments to
restore impairments in the capital of the Corporation.
<PAGE>
ARTICLE VIII - DIRECTORS: For the management of the business, and for the
conduct of the affairs of the Corporation, and for the future definition,
limitation, and regulation of the powers of the Corporation and its directors
and stockholders, it is further provided:
Section 1. Size of Board. The number of directors of the Corporation,
their qualifications, terms of office, manner of election,
time and place of meeting, and powers ad duties shall be
such as are prescribed by statute and in the by-laws of the
Corporation.
Section 2. Powers of Board. In furtherance and not in limitation of the
powers conferred by the GCL, the Board of Directors is
expressly authorized and empowered:
(a) To make, alter, amend, and repeal the By-Laws subject
to the power of the stockholders to alter or repeal the
By-Laws made by the Board of Directors.
(b) Subject to the applicable provisions of the GCL and the
By-Laws then in effect, to determine, from time to
time, whether and to what extent, and at what times and
places, and under what conditions and regulations, the
accounts and books of the Corporation, or any of them,
shall be open to stockholder inspection. No Stockholder
shall have any right to inspect any of the accounts,
books or documents of the Corporation, except as
permitted by law, unless and until authorized to do so
by resolution of the Board of Directors or of the
Stockholders of the Corporation.
(c) To issue stock of the Corporation for money, property
services rendered, labor performed, cash advanced,
acquisitions for other corporations or for any other
assets of value in accordance with the action of the
Board of Directors without vote or consent of the
stockholders and the judgment of the Board of Directors
as to value received and in return therefore shall be
conclusive and said stock, when issued, shall be
fully-paid and non-assessable (provided also that the
subscription price is equal to or exceeds the aggregate
par value of such shares).
(d) To authorize and issue, without stockholder consent,
obligations of the Corporation, secured and unsecured,
under such terms and conditions as the Board, in its
sole discretion, may determine, and to pledge or
mortgage, as security therefore, any real or personal
property of the Corporation, including after-acquired
property;
(e) To determine whether any and, if so, what part, of the
earned surplus of the Corporation shall be paid in
dividends to the
<PAGE>
stockholders, and to direct and determine other use and
disposition of any such earned surplus;
(f) To fix, from time to time, the amount of the profits of
the Corporation to be reserved as working capital or
for any other lawful purpose;
(g) To establish bonus, profit-sharing, stock option, or
other types of incentive compensation plans for the
employees, including offices and directors, of the
Corporation and to fix the amount of profits to be
shared or distributed, and to determine the persons to
participate in any such plans and the amount of their
respective participations;
(h) To designate, by resolution or resolutions passed by a
majority of the whole board, one or more committees,
each consisting of two or more directors, which, to the
extent permitted by law and authorized by resolution or
the By-Laws, shall have and may exercise the powers of
the Board;
(i) To provide for the reasonable compensation of the
directors of the Corporation by By-Law, and to fix the
terms and conditions upon which such compensation will
be paid; and
(j) In addition to the powers and authority hereinbefore,
or by statute, expressly conferred upon it, the Board
of Directors may exercise all such powers and do all
such acts and things as may be exercised or done by the
Corporation, subject, nevertheless, to the provisions
of the laws of the State of Delaware, of this
Certificate of Incorporation, and of the By-Laws of the
Corporation.
Section 3. Interested Directors. No contract or transaction between this
Corporation and any of its directors, or between this Corporation and any
other corporation, firm, association, or other legal entity shall be
invalidated by reason of the fact that the director of the Corporation has
a direct interest, pecuniary or otherwise, in such corporation, firm,
association, or legal entity, or because the interested director was
present at the meeting of the Board of Directors which acted upon or in
reference to such contract or transaction, or because he participated in
such action, provided that the Corporation is in compliance with one or
more of the conditions of Section 144 of the GCL (or any successor
provision thereto).
ARTICLE IX - LIMITATION OF LIABILITY OF OFFICERS OR DIRECTORS. The personal
liability of a director or officer of the Corporation to the Corporation or the
stockholders for damages for breach of fiduciary duty as a director or officer
shall be limited to acts or omissions which involve intentional misconduct,
fraud or a knowing violation of law, to the extent permissible under the GCL.
<PAGE>
ARTICLE X - INDEMNIFICATION. Each director and officer of the Corporation, and
such other persons as may be approved in accordance with Section 145 of the GCL
(or any successor provision thereto) may be indemnified by the Corporation as
follows:
(a) The Corporation may indemnify any person who was or is party, or is
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action
by or in the right of the Corporation), by reason of the fact that he
is or was a director, officer, employee or agent of the Corporation,
or is or was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership joint
venture, trust or other enterprise, against expenses (including
attorneys fees), judgments, fines and amounts paid in settlement,
actually and reasonably incurred by him in connection with the action,
suit or proceeding, if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interest of
the Corporation and with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding, by judgment, order
settlement, conviction or upon a plea of nolo contedere or its
equivalent, does not of itself create a presumption that the person
did not act in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interest of the Corporation, and
that, with respect to any criminal action or proceeding, he had
reasonable cause to believe that his conduct was unlawful.
(b) The Corporation may indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending or completed
action or suit by in the right of the Corporation, to procure a
judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation, as a director, officer,
employee, or agent of another corporation, partnership, joint venture,
trust or other interpose against expense including amounts paid in
settlement and attorneys' fees actually and reasonably incurred by him
in connection with the defense or settlement of the action or suit, if
he acted in good faith and in a manner which he reasonably believe to
be in or not opposed to the best interest of the Corporation.
Indemnification may not be made for any claim, issue or matter as to
which such a person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable
to the Corporation or for amounts paid in settlement to the
Corporation, unless and only to the extent that the court in which the
action or suit was brought or other court of competent jurisdiction
determines upon application that in view of all the circumstances of
the case the person is fairly and reasonably entitled to indemnity for
such expenses as the court deems proper.
<PAGE>
(c) To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense
of any action, suit or proceeding referred to in subsections (a) and
(b) of this Article, or in defense of any claim, issue or matter
herein, he must be indemnified by the Corporation against expenses,
including attorney's fees, actually and reasonably incurred by him in
connection with the defense.
(d) Any other indemnification under subsections (a) and (b) unless ordered
by a court or advanced pursuant to subsection (e), must be made by the
Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee
or agent is proper in the circumstances. The determination must be
made by the one or more of the persons (or groups thereof) specified
in Section 145 of the GCL (or any successor provision thereto).
(e) Expenses of officers and directors incurred in defending a civil or
criminal action, suit or proceeding must be paid by the Corporation as
they are incurred and in advance of the final disposition of the
action, suit or proceeding, upon receipt of an undertaking by or on
behalf of the director or officer to repay the amount if it is
ultimately determined by a court of competent jurisdiction that he is
not entitled to be indemnified by the Corporation. The provisions of
this subsection do not affect any rights to advancement of expenses to
which corporate personnel other than directors or officers may be
entitled under any contract or otherwise by law.
(f) The indemnification and advancement of expenses authorized in or
ordered by a court pursuant to this section:
(i) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses my be entitled under
the certificate or articles of incorporation or any by-law
agreement, vote of stockholders or disinterested directors or
otherwise, for either an action is his official capacity or an
action in another capacity while holding his office, except that
indemnification, unless ordered by a court pursuant to subsection
(b) or for the advancement of expenses made pursuant to
subsection (e) may not be made to or on behalf of any director or
officer if a final adjudication establishes that his acts or
omissions involved intentional misconduct, fraud or a knowing
violation of the law and was material to the cause of action.
(ii) Continues for a person who has ceased to be a director, officer,
employee, or agent and inures to the benefit of the heirs,
executors and administrators of such a person.
<PAGE>
ARTICLE XI - PLACE OF MEETING; CORPORATE BOOKS. Subject to the GCL, the
stockholders and the Directors shall nave power to hold their meetings, and the
Directors shall have power to have an office or offices and to maintain the
books of the Corporation either inside or outside of the State of Delaware, at
such place or places as may from time to time be designated in the By-Laws or by
appropriate resolution.
ARTICLE XII - AMENDMENT OF ARTICLES. The provisions of this Certificate of
Incorporation may be amended, altered or repealed from time to time to the
extent and in the manner prescribed by the GCL, and additional provisions
authorized by such laws as are then in force may be added. All rights herein
conferred on the directors, officers and stockholders are granted subject to
this reservation.
ARTICLE XIII - INCORPORATOR. The name and mailing address of the incorporator
is:
Marc A. Berger
Goodman Phillips & Vineberg
430 Park Avenue
New York, NY 10022
I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of
Delaware, do make this certificate, hereby declaring and certifying that this is
my act and deed and the facts herein stated are true, and accordingly have
hereunto set my hand this 10th day of July, 1999.
/s/ Marc A. Berger
Marc A. Berger
<PAGE>
CERTIFICATE OF MERGER
OF
PLANET411.COM CORPORATION,
a Nevada corporation,
With and into
PLANET411.COM INC.,
a Delaware corporation
------------------------------------------------------
Pursuant to Section 252 of the
Delaware General Corporation Law
------------------------------------------------------
Planet411.com Inc., a Delaware corporation, desiring to merge with
Planet411.com Corporation, a Nevada corporation, pursuant to the provisions of
Section 252(c) of the General Corporation Law of the State of Delaware (the
"GCL"), does hereby certify as follows:
FIRST The names and states of incorporation of each constituent corporation
are:
Name State of Incorporation
Planet411.com Inc. Delaware
Planet411.com Corporation Nevada
SECOND: An Agreement and Plan of Merger has been approved, adopted,
certified, executed and acknowledged by Planet411.com Corporation, a Nevada
corporation, in accordance with Section 252(c) of the GCL and the applicable
sections of the Nevada Revised Statutes, and approved, adopted, certified,
executed and acknowledged by Planet411.com, a Delaware corporation, in
accordance with Section 252(c) of the GCL.
THIRD: The name of the surviving corporation is Planet411.com Inc., a
Delaware corporation, which will continue its existence under the name
Planet411.com Inc. upon the effective date of the merger pursuant to the
provisions of the GCL.
FOURTH: The Certificate of Incorporation of Planet411.com Inc., a Delaware
corporation, shall be the Certificate of Incorporation of the surviving
corporation.
FIFTH: An executed copy of the Agreement and Plan of Merger is on file at
the principal place of business of the surviving corporation, located at 440
Rene Levesque Blvd. Ouest, Suite 401, Montreal, PQ H2Z 1V7, and a copy of the
Agreement and Plan of Merger will be furnished by the surviving corporation, on
request and without cost, to any shareholder of either constituent corporation.
SIXTH: Planet411.com Corporation, a Nevada corporation, has authorized
capital stock of 310,000,001 shares, divided as follows: 10,000,000 shares of
preferred stock, par value $0.001; 300,000,000 shares of common stock, par value
$0.001; and 1 share of Special Voting Stock, par value $0.001.
[The remainder of this page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, Planet411.com Inc., a Delaware corporation, has caused
this Certificate to be executed by its President thereunto duly authorized this
1st day of October, 1999.
Planet411.com Inc.
(A Delaware Corporation)
By: /s/ Joseph Farag
------------------------
Name: Joseph Farag
Title: President
BY-LAWS OF
PLANET411.COM INC.
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the Corporation
shall be in the City of Wilmington, County of New Castle, State of Delaware.
Section 2. Additional Offices. The Corporation may also have offices at
such other places, both within and without the State of Delaware, as the Board
of Directors may from time to time determine or as the business of the
Corporation may require.
ARTICLE II
MEETING OF STOCKHOLDERS
Section 1. Time and Place. A meeting of stockholders for any purpose may be
held at such time and place within or without the State of Delaware as the Board
of Directors may fix from time to time or as may be fixed by the written consent
of a majority of the stockholders entitled to vote thereat.
Section 2. Annual Meeting. The annual meeting of stockholders shall be held
on the first business day in April or as soon thereafter as possible, provided,
however, that should any day fall on a legal holiday, then such annual meetings
of stockholders shall be held at the same time and place on the next day
thereafter ensuing which is not a legal holiday. At such meetings Directors
shall be elected, reports of the affairs of the Corporation shall be considered,
and any other business may be transacted as may properly come before the
meeting.
Section 3. Notice of Annual Meeting. Written notice of each annual meeting
shall be given to each stockholder entitled to vote thereat, not less than ten
(10) nor more than sixty (60) days before each annual meeting, and shall specify
the place, the day and hour of such meeting, and shall state other matters, if
any, that may be expressly required by law.
Section 4. Special Meetings. Special meetings of the stockholders may be
called for any purpose or purposes, unless otherwise prescribed by law or by the
Certificate of Incorporation, by the Chairman of the Board or the President, and
shall be called by the President or Secretary at the written request of a
majority of the Board of Directors or of stockholders owning fifty percent (50%)
of the shares of capital stock of the Corporation issued, outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 5. Notice of Special Meetings. Except in special cases where other
express provisions are made by law, notice of such special meetings shall be
given in the same manner as is required for notice of the annual meetings of
stockholders. Notice of any special meeting shall specify in addition to the
place, date and hour of such meeting, the general nature of the business to be
transacted.
Section 6. Conduct of Business. Such person as the Board of Directors may
designate, or, in the absence of such a person, the highest ranking officer of
the Corporation who is present, shall call to order any meeting of the
stockholders and act as chairman of the meeting. The chairman of the meeting
shall determine the order of business and procedure at the meeting.
<PAGE>
Section 7. List of Stockholders. The officer in charge of the stock ledger
of the Corporation or the transfer agent shall prepare and make, at least ten
(10) days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten (10) days prior to the meeting, at
a place within the city where the meeting is to be held, which place, if other
than the place of meeting, shall be specified in the notice of the meeting. The
list shall also be produced and kept at the place of the meeting during the
whole time thereof, and may be inspected by any stockholder who is present in
person thereat.
Section 8. Record Date. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action, the Board of Directors may fix, in advance, a record
date, which shall not be more than sixty (60) nor less than ten (10) days before
the date of such meeting, nor more than sixty (60) days prior to any other
action. If no record date if fixed, the record date shall be as provided by law.
Section 9. Quorum. The presence in person or representation by proxy of the
holders of a majority of the shares of the capital stock of the Corporation
issued and outstanding and entitled to vote shall be necessary to, and shall
constitute a quorum for, the transaction of business at all meetings of the
stockholders, except as otherwise provided by law or by the Certificate of
Incorporation. The stockholders present at a duly called or held meeting at
which a quorum is present may continue to do business until adjournment,
notwithstanding the withdrawal of enough stockholders, to leave less than a
quorum.
Section 10. Adjournments. Any stockholders' meeting, annual or special,
whether or not a quorum is present, may be adjourned from time to time by the
vote of a majority of the shares, the holders of which are either present in
person or represented by proxy thereat, but in the absence of a quorum, no other
business may be transacted at the meeting. Notice of the adjourned meeting shall
be given to each stockholder of record entitled to vote thereat if the
adjournment is for more than thirty (30) days, or if, after the adjournment, a
new record date is fixed for the adjourned meeting. Except as provided above, if
the time and place of the adjourned meeting are announced at the meeting at
which the adjournment is taken, no further notice of the adjourned meeting need
be given. The adjourned meeting may transact any business which could properly
be considered at the original meeting. If a quorum is present at the original
meeting, it is not necessary for the transaction of business that a quorum be
present at the adjourned meeting.
Section 11. Voting.
a. At any meeting of stockholders, every stockholder having the right to
vote shall be entitled to vote in person or by proxy. Except as otherwise
provided by law or the Certificate of Incorporation, each stockholder of record
shall be entitled to one vote for each share of capital stock registered in his
name on the books of the Corporation.
b. All elections shall be determined by a majority vote, and, except as
otherwise provided by law or the Certificate of Incorporation, all other matters
shall be determined by a majority vote of the shares present in person or
represented by proxy and voting on such other matters.
<PAGE>
c. All voting, except on the election of directors, may be by show of hands
(or voice if such meeting is pursuant to Section 14 below) or by ballot,
provided, however, that upon demand therefor by a stockholder entitled to vote
or by his proxy, a ballot vote shall be taken.
Section 12. Action by Consent. Any action required or permitted by law or
by the Certificate of Incorporation to be taken at any meeting of stockholders
may be taken without a meeting, without prior notice, and without a vote, if a
written consent, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present or represented by proxy and
voted. Such written consent shall be filed with the minutes of the meetings of
stockholders. Prompt notice of the taking of corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing thereto.
Section 13. Proxies. Every person entitled to vote or execute consents
shall have the right to do so either in person or by one or more agents
authorized by a written proxy executed by such person or his duly authorized
agent, and filed with the Secretary of the Corporation; provided, that no such
proxy shall be valid after the expiration of three (3) years from the date of
its execution, unless the person executing it specifies therein the length of
time for which such proxy is to continue in force, which in no case shall exceed
seven (7) years from the date of its execution. A duly executed proxy shall be
irrevocable if it states that it is irrevocable and if, and only as long as, it
is coupled with an interest sufficient in law to support an irrevocable power.
Section 14. Meetings by Telephone or Similar Communication Equipment.
Stockholders may participate in a meeting by means of a conference telephone or
similar communications equipment by which all stockholders participating in the
meeting can hear and be heard by each other. To the extent permitted by law,
with respect to the relevant meeting, such participation in a meeting by
telephonic or similar equipment shall constitute presence in person within the
United States (regardless of the location from where the communication
originates) by a stockholder.
ARTICLE III
DIRECTORS
Section 1. Number and Tenure. The number of directors that shall constitute
the whole board shall be one or more, which number may be increased and/or
decreased from time to time by the Board of Directors and the stockholders
within the limits permitted by law. The Directors shall be elected at the annual
meeting or a special meeting of stockholders, except as provided in Section 2 of
this Article, and each Director shall hold office until his successor is elected
and qualified or until his earlier resignation or removal.
Section 2. Vacancies. Vacancies and newly created directorships resulting
from any increase in the authorized number of Directors may be filled by a
majority of the directors then in office, though less than a quorum, and each of
the Directors so chosen shall hold office until his successor is elected at an
annual or a special meeting of stockholders or until his earlier resignation or
removal. A vacancy or vacancies in the Board of Directors shall be deemed to
exist in case of the death, resignation or removal of any Director or if the
stockholders fail at any annual or special meeting of stockholders at which any
Director or Directors are elected to elect the full number of Directors to be
voted for at that meeting. The
<PAGE>
stockholders may elect any Director or Directors at any time to fill a vacancy
or vacancies not filled by the Board of Directors.
Section 3. Removal or Resignation. Except as otherwise provided by law or
the Certificate of Incorporation, any Director or the entire Board of Directors
may be removed, with or without cause, by the holders of the majority of the
shares then entitled to vote at an election of Directors. Any Director may
resign at any time by giving written notice to the Board of Directors, the
Chairman of the Board of Directors, the President or the Secretary of the
Corporation. Unless otherwise specified in such written notice, the resignation
shall take effect upon delivery to the Board of Directors or the designated
officer. It shall not be necessary for a resignation to be accepted before it
becomes effective.
Section 4. Powers. The business and affairs of the Corporation shall be
managed by or under the direction of its Board of Directors which shall exercise
all such powers of the Corporation and do all such lawful acts and things as are
not by law or by the Certificate of Incorporation or by these by-laws directed
or required to be exercised or done by the stockholders. Without prejudice to
such general powers, but subject to the same limitations, it is hereby expressly
declared that the Directors shall have the following powers, to wit:
First: To select and remove all the other officers, agents and employees of
the Corporation, prescribe such powers and duties for them as may not be
inconsistent with law, with the Certificate of Incorporation, or with these
by-laws, fix their compensation and require from them security for faithful
service.
Second: To conduct, manage and control the affairs and business of the
Corporation, and to make such rules and regulations therefor not inconsistent
with law, the Certificate of Incorporation or these by-laws, as they may deem
best.
Third: To change from time to time the registered office of the Corporation
from one location to another within Delaware as provided in Article I, Section 1
hereof; to fix and locate from time to time one or more subsidiary offices of
the Corporation within or without the State of Delaware, as provided in Article
I, Section 2, hereof; to designate any place within or without the State of
Delaware for the holding of any stockholders' meeting or meetings; and to adopt,
make and use a corporate seal, and to prescribe the form of certificates of
stock and to alter the form of such seal and of such certificates from time to
time, as in their judgment they may deem best, provided such seal and such
certificates shall at all times comply with the provisions of law.
Fourth: To authorize the issuance of authorized shares of stock of the
Corporation from time to time, upon such terms as may be lawful, in
consideration of money paid, labor done or services actually rendered, debts or
securities cancelled, or tangible or intangible property actually received, or
in the case of shares issued as a dividend, against amounts transferred from
surplus to stated capital.
Fifth: To borrow money and incur indebtedness for the purposes of the
Corporation, and to cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages,
pledges, hypothecations or other evidence of debt and securities therefor.
Sixth. To purchase or otherwise acquire any property, rights or privileges
on such terms as it shall determine.
<PAGE>
Seventh. To adopt from time to time such stock, option, stock purchase,
bonus or other compensation plan and such insurance, retirement or other benefit
plan for directors, officers and agents of the Corporation and its subsidiaries
as it may determine.
Section 5. Regular Annual Meetings. The first meeting of each newly elected
Board of Directors shall be held immediately following the adjournment of the
annual meeting of stockholders and at the place thereof (unless same is not in
the United States). No notice of such meeting shall be necessary to the
Directors in order to constitute the meeting legally. In the event such meeting
is not so held, the meeting may be held at such time and place within the United
States as shall be specified in a notice given as hereinafter provided for
special meetings of the Board of Directors.
Section 6. Regular Meetings. The Board of Directors of the Corporation or
any committee thereof may hold regular meetings either within or without the
State of Delaware. Regular meetings of the Board of Directors may be held
without notice at such time and at such place within the United States as shall
from time to time be determined by the Board of Directors.
Section 7. Special Meetings. Special meetings of the Board of Directors or
any committee thereof may be called by the Chairman of the Board or the
President, and the President or the Secretary shall call a special meeting upon
request of one (1) Director or upon the request of stockholders holding not less
than fifty percent (50%) of the voting power of the Corporation. If given
personally, by facsimile, telephone or by telegram, the notice shall be given at
least the day prior to the meeting. Notice may be given by mail if it is mailed
at least three (3) days before the meeting. The notice need not specify the
business to be transacted. All of such meeting shall take place within the
United States.
Section 8. Meetings by Telephone or Similar Communication Equipment. The
Board of Directors may participate in a meeting by means of a conference
telephone or similar communications equipment by which all Directors
participating in the meeting can hear and be heard by each other. To the extent
permitted by law, with respect to the relevant meeting, such participation in a
meeting by telephonic or similar equipment shall constitute presence in person
within the United States (regardless of the location from where the
communication originates) by a Director.
Section 9. Quorum. At meetings of the Board of Directors, a majority of the
Directors at that time in office shall constitute a quorum for the transaction
of business and the act of a majority of the Directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors. If a quorum
shall not be present at any meeting of the Board of Directors, the Directors
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
Section 10. Compensation. The Directors may be paid their expenses of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors or a stated salary as
Director, as may from time to time be determined by the Board of Directors. No
such payment shall preclude any Director from serving the Corporation in any
other capacity and receiving compensation therefor. Members of any committees
may be allowed like reimbursement and compensation for attending committee
meetings.
Section 11. Action by Consent. Any action required or permitted to be taken
at any meeting of the Board of Directors or of any committee of the Board of
Directors may be taken without a meeting if a written consent to such action is
signed by all members of the Board of Directors or of any committee of the
<PAGE>
Board of Directors, as the case may be, and such written consent is filed with
the minutes of its proceedings.
Section 12. Committees. By resolution of the Board of Directors, the Board
of Directors shall have the authority to form any committees for whatever
purpose. A committee may consist of as few as one member. A committee may
exercise all the powers of the Board of Directors except as prohibited by law.
In the absence or disqualification of a member of a committee, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may appoint another member of the Board
of Directors to act at the meeting in the place of any such absent or
disqualified member. The Board of Directors may provide that a committee shall
have the power or authority to declare a dividend, to authorize the issuance of
stock or to adopt a certificate of ownership or merger. Each committee shall
keep regular minutes of its meetings and report the same to the Board of
Directors when required.
ARTICLE IV
Officers
Section 1. Officers. The Officers of the Corporation shall be a President
and a Secretary. The Corporation may also have, at the discretion of the Board
of Directors, one Chief Executive Officer, one or more Vice Presidents, one
Chief Financial Officer, one or more Treasurers, one or more Assistant
Secretaries, and such other officers as may be appointed in accordance with the
provisions of Section 3 of this Article. One person may hold two or more
offices. All Officers shall exercise the powers and perform the duties as set
forth in these by-laws or as shall from time to time be determined by the Board
of Directors.
Section 2. Election. The Officers of the Corporation, except such Officers
as may be appointed in accordance with the provisions of Section 3 or Section 5
of this Article, shall be chosen annually by the Board of Directors, and each
shall hold his office until he shall resign or shall be removed or disqualified
to serve, or his successor shall be elected and qualified.
Section 3. Subordinate Officer, Etc. The Board of Directors may appoint
such other Officers as the business of the Corporation may require, each of whom
shall hold office for such period, have such authority and perform such duties
as are provided in the by-laws or as the Board of Directors from time to time
determine.
Section 4. Removal and Resignation. Any Officer may be removed, either with
or without cause, by a majority of the Directors at the time in office, at any
annual regular or special meeting of the Board, or by an Officer upon whom such
power of removal may be conferred by the Board of Directors.
Any Officer may resign at any time by giving written notice to the Board of
Directors, to the President, or to the Secretary of the Corporation. Any such
resignation shall take effect at the date of the receipt of such notice or any
later time specified therein; the acceptance of such resignation shall not be
necessary to make it effective.
Section 5. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed by the by-laws for regular appointments to such office.
Section 6. Chief Executive Officer. The Chief Executive Officer, subject to
the control of the
<PAGE>
Board of Directors, shall have general supervision, direction and control of the
business and subordinate Officers of the Corporation. He shall have the general
powers and full duties of management usually vested in the office of the Chief
Executive Officer of a corporation, including, but not limited to, the power in
the name of the Corporation and on its behalf to execute any and all stock
certificates, deeds, mortgages, contracts, agreements, and other instruments in
writing, and shall have such other powers and duties as may be prescribed by the
Board of Directors or the by-laws.
Section 7. President. The President shall, subject to the control of the
Board of Directors, have general supervision, direction and control of the
business and subordinate Officers of the Corporation. He shall have the general
powers and full duties of management usually vested in the office of the
President of a corporation, including, but not limited to, the power in the name
of the Corporation and on its behalf to execute any and all stock certificates,
deeds, mortgages, contracts, agreements, and other instruments in writing, and
shall have such other powers and duties as may be prescribed by the Board of
Directors or the by-laws.
Section 8. Vice President. Each Vice President, if any, shall perform such
duties as the Board of Directors shall prescribe. In the absence of the
President or in the event of his inability or refusal to act, the Vice President
designated by the Board of Directors shall perform the duties and exercise the
powers of the President.
Section 9. Secretary. The Secretary shall keep, or cause to be kept, a book
of Minutes at such place as the Board of Directors may order, of all meetings of
Directors and stockholders, with the time and place of holding, whether regular
or special, and if special, how authorized, the notice thereof given, the names
of those present at Directors' meetings, and the number of shares present or
represented at stockholders' meetings and the proceedings thereof.
The Secretary shall keep or cause to be kept, at such place as the Board of
Directors may order, a share register, or a duplicate share register, showing
the names of the stockholders and their addresses, the number and classes of
shares held by each, the number and date of certificates issued for the same,
and the number and date of cancellation of every certificate surrendered for
cancellation.
The Secretary shall give, or cause to be given, notice of all the meetings
of the stockholders and of the Board of Directors required by the by-laws or by
law to be given, and he shall keep the seal of the Corporation in safe custody
and shall have such other powers and perform such other duties as may be
prescribed by the Board of Directors or by the by-laws.
Section 10. Chief Financial Officer. The Chief Financial Officer shall,
subject to the control of the Board of Directors, the President and Chief
Executive Officer, if any, have general supervision, direction and control of
the finances of the corporation and shall have the general powers and full
duties of management usually vested in the office of the Chief Financial Officer
of a corporation, and shall have such other powers and duties as may be
prescribed by the Board of Directors or the by-laws.
Section 11. Treasurer. Subject to the power and responsibilities vested in
the Chief Financial Officer, if any, the Treasurer shall keep and maintain or
cause to be kept and maintained, adequate and correct accounts of the properties
and business transactions of the Corporation. The books of account shall be open
to inspection by any Director at all reasonable items. The Treasurer shall
deposit all monies and other valuables in the name of and to the credit of the
Corporation with such depositories as may be designated by the Board of
Directors, and he shall render to the President and Directors whenever they
request it
<PAGE>
an account of all transactions and of the financial condition of the
Corporation, and shall have such other powers and perform such other duties as
may be prescribed by the Board of Directors or the bylaws.
Section 10. Assistant Secretary. During the absence or disability of the
Secretary, or as directed by the Board of Directors, the Assistant Secretary
shall have all the powers and functions of the Secretary.
Section 11. Compensation. The salaries of all officers of the Corporation
shall be fixed from time to time by the Board of Directors and no officer shall
be prevented from receiving a salary because he is also a Director of the
Corporation.
ARTICLE V
AFFILIATED TRANSACTIONS AND INTERESTED DIRECTORS
Section 1. Affiliated Transactions. No contract or transaction between the
Corporation and one or more of its Directors or Officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its Directors or Officers are Directors or
Officers or have a financial interest, shall be void or voidable solely for this
reason, or solely because the Director or Officer is present at or participates
in the meeting of the Board of Directors or committee thereof that authorizes
the contract or transaction or solely because his or their votes are counted for
such purpose, if:
a. The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of Directors or
the committee, and the Board of Directors or committee in good faith authorized
the contract or transaction by the affirmative vote of a majority of the
disinterested Directors, even though the disinterested Directors be less than a
quorum; or
b. The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by the vote of the stockholders; or
c. The contract or transaction is fair as to the Corporation as of the time
it is authorized, approved, or ratified by the Board of Directors, a committee
thereof, or the stockholders.
Section 2. Determining Quorum. Common or interested Directors may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors or of a committee thereof which authorized the contract or
transaction.
ARTICLE VI
LIABILITY TO CORPORATION AND INDEMNIFICATION
Section 1. Liability to Corporation. No person shall be liable to the
Corporation for any loss or damage suffered by it on account of any action taken
or omitted to be taken by him as a Director or Officer of the Corporation in
good faith, if such person (i) exercised or used the same degree of diligence,
care, and skill as an ordinarily prudent man would have exercised or used under
the circumstances in the conduct of his own affairs, or (ii) took, or omitted to
take, such action in reliance upon advice of counsel for the Corporation, or
upon statements made or information furnished by Officers or employees of the
Corporation which he had reasonable grounds to believe to be true, or upon a
financial statement of the Corporation provided by a person in charge of its
accounts or certified by a public accountant or a firm of public accountants.
<PAGE>
Section 2. Indemnification. The Corporation shall indemnify its Officers,
Directors, affiliates, agents or employees to the greatest extent permitted by
the Delaware General Corporation Law ("GCL"), and to pay all expenses, costs and
other amounts in advance on behalf of such individuals to the greatest extent
provided by Section 145 of the GCL or any successor provision thereto.
ARTICLE VII
STOCK CERTIFICATES
Section 1. Form and Signatures.
a. Every holder of stock of the Corporation shall be entitled to a
certificate stating the number and class, and series, if any, of shares owned by
him, signed by the Chairman of the Board, or the President or a Vice President
and by the Treasurer, or the Secretary or an Assistant Secretary of the
Corporation, and bearing the seal of the Corporation. The signature and the seal
may be a facsimile. A certificate may be signed, manually or by facsimile, by a
transfer agent or registrar other than the Corporation or its employee. In case
any Officer who has signed or whose facsimile signature has been placed on a
certificate shall have ceased to be such Officer before such certificate is
issued, it may nevertheless be issued by the Corporation with the same effect as
if he were such Officer at the date of its issue. Such certificate shall be
issued only when any such shares are fully paid up, except that certificates for
shares may be issued prior to full payment under such restrictions and for such
purposes as the Board of Directors or the by-laws may provide; provided,
however, that any such certificate so issued prior to full payment shall state
the amount remaining unpaid and the terms of payment thereof.
b. All stock certificates representing shares of capital stock that are
subject to restrictions on transfer or to other restrictions may have imprinted
thereon any notation to that effect determined by the Board of Directors.
Section 2. Registration of Transfer. Upon surrender to the Corporation or
any transfer agent of the Corporation of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignment, or authority to
transfer, the Corporation or its transfer agent shall issue a new certificate to
the person entitled thereto, cancel the old certificate, and record the
transaction upon its books.
Section 3. Registered Stockholders.
a. Except as otherwise provided by law, the Corporation shall be entitled
to recognize the exclusive right of a person who is registered on its books as
the owner of shares of its capital stock to receive dividends or other
distributions and to vote or consent as such owner, and, in the case of stock
not paid in full, to hold liable for calls and assessments any person who is
registered on its books as the owner of shares of its capital stock. The
Corporation shall not be bound to recognize any equitable or legal claim to, or
interest in, such shares on the part of any other person.
b. If a stockholder desires that notices and/or dividends be sent to a name
or address other than the name or address appearing on the stock ledger
maintained by the Corporation, or its transfer agent or registrar, if any, the
stockholder shall have the duty to notify the Corporation, or its transfer agent
or registrar, if any, in writing of his desire and specify the alternate name or
address to be used.
<PAGE>
Section 4. Lost, Stolen or Destroyed Certificates. The Board of Directors
may direct that a new certificate be issued to replace any certificate
theretofore issued by the Corporation that, it is claimed, has been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen, or destroyed. When
authorizing the issue of a new certificate, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of the lost, stolen, or destroyed certificate, or his legal
representative, to advertise the same in such manner as it shall require, to
give the Corporation a bond in such sum, or other security in such form, as it
may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate claimed to have been lost, stolen,
or destroyed, and to accept such other terms and conditions as the Board of
Directors may require.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. Dividends. Subject to the provisions of law and the Certificate
of Incorporation, dividends upon the outstanding capital stock of the
Corporation may be declared by the Board of Directors and may be paid in cash,
in property, or in shares of the Corporation's capital stock.
Section 2. Reserves. The Board of Directors shall have full power, subject
to the provisions of law and the Certificate of Incorporation, to determine
whether any, and, if so, what part, of the funds legally available for the
payment of dividends shall be declared as dividends and paid to the stockholders
of the Corporation. The Board of Directors, in its sole discretion, may fix a
sum that may be set aside or reserved over and above the paid-in capital of the
Corporation as a reserve for any proper purpose, and may, from time to time,
increase, diminish, or vary such amount.
Section 3. Fiscal Year. The fiscal year of the corporation initially shall
be a calendar year, and subsequently shall be determined from time to time by
the Board of Directors.
Section 4. Seal. The corporate seal shall have inscribed thereon the name
of the Corporation, the year of its incorporation, and the words "Corporate
Seal" and "Delaware".
Section 5. Corporate Records. The Corporation may keep its stock ledger,
books of account and minutes of proceedings of the stockholders, the Board of
Directors and the committees of the Board of Directors, either within or without
the State of Delaware, as the Board of Directors may from time to time
determine.
Section 6. Checks, Drafts, Etc. All checks, drafts or other orders for
payment of money, notes or other evidences of indebtedness, issued in the name
of or payable to the Corporation, shall be signed or endorsed by such person or
persons in such manner as, from time to time, shall be determined by resolution
of the Board of Directors.
Section 7. Representation of Shares of Other Corporations. The Chairman of
the Board, President, Secretary and Treasurer of the Corporation are each
authorized to vote, represent and exercise on behalf of the Corporation all
rights incident to any and all shares of any other corporation or corporations
standing in the name of the Corporation. The authority herein granted to said
officers to vote or represent on behalf of the Corporation any and all shares
held by the Corporation in any other corporation or corporations may be
exercised either by such officers in person or by any person authorized to do so
by proxy or power of attorney duly executed by said officers.
<PAGE>
Section 8. Notice. Whenever, under the provisions of law or of the
Certificate of Incorporation or of these by-laws, notice is required to be given
to any director, stockholder, officer or agent, it shall not be construed to
mean personal notice, but such notice may be given in writing, by mail,
addressed to such person, at his address as it appears on the records of the
corporation, with the requisite postage thereon prepaid, or by telegram or
facsimile (to the telex or facsimile number appearing on the records of the
corporation, as applicable) and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail, delivered to
the telegraph office, or upon receipt of confirmation of delivery of such fax is
received, as the case may be. Notice to directors may also be given by
telephone. Whenever any notice is required to be given under the provisions of
law or the Certificate of Incorporation or of these by-laws, a waiver thereof in
writing, signed by the person or persons entitled to said notice, whether before
or after the time stated therein, shall be deemed equivalent thereto.
ARTICLE X
AMENDMENTS
Section 1. Power of Stockholders. New by-laws may be adopted, or these
by-laws may be amended or repealed, by the majority vote of the outstanding
shares of the Corporation, or by the written consent of the holders of such
shares.
Section 2. Power of Directors. The Directors may amend these By-laws by
majority vote.
ARTICLE XI
SUPREMACY CLAUSE
In the event that the corporation becomes a party to either of
o that certain Voting, Support and Exchange Trust Agreement by and among
Planet411.com Inc., a Nevada corporation ("Nevadaco"), 3560309 Canada
Inc. ("Subco"), 3027219 Nova Scotia Company ("Novaco") and Joseph
Farag, Stephane Chouinard and Johnson Joseph, as trustees, and/or
o that certain Combination Agreement by and among Nevadaco, Subco,
Novaco, 9066-4871 Quebec Inc. and the various Stockholders named
therein,
then, to the extent permitted under the corporation's certificate of
incorporation, in the event of a conflict between the terms of either or both of
such agreements and the terms of these by-laws, the terms of such agreements
shall govern.
NOT VALID UNLESS COUNTERSIGNED BY TRANSFER AGENT
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
CUSIP NO. 727D2N 10 9
NUMBER SHARES
Planet411.com Corporation
AUTHORIZED COMMON STOCK: 300,000,000 SHARES
PAR VALUE: $.001 PER SHARE
THIS CERTIFIES THAT
IS THE RECORD HOLDER OF
-- Shares of PLANET411.COM CORPORATION Common Stock --
transferable on the books of the Corporation in person or by duly authorized
attorney upon surrender of this Certificate properly endorsed. This Certificate
is not valid until countersigned by the Transfer Agent and registered by the
Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
Dated:
/s/ JOSEPH FARAG
- ----------------------
PRESIDENT
[SEAL]
/s/ STEPHANE CHOUINARD
- -----------------------
SECRETARY
NOT VALID UNLESS COUNTERSIGNED BY TRANSFER AGENT
Countersigned Registered:
NEVADA AGENCY AND TRUST COMPANY
50 WEST LIBERTY STREET, SUITE 830 By: ________________
EXHIBIT 4.2
THIS WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR
ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT OR SUCH LAWS OR ANY EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH
LAWS.
Number of Shares Underlying Warrant: *_________________*
-------------------------------
PLANET411.COM INC.
WARRANT
-------------------------------
This certifies that, for good and valuable consideration, PLANET411.COM
INC., a Delaware corporation (including its permitted successor(s) and
assign(s), the "Company"), grants to
------------------------------------
(Name of Warrantholder)
(including its successors and assigns in accordance herewith, the
"Warrantholder"), the right to subscribe for and purchase from the Company
______________________ (_____) validly issued, fully paid and nonassessable
shares of common stock, par value US$0.001 per share (the "Common Stock"), of
the Company (such shares underlying this warrant being the "Warrant Shares") at
the purchase price per share (the "Exercise Price") equal to US$_________ (being
the original purchase price per Unit paid by the Warrantholder, as such price
may be adjusted to reflect the price adjustments contained herein) until 5:00
p.m. Eastern Daylight Time on o, 2000 (the "Expiration Date"), all subject to
the terms, conditions and adjustments herein set forth.
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<PAGE>
1. Duration and Exercise of Warrant; Limitation on Exercise; Payment of
Taxes.
1.1 Duration and Exercise of Warrant. Subject to the terms and conditions
set forth herein, the Warrant may be exercised, in whole or in part, by the
Warrantholder by:
(a) the surrender of this Warrant to the Company, with a duly executed Exercise
Notice in the form attached hereto as Exhibit A specifying the number of Warrant
Shares to be purchased, during normal business hours on any business day prior
to the Expiration Date; and
(b) the delivery of payment to the Company, for the account of the Company, by
cash or by certified or bank cashier's check, of the Exercise Price for the
number of Warrant Shares specified in the Exercise Notice in lawful money of the
United States of America. The Company agrees that such Warrant Shares shall be
deemed to be issued to the Warrantholder as the record holder of such Warrant
Shares as of the close of business on the date on which this Warrant shall have
been surrendered and payment made for the Warrant Shares as aforesaid (or as
provided in Section 1.2 below).
1.2 Conversion Right (Cashless Exercise).
(a) In lieu of the payment of the Exercise Price, the Warrantholder shall have
the right (but not the obligation) to require the Company to convert this
Warrant, in whole or in part, into shares of Common Stock (the "Conversion
Right") as provided for in this Section 1.2. Upon exercise of the Conversion
Right, the Company shall deliver to the Warrantholder (without payment by the
Warrantholder of any of the Exercise Price) that number of shares of Common
Stock equal to the quotient obtained by dividing (x) the sum of (A) the value of
the Warrant at the time the Conversion Right is exercised (determined by
subtracting the aggregate Exercise Price in effect immediately prior to the
exercise of the Conversion Right from the aggregate Fair Market Value for the
shares of Common Stock issuable upon exercise of the Warrant immediately prior
to the exercise of the Conversion Right) and (B) the aggregate par value for
such Common Stock by (y) the Fair Market Value of one share of Common Stock
immediately prior to the exercise of the Conversion Right, provided that the
Warrantholder has paid to the Company the par value for such Common Stock. The
Fair Market Value of a share of Common Stock as of a particular date (the
"Determination Date") shall mean:
(i) If the Common Stock is listed on a national securities exchange, then
the Fair Market Value shall be the average of the last 10 "daily sales
prices" of the Common Stock on the principal national securities
exchange on which the Common Stock is listed or admitted for trading
on the last 10 business days prior the Determination Date, or if not
listed or traded on any such exchange, then the Fair Market Value
shall be the average of the last 10 "daily sales prices" of the Common
Stock on the National Market of The Nasdaq Stock Market (the "Nasdaq
National Market") on the last 10 business days prior to the
Determination Date. The "daily sales price" shall be the closing price
of the Common Stock at the end of each day; or
(ii) If the Common Stock is not so listed or admitted to unlisted trading
privileges or if no such sale is made on at least nine of such days,
then the Fair Market Value shall be the fair value as reasonably
determined in good faith by the Company's Board of
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<PAGE>
Directors (which determination shall be supported by a fairness opinion of
an investment bank and reasonably described in the written notice delivered
to the Warrantholder together with the Common Stock certificates).
(b) The Conversion Right may be exercised by the Warrantholder on any business
day prior to the Expiration Date by delivering to the Company the Warrant
Certificate, with a duly executed Exercise Notice with the conversion section
completed, exercising the Conversion Right and specifying the total number of
shares of Common Stock that will be issued to the Warrantholder pursuant to such
conversion.
1.3 Limitations on Exercise. Notwithstanding anything to the contrary
herein, this Warrant may be exercised only upon the delivery to the Company of
any certificates or other documents reasonably requested by the Company to
satisfy the Company that the proposed exercise of this Warrant may be effected
without registration under the Securities Act. The Warrantholder shall not be
entitled to exercise this Warrant, or any part thereof, unless and until such
certificates or other documents are reasonably acceptable to the Company. In the
event that the Warrantholder delivers payment of the Exercise Price pursuant to
Section 1.1 in connection with a proposed exercise of this Warrant and the
Company reasonably determines that no exemption from such registration is
available for such exercise, then the Company shall promptly return such payment
to the Warrantholder. In such event, the Warrantholder shall be deemed to have
exercised the Conversion Right provided for in Section 1.2(b) in connection with
such exercise without the necessity of providing further documentation or
information.
1.4 Warrant Shares Certificate. A stock certificate or certificates for the
Warrant Shares specified in the Exercise Notice shall be delivered to the
Warrantholder within 10 business days after receipt of the Exercise Notice and
receipt of payment of the purchase price if the Conversion Right is not
exercised. If this Warrant shall have been exercised only in part, the Company
shall, at the time of delivery of the stock certificate or certificates, deliver
to the Warrantholder a new Warrant evidencing the rights to purchase the
remaining Warrant Shares, which new Warrant shall in all other respects be
identical with this Warrant.
1.5 Payment of Taxes. The issuance of certificates for Warrant Shares shall
be made without charge to the Warrantholder for any stock transfer or other
issuance tax in respect thereto; provided, however, that the Warrantholder shall
be required to pay any and all taxes which may be payable in respect of any
transfer involved in the issuance and delivery of any certificate in a name
other than that of the then Warrantholder as reflected upon the books of the
Company.
1.6 Divisibility of Warrant; Transfer of Warrant.
(a) Subject to the provisions of this Section 1.6, this Warrant may be divided
into warrants of 1,000 shares or multiples thereof, upon surrender at the
principal office of the Company, without charge to any Warrantholder. Upon such
division, the Warrants may be transferred of record as the then Warrantholder
may specify without charge to such Warrantholder (other than any applicable
transfer taxes). In addition, subject to the provisions of this Section 1.6, the
Warrantholder shall also have the right to transfer this Warrant in its entirety
to any person or entity.
(b) Upon surrender of this Warrant to the Company with a duly executed
Assignment Form in the form attached hereto as Exhibit B and funds sufficient to
pay any transfer tax, the Company
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<PAGE>
shall, without charge, execute and deliver a new Warrant or Warrants of like
tenor in the name of the assignee named in such Assignment Form, and this
Warrant shall promptly be canceled. Each Warrantholder agrees that prior to any
proposed transfer (whether as the result of a division or otherwise) of this
Warrant, such Warrantholder shall give written notice to the Company of such
Warrantholder's intention to effect such transfer. Each such notice shall
describe the manner and circumstances of the proposed transfer in sufficient
detail, and, if requested by the Company, shall be accompanied by a written
opinion of legal counsel, which opinion shall be addressed to the Company and be
reasonably satisfactory in form and substance to the Company's counsel, to the
effect that the proposed transfer of this Warrant may be effected without
registration under the Securities Act. The Warrantholder shall not be entitled
to transfer this Warrant, or any part thereof, if such legal opinion is not
acceptable to the Company or if such documentation is not provided. The term
"Warrant" as used in this Agreement shall be deemed to include any Warrants
issued in substitution or exchange for this Warrant.
2. Restrictions on Transfer; Restrictive Legends.
Except as otherwise permitted by this Section 2, each Warrant shall (and
each Warrant issued upon direct or indirect transfer or in substitution for any
Warrant pursuant to Section 1.6 or Section 4 shall) be stamped or otherwise
imprinted with a legend in substantially the following form:
THIS WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR
ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT AND SUCH LAWS.
Except as otherwise permitted by this Section 2, each stock certificate for
Warrant Shares issued upon the exercise of any Warrant and each stock
certificate issued upon the direct or indirect transfer of any such Warrant
Shares shall be stamped or otherwise imprinted with a legend in substantially
the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN
MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
OR SUCH LAWS OR ANY EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND
SUCH LAWS.
4
<PAGE>
Notwithstanding the foregoing, the Warrantholder may require the Company to
issue a Warrant or a stock certificate for Warrant Shares, in each case without
a legend, if either (i) such Warrant or such Warrant Shares, as the case may be,
have been sold pursuant to an effective Registration Statement under the
Securities Act or (ii) the Warrantholder has delivered to the Company an opinion
of legal counsel, which opinion shall be addressed to the Company and be
reasonably satisfactory in form and substance to the Company's counsel, to the
effect that such legend is not required with respect to such Warrant or such
Warrant Shares, as the case may be.
3. Reservation of Shares, Etc.
The Company covenants and agrees as follows:
(a) all Warrant Shares which are issued upon the exercise of this Warrant will,
upon issuance, be validly issued, fully paid, and nonassessable, not subject to
any preemptive rights, and free from all taxes, liens, security interests,
charges and other encumbrances with respect to the issue thereof, other than
taxes with respect to any transfer occurring contemporaneously with such issue;
(b) during the period within which this Warrant may be exercised, the Company
will at all times have authorized and reserved, and keep available free from
preemptive rights, a sufficient number of shares of Common Stock to provide for
the exercise of the rights represented by this Warrant; and
(c) the Company will, from time to time, take all such action as may be required
to assure that the par value per share of the Warrant Shares is at all times
equal to or less than the then effective Exercise Price.
4. Loss or Destruction of Warrant.
Subject to the terms and conditions hereof, upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant and, in the case of loss, theft or destruction, of
such bond or indemnification as the Company may reasonably require, and, in the
case of such mutilation, upon surrender and cancellation of this Warrant, the
Company will execute and deliver a new Warrant of like tenor.
5. Ownership of Warrant.
The Company may deem and treat the person in whose name this Warrant is
registered as the holder and owner hereof (notwithstanding any notations of
ownership or writing hereon made by anyone other than the Company) for all
purposes and shall not be affected by any notice to the contrary, until
presentation of this Warrant for registration of transfer.
6. Certain Adjustments.
6.1 The number of Warrant Shares purchasable upon exercise of this Warrant
and the Exercise Price shall be subject to adjustment as follows:
(a) Stock Dividends. If at any time after the date of the issuance of this
Warrant (i) the Company shall fix a record date for the issuance of any stock
dividend payable in shares of
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<PAGE>
Common Stock or (ii) the number of shares of Common Stock shall have been
increased by a subdivision or split-up of shares of Common Stock, then, on the
record date fixed for the determination of holders of Common Stock entitled to
receive such dividend or immediately after the effective date of subdivision or
split up, as the case may be, the number of shares to be delivered upon exercise
of this Warrant will be increased so that the Warrantholder will be entitled to
receive the number of shares of Common Stock that such Warrantholder would have
owned immediately following such action had this Warrant been exercised
immediately prior thereto, and the Exercise Price will be adjusted as provided
below in paragraph (g).
(b) Combination of Stock. If the number of shares of Common Stock outstanding at
any time after the date of the issuance of this Warrant shall have been
decreased by a combination of the outstanding shares of Common Stock, then,
immediately after the effective date of such combination, the number of shares
of Common Stock to be delivered upon exercise of this Warrant will be decreased
so that the Warrantholder thereafter will be entitled to receive the number of
shares of Common Stock that such Warrantholder would have owned immediately
following such action had this Warrant been exercised immediately prior to such
combination, and the Exercise Price will be adjusted as provided below in
paragraph (g).
(c) Reorganization, etc. If any capital reorganization of the Company, any
reclassification of the Common Stock, any consolidation of the Company with or
merger of the Company with or into any other person, or any sale or lease or
other transfer of all or substantially all of the assets of the Company to any
other person, shall be effected in such a way that the holders of Common Stock
shall be entitled to receive stock, other securities or assets (whether such
stock, other securities or assets are issued or distributed by the Company or
another person) with respect to or in exchange for Common Stock, then, upon
exercise of this Warrant, the Warrantholder shall have the right to receive the
kind and amount of stock, other securities or assets receivable upon such
reorganization, reclassification, consolidation, merger or sale, lease or other
transfer by a holder of the number of shares of Common Stock that such
Warrantholder would have been entitled to receive upon exercise of this Warrant
had this Warrant been exercised immediately prior to such reorganization,
reclassification, consolidation, merger or sale, lease or other transfer,
subject to adjustments that shall be as nearly equivalent as may be practicable
to the adjustments provided for in this Section 6.1.
(d) Distributions to All Holders of Common Stock. If the Company shall, at any
time after the date of issuance of this Warrant, fix a record date to distribute
to all holders of its Common Stock, any shares of capital stock of the Company
(other than Common Stock) or evidences of its indebtedness or assets (not
including cash dividends or other distributions, whether paid from retained
earnings of the Company or otherwise) or rights or warrants to subscribe for or
purchase any of its securities, then the Warrantholder shall be entitled to
receive, upon exercise of the Warrant, that portion of such distribution to
which it would have been entitled had the Warrantholder exercised its Warrant
immediately prior to the date of such distribution. At the time it fixes the
record date for such distribution, the Company shall allocate sufficient
reserves to ensure the timely and full performance of the provisions of this
Section 6.1(d). The Company shall promptly (but in any case no later than five
Business Days prior to the record date of such distribution) mail by first
class, postage prepaid, to the Warrantholder, notice that such distribution will
take place.
(e) Fractional Shares. No fractional shares of Common Stock or scrip shall be
issued to a
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<PAGE>
Warrantholder in connection with the exercise of this Warrant. Instead of any
fractional shares of Common Stock that would otherwise be issuable to such
Warrantholder, the Company will pay to such Warrantholder a cash adjustment in
respect of such fractional interest in an amount equal to that fractional
interest of the then current Fair Market Value per share of Common Stock.
(f) Carryover. Notwithstanding any other provision of this Section 6, no
adjustment shall be made to the number of shares of Common Stock to be delivered
to the Warrantholder (or to the Exercise Price) if such adjustment represents
less than 1% of the number of shares to be so delivered, but any lesser
adjustment shall be carried forward and shall be made at the time and together
with the next subsequent adjustment which together with any adjustments so
carried forward shall amount to 1% or more of the number of shares to be so
delivered.
(g) Exercise Price Adjustment. Whenever the number of Warrant Shares purchasable
upon the exercise of this Warrant is adjusted, as herein provided, the Exercise
Price payable upon the exercise of this Warrant shall be adjusted by multiplying
such Exercise Price immediately prior to such adjustment by a fraction, of which
the numerator shall be the number of Warrant Shares purchasable upon the
exercise of the Warrant immediately prior to such adjustment, and of which the
denominator shall be the number of Warrant Shares purchasable immediately
thereafter.
6.2 Other Dilutive Events. In case any event shall occur as to which the
provisions of Section 6.1 are not strictly applicable, but the failure to make
any adjustment would not fairly protect the purchase rights represented by this
Warrant in accordance with the essential intent and principles of such section,
then, in each such case, the Company shall, at its expense, appoint a firm of
independent public accountants of recognized national standing (who may be the
independent public accountants regularly employed by the Company) to issue a
report which shall determine the adjustment, if any, on a basis consistent with
the essential intent and principles established in Section 6.1, necessary to
preserve without dilution the purchase rights represented by this Warrant. Upon
receipt of such report, the Company will promptly mail a copy thereof to the
Warrantholder and shall make the adjustments described therein.
6.3 Notice of Adjustments. Whenever the number of Warrant Shares or the
Exercise Price of such Warrant Shares is adjusted, as herein provided, the
Company shall promptly mail by first class, postage prepaid, to the
Warrantholder, notice of such adjustment or adjustments and a certificate of a
firm of independent public accountants of recognized national standing selected
by the Board of Directors of the Company (who shall be appointed at the
Company's expense and who may be the independent public accountants regularly
employed by the Company) setting forth the number of Warrant Shares and the
Exercise Price of such Warrant Shares after such adjustment, a brief statement
of the facts requiring such adjustment, and the computation by which such
adjustment was made.
6.4 Notice of Extraordinary Corporate Events. In case the Company after the
date hereof shall propose to (i) distribute any dividend (whether stock or cash
or otherwise) to the holders of shares of Common Stock or to make any other
distribution to the holders of shares of Common Stock, (ii) offer to the holders
of shares of Common Stock rights to subscribe for or purchase any additional
shares of any class of stock or any other rights or options, or (iii) effect any
reclassification of the Common Stock (other than a reclassification involving
merely the par value or a subdivision or combination of outstanding shares of
Common Stock), any capital reorganization, any consolidation or merger (other
than a merger in which no distribution of
7
<PAGE>
securities or other property is to be made to holders of shares of Common
Stock), any sale, transfer or other disposition of all or substantially all of
its property, assets and business, or the liquidation, dissolution or winding up
of the Company, then, in each such case, the Company shall mail to each
Warrantholder notice of such proposed action, which notice shall specify the
date on which (a) the books of the Company shall close, or (b) a record shall be
taken for determining the holders of Common Stock entitled to receive such stock
dividends or other distribution or such rights or transfer, other disposition,
liquidation, dissolution or winding up shall take place or commence, as the case
may be, and the date, if any, as of which it is expected that holders of record
of Common Stock shall be entitled to receive securities or other property
deliverable upon such action. Such notice shall be mailed in the case of any
action covered by clause (i) or (ii) above at least 10 days prior to the record
date for determining holders of Common Stock for purposes of receiving such
payment or offer, or in the case of any action covered by clause (iii) above at
least 30 days prior to the date upon which such action takes place and 20 days
prior to any record date to determine holders of Common Stock entitled to
receive such securities or other property.
6.5 Effect of Failure to Notify. Failure to file any certificate or notice
or to mail any notice, or any defect in any certificate or notice, pursuant to
Sections 6.3 and 6.4 shall not affect the legality or validity of the adjustment
to the Exercise Price, the number of shares purchasable upon exercise of this
Warrant or any transaction giving rise thereto.
6.6 Merger with Planet411.com Inc. Notwithstanding the foregoing or any
other provisions contained herein, the Company will only be required to provide
the Warrantholder with notice of the effective date, if any, of the Company's
merger with and into Planet411.com Inc., a Delaware corporation ("Delco"). The
Warrantholder, by his, her or its acceptance hereof and delivery of the
subscription documents in connection herewith, conclusively consents in all
capacities to such merger, pursuant to which shares having substantially
identical characteristics will be issued by Delco on a 1.00:1.00 basis to
holders of equity in the Company and pursuant to which Delco shall succeed to
all of the assets of the Company and assume all of the liabilities of the
Company (including liabilities to the Warrantholder in such capacity). No
adjustment otherwise contemplated by this Section 6 shall be made in connection
with such merger.
7. Miscellaneous.
7.1 Entire Agreement. This Warrant constitutes the entire agreement between
the Company and the Warrantholder with respect to the Warrants.
7.2 Binding Effects; Benefits. This Warrant shall inure to the benefit of
and shall be binding upon the Company and the Warrantholder and their respective
legal representatives, successors and assigns, as applicable. Nothing in this
Warrant, expressed or implied, is intended to or shall confer on any person
other than the Company and the Warrantholder, or their respective heirs, legal
representatives, successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Warrant.
7.3 Section and Other Headings. This section and other headings contained
in this Warrant are for reference purposes only and shall not be deemed to be a
part of this Warrant or to affect the meaning or interpretation of this Warrant.
8
<PAGE>
7.4 Pronouns. All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.
7.5 Further Assurances. Each of the Company and the Warrantholder shall do
and perform all such further acts and things and execute and deliver all such
other certificates, instruments and documents as the Company or the
Warrantholder may, at any time and from time to time, reasonably request in
connection with the performance of any of the provisions of this Agreement.
7.6 Notices. All notices and other communications required or permitted to
be given under this Warrant shall be in writing and shall be deemed to have been
duly given if delivered personally or sent by United States mail, postage
prepaid, to the parties hereto at the following addresses or to such other
address as any party hereto shall hereafter specify by notice to the other party
hereto:
(a) if to the Company, addressed to:
Planet 411
440 Rene Levesque Ouest
Suite 401
Montreal, PQ H2Z 1V7
Attn:General Counsel
Telephone: 514/866-4638
Facsimile: 514/866-5020
(b) if to the Warrantholder, addressed to him, her or it
at the address contained in the Warrantholder's
subscription for the Unit(s) of which this warrant
forms a part:
Except as otherwise provided herein, all such notices and communications shall
be deemed to have been received on the date of delivery thereof, if delivered
personally, or on the third business day after the mailing thereof.
7.7 Separability. Any term or provision of this Warrant which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the terms and provisions of this Warrant or affecting the
validity or enforceability of any of the terms or provisions of this Warrant in
any other jurisdiction.
[The remainder of this page intentionally left blank]
9
<PAGE>
7.8 Governing Law. This Warrant shall be deemed to be a contract made under
the laws of the State of New York and for all purposes shall be governed by and
construed in accordance with the laws of such state applicable to such
agreements made and to be performed entirely within such state.
7.9 No Rights or Liabilities as Stockholder. Nothing contained in this
Warrant shall be determined as conferring upon the Warrantholder any rights as a
stockholder of the Company or as imposing any liabilities on the Warrantholder
to purchase any securities whether such liabilities are asserted by the Company
or by creditors or stockholders of the Company or otherwise.
[Signature Page is Next]
10
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer.
PLANET411.COM INC.
By:
------------------------------------
Name:
Title:
Dated: ______________, 1999
11
<PAGE>
EXHIBIT A
FORM OF EXERCISE NOTICE
The undersigned registered owner of this Warrant hereby irrevocably
exercises this Warrant, or portion hereof (representing an integral number of
underlying shares of Common Stock) below designated, into shares of Common Stock
of Planet411.com Inc. (or its permitted successor(s), collectively, Planet411)
in accordance with the terms of the Warrant, and directs that the shares
issuable and deliverable upon such exercise and a Warrant for shares of the
Common Stock of Planet411 representing the unexercised portion of this Warrant,
together with a check for fractional shares created by adjustments to this
Warrant, be issued and delivered to the registered holder hereof unless a
different name has been indicated below. If shares are to be issued in the name
of a person other than the undersigned, the undersigned will pay all transfer
taxes payable with respect thereto.
Dated:
------------------------------
------------------------------
Signature(s)
Fill in for registration of shares if to be delivered other than to and in the
name of the registered holder:
- ------------------------------
(Name)
- ------------------------------
(Street Address)
- ------------------------------
(City, State and Zip Code)
Please print name and address:
Number of Warrants
Exercised (if less
than all): ______________
------------------------------
Social Security or other
Taxpayer Identification Number
12
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
To assign this Warrant, fill in the form below: (I) or (we) assign and transfer
this Warrant to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
- --------------------------------------------------------------------------------
and irrevocably appoint ____________________________________ his/its attorney in
fact to transfer this Warrant on the books of the Planet411.com Inc., or its
permitted successor(s) and assign(s), with full power of transfer in the
premises.
Date _________________ _____, _____________
Your Signature:
Corporate name, if applicable: , by
----------------------------------------------------------
(Sign exactly as name appears on the face of this Warrant)
Consent of Planet411.com Inc. (or its permitted successor(s) and assign(s)),
indicated by the signature of an executive officer thereof, is required for the
effective transfer of this Warrant.
- ----------------------------------------
Name:
Title:
Issuing Company:
VOTING, SUPPORT AND EXCHANGE TRUST AGREEMENT
AGREEMENT made as of the 13th day of May, 1999.
BETWEEN:
PLANET 411.COM CORPORATION, a corporation existing under the laws of the
State of Nevada (the "Parent"),
- and -
3560309 CANADA INC., a corporation existing under the laws of Canada (the
"Corporation"),
- and -
PLANET 411 (NOVA SCOTIA) COMPANY, a company existing under the laws of Nova
Scotia ("NovaCo")
- and -
JOSEPH FARAG, STEPHANE CHOUINARD AND JOHNSON JOSEPH, Businessmen, all of
the District of Montreal, Province of Quebec (collectively, the "Trustee")
WHEREAS, pursuant to a unanimous shareholders agreement and special mandate
(the "Mandate") entered into as of March 18, 1999 among the Trustee, the holders
of all of the outstanding shares (the "QuebecCo Shares") of 9066-4871 Quebec
inc. (the "Shareholders") and 9066-4871 Quebec Inc. ("QuebecCo"), the
Shareholders appointed the Trustee as mandataries of the Shareholders for the
purpose of selling, directly or indirectly, all of the QuebecCo Shares to
Parent, holding the Exchangeable Shares, holding the Voting Share and exercise
the voting rights attaching thereto and exercising the retraction rights
attaching to the Exchangeable Shares, including the Exchange Right;
WHEREAS, pursuant to a combination agreement dated as of April 20, 1999
among the Parent, the Corporation, NovaCo, QuebecCo and the Shareholders (such
agreement as it may be amended or restated is hereinafter referred to as the
"Combination Agreement"), the parties agreed that on the Effective Date (as
defined in the Combination Agreement), the Parent, the Corporation, NovaCo and
the Trustee would execute and deliver a Voting, Support and Exchange Trust
Agreement substantially in the form set forth in Annex I to the Combination
Agreement;
AND WHEREAS, pursuant to 46 separate agreements between the Corporation and
the Shareholders, the Shareholders sold, transferred and assigned to the
Corporation all of the outstanding shares in the capital of 90n66-4871 Quebec
Inc., in consideration for which the Corporation issued to the Shareholders the
25,094,996 Exchangeable Shares and 8,400 Preferred Shares which are currently
issued
<PAGE>
-2-
and outstanding;
AND WHEREAS NovaCo is to grant to and in favour of Non-Affiliated Holders
(as hereinafter defined) from time to time of Exchangeable Shares the right, in
the circumstances set forth herein, to require NovaCo to purchase from each
Non-Affiliated Holder all or any part of the Exchangeable Shares held by the
Non-Affiliated Holder;
AND WHEREAS the parties desire to make appropriate provision and to
establish a procedure whereby voting rights in the Parent shall be exercisable
by Non-Affiliated Holders from time to time of Exchangeable Shares by and
through the Trustee, which will hold registered title to the Voting Share (as
hereinafter defined) to which voting rights attach for the benefit of
Non-Affiliated Holders and whereby the rights to require NovaCo to purchase
Exchangeable Shares from the Non-Affiliated Holders shall be exercisable by
Non-Affiliated Holders from time to time of Exchangeable Shares by and through
the Trustee, which will exercise such rights in the name and for the benefit of
Non-Affiliated Holders;
AND WHEREAS the parties desire to make appropriate provision and to
establish a procedure whereby the Parent will take certain actions and make
certain payments and deliveries necessary to ensure that the Corporation or
NovaCo, as the case may be, will be able to make certain payments and to deliver
or cause to be delivered shares of Parent Common Stock (as hereinafter defined)
in satisfaction of the obligations of the Corporation or NovaCo, as the case may
be, under the Exchangeable Share Provisions (as hereinafter defined) and this
trust agreement;
AND WHEREAS these recitals and any statements of fact in this trust
agreement are made by the Parent, the Corporation and NovaCo and not by the
Trustee;
NOW THEREFORE, in consideration of the respective covenants and agreements
provided in this trust agreement and for other good and valuable consideration
(the receipt and sufficiency of which are hereby acknowledged), the parties
agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 Definitions. In this trust agreement, unless something in the subject
matter or content is inconsistent therewith:
"Applicable Laws" has the meaning set out in Section 0 hereof.
"Automatic Exchange Right" has the meaning set out in Section 5.11 hereof.
"Board of Directors" means the board of directors of the Corporation.
<PAGE>
-3-
"Business Day" means a day other than a Saturday, a Sunday or a day when
banks are not open for business in either or both of New York, New York and
Montreal, Quebec.
"Canadian Dollar Equivalent" means in respect of an amount expressed in a
foreign currency (the "Foreign Currency Amount") at any date the product
obtained by multiplying (a) the Foreign Currency Amount by (b) the official noon
spot exchange rate on such date for such foreign currency as reported by the
Bank of Canada or, in the event such spot exchange rate is not available, such
exchange rate on such date for such foreign currency as may be deemed by the
Board of Directors, acting reasonably, to be appropriate for such purpose.
"CBCA" means the Canada Business Corporations Act, as amended.
"Combination Agreement" has the meaning set out in the recitals hereto.
"Code" means the United States Internal Revenue Code of 1986, as amended.
"Current Market Price" means, in respect of a share of Parent Common Stock
on any date, the Canadian Dollar Equivalent of the average closing sales price
of shares of Parent Common Stock during a period of 20 consecutive trading days
ending not more than five trading days before such date on such stock exchange
or automated quotation system on which the shares of Parent Common Stock 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
Stock during such period is inadequate to create a market that reflects the fair
market value of the Parent Common Stock, then the Current Market Price of a
share of the Parent Common Stock shall be determined by the Board of Directors
based upon the advice of such qualified independent financial advisors as the
Board of Directors may deem to be appropriate, and provided further that any
such selection, opinion or determination by the Board of Directors shall be
conclusive and binding.
"Dividend Amount" has the meaning set out in Section 1.1 of the
Exchangeable Share Provisions.
"Effective Date" has the meaning set out in the Combination Agreement.
"Exchange Right" has the meaning set out in Section 0 hereof.
"Exchangeable Share Provisions" means the rights, privileges, restrictions
and conditions attaching to the Exchangeable Shares.
"Exchangeable Shares" means the Exchangeable Shares of the Corporation.
"Insolvency Event" means the institution by the Corporation of any
proceeding to be adjudicated a bankrupt or insolvent or to be dissolved or wound
up, or the consent of the Corporation 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
<PAGE>
-4-
without limitation the Companies Creditors' Arrangement Act (Canada) and the
Bankruptcy and Insolvency Act (Canada), and the failure by the Corporation to
contest in good faith any such proceedings commenced in respect of the
Corporation within 15 days of becoming aware thereof, or the consent by the
Corporation to the filing of any such petition or to the appointment of a
receiver, or the making by the Corporation of a general assignment for the
benefit of creditors, or the admission in writing by the Corporation of its
inability to pay its debts generally as they become due, or the Corporation not
being permitted, pursuant to solvency requirements or other provisions of
applicable law, to redeem any Retracted Shares pursuant to Section 0 of the
Exchangeable Share Provisions.
"Liquidation Amount" has the meaning set out in Section 5.1(1) of the
Exchangeable Share Provisions.
"Liquidation Call Right" has the meaning set out in Section 5.14 hereof.
"Liquidation Call Purchase Price" has the meaning set out in Section 5.14
hereof.
"Liquidation Date" has the meaning set out in Section 5.1(1) of the
Exchangeable Share Provisions.
"List" has the meaning set out in Section 0 hereof.
"Mandate" has the meaning set out in the recitals hereto.
"Non-Affiliated Holder Votes" has the meaning set out in Section 0 hereof.
"Non-Affiliated Holders" means the registered holders of Exchangeable
Shares other than the Parent and its Subsidiaries.
"NovaCo Call Notice" has the meaning set out in Section 5.17 hereof.
"Offer" has the meaning set out in Section 0 hereof.
"Officer's Certificate" means, with respect to the Parent, the Corporation
or NovaCo, as the case may be, a certificate signed by any one of the Chairman
of the Board, the Vice-Chairman of the Board, the President, any Vice-President
or any other senior officer of the Parent, the Corporation or NovaCo, as the
case may be.
"Parent Board of Directors" means the board of directors of the Parent.
"Parent Common Stock" and "shares of Parent Common Stock" each mean the
shares of Common Stock of the Parent, par value US$0.001 per share, having
voting rights of one vote per share, and any other securities into which such
shares may be changed or for which such shares may be exchanged (whether or not
the Parent shall be the issuer of such other securities) or any other
consideration which may be received by the holders of such shares, pursuant to a
recapitalization, reconstruction, reorganization or
<PAGE>
-5-
reclassification of, or amalgamation, merger, liquidation or similar
transaction, affecting such shares.
"Parent Consent" has the meaning set out in Section 0 hereof.
"Parent Liquidation Event" has the meaning set out in Section 5.10 hereof.
"Parent Liquidation Event Effective Date" has the meaning set out in
Section 5.12 hereof.
"Parent Meeting" has the meaning set out in Section 0 hereof.
"Parent Successor" has the meaning set out in Section 0 hereof.
"Preferred Shares" means the Preferred Shares of the Corporation.
"QuebecCo" means 9066-4871 Quebec Inc.
"Retracted Shares" has the meaning set out in Section 0 hereof.
"Retraction Call Purchase Price" has meaning set out in Section 5.16
hereof.
"Retraction Call Right" has the meaning set out in Section 5.16 hereof.
"Retraction Date" has the meaning set out in Section 6.1(1) of the
Exchangeable Share Provisions.
"Retraction Price" has the meaning set out in Section 6.1(1) of the
Exchangeable Share Provisions.
"Retraction Request" has the meaning set out in Section 6.1(1) of the
Exchangeable Share Provisions.
"Subsidiary" of the Parent means any corporation more than 50% of the
outstanding stock of which, by vote or value, is owned, directly or indirectly,
by the Parent, by one or more other Subsidiaries of the Parent or by the Parent
and one or more other Subsidiaries of the Parent.
"Trust Estate" means the Voting Share, any other securities, the Exchange
Right and any money or other rights or assets that may be held or exercised by
the Trustee from time to time pursuant to this trust agreement in the name or on
behalf of the Shareholders.
"Trustee", subject to the provisions of Article 0 hereof, includes any
successor(s) to the Trustee.
"Voting Rights" means the voting rights attached to the Voting Share.
"Voting Share" means the one share of Special Voting Stock of the Parent,
par value US$0.001,
<PAGE>
-6-
issued by the Parent to and deposited with the Trustee, which entitles the
holder of record to a number of votes at meetings of holders of Parent Common
Stock equal to the number of Exchangeable Shares outstanding from time to time
that are held by Non-Affiliated Holders.
1.2 Interpretation Not Affected by Headings, etc. The division of this
trust agreement into articles and sections and the insertion of headings are for
reference purposes only and shall not affect the interpretation of this trust
agreement. Unless otherwise indicated, any reference in this trust agreement to
an article or section refers to the specified article or section of this trust
agreement.
1.3 Number, Gender and Persons. In this trust agreement, unless the context
otherwise requires, words importing the singular number include the plural and
vice versa, words importing any gender include all genders and words importing
persons include individuals, corporations, partnerships, companies,
associations, trusts, unincorporated organizations, governmental bodies and
other legal or business entities of any kind.
1.4 Date for Any Action. If any date on which any action is required to be
taken under this trust agreement is not a Business Day, such action shall be
required to be taken on the next succeeding Business Day.
1.5 Payments. All payments to be made hereunder will be made without
interest and less any tax required by law to be deducted and withheld.
ARTICLE 2
ADMINISTRATION OF PROPERTY
2.1 Establishment of Administration. One of the purposes of this trust
agreement is to give effect to the full administration by the Trustee of the
property comprised in the Trust Estate for the benefit of the Non-Affiliated
Holders, as herein and in the Mandate provided. The Trustee will hold the Voting
Share in order to enable the Trustee to exercise the Voting Rights and will hold
the Exchange Right in order to enable the Trustee to exercise such right and
will hold the other rights granted in or resulting from the Trustee being a
party to this trust agreement in order to enable the Trustee to exercise or
enforce such rights, in each case as mandataries with full administration for
and on behalf of the Non-Affiliated Holders as provided in this trust agreement
and in the Mandate.
2.2 The parties hereto acknowledge and agree that all of the rights and
obligations of the Shareholders and the Trustee hereunder are subject to the
rights and obligations of such parties set forth in the Mandate and the exercise
by the Shareholders of any of their rights hereunder shall at all times while
the Mandate is in force, be subject to the terms and conditions of the Mandate
and the rights of the Trustee thereunder.
<PAGE>
-7-
ARTICLE 3
VOTING SHARE
3.1 Issue and Ownership of the Voting Share. Simultaneously with the
execution and delivery of this trust agreement, the Parent will issue to and
deposit with the Trustee the Voting Share to be hereafter held of record by the
Trustee as mandatary for and on behalf of, and for the use and benefit of, the
Non-Affiliated Holders, in accordance with the provisions of this trust
agreement. The Parent hereby acknowledges receipt from the Trustee as trustee
for and on behalf of the Non-Affiliated Holders of good and valuable
consideration (and the adequacy thereof) for the issuance of the Voting Share by
the Parent to the Trustee. During the term of this agreement and subject to the
terms and conditions of this trust agreement, the Trustee shall possess and
retain registered title to the Voting Share and shall, in the Trustee's capacity
as mandatary with full administration, be entitled to exercise all of the rights
and powers of an owner with respect to the Voting Share, provided that the
Trustee shall:
(a) hold the Voting Share and the registered title thereto as
mandatary solely for the use and benefit of the Non-Affiliated Holders in
accordance with the provisions of this trust agreement; and
(b) except as specifically authorized by this trust agreement, have no
power or authority to sell, transfer, vote or otherwise deal in or with the
Voting Share and the Voting Share shall not be used or disposed of by the
Trustee for any purpose other than the purposes set forth in this trust
agreement.
3.2 Legended Share Certificates. The Corporation will cause each
certificate representing Exchangeable Shares to bear an appropriate legend
notifying the Non-Affiliated Holders of their right to instruct the Trustee with
respect to the exercise of the Voting Rights with respect to the Exchangeable
Shares held by a Non-Affiliated Holder.
3.3 Safekeeping of Certificate. The certificate representing the Voting
Share shall at all times be held in safe keeping by the Trustee or its agent.
ARTICLE 4
EXERCISE OF VOTING RIGHTS
4.1 Voting Rights. The Trustee, as the holder of record of the Voting
Share, shall be entitled to all of the Voting Rights, including the right to
consent to or to vote in person or by proxy the Voting Share, on any matter,
question or proposition whatsoever that may come before the stockholders of the
Parent at a Parent Meeting or in connection with a Parent Consent. The Voting
Rights shall be and remain vested in and exercised by the Trustee. Subject to
Section 0 hereof, the Trustee shall exercise the Voting Rights only on the basis
of instructions received pursuant to this Article 0 from Non-Affiliated Holders
entitled
<PAGE>
-8-
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 Non-Affiliated Holder with respect to the
Voting Rights to which such Non-Affiliated Holder is entitled, the Trustee shall
not exercise or permit the exercise of the Voting Rights relating to such
Non-Affiliated Holder's Exchangeable Shares.
4.2 Number of Votes. With respect to all meetings of stockholders of the
Parent at which holders of shares of Parent Common Stock are entitled to vote (a
"Parent Meeting") and with respect to all written consents sought from the
holders of shares of Parent Common Stock (a "Parent Consent"), each
Non-Affiliated Holder shall be entitled to instruct the Trustee to cast and
exercise, in the manner instructed, one vote for each Exchangeable Share owned
of record by such Non-Affiliated Holder 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 "Non-Affiliated Holder 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.
4.3 Mailings to Shareholders. With respect to each Parent Meeting and
Parent Consent, the Trustee will mail or cause to be mailed (or otherwise
communicate in the same manner that the Parent utilizes in communications to
holders of Parent Common Stock, subject to the Trustee being advised in writing
of such method and its ability to provide this method of communication) to each
of the Non-Affiliated Holders named in the List 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 Non-Affiliated Holder is entitled, subject
to the provisions of Section 0 hereof, to instruct the Trustee as to the
exercise of the Non-Affiliated Holder Votes with respect to such Parent
Meeting or Parent Consent, as the case may be, or, pursuant and subject to
Section 0 hereof, to attend such Parent Meeting and to exercise personally
the Non-Affiliated Holder Votes thereat;
(c) a statement as to the manner in which such instructions may be
given to the Trustee, including an express indication that instructions may
be given to the Trustee to give:
(i) a proxy to such Non-Affiliated Holder or its designee to
exercise personally such holder's Non-Affiliated Holder Votes; or
(ii) a proxy to a designated agent or other representative of the
management of the Parent to exercise such Non-Affiliated Holder Votes;
(d) a statement that if no such instructions are received from the
Non-Affiliated Holder, the Non-Affiliated Holder Votes to which such
Non-Affiliated Holder is entitled will not be exercised;
(e) a form of direction whereby the Non-Affiliated Holder may so
direct and instruct the
<PAGE>
-9-
Trustee to the extent contemplated herein; and
(f) a statement of (i) the time and date by which such instructions
must be received by the Trustee in order to be binding upon it, which in
the case of a 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 instructions.
The materials referred to above are to be provided by the Parent to the
Trustee, but shall be subject to review and comment by the Trustee. For the
purpose of determining Non-Affiliated Holder Votes to which a Non-Affiliated
Holder is entitled in respect of any such Parent Meeting or Parent Consent, the
number of Exchangeable Shares owned of record by the Non-Affiliated Holder 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. The Parent will notify the Trustee in writing of any decision of
the Parent Board of Directors with respect to the calling of any such Parent
Meeting or the seeking of any such Parent Consent and shall provide all
necessary information and materials to the Trustee in each case promptly and in
any event in sufficient time to enable the Trustee to perform its obligations
contemplated by this Section 0.
4.4 Copies of Stockholder Information. The Parent will deliver to the
Trustee copies of all proxy materials (including notices of Parent Meetings but
excluding proxies to vote shares of Parent Common Stock), information
statements, reports (including without limitation all interim and annual
financial statements) and other written communications that are to be
distributed from time to time to holders of Parent Common Stock in sufficient
quantities and in sufficient time so as to enable the Trustee to send those
materials to each Non-Affiliated Holder at the same time as such materials are
first sent to holders of Parent Common Stock. The Trustee will mail or otherwise
send to each Non-Affiliated Holder, at the expense of Parent, copies of all such
materials (and all materials specifically directed to the Non-Affiliated Holders
or to the Trustee for the benefit of the Non-Affiliated Holders by the Parent)
received by the Trustee from the Parent at the same time as such materials are
first sent to holders of Parent Common Stock. The Trustee will make copies of
all such materials available for inspection by any Non-Affiliated Holder at the
principal office of QuebecCo in the City of Montreal.
4.5 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 Stock by or on behalf of a third party, including without
limitation dissident proxy and information circulars (and related information
and material) and tender and exchange offer circulars (and related information
and material), the Parent shall use reasonable efforts to obtain and deliver to
the Trustee copies thereof in sufficient quantities so as to enable the Trustee
to forward such material (unless the same has been provided directly to
Non-Affiliated Holders by such third party) to each Non-Affiliated Holder as
soon as practicable thereafter. As soon as practicable after receipt thereof,
the Trustee will mail or otherwise send to each Non-Affiliated Holder, at the
expense of the Parent, copies of all such materials received by the Trustee from
the Parent. The Trustee will also make copies of all such materials available
for inspection by any Non-Affiliated Holder at the principal office of QuebecCo
in the City of Montreal.
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4.6 List of Persons Entitled to Vote. The Corporation shall, (a) prior to
each annual, general and special Parent Meeting or the seeking of any Parent
Consent and (b) forthwith upon each request made at any time by the Trustee in
writing , prepare or cause to be prepared a list (a "List") of the names and
addresses of the Non-Affiliated Holders arranged in alphabetical order and
showing the number of Exchangeable Shares held of record by each such
Non-Affiliated Holder, in each case at the close of business on the date
specified by the Trustee in such request or, in the case of a List prepared in
connection with a 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 Stock 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 Trustee promptly after
receipt by the Corporation of such request or the record date for such meeting
or seeking of consent, as the case may be, and, in any event, within sufficient
time as to enable the Trustee to perform its obligations under this trust
agreement. The Parent agrees to give the Corporation 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 the Corporation to perform its obligations under this Section 0.
4.7 Entitlement to Direct Votes. Any Non-Affiliated Holder named in a List
prepared in connection with any Parent Meeting or any Parent Consent will be
entitled (a) to instruct the Trustee in the manner described in Section 0 hereof
with respect to the exercise of the Non-Affiliated Holder Votes to which such
Non-Affiliated Holder 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 Non-Affiliated Holder Votes to which such
Non-Affiliated Holder is entitled except, in each case, to the extent that such
Non-Affiliated Holder has transferred the ownership of any Exchangeable Shares
in respect of which such Non-Affiliated Holder is entitled to Non-Affiliated
Holder Votes after the close of business on the record date for such meeting or
seeking of consent.
4.8 Voting by Trustee, and Attendance of Trustee Representative at Meeting.
(a) In connection with each Parent Meeting and Parent Consent, the Trustee
shall exercise, either in person or by proxy, in accordance with the
instructions received from a Non-Affiliated Holder pursuant to Section 0 hereof,
the Non-Affiliated Holder Votes as to which such Non-Affiliated Holder is
entitled to direct the vote (or any lesser number thereof as may be set forth in
the instructions); provided, however, that such written instructions are
received by the Trustee from the Non-Affiliated Holder prior to the time and
date fixed by it for receipt of such instructions in the notice given by the
Trustee to the Non-Affiliated Holder pursuant to Section 0 hereof.
(b) The Trustee shall cause such representatives as are empowered by it to
sign and deliver, on behalf of the Trustee, proxies for Voting Rights enabling a
Non-Affiliated Holder to attend each Parent Meeting. Upon submission by a
Non-Affiliated Holder (or its designee) of identification satisfactory to the
Trustee's representatives, and at the Non-Affiliated Holder's request, such
representatives shall sign and deliver to such Non-Affiliated Holder (or its
designee) a proxy to exercise personally the Non-Affiliated Holder Votes as to
which such Non-Affiliated Holder is otherwise entitled hereunder to direct the
vote, if such Non-
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Affiliated Holder either (i) has not previously given the Trustee instructions
pursuant to Section 0 hereof in respect of such meeting, or (ii) submits to the
Trustee's representatives written revocation of any such previous instructions.
At such meeting, the Non-Affiliated Holder exercising such Non-Affiliated Holder
Votes shall, to the greatest extent permitted by applicable law, have the same
rights as the Trustee to speak at the meeting in respect of any matter, question
or proposition, to vote by way of ballot at the meeting in respect of any
matter, question or proposition and to vote at such meeting by way of a show of
hands in respect of any matter, question or proposition.
4.9 Distribution of Written Materials. Any written materials to be
distributed by the Trustee to the Non-Affiliated Holders pursuant to this trust
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
Stock, subject to the Trustee being advised in writing of such method of
communication and its ability to provide same) to each Non-Affiliated Holder at
its address as shown on the books of the Corporation. The Corporation shall
provide or cause to be provided to the Trustee for this purpose, on a timely
basis and without charge or other expense:
(a) current lists of the Non-Affiliated Holders; and
(b) upon the request of the Trustee, mailing labels to enable the
Trustee to carry out its duties under this trust agreement.
The materials referred to above are to be provided by the Parent to the
Trustee, but shall be subject to review and comment by the Trustee.
4.10 Termination of Voting Rights. All the rights of a Non-Affiliated
Holder with respect to the Non-Affiliated Holder Votes exercisable in respect of
the Exchangeable Shares held by such Non-Affiliated Holder, including the right
to instruct the Trustee as to the voting of or to vote personally such
Non-Affiliated Holder Votes, shall be deemed to be surrendered by the
Non-Affiliated Holder to the Parent or NovaCo, as the case may be, and such
Non-Affiliated Holder Votes and the Voting Rights represented thereby shall
cease immediately upon the delivery by such Non-Affiliated Holder to the Trustee
of the certificates representing such Exchangeable Shares in connection with the
exercise by the Non-Affiliated Holder of the Exchange Right, or upon the
redemption of Exchangeable Shares pursuant to Article 6 of the Exchangeable
Share Provisions, or upon the effective date of the liquidation, dissolution or
winding up of the Corporation pursuant to Article 5 of the Exchangeable Share
Provisions, or upon the purchase of Exchangeable Shares from the holder thereof
by NovaCo pursuant to the exercise by NovaCo of the Retraction Call Right or the
Liquidation Call Right (unless in any case the Corporation or NovaCo shall not
have delivered the requisite shares of Parent Common Stock and cheque, if any,
deliverable in exchange therefor to the Non-Affiliated Holders or to the Trustee
for delivery to the Non-Affiliated Holders).
<PAGE>
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ARTICLE 5
EXCHANGE AND CALL RIGHTS AND PARENT SUPPORT
5.1 Grant and Ownership of the Exchange Right. The Parent hereby grants to
the Trustee as mandatary for and on behalf of, and for the use and benefit of,
the Non-Affiliated Holders the right (the "Exchange Right"), upon the occurrence
and during the continuance of an Insolvency Event, to require the Parent to
purchase from each or any Non-Affiliated Holder all or any part of the
Exchangeable Shares held by the Non-Affiliated Holder, all in accordance with
the provisions of this trust agreement. The Parent hereby acknowledges receipt
from the Trustee, as trustee for and on behalf of the Non-Affiliated Holders, of
good and valuable consideration (and the adequacy thereof) for the grant of the
Exchange Right by the Parent to the Trustee. During the term hereof and subject
to the terms and conditions of this trust agreement, the Trustee shall possess
and shall be entitled to exercise all of the rights and powers of an owner with
respect to the Exchange Right, provided that the Trustee shall:
(a) hold the Exchange Right and the legal title thereto as mandatary
solely for the use and benefit of the Non-Affiliated Holders in accordance
with the provisions of this trust agreement; and
(b) except as specifically authorized by this trust agreement, have no
power or authority to exercise or otherwise deal in or with the Exchange
Right, and the Trustee shall not exercise such right for any purpose other
than the purposes provided for or contemplated pursuant to this trust
agreement.
5.2 Legended Share Certificates. The Corporation will cause each
certificate representing Exchangeable Shares to bear an appropriate legend
notifying the Non-Affiliated Holders of their right to instruct the Trustee with
respect to the exercise of the Exchange Right in respect of the Exchangeable
Shares held by a Non-Affiliated Holder.
5.3 General Exercise of Exchange Right. The Exchange Right shall be and
remain vested in and exercisable by the Trustee. Subject to Section 0 hereof,
the Trustee shall exercise the Exchange Right only on the basis of instructions
received pursuant to this Article 0 from Non-Affiliated Holders entitled to
instruct the Trustee as to the exercise thereof. To the extent that no
instructions are received from a Non-Affiliated Holder with respect to the
Exchange Right, the Trustee shall not exercise or permit the exercise of the
Exchange Right.
5.4 Purchase Price. The purchase price payable by the Parent for each
Exchangeable Share to be purchased by the Parent under the Exchange Right shall
be an amount per share equal to (a) the Current Market Price of a share of
Parent Common Stock on the last Business Day prior to the day of closing of the
purchase and sale of such Exchangeable Share under the Exchange Right, which
shall be satisfied in full by causing to be delivered to such holder one share
of Parent Common Stock, plus (b) the Dividend Amount, if any. The purchase price
for each such Exchangeable Share so purchased may be satisfied only by the
Parent delivering or causing to be delivered to the Trustee, on behalf of the
relevant Non-Affiliated Holder,
<PAGE>
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one share of Parent Common Stock and a cheque for the balance, if any, of the
purchase price.
5.5 Exercise Instructions. Subject to the terms and conditions herein set
forth, a Non-Affiliated Holder shall be entitled, upon the occurrence and during
the continuance of an Insolvency Event, to instruct the Trustee to exercise the
Exchange Right with respect to all or any part of the Exchangeable Shares
registered in the name of such Non-Affiliated Holder on the books of the
Corporation. To cause the exercise of the Exchange Right by the Trustee, the
Non-Affiliated Holder shall deliver to the Trustee, in person or by certified or
registered mail, at its address set forth in Section 14.3 hereof, the
certificates representing the Exchangeable Shares which such Non-Affiliated
Holder 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 CBCA and such additional documents and
instruments as the Trustee or the Corporation may reasonably require together
with (a) a duly completed form of notice of exercise of the Exchange Right,
contained on the reverse of or attached to the Exchangeable Share certificates,
stating (i) that the Non-Affiliated Holder thereby instructs the Trustee to
exercise the Exchange Right so as to require the Parent to purchase from the
Non-Affiliated Holder the number of Exchangeable Shares specified therein, (ii)
that such Non-Affiliated Holder has good title to and owns all such Exchangeable
Shares to be acquired by the Parent free and clear of all liens, claims and
encumbrances, (iii) the names in which the certificates representing Parent
Common Stock issuable in connection with the exercise of the Exchange Right are
to be issued and (iv) the names and addresses of the persons to whom such new
certificates should be delivered and (b) payment (or evidence satisfactory to
the Trustee, the Corporation and the Parent of payment) of the taxes (if any)
payable as contemplated by Section 5.8 hereof. If only a portion of the
Exchangeable Shares represented by any certificate delivered to the Trustee are
to be purchased by the Parent under the Exchange Right, a new certificate for
the balance of such Exchangeable Shares shall be issued to the holder at the
expense of the Corporation.
5.6 Delivery of Parent Common Stock: Effect of Exercise. Promptly after
receipt of the certificates representing the Exchangeable Shares that a
Non-Affiliated Holder desires the Parent to purchase under the Exchange Right
(together with such documents and instruments of transfer and a duly completed
form of notice of exercise of the Exchange Right and payment of taxes payable as
contemplated by Section 5.8 hereof, if any, or evidence thereof), duly endorsed
for transfer to the Parent, the Trustee shall notify the Parent and the
Corporation of its receipt of the same, which notice to the Parent and the
Corporation shall constitute exercise of the Exchange Right by the Trustee on
behalf of the holder of such Exchangeable Shares, and the Parent shall
immediately thereafter deliver or cause to be delivered to the Trustee, for
delivery to the Non-Affiliated Holder of such Exchangeable Shares (or to such
other persons, if any, properly designated by such Non-Affiliated Holder), a
certificate for the number of shares of Parent Common Stock deliverable in
connection with such exercise of the 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, security interest or adverse claim) and a cheque for the
balance, if any, of the purchase price therefor, provided, however, that no such
delivery shall be made unless and until the Non-Affiliated Holder requesting the
same shall have paid (or provided evidence satisfactory to the Trustee, the
Corporation and the Parent of the payment of) the taxes (if any) payable as
contemplated by Section 5.8 hereof. Immediately upon the giving of notice by the
Trustee to the Parent and the Corporation of the exercise of the Exchange Right,
as provided in this Section 5.6, the closing of the transaction of purchase and
sale contemplated by the Exchange Right shall be deemed
<PAGE>
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to have occurred, and the Non-Affiliated Holder of such Exchangeable Shares
shall be deemed to have transferred to the Parent all of its right, title and
interest in and to such Exchangeable Shares and the related interest in the
Trust Estate and shall not be entitled to exercise any of the rights of a holder
in respect thereof, other than the right to receive its proportionate part of
the total purchase price therefor, unless the requisite number of shares of
Parent Common Stock (together with a cheque for the balance, if any, of the
total purchase price therefor) is not delivered by the Parent to the Trustee,
for delivery to such Non-Affiliated Holder (or to such other persons, if any,
properly designated by such Non-Affiliated Holder), within five Business Days of
the date of the giving of such notice by the Trustee, in which case the rights
of the Non-Affiliated Holder shall remain unaffected until such shares of Parent
Common Stock are so delivered by the Parent and any such cheque is so delivered
and paid. Concurrently with the closing of the transaction of purchase and sale
contemplated by the Exchange Right, such Non-Affiliated Holder shall be
considered and deemed for all purposes to be the holder of the shares of Parent
Common Stock delivered to it pursuant to the Exchange Right.
5.7 Exercise of Exchange Right Subsequent to Retraction. In the event that
a Non-Affiliated Holder has exercised its right under Article 6 of the
Exchangeable Share Provisions to require the Corporation to redeem any or all of
the Exchangeable Shares held by the Non-Affiliated Holder (the "Retracted
Shares") and is notified by the Corporation pursuant to Section 6.1(4) of the
Exchangeable Share Provisions that the Corporation will not be permitted as a
result of solvency requirements of applicable law to redeem all such Retracted
Shares, subject to receipt by the Trustee of written notice to that effect from
the Corporation and provided that NovaCo shall not have exercised its Retraction
Call Right with respect to the Retracted Shares and that the Non-Affiliated
Holder shall not have revoked the retraction request delivered by the
Non-Affiliated Holder to the Corporation pursuant to Section 6.1(5) of the
Exchangeable Share Provisions, the retraction request will constitute and will
be deemed to constitute notice from the Non-Affiliated Holder to the Trustee
instructing the Trustee to exercise the Exchange Right with respect to those
Retracted Shares that the Corporation is unable to redeem. In any such event,
the Corporation hereby agrees with the Trustee and in favour of the
Non-Affiliated Holder immediately to notify the Trustee of such prohibition
against the Corporation redeeming all of the Retracted Shares and immediately to
forward or cause to be forwarded to the Trustee all relevant materials delivered
by the Non-Affiliated Holder to the Corporation (including without limitation a
copy of the retraction request delivered pursuant to Section 6.1(1) of the
Exchangeable Share Provisions) in connection with such proposed redemption of
the Retracted Shares and the Trustee will thereupon exercise the Exchange Right
with respect to the Retracted Shares that the Corporation is not permitted to
redeem and will require the Parent to purchase such shares in accordance with
the provisions of this Article 0.
5.8 Stamp or Other Transfer Taxes. Upon any sale of Exchangeable Shares to
the Parent pursuant to the Exchange Right or the Automatic Exchange Right, the
share certificate or certificates representing the Parent Common Stock to be
delivered in connection with the payment of the total purchase price therefor
shall be issued in the name of the Non-Affiliated Holder of the Exchangeable
Shares so sold or in such names as such Non-Affiliated Holder may otherwise
direct in writing without charge to the holder of the Exchangeable Shares so
sold, provided, however, that such Non-Affiliated Holder (a) shall pay (and
neither the Parent, the Corporation nor the Trustee shall be required to pay)
any documentary, stamp, transfer or other similar taxes that may be payable in
respect of any transfer involved in the issuance or delivery of such shares
<PAGE>
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to a person other than such Non-Affiliated Holder or (b) shall have established
to the satisfaction of the Trustee, the Parent and the Corporation that such
taxes, if any, have been paid.
5.9 Notice of Insolvency Event. Immediately upon the occurrence of an
Insolvency Event or any event that with the giving of notice or the passage of
time or both would be an Insolvency Event, the Corporation and the Parent shall
give written notice thereof to the Trustee. As soon as practicable after
receiving notice from the Corporation or the Parent or from any other person of
the occurrence of an Insolvency Event, the Trustee will mail to each
Non-Affiliated Holder, at the expense of the Parent, a notice of such Insolvency
Event in the form provided by the Parent, which notice shall contain a brief
statement of the right of the Non-Affiliated Holders with respect to the
Exchange Right.
5.10 Parent Liquidation Event. The Parent shall give the Corporation
written notice of each of the following events (each a "Parent Liquidation
Event") at the time set forth below:
(a) in the event of any determination by the Parent Board of Directors
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 stockholders for the purpose of winding up it affairs,
at least 60 days prior to the proposed effective date of such liquidation,
dissolution, winding up or other distribution; and
(b) immediately, upon the earlier of (i) receipt by the Parent of
notice of and (ii) 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 among its
stockholders for the purpose of winding up its affairs.
5.11 Notice of Parent Liquidation Event. Immediately following receipt by
the Corporation from the Parent of notice of any Parent Liquidation Event
contemplated by Section 5.10(a) or (b), the Corporation will give notice thereof
to the holders of Exchangeable Shares. Such notice shall be provided by the
Parent to the Corporation and shall include a brief description of the automatic
exchange of Exchangeable Shares for shares of Parent Common Stock provided for
in Section 0 below (the "Automatic Exchange Right").
5.12 Automatic Exchange Right. In order that the holders of Exchangeable
Shares (other than the Parent or any Subsidiary thereof) will be able to
participate on a pro rata basis with the holders of Parent Common Stock in the
distribution of assets of the Parent in connection with a Parent Liquidation
Event, on the fifth Business Day prior to the effective date (the "Parent
Liquidation Event Effective Date") of a Parent Liquidation Event all of the then
outstanding Exchangeable Shares (other than Exchangeable Shares held by the
Parent or any Subsidiary thereof) shall be automatically exchanged for shares of
Parent Common Stock. To effect such automatic exchange, the Parent shall
purchase each Exchangeable Share outstanding on the fifth Business Day prior to
the Parent Liquidation Event Effective Date and held by a holder of Exchangeable
Shares (other than the Parent or any Subsidiary thereof), and each such holder
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 a share of Parent Common
Stock on the fifth Business Day prior to the Parent Liquidation Event
<PAGE>
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Effective Date, which shall be satisfied in full by the Parent delivering to
such holder one share of Parent Common Stock, plus (b) the Dividend Amount, if
any.
5.13 Issuance of Parent Common Stock Upon Automatic Exchange. On the fifth
Business Day prior to the Parent Liquidation Event Effective Date, the closing
of the transaction of purchase and sale contemplated by the automatic exchange
of Exchangeable Shares for Parent Common Stock shall be deemed to have occurred,
and each holder of Exchangeable Shares (other than the Parent or any Subsidiary
thereof) shall be deemed to have transferred to the Parent all of such holder's
right, title and interest in and to such Exchangeable Shares and shall cease to
be a holder of such Exchangeable Shares and the Parent shall deliver or cause to
be delivered to the Trustee, for delivery to such holders, the certificates for
the number of shares of Parent Common Stock deliverable upon the automatic
exchange of Exchangeable Shares for shares of Parent Common Stock (which shares
shall be duly issued as fully paid and non-assessable and shall be free and
clear of any lien, claim or encumbrance, security interest or adverse claim) and
a cheque for the balance, if any, of the total purchase price for such
Exchangeable Shares and any interest on such deposit shall belong to the Parent.
Concurrently with each such holder ceasing to be a holder of Exchangeable
Shares, such holder shall be considered and deemed for all purposes to be the
holder of the shares of Parent Common Stock delivered to it, or to the Trustee
on its behalf, pursuant to the automatic exchange of Exchangeable Shares for
shares of Parent Common Stock and the certificates held by such holder
previously representing the Exchangeable Shares exchanged by such holder with
the Parent pursuant to such automatic exchange shall thereafter be deemed to
represent shares of Parent Common Stock delivered to such holder by the Parent
pursuant to such automatic exchange. Upon the request of any such former holder
of Exchangeable Shares and the surrender by such holder of Exchangeable Share
certificates deemed to represent Parent Common Stock, duly endorsed in blank and
accompanied by such instruments of transfer as the Parent may reasonably
require, the Parent shall deliver to such holder certificates representing the
shares of Parent Common Stock of which such holder is the holder and a cheque in
payment of the remaining portion, if any, of the purchase price.
5.14 Liquidation Call Right. NovaCo shall have the overriding right (a
"Liquidation Call Right"), in the event of and notwithstanding the proposed
liquidation, dissolution or winding up of the Corporation pursuant to Section
5.1 of the Exchangeable Share Provisions, to purchase from all but not less than
all of the holders of Exchangeable Shares on the Liquidation Date (other than
the Parent or any Subsidiary thereof) all but not less than all of the
Exchangeable Shares held by each such holder on payment by NovaCo of an amount
per share equal to (i) the Current Market Price share of a share of Parent
Common Stock on the last Business Day prior to the Liquidation Date, which shall
be satisfied in full by causing to be delivered to such holder one share of
Parent Common Stock, plus (ii) the Dividend Amount, if any (collectively, the
"Liquidation Call Purchase Price"). In the event of the exercise of a
Liquidation Call Right, each holder of Exchangeable Shares (other than the
Parent or any Subsidiary thereof) shall be obligated to sell all the
Exchangeable Shares held by such holder to NovaCo on the Liquidation Date on
payment by NovaCo to the holder of the Liquidation Call Purchase Price for each
such share.
5.15 Exercise of Liquidation Call Right. For the purposes of completing a
purchase of the Exchangeable Shares pursuant to the exercise of a Liquidation
Call Right, NovaCo shall deposit with the Trustee, on or before the Liquidation
Date, certificates representing the total number of shares of Parent
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Common Stock deliverable by NovaCo (which shares shall be duly issued as fully
paid and non-assessable and shall be free and clear of any lien, claim,
encumbrance, security interest or adverse claim) in payment of the total
Liquidation Call Purchase Price and a cheque in the amount of the remaining
portion, if any, of the total Liquidation Call Purchase Price and any interest
allowed on such deposit shall belong to NovaCo. Provided that the total
Liquidation Call Purchase Price has been so deposited with the Trustee, on and
after the Liquidation Date the rights of each holder of Exchangeable Shares
(other than the Parent or any Subsidiary thereof) will be limited to receiving
such holder's proportionate part of the total Liquidation Call Purchase Price
payable by NovaCo, upon presentation and surrender by the holder of Exchangeable
Shares of certificates representing the Exchangeable Shares held by such holder
in accordance with the following provisions and such holder shall on and after
the Liquidation Date be considered and deemed for all purposes to be the holder
of shares of Parent Common Stock delivered to such holder. Upon surrender to
NovaCo of a certificate representing Exchangeable Shares, together with such
other documents and instruments as may be required to effect a transfer of
Exchangeable Shares under the CBCA, and such additional documents and
instruments as the Corporation or NovaCo may reasonably require, the holder of
such surrendered certificate shall be entitled to receive in exchange therefor,
and NovaCo shall deliver to such holder or to the Trustee on behalf of such
holder, a certificate representing the shares of Parent Common Stock to which
such holder is entitled and a cheque in payment of the remaining portion, if
any, of the holder's proportionate part of the total Liquidation Call Purchase
Price. If NovaCo does not exercise its Liquidation Call Right in the manner
described above, on the Liquidation Date the holders of Exchangeable Shares
shall be entitled to receive in exchange therefor the liquidation price
otherwise payable by the Corporation in connection with the liquidation,
dissolution or winding up of the Corporation pursuant to Section 5.1 of the
Exchangeable Share Provisions.
5.16 Retraction Call Right. In the event that a holder of Exchangeable
Shares delivers a Retraction Request pursuant to Section 6.1 of the Exchangeable
Share Provisions and subject to the limitations set forth in Section 5.17,
NovaCo shall have the overriding right (a "Retraction Call Right"),
notwithstanding the proposed redemption of the Exchangeable Shares by the
Corporation pursuant to Section 6.1 of the Exchangeable Share Provisions, to
purchase from such holder on the Retraction Date all but not less than all of
the Retracted Shares held by such holder on payment by NovaCo of an amount per
share equal to (i) the Current Market Price of a share of Parent Common Stock on
the last Business Day prior to the Retraction Date, which shall be satisfied in
full by NovaCo causing to be delivered to such holder one share of Parent Common
Stock for each Exchangeable Share presented and surrendered by the holder, plus
(ii) the Dividend Amount, if any (collectively, the "Retraction Call Purchase
Price"). In the event of the exercise of a Retraction Call Right, a holder of
Exchangeable Shares who has delivered a Retraction Request shall be obligated to
sell all the Retracted Shares to NovaCo on the Retraction Date on payment by
NovaCo of an amount per share equal to the Retraction Call Purchase Price.
5.17 Exercise of Retraction Call Right. Upon receipt by the Corporation of
a Retraction Request, the Corporation shall immediately notify NovaCo thereof.
In order to exercise its Retraction Call Right, NovaCo must notify the
Corporation in writing of its determination to do so (a "NovaCo Call Notice")
within two Business Days of notification to NovaCo by the Corporation of the
receipt by the Corporation of the Retraction Request. If NovaCo so notifies the
Corporation within such two Business Day period, the Corporation shall notify
the holder as soon possible thereafter as to the exercise of a Retraction Call
Right.
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If NovaCo delivers a NovaCo Call Notice within such two Business Day period and
duly exercises its Retraction Call Right in accordance with the terms hereof,
the obligation of the Corporation to redeem the Retracted Shares shall terminate
and, provided that the Retraction Request is not revoked by the holder in the
manner specified in Section 6.1(5) of the Exchangeable Share Provisions, NovaCo
shall purchase from such holder and such holder shall sell to NovaCo on the
Retraction Date the Retracted Shares for the Retraction Call Purchase Price. For
the purposes of completing a purchase pursuant to a Retraction Call Right,
NovaCo shall deposit with the Corporation, on or before the Retraction Date,
certificates representing the number of shares of Parent Common Stock to which
such holder is entitled and a cheque in the amount of the remaining portion, if
any, of the aggregate Retraction Call Purchase Price to which such holder is
entitled. Provided that the aggregate Retraction Call Purchase Price has been so
deposited with the Corporation, the closing of the purchase and sale of the
Retracted Shares pursuant to the Retraction Call Right shall be deemed to have
occurred as at the close of business on the Retraction Date and, for greater
certainty, no redemption by the Corporation of such Retracted Shares shall take
place on the Retraction Date. In the event that NovaCo does not deliver a NovaCo
Call Notice within such two Business Day period, and provided that the
Retraction Request is not revoked by the holder in the manner specified in
Section 6.1(5) of the Exchangeable Share Provisions, the Corporation shall
redeem the Retracted Shares on the Retraction Date and in the manner otherwise
contemplated in Section 6.1 of the Exchangeable Share Provisions.
5.18 Payment of Retraction Call Purchase Price. For the purposes of
completing a purchase of Exchangeable Shares pursuant to the exercise of a
Retraction Call Right, NovaCo shall deliver or cause the Corporation to deliver
to the relevant holder, at the address of the holder recorded in the securities
register of the Corporation for the Exchangeable Shares or at the address
specified in the holder's Retraction Request or by holding for pick-up by the
holder at the registered office of the Corporation a certificate representing
the number of shares of Parent Common Stock to which such holder is entitled
(which shares shall be duly issued as fully paid and non-assessable and shall be
free and clear of any lien, claim, encumbrance, security interest or adverse
claim) registered in the name of the holder or in such other name as the holder
may request in payment of the Retraction Call Purchase Price and a cheque of
NovaCo payable at par and in Canadian dollars at any branch of the bankers of
NovaCo or of the Corporation in Canada in payment of the remaining portion, if
any, of such aggregate Retraction Call Purchase Price and such delivery of such
certificate and cheque on behalf of NovaCo by the Corporation shall be deemed to
be payment of and shall satisfy and discharge all liability for the Retraction
Call Purchase Price to the extent that the same is represented by such share
certificates and cheque, unless such cheque is not paid on due presentation.
5.19 Rights of Holder Following Exercise of Retraction Call Right. On and
after the close of business on the Retraction Date, the holder of the Retracted
Shares shall not be entitled to exercise any of the rights of a holder in
respect thereof, other than the right to receive its proportionate part of the
total Retraction Call Purchase Price unless upon presentation and surrender of
certificates in accordance with the foregoing provisions, payment of the
aggregate Retraction Call Purchase Price payable to such holder shall not be
made, in which case the rights of such holder shall remain unaffected until such
aggregate Retraction Call Purchase Price 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
such aggregate Retraction Call Purchase Price has been made in accordance with
the foregoing provisions, the holder of the Retracted Shares so purchased by
NovaCo shall thereafter be considered and deemed for all
<PAGE>
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purposes to be a holder of the shares of Parent Common Stock delivered to such
holder.
ARTICLE 6
COVENANTS, REPRESENTATIONS AND WARRANTIES
6.1 Covenants of Parent Regarding Exchangeable Shares. So long as any
Exchangeable Shares are outstanding, the Parent will:
(a) not declare or pay any dividend on the Parent Common Stock unless
(i) the Corporation will 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 an
equivalent dividend on the Exchangeable Shares and (ii) the Corporation
shall simultaneously declare or pay, as the case may be, an equivalent
dividend on the Exchangeable Shares;
(b) advise the Corporation sufficiently in advance of the declaration
by the Parent of any dividend on the Parent Common Stock and take all such
other actions as are necessary, in cooperation with the Corporation, to
ensure that the 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 Stock;
(c) ensure that the record date for determining shareholders entitled
to receive any dividend declared on the Parent Common Stock is not less
than 10 Business Days after the declaration date for such dividend or such
shorter period within which applicable law may be complied with;
(d) take all such actions and do all such things as are necessary or
desirable to enable and permit the Corporation, in accordance with
applicable law, to pay and otherwise perform its obligations with respect
to the satisfaction of the Liquidation Amount in respect of each issued and
outstanding Exchangeable Share upon the liquidation, dissolution or winding
up of the Corporation, including without limitation all such actions and
all such things as are necessary or desirable to enable and permit the
Corporation to cause to be delivered shares of Parent Common Stock to the
holders of Exchangeable Shares in accordance with the provisions of Article
5 of the Exchangeable Share Provisions;
(e) take all such actions and do all such things as are necessary or
desirable to enable and permit the Corporation, in accordance with
applicable law, to pay and otherwise perform its obligations with respect
to the satisfaction of the Retraction Price, including without limitation
all such actions and all such things as are necessary or desirable to
enable and permit the Corporation to cause to be delivered shares of Parent
Common Stock to the holders of Exchangeable Shares, upon the retraction of
the Exchangeable Shares in accordance with the provisions of Article 6 of
the Exchangeable Share Provisions;
<PAGE>
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(f) take all such actions and do all such things as are necessary or
desirable to enable and permit NovaCo, in accordance with applicable law,
to pay and otherwise perform its obligations arising upon the exercise by
it of the Liquidation Call Right or the Retraction Call Right, including
without limitation all such actions and all such things as are necessary or
desirable to enable and permit NovaCo to cause to be delivered shares of
Parent Common Stock to the holders of Exchangeable Shares in accordance
with the provisions of the Liquidation Call Right or the Retraction Call
Right, as the case may be; and
(g) cause NovaCo to not exercise its vote as a shareholder to initiate
the voluntary liquidation, dissolution or winding up of the Corporation nor
take any action or omit to take any action that is designed to result in
the liquidation, dissolution or winding up of the Corporation.
6.2 Segregation of Funds. The Parent will cause the Corporation to deposit
a sufficient amount of funds in a separate account and segregate a sufficient
amount of such other assets as is necessary to enable the Corporation to pay or
otherwise satisfy the applicable dividends, Liquidation Amount or Retraction
Price, in each case for the benefit of Non-Affiliated Holders from time to time
of the Exchangeable Shares, and to use such funds and other assets so segregated
exclusively for the payment of dividends and the payment or other satisfaction
of the Liquidation Amount or the Retraction Price, as applicable.
6.3 Certain Representations. The Parent hereby represents, warrants and
covenants that:
(a) it has irrevocably reserved for issuance and will at all times
keep available, free from pre-emptive and other rights, out of its
authorized and unissued capital stock such number of shares of Parent
Common Stock (or other shares or securities into which the Parent Common
Stock may be reclassified or changed as contemplated by Section 0 hereof)
(i) as is equal to the sum of (x) the number of Exchangeable Shares issued
and outstanding from time to time and (y) the number of Exchangeable Shares
issuable upon the exercise of all rights to acquire Exchangeable Shares
outstanding from time to time and (ii) as are now and may hereafter be
required to enable and permit each of the Corporation and NovaCo to meet
its obligations hereunder, under the Exchangeable Share Provisions and
under any other security or commitment pursuant to which the Corporation,
NovaCo or the Parent may now or hereafter be required to issue and/or
deliver shares of Parent Common Stock; and
(b) it is not as of the Effective Date, and has not been at any time
within the last year prior to the Effective Date, a "United States real
property holding corporation" within the meaning of Section 897 of the
Code.
6.4 Notification of Certain Events. In order to assist the Parent to comply
with its obligations hereunder and to permit NovaCo to exercise the Liquidation
Call Right or the Retraction Call Right, the Corporation will give the Parent
and NovaCo notice of each of the following events at the time set forth below:
<PAGE>
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(a) in the event of any determination by the Board of Directors to
institute voluntary liquidation, dissolution or winding up proceedings with
respect to the Corporation or to effect any other distribution of the
assets of the Corporation 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) immediately, upon the earlier of (i) receipt by the Corporation of
notice of, and (ii) the Corporation 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
Corporation or to effect any other distribution of the assets of the
Corporation among its shareholders for the purpose of winding up its
affairs;
(c) immediately, upon receipt by the Corporation of a Retraction
Request;
(d) as soon as practicable upon the issuance by the Corporation of any
Exchangeable Shares or rights to acquire Exchangeable Shares.
6.5 Delivery of Shares of Parent Common Stock. Upon notice of any event
that requires the Corporation or NovaCo to cause to be delivered shares of
Parent Common Stock to any holder of Exchangeable Shares, the Parent shall, in
any manner deemed appropriate by it, provide such shares or cause such shares to
be provided to the Corporation or NovaCo, as the case may be, which shall
forthwith deliver the requisite shares of Parent Common Stock to or to the order
of the former holder of the surrendered Exchangeable Shares, as the Corporation
or NovaCo shall direct. All such shares of Parent Common Stock shall be duly
issued as fully paid, non-assessable, free of pre-emptive rights and shall be
free and clear of any lien, claim, encumbrance, security interest or adverse
claim.
6.6 Qualification of Shares of Parent Common Stock. The Parent covenants
that if any shares of Parent Common Stock (or other shares or securities into
which the Parent Common Stock may be reclassified or changed as contemplated by
Section 0 hereof) to be issued and delivered hereunder, including for greater
certainty, pursuant to the Exchangeable Share Provisions or Article 5 hereof,
require registration or qualification with or approval of or the filing of any
document including any prospectus or similar document or the taking of any
proceeding with or the obtaining of any order, ruling or consent from any
governmental or regulatory authority under any Canadian or United States
federal, provincial or state law or regulation or pursuant to the rules and
regulations of any regulatory authority or the fulfilment of any other legal
requirement (collectively, the "Applicable Laws") before such shares (or other
shares or securities into which the Parent Common Stock may be reclassified or
changed as contemplated by Section 0 hereof) may be issued and delivered by the
Parent to the initial holder thereof or in order that such shares may be freely
traded in the United States thereafter (other than any restrictions on transfer
by reason of a holder being an "affiliate" of the Parent or, prior to the
Effective Date, of QuebecCo for purposes of United States federal or state
securities law), the Parent will in good faith expeditiously take all such
actions and do all such things as are necessary to cause such shares of Parent
Common Stock (or other shares or securities into which the Parent Common Stock
may be reclassified or changed as contemplated by Section 0 hereof) to be and
remain duly registered, qualified or approved. The Parent will in good faith
expeditiously take all such actions
<PAGE>
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and do all such things as are necessary to cause all shares of Parent Common
Stock (or other shares or securities into which the Parent Common Stock may be
reclassified or changed as contemplated by Section 0 hereof) to be delivered
hereunder, including for greater certainty, pursuant to the Exchangeable Share
Provisions or Article 5 hereof, to be listed, quoted or posted for trading on
all stock exchanges and quotation systems on which such shares are listed,
quoted or posted for trading at such time.
6.7 Economic Equivalences.
(a) The Parent will not without the prior approval of the Corporation and
the prior approval of the holders of the Exchangeable Shares given in accordance
with Section 8.2 of the Exchangeable Share Provisions:
(i) issue or distribute shares of Parent Common Stock (or securities
exchangeable for or convertible into or carrying rights to acquire shares
of Parent Common Stock) to the holders of all or substantially all of the
then outstanding shares of Parent Common Stock by way of stock dividend or
other distribution, other than an issue of shares of Parent Common Stock
(or securities exchangeable for or convertible into or carrying rights to
acquire shares of Parent Common Stock) to holders of shares of Parent
Common Stock who exercise an option to receive dividends in shares of
Parent Common Stock (or securities exchangeable for or convertible into or
carrying rights to acquire shares of Parent Common Stock) in lieu of
receiving cash dividends;
(ii) issue or distribute rights, options or warrants to the holders of
all or substantially all of the then outstanding shares of Parent Common
Stock entitling them to subscribe for or to purchase shares of Parent
Common Stock (or securities exchangeable for or convertible into or
carrying rights to acquire shares of Parent Common Stock); or
(iii) issue or distribute to the holders of all or substantially all
of the then outstanding shares of Parent Common Stock (A) shares or
securities of the Parent of any class other than Parent Common Stock (other
than shares convertible into or exchangeable for or carrying rights to
acquire shares of Parent Common Stock), (B) rights, options or warrants
other than those referred to in Section 6.7(a)(ii) above, (C) evidences of
indebtedness of the Parent or (D) assets of the Parent;
unless (x) the Corporation is permitted under applicable law to issue
or distribute the economic equivalent on a per share basis of such rights,
options, warrants, securities, shares, evidences of indebtedness or other
assets to holders of the Exchangeable Shares and (y) the Corporation shall
issue or distribute such rights, options, warrants, securities, shares,
evidences of indebtedness or other assets simultaneously to holders of the
Exchangeable Shares.
(b) The Parent will not without the prior approval of the Corporation and
the prior approval of the holders of the Exchangeable Shares given in accordance
with Section 8.2 of the Exchangeable Share Provisions:
(i) subdivide or change the then outstanding shares of Parent Common
Stock into a
<PAGE>
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greater number of shares of Parent Common Stock; or
(ii) reduce, combine, consolidate or change the then outstanding
shares of Parent Common Stock into a lesser number of shares of Parent
Common Stock; or
(iii) reclassify or otherwise change the shares of Parent Common Stock
or effect an amalgamation, merger, reorganization or other transaction
affecting the shares of Parent Common Stock;
unless (x) the Corporation is permitted under applicable law to simultaneously
make the same or an economically equivalent change to, or in the rights of
holders of, the Exchangeable Shares and (y) the same or an economically
equivalent change is made to, or in the rights of the holders of, the
Exchangeable Shares.
(c) The Parent will ensure that the record date for any event referred to
in Section 0 or 0 above, or (if no record date is applicable for such event) the
effective date for any such event, is not less than 20 Business Days after the
date on which such event is declared or announced by the Parent (with
simultaneous notice thereof to be given by the Parent to the Corporation).
(d) The Board of Directors shall determine, in good faith and in its sole
discretion (with the assistance of such reputable and qualified independent
financial advisors and/or other experts as the Board of Directors may require),
economic equivalence for the purposes of any event referred to in Section 0 or 0
and each such determination shall be conclusive and binding on the Parent. 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:
(i) in the case of any stock dividend or other distribution payable in
shares of Parent Common Stock, the number of such shares issued in
proportion to the number of shares of Parent Common Stock previously
outstanding;
(ii) in the case of the issuance or distribution of any rights,
options or warrants to subscribe for or purchase shares of Parent Common
Stock (or securities exchangeable for or convertible into or carrying
rights to acquire shares of Parent Common Stock), the relationship between
the exercise price of each such right, option or warrant and the current
market value (as determined by the Board of Directors in the manner above
contemplated) of a share of Parent Common Stock;
(iii) in the case of the issuance or distribution of any other form of
property (including without limitation any shares or securities of the
Parent of any class other than Parent Common Stock, any rights, options or
warrants other than those referred to in Section 0 above, any evidences of
indebtedness of the Parent or any assets of the 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 share of Parent Common Stock and the
current market value (as determined by the Board of Directors in the manner
above contemplated) of a share of Parent Common Stock;
<PAGE>
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(iv) in the case of any subdivision or change of the then outstanding
shares of Parent Common Stock into a greater number of shares of Parent
Common Stock or the reduction, combination or consolidation or change of
the then outstanding shares of Parent Common Stock into a lesser number of
shares of Parent Common Stock or any amalgamation, merger, reorganization
or other transaction affecting the Parent Common Stock, the effect thereof
upon the then outstanding shares of Parent Common Stock; 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 shares
of Parent Common Stock 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).
For purposes of the foregoing determinations, the current value of any
security listed and traded or quoted on a securities exchange or automated
quotation system shall be the weighted average of the daily trading prices of
such security during a period of not less than 20 consecutive trading days
ending not more than five trading days before the date of determination on the
principal securities exchange or automated quotation system on which such
securities are listed and traded or quoted; provided, however, that if in the
opinion of the Board of Directors the public distribution or trading activity of
such securities during such period does not create a market that reflects the
fair market value of such securities, then the current market value thereof
shall be determined by the Board of Directors, in good faith and in its sole
discretion (with the assistance of such reputable and qualified independent
financial advisors and/or other experts as the board may require), and provided
further that any such determination by the Board of Directors shall be
conclusive and binding on the Parent.
6.8 Tender Offers, etc. In the event that a tender offer, share exchange
offer, issuer bid, take-over bid or similar transaction with respect to Parent
Common Stock (each, an "Offer") is proposed by the Parent or is proposed to the
Parent or its shareholders and is recommended by the Parent Board of Directors,
or is otherwise effected or to be effected with the consent or approval of the
Parent Board of Directors, the Parent will use reasonable efforts (to the
extent, in the case of an Offer by a third party, within its control)
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 to participate in such Offer to the same extent and on an economically
equivalent basis as the holders of shares of Parent Common Stock, without
discrimination. Without limiting the generality of the foregoing, the Parent
will use reasonable efforts expeditiously and in good faith to ensure that
holders of Exchangeable Shares may participate in all such Offers without being
required to retract Exchangeable Shares as against the Corporation (or, if so
required, to ensure that any such retraction shall be effective only upon, and
shall be conditional upon, the closing of the Offer and only to the extent
necessary to tender or deposit to the Offer).
6.9 Ownership of Outstanding Shares. Without the prior approval of the
Corporation and the prior approval of the Non-Affiliated Holders given in
accordance with Section 8.2 of the Exchangeable
<PAGE>
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Share Provisions, the Parent covenants and agrees that, as long as any
outstanding Exchangeable Shares are owned by any person or entity other than the
Parent or any of its Subsidiaries, the Parent will be and remain the direct or
indirect beneficial owner of all issued and outstanding securities of the
Corporation and of NovaCo carrying or otherwise entitled to voting rights in any
circumstances, other than the Exchangeable Shares and the Preferred Shares.
6.10 Parent Not to Vote Exchangeable Shares. The Parent covenants and
agrees that it will appoint and cause to be appointed proxyholders with respect
to all Exchangeable Shares held by the Parent and its Subsidiaries 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. The Parent further
covenants and agrees that it will not, and will cause its Subsidiaries not to,
exercise any voting rights that may be exercisable by holders of Exchangeable
Shares from time to time pursuant to the Exchangeable Share Provisions or
pursuant to the provisions of the CBCA (or any successor or other corporate
statute by which the Corporation may in the future be governed) with respect to
any Exchangeable Shares held by it or by its direct or indirect Subsidiaries in
respect of any matter considered at any meeting of holders of Exchangeable
Shares.
6.11 Due Performance. On or after the Effective Date, the Parent and NovaCo
shall duly and timely perform all of their obligations provided for in the
Combination Agreement, including any obligations that may arise upon the
exercise of rights by any holder of Exchangeable Shares (including the Parent)
under the Exchangeable Share Provisions.
6.12 Issue of Additional Shares. During the term of this trust agreement,
the Parent will not issue any shares of Special Voting Stock of the Parent, par
value US$0.001, other than the Voting Share.
ARTICLE 7
CONCERNING THE TRUSTEE
7.1 Power and Duties of the Trustee. The rights, powers and authorities of
the Trustee under this trust agreement, in their capacity as mandataries of the
Shareholders, shall include:
(a) receipt and deposit of the Voting Share from the Parent as
mandataries for and on behalf of the Non-Affiliated Holders in accordance
with the provisions of this trust agreement;
(b) granting proxies and distributing materials to Non-Affiliated
Holders as provided in this trust agreement;
(c) voting the Non-Affiliated Holder Votes in accordance with the
provisions of this trust agreement;
(d) receiving the grant of the Exchange Right from the Parent as
mandataries for and on behalf of the Non-Affiliated Holders in accordance
with the provisions of this trust agreement;
<PAGE>
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(e) exercising the Exchange Right and enforcing the benefit of the
Automatic Exchange Right in accordance with the provisions of this trust
agreement, and in connection therewith receiving from Non-Affiliated
Holders Exchangeable Shares and other requisite documents and distributing
to such Non-Affiliated Holders the shares of Parent Common Stock and
cheques, if any, to which such Non-Affiliated Holders are entitled upon the
exercise of the Exchange Right or pursuant to the Automatic Exchange Right,
as the case may be;
(f) holding registered title, if applicable, to the Trust Estate;
(g) investing any money forming, from time to time, a part of the
Trust Estate as provided in this trust agreement;
(h) taking action at the direction of a Non-Affiliated Holder to
enforce the obligations of the Corporation and/or NovaCo and/or the Parent
under this trust agreement and/or the Exchangeable Share Provisions; and
(i) taking such other actions and doing such other things as are
specifically provided in this trust agreement.
In the exercise of such rights, powers and authorities the Trustee shall
have (and is granted) such incidental and additional rights, powers and
authority not in conflict with any of the provisions of this trust agreement as
the Trustee, acting in good faith and in the reasonable exercise of its
discretion, may deem necessary, appropriate or desirable to effect the purpose
of its mandate. Any exercise of such discretionary rights,powers and authorities
by the Trustee shall be final, conclusive and binding upon all persons. For
greater certainty, the Trustee shall have only those duties as are set out
specifically in this trust agreement or the Mandate. The Trustee in exercising
its rights, powers, duties and authorities hereunder and thereunder shall act
honestly and in good faith with a view to the best interests of the
Non-Affiliated Holders and shall exercise the care, diligence and skill that a
reasonably prudent mandatary would exercise in comparable circumstances. The
Trustee shall not be bound to give any notice or do or take any act, action or
proceeding by virtue of the powers conferred on it hereby or by the Mandate
unless and until it shall be specifically required to do so under the terms
hereof or thereof, nor shall the Trustee be required to take any notice of, or
to do or to take any act, action or proceeding as a result of any default or
breach of any provision hereunder, unless and until notified in writing of such
default or breach, which 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 trust 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 Intentionally deleted.
7.3 Dealings with Transfer Agents, Registrars, etc. The Corporation and the
Parent irrevocably authorize the Trustee, from time to time, to:
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(a) consult, communicate and otherwise deal with the respective
registrars and transfer agents, if any, and with any such subsequent
registrar or transfer agent, if any, of the Exchangeable Shares and the
Parent Common Stock; and
(b) requisition, from time to time, from any such registrar or
transfer agent any information readily available from the records
maintained by it which the Trustee may reasonably require for the discharge
of its duties and responsibilities under this trust agreement. The Parent
covenants that, to the extent required under the Exchangeable Share
Provisions or hereunder, it will supply the Trustee in a timely manner with
duly executed share certificates for the purpose of completing the exercise
from time to time of all rights to acquire Parent Common Stock hereunder,
under the Exchangeable Share Provisions and under any other security or
commitment given to the Non-Affiliated Holders pursuant thereto, in each
case pursuant to the provisions hereof or of the Exchangeable Share
Provisions or otherwise.
7.4 Books and Records. The Trustee shall keep available for inspection by
the Parent and the Corporation, at the principal office of QuebecCo, correct and
complete books and records of account relating to the Trustee's actions under
this trust agreement, including without limitation all information relating to
mailings and instructions to and from Non-Affiliated Holders and all
transactions pursuant to the Voting Rights, Exchange Right and Automatic
Exchange Right for the term of this trust agreement. On or before March 31,
2000, and on or before March 31 in every year thereafter, so long as the Voting
Share is on deposit with the Trustee, the Trustee shall transmit to the Parent
and the Corporation a brief report, dated as of the preceding December 31, with
respect to: (a) the property and funds comprising the Trust Estate as of that
date; (b) the number of exercises of the Exchange Right, if any, and the
aggregate number of Exchangeable Shares received by the Trustee on behalf of
Non-Affiliated Holders in consideration of the issue and delivery by the Parent
of shares of Parent Common Stock in connection with the Exchange Right, during
the calendar year ended on such date; and (c) all other actions taken by the
Trustee in the performance of its duties under this trust agreement which it had
not previously reported.
7.5 Intentionally deleted.
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 trust agreement at the request, order or direction of any Non-Affiliated
Holder upon such Non-Affiliated Holder furnishing to the Trustee reasonable
funding, security and indemnity against the costs, expenses and liabilities that
may be incurred by the Trustee therein or thereby, provided that no
Non-Affiliated Holder shall be obligated to furnish to the Trustee any such
funding, security or indemnity in connection with the exercise by the Trustee of
any of its rights, duties, powers and authorities with respect to the Voting
Share pursuant to Article 0 hereof and with respect to the Exchange Right
pursuant to Article 0 hereof, subject to the provisions of Section 0 hereof.
None of the provisions contained in this trust agreement shall require the
Trustee to expend or risk its own funds or otherwise incur financial liability
in the exercise of any of its rights, powers, duties or authorities unless
funded, given funds, security and indemnified as aforesaid.
<PAGE>
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7.7 Actions by Non-Affiliated Holders. No Non-Affiliated Holder shall have
the right to institute any action, suit or proceeding or to exercise any other
remedy authorized by this trust agreement for the purpose of enforcing any of
its rights or for the execution of any trust or power hereunder unless the
Non-Affiliated Holder has requested the Trustee to take or institute such
action, suit or proceeding and furnished the Trustee with the funding, security
and indemnity referred to in Section 0 hereof and the Trustee shall have failed
to act within a reasonable time thereafter. In such case, but not otherwise, the
Non-Affiliated Holder shall be entitled to take proceedings in any court of
competent jurisdiction such as the Trustee might have taken; it being understood
and intended that no one or more Non-Affiliated Holders shall have any right in
any manner whatsoever to effect, disturb or prejudice the rights hereby created
by any such action, or to enforce any right hereunder or under the Voting Rights
or the Exchange Right except subject to the conditions and in the manner herein
provided, and that all powers and trusts hereunder shall be exercised and all
proceedings at law shall be instituted, had and maintained by the Trustee,
except only as herein provided, and in any event for the equal benefit of all
Non-Affiliated Holders.
7.8 Reliance upon Declarations. The Trustee shall not be considered to be
in contravention of any of its rights,powers, duties and authorities hereunder
if, when required, it acts and relies in good faith upon lists, mailing labels,
notices, statutory declarations, certificates, opinions, reports or other papers
or documents furnished pursuant to the provisions hereof or required by the
Trustee to be furnished to it in the exercise of its rights, powers, duties and
authorities hereunder and such lists, mailing labels, notices, statutory
declarations, certificates, opinions, reports or other papers or documents
comply with the provisions of Section 0 hereof, if applicable, and with any
other applicable provisions of this trust agreement.
7.9 Evidence and Authority to Trustee. The Corporation and/or NovaCo and/or
the Parent shall furnish to the Trustee evidence of compliance with the
conditions provided for in this trust agreement relating to any action or step
required or permitted to be taken by the Corporation and/or NovaCo and/or the
Parent or the Trustee under this trust agreement or as a result of any
obligation imposed under this trust agreement including, without limitation, in
respect of the Voting Rights, the Exchange Right or Automatic Exchange Right and
the taking of any other action to be taken by the Trustee at the request of or
on the application of the Corporation and/or NovaCo and/or the Parent forthwith
if and when:
(a) such evidence is required by any other section of this trust
agreement to be furnished to the Trustee in accordance with the terms of
this Section 0; or
(b) the Trustee, in the exercise of its rights, powers, duties and
authorities under this trust agreement, gives the Corporation and/or NovaCo
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 the Corporation
and/or NovaCo and/or the Parent or a statutory declaration or a certificate made
by persons entitled to sign an Officer's Certificate stating that any such
condition has been complied with in accordance with the terms of this trust
agreement. Whenever such evidence relates to a matter other than the Voting
Rights or the Exchange Right 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
<PAGE>
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authority to a statement made by such person, provided that if such report or
opinion is furnished by a director, officer or employee of the Corporation
and/or NovaCo and/or the Parent it shall be in the form of an Officer's
Certificate or a statutory declaration. Each statutory declaration, certificate,
opinion or report furnished to the Trustee as evidence of compliance with a
condition provided for in this trust agreement shall include a statement by the
person giving the evidence:
(c) declaring that such person has read and understands the provisions
of this trust agreement relating to the condition in question;
(d) describing the nature and scope of the examination or
investigation upon which such person based the statutory declaration,
certificate, statement or opinion; and
(e) declaring that such person has made such examination or
investigation as such person believes is necessary to enable such person to
make the statements or give the opinions contained or expressed therein.
7.10 Experts, Advisors and Agents. The Trustee may:
(a) in relation to these presents act and rely on the opinion or
advice of or information obtained from or prepared by any solicitor,
auditor, accountant, appraiser, valuer, engineer or other expert, whether
retained by the Trustee or by the Corporation and/or NovaCo and/or the
Parent or otherwise, and may employ such assistants as may be necessary to
the proper determination and discharge of its powers and duties and
determination of its rights hereunder and may pay proper and reasonable
compensation for all such legal and other advice or assistance as
aforesaid; and
(b) employ such agents and other assistants as it may reasonably
require for the proper determination and discharge of its powers and duties
hereunder and may pay reasonable remuneration for all services performed
for it (and shall be entitled to receive reasonable remuneration for all
services performed by it) in the discharge of its obligations hereunder and
compensation for all disbursements, costs and expenses made or incurred by
it in the determination and discharge of its duties hereunder and in the
management of the Trust Estate.
7.11 Investment of Money Held by Trustee. Unless otherwise provided in this
trust agreement, any money held by or on behalf of the Trustee which under the
terms of this trust 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 applicable laws of the Province of Quebec,
mandataries with full administration are authorized to invest money under
administration, provided that such securities are stated to mature within two
years after their purchase by the Trustee, and the Trustee shall so invest such
money on the written direction of the Corporation. Pending the investment of any
money as herein before provided, such money may be deposited in the name of the
Trustee in any chartered bank in Canada or, with the consent of the Corporation,
in the deposit department of any loan or trust company authorized to accept
deposits under the laws of Canada or any province thereof at the rate of
interest then current on similar deposits.
<PAGE>
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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 trust agreement or otherwise in
respect of the premises.
7.13 Trustee Not Bound to Act on Corporation's Request. Except as in this
trust agreement otherwise specifically provided the Trustee shall not be bound
to act in accordance with any direction or request of the Corporation and/or
NovaCo and/or the Parent or of the directors thereof until a duly authenticated
copy of the instrument or resolution containing such direction or request shall
have been delivered to the Trustee, and the Trustee shall be empowered to act
and rely upon any such copy purporting to be authenticated and believed by the
Trustee to be genuine.
7.14 Intentionally deleted.
7.15 Conflicting Claims. If conflicting claims or demands are made or
asserted with respect to any interest of any Non-Affiliated Holder in any
Exchangeable Shares, including any disagreement between the heirs,
representatives, successors or assigns succeeding to all or any part of the
interest of any Non-Affiliated Holder in any Exchangeable Shares resulting in
conflicting claims or demands being made in connection with such interest, then
the Trustee shall be entitled, at its sole discretion, to refuse to recognize or
to comply with any such claim or demand. In so refusing, the Trustee may elect
not to exercise any Voting Rights, the Exchange Right or other rights subject to
such conflicting claims or demands and, in so doing, the Trustee shall not be or
become liable to any person on account of such election or its failure or
refusal to comply with any such conflicting claims or demands. The Trustee shall
be entitled to continue to refrain from acting and to refuse to act until:
(a) the rights of all adverse claimants with respect to the Voting
Rights, Exchange Right or other rights subject to such conflicting claims
or demands have been adjudicated by a final judgment of a court of
competent jurisdiction; or
(b) all differences with respect to the Voting Rights, Exchange Right
or other 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.
<PAGE>
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ARTICLE 8
COMPENSATION
8.1 Expenses of the Trustee. The Parent and the Corporation solidarily
agree to reimburse the Trustee for all reasonable expenses (including but not
limited to taxes, compensation paid to experts, agents and advisors and travel
expenses) and disbursements, including the cost and expense of any suit or
litigation of any character and any proceedings before any governmental agency
reasonably incurred by the Trustee in connection with its rights and duties
under this trust agreement; provided that the Parent and the Corporation shall
have no obligation to reimburse the Trustee for any expenses or disbursements
paid, incurred or suffered by the Trustee in any suit or litigation in which the
Trustee is determined to have acted in bad faith or with negligence or wilful
misconduct.
ARTICLE 9
INDEMNIFICATION AND LIMITATION OF LIABILITY
9.1 Indemnification of the Trustee. The Parent and the Corporation
solidarily agree to indemnity and hold harmless the Trustee and each of its
agents appointed and acting in accordance with this trust agreement
(collectively, the "Indemnified Parties") against all claims, losses, damages,
costs, penalties, fines and reasonable expenses (including reasonable expenses
of the Trustee's legal counsel) which, without fraud, negligence, wilful
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 administration of the Trust Estate, its compliance with its duties set
forth in this trust agreement, or any written or oral instructions delivered to
the Trustee by the Parent or the Corporation pursuant hereto. In no case shall
the Parent or the Corporation be liable under this indemnity for any claim
against any of the Indemnified Parties if such claim is incurred or suffered by
reason of or as a result of the fraud, negligence, wilful misconduct or bad
faith of an Indemnified Party and unless the Parent and the Corporation shall be
notified by the Trustee of the written assertion of a claim or of any action
commenced against the Indemnified Parties, promptly after any of the Indemnified
Parties shall have received any such information as to the nature and basis of
the claim. Subject to 0, below, the Parent and the Corporation shall be entitled
to participate at their own expense in the defense and, if the Parent or the
Corporation so elect at any time after receipt of such notice, any of them may
assume the defense of any suit brought to enforce any such claim. The Trustee
shall have the right to employ separate counsel in any such suit and participate
in the defense thereof but the fees and expenses of such counsel shall be at the
expense of the Trustee unless: (a) the employment of such counsel has been
authorized by the Parent or the Corporation, such authorization not to be
unreasonably withheld; or (b) the named parties to any such suit include both
the Trustee and the Parent or the Corporation and the Trustee shall have been
advised by counsel acceptable to the Parent or the Corporation that there may be
one or more legal defenses available to the Trustee that are different from or
in addition to those available to the Parent or the Corporation and that an
actual or potential conflict of interest exists (in which case the Parent and
the Corporation shall not have the right to assume the defense of such suit on
behalf of the Trustee but shall be liable to pay the reasonable fees and
expenses of counsel for the Trustee). Such indemnification
<PAGE>
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shall survive the resignation or removal of the Trustee and the termination of
this trust agreement.
9.2 Limitation of Liability. The Trustee shall not be held liable for any
loss which may occur by reason of depreciation of the value of any part of the
Trust Estate or any loss incurred on any investment of funds pursuant to this
trust agreement, except to the extent that such loss is attributable to the
fraud, negligence, wilful misconduct or bad faith on the part of the Trustee.
ARTICLE 10
CHANGE OF TRUSTEE
10.1 Filling of Vacancy. The provisions of Part VII of the Mandate shall
apply hereto, mutatis mutandis, with the intent that the Trustee hereunder shall
at all times be the Mandataries thereunder. For greater certainty, any
individual ceasing to be a mandatary under the Mandate shall cease to be a
mandatary of the Shareholders hereunder and any person becoming a Mandatary in
accordance with Part VII of the Mandate shall, subject to the other provisions
of this Article 10, become a mandatary of the Shareholders hereunder.
10.2 Successor Trustee. Any successor mandatary of the Shareholders
appointed as provided under this trust agreement shall execute, acknowledge and
deliver to the Parent, NovaCo and the Corporation an instrument accepting such
appointment. Thereupon such successor, without any further act, deed or
conveyance, shall become vested with all the rights, powers, duties and
obligations of its predecessor under this trust agreement, with like effect as
if originally named as mandatary in this trust agreement. Upon the request of
any such successor, the Parent, NovaCo and the Corporation shall execute any and
all instruments in writing for more fully and certainly vesting in and
confirming to such successor all such rights and powers.
10.3 Notice of Successor Trustee. Upon acceptance of appointment by a
successor mandatary as provided herein, the Parent, NovaCo and the Corporation
shall cause to be mailed notice of such succession to each Non-Affiliated Holder
specified in a List. If the Parent, NovaCo or the Corporation shall fail to
cause such notice to be mailed within 10 days after acceptance of appointment by
the successor, the successor shall cause such notice to be mailed at the expense
of the Parent, NovaCo and the Corporation.
ARTICLE 11
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 of 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, but may do so if:
<PAGE>
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(a) such other person or continuing corporation (the "Parent
Successor"), by operation of law, becomes, without more, bound by the terms
and provisions of this trust agreement or, if not so bound, executes, prior
to or contemporaneously with the consummation of such transaction a trust
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 money 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 the Parent under this trust agreement; and
(b) such transaction shall, to the satisfaction of the Trustee and in
the opinion of legal counsel to the Trustee, be upon such terms as
substantially to preserve and not to impair in any material respect any of
the rights, duties, powers and authorities of the Trustee or of the
Non-Affiliated Holders hereunder.
11.2 Vesting of Powers in Successor. Whenever the conditions of Section 0
hereof have been duly observed and performed, if required by Section 0 hereof,
the Trustee, the Parent Successor, NovaCo and the Corporation shall execute and
deliver the supplemental trust agreement provided for in Article 0 hereof 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 trust agreement in the
name of the Parent or otherwise and any act or proceeding by any provision of
this trust agreement required to be done or performed by the Parent Board of
Directors or any officers of the Parent may be done and performed with like
force and effect by the directors or officers of such Parent Successor.
11.3 Wholly-Owned Subsidiaries. Nothing herein shall be construed as
preventing the amalgamation 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 provided that all of the assets of
such Subsidiary are transferred to the Parent or another wholly-owned Subsidiary
of the Parent, and any such transactions are expressly permitted by this Article
0.
ARTICLE 12
AMENDMENTS AND SUPPLEMENTAL TRUST AGREEMENTS
12.1 Amendments, Modifications, etc. This trust agreement may not be
amended or modified except by an agreement in writing executed by the
Corporation, the Parent, NovaCo and the Trustee and approved by the
Non-Affiliated Holders in accordance with Section 8.2 of the Exchangeable Share
Provisions.
12.2 Ministerial Amendments. Notwithstanding the provisions of Section 0
hereof, the parties to this trust agreement may in writing, at any time and from
time to time, without the approval of the Non-Affiliated Holders, amend or
modify this trust agreement for the purposes of:
<PAGE>
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(a) adding to the covenants of any or all of the parties hereto for
the protection of the Non-Affiliated Holders hereunder;
(b) making such amendments or modifications not inconsistent with this
trust agreement as may be necessary or desirable with respect to matters or
questions which, in the opinion of the Board of Directors and the Parent
Board of Directors and in the opinion of the Trustee and its counsel,
having in mind the best interests of the Non-Affiliated Holders as a whole,
it may be expedient to make, provided that such boards of directors and the
Trustee and its counsel shall be of the opinion that such amendments and
modifications will not be prejudicial to the interests of the
Non-Affiliated Holders as a whole; or
(c) making such changes or corrections which, on the advice of counsel
to the Corporation, the Parent and the Trustee, are required for the
purpose of curing or correcting any ambiguity or defect or inconsistent
provision or clerical omission or mistake or manifest error, provided that
the Trustee and its counsel and the Board of Directors and the Parent Board
of Directors shall be of the opinion that such changes or corrections will
not be prejudicial to the interests of the Non-Affiliated Holders as a
whole.
12.3 Meeting to Consider Amendments. The Corporation, at the request of the
Parent, shall call a meeting or meetings of the Non-Affiliated Holders for the
purpose of considering any proposed amendment or modification requiring approval
pursuant hereto. Any such meeting or meetings shall be called and held in
accordance with the by-laws of the Corporation, the Exchangeable Share
Provisions and all applicable laws.
12.4 Changes in Capital of Parent and the Corporation. At all times after
the occurrence of any event effected pursuant to Section 0 or Section 0 hereof,
as a result of which either the Parent Common Stock or the Exchangeable Shares
or both are in any way changed, this trust 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 the Parent Common
Stock or the Exchangeable Shares or both are so changed and the parties hereto
shall execute and deliver a supplemental trust agreement giving effect to and
evidencing such necessary amendments and modifications.
12.5 Execution of Supplemental Trust Agreements. No amendment to or
modification or waiver of any of the provisions of this trust agreement
otherwise permitted hereunder shall be effective unless made in writing and
signed by all of the parties hereto. From time to time the Corporation (when
authorized by a resolution of the Board of Directors), the Parent (when
authorized by a resolution of the Parent Board of Directors), NovaCo (when
authorized by a resolution of its board of directors) and the Trustee may,
subject to the provisions of these presents, and they shall, when so directed by
these presents, execute and deliver by their proper officers, trust 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
<PAGE>
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Article 0 hereof and the successor of any successor mandatary in accordance
with the provisions of Article 0 hereof;
(b) making any additions to, deletions from or alterations of the
provisions of this trust agreement or the Voting Rights or the Exchange
Right which, in the opinion of the Trustee and its counsel, will not be
prejudicial to the interests of the Non-Affiliated Holders as a whole or
are in the opinion of counsel to the Trustee necessary or advisable in
order to incorporate, reflect or comply with any legislation the provisions
of which apply to the Parent, the Corporation, the Trustee or this trust
agreement; and
(c) for any other purposes not inconsistent with the provisions of
this trust agreement, including without limitation to make or evidence any
amendment or modification to this trust agreement as contemplated hereby,
provided that, in the opinion of the Trustee and its counsel, the rights of
the Trustee and the Non-Affiliated Holders as a whole will not be
prejudiced thereby.
ARTICLE 13
TERMINATION
13.1 Term. This trust agreement shall continue in effect until the earliest
to occur of the following events:
(a) no outstanding Exchangeable Shares are held by any Non-Affiliated
Holder; and
(b) each of the Corporation, NovaCo and the Parent elects in writing
to terminate this trust agreement and such termination is approved by the
Non-Affiliated Holders of the Exchangeable Shares in accordance with
Section 8.2 of the Exchangeable Share Provisions.
13.2 Survival of Agreement. This trust agreement shall survive and shall
continue until there are no Exchangeable Shares outstanding held by any
Non-Affiliated Holder, provided, however, that the provisions of Articles 0 and
0 hereof and the representation contained in Section 0 hereof shall survive any
such termination of this trust agreement.
ARTICLE 14
GENERAL
14.1 Severability. If any provision of this trust agreement is held to be
invalid, illegal or unenforceable, the validity, legality or enforceability of
the remainder of this trust agreement shall not in any way be affected or
impaired thereby and this trust agreement shall be carried out as nearly as
possible in accordance with its original terms and conditions.
<PAGE>
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14.2 Enurements. This trust agreement shall be binding upon and enure to
the benefit of the parties hereto and their respective successors and permitted
assigns and to the benefit of the Non-Affiliated Holders, and with respect to
the representations contained in Section 0, all shareholders of the Corporation
who receive Parent Common Stock through holding Exchangeable Shares.
14.3 Notices to Parties. All notices and other communications between the
parties hereunder shall be in writing and shall be deemed to have been given if
delivered personally or by confirmed telecopy to the parties at the following
addresses (or at such other address for such party as shall be specified in like
notice):
(a) if to the Parent, NovaCo 440 Rene Levesque West
or the Corporation, at: Suite 400
Montreal, Quebec
H2Z 1V7
Attention: Joseph Farag
Telecopy: (514) 866-5118
(b) if to the Trustee at: c/o Joseph Farag
440 Rene Levesque West Suite 400
Montreal, Quebec
H2Z 1V7
Telecopy: (514) 866-5118
Any notice or other communication given personally shall be deemed to have
been given and received upon delivery thereof and if given by telecopy shall be
deemed to have been given and received on the date of receipt thereof unless
such day is not a Business Day in which case it shall be deemed to have been
given and received upon the immediately following Business Day.
14.4 Notice of Non-Affiliated Holders. Any and all notices to be given and
any documents to be sent to any Non-Affiliated Holders may be given or sent to
the address of such holder shown on the register of holders of Exchangeable
Shares in any manner permitted by the CBCA 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 Act, the provisions of which Act
shall apply mutatis mutandis to notices or documents as aforesaid sent to such
holders.
14.5 Risk of Payments by Post. Whenever payments are to be made or
documents are to be sent to any Non-Affiliated Holder by the Trustee, by the
Corporation, by NovaCo or the Parent or by such Non-Affiliated Holder to the
Trustee, the Parent, NovaCo or the Corporation, the making of such payment or
<PAGE>
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sending of such document sent through the post shall be at the risk of the
Corporation, in the case of payments made or documents sent by the Trustee, the
Corporation, NovaCo or the Parent and the Non-Affiliated Holder, in the case of
payments made or documents sent by the Non-Affiliated Holder.
14.6 Counterparts. This trust 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 trust 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, NovaCo and the Corporation each agree that any
action or proceeding arising out of or relating to this trust agreement may be
instituted in the courts 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 agrees not to seek, and
hereby waives, any review of the merits of any such judgment by the courts of
any other jurisdiction and hereby appoints the Trustee at its address set forth
in Section 14.3 hereof as its attorney for service of process.
14.9 Plural, Singular, Gender. When the context in which the words are used
in this agreement indicates that such is the intent, words in the singular
number shall include the plural and vice versa. References to any gender shall
include any other gender as may be applicable under the circumstances.
<PAGE>
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14.10 Language. The parties acknowledge that they have requested that this
agreement and all ancillary documents be drawn up in the English language only.
Les parties reconnaissent avoir exige que cette convention ainsi que tous les
documents y afferents soient rediges en anglais seulement.
IN WITNESS WHEREOF, the parties hereto have caused this trust agreement to
be duly executed as of the date first above written.
PLANET 411.COM CORPORATION
By: /s/ Stephane Chouinard
---------------------------------
Name: Stephane Chouinard
Title:
3560309 CANADA INC.
By: /s/ Johnson Joseph
---------------------------------
Name: Johnson Joseph
Title:
PLANET 411 (NOVA SCOTIA) COMPANY
By: /s/ Joesph Farag
---------------------------------
Name: Joseph Farag
Title:
/s/ Joseph Farag
JOSEPH FARAG
/s/ Stephane Chouinard
STEPHANE CHOUINARD
/s/ Johnson Joseph
JOHNSON JOSEPH
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT dated as of September 17, 1999,
made by and between Planet411.com Corporation, a Nevada corporation ("Assignor")
and Planet411.com Inc., a Delaware corporation ("Assignee").
W I T N E S S E T H:
WHEREAS, Assignor and Assignee have approved the merger of Assignor with
and into Assignee; and
WHEREAS, Assignor is party to (a) that certain Combination Agreement made
as of April 20th, 1999 by and among Assignor, 3560309 Canada Inc. ("Canco") ,
Planet 411 (Nova Scotia) Company ("Novaco"), 9066-4871 Quebec Inc. and the
Stockholders (as defined therein), who are represented by their mandataries
Joseph Farag, Stephane Chouinard and Johnson Joseph (hereinafter the
"Combination Agreement") and (b) that certain Voting, Support and Exchange Trust
Agreement made as of May 13, 1999 by and among Assignor, Canco, Novaco, Joseph
Farag, Stephane Chouinard and Johnson Joseph (collectively as the Trustee
thereunder) (the "Voting Agreement" and collectively with the Combination
Agreement, the "Agreements");
NOW, THEREFORE, IT IS AGREED:
1. Assignment and Assumption. Assignor hereby transfers and assigns all of
its rights and interest in and to, and delegates its liabilities and obligations
under each of the Agreements to Assignee, and Assignee hereby accepts such
transfer and assignment from Assignor and assumes all of the liabilities and
obligations of Assignor under each of the Agreements.
2. Further Assurances. Assignor and Assignee each hereby agree to execute
and deliver such other instruments and documents, and take such other action, as
any party to any of the Agreements may reasonably request in connection with the
transactions contemplated by this Assignment and Assumption Agreement.
3. Successors and Assigns; Bank as Third Party Beneficiary. This Assignment
and Assumption Agreement shall be binding upon the successors and permitted
assigns of Assignor and Assignee. This Assignment and Assumption Agreement shall
inure to the benefit of the parties hereto and to the parties to each of the
Agreements, with no other third party beneficiaries intended hereby.
4. GOVERNING LAW. THIS ASSIGNMENT AND ASSUMPTION AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK, WITHOUT REGARD TO CHOICE OF LAW PRINCIPLES.
5. Severability. If at any time any provision of this Assignment and
Assumption Agreement is or becomes invalid, illegal or unenforceable in any
respect under the laws of the State of New York or the State of Nevada or any
other jurisdiction whose administrative laws are applicable thereto, as the case
may be, then neither the legality, validity or the enforceability of the
remaining provisions hereof or thereof shall in any way be affected or impaired
hereby or thereby.
6. Amendment and Waiver. Any amendment or waiver of any provision of this
Assignment and Assumption Agreement shall be in writing signed by the parties
hereto. No failure or delay by any
<PAGE>
party hereto in exercising any right, power or privilege hereunder shall operate
as a waiver thereof and any waiver of any breach of the provisions of this
Assignment and Assumption Agreement shall be without prejudice to any rights
with respect to any other or future breach hereof or thereof.
7. Counterparts. This Agreement may be executed in several counterparts
each of which when executed by any of the parties shall be deemed to be an
original, and such counterparts shall together constitute but one and the same
instrument.
[The remainder of this page intentionally left blank]
2
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Assignment and
Assumption Agreement to be duly executed and delivered as of the date first
above written.
ASSIGNEE:
PLANET411.COM CORPORATION
By: /s/ STEPHANE CHOUINARD
-------------------------------------
Name: Stephane Chouinard
ASSIGNOR:
PLANET411.COM INC.
By: /s/ JOSEPH FARAG
-------------------------------------
Name: Joseph Farag
3
<PAGE>
The undersigned, being additional parties to the Combination Agreement or
the Voting Agreement (each as defined herein), as applicable, hereby consent to
the terms and conditions of this Assignment and Assumption Agreement.
Combination Agreement Voting Agreement
3560309 Canada Inc. 3560309 Canada Inc.
By: /s/ JOHNSON JOSEPH By: /s/ JOHNSON JOSEPH
------------------------------- -----------------------------------
Johnson Joseph Johnson Joseph
Planet 411 (Nova Scotia) Company Planet 411 (Nova Scotia) Company
By: /s/ JOSEPH FARAG By: /s/ JOSEPH FARAG
------------------------------- -----------------------------------
Joseph Farag Joseph Farag
The Individuals Listed on Schedules 2.2 and
2.2A of the Combination Agreement, acting
and represented herein by the following:
/s/ JOSEPH FARAG /s/ JOSEPH FARAG
---------------------------- -----------------------------------
Joseph Farag, Mandatary Joseph Farag
/s/ STEPHANE CHOUINARD /s/ STEPHANE CHOUINARD
----------------------------- -----------------------------------
Stephane Chouinard, Mandatary Stephane Chouinard
/s/ JOHNSON JOSEPH /s/ JOHNSON JOSEPH
----------------------------- -----------------------------------
Johnson Joseph, Mandatary Johnson Joseph
9066-4871 Quebec, Inc.
By: /s/ JOSEPH FARAG
-----------------------------
Joseph Farag
EXHIBIT 10.1
Internet Services Agreement
This Internet Services Agreement (the "Agreement"), by and between EMC
Corporation ("EMC"), a Massachusetts corporation with a principal place of
business at 171 South Street, Hopkinton, MA 01748, and 9066-4871 Quebec Inc.
d.b.a. "Planet 411", (the "Company") a Quebec corporation with a principal place
of business at 440 Rene Levesque West, suite 400 is made this 15th day of May
1999 (the "Effective Date").
WHEREAS, EMC HAS PRODUCTS AND SERVICES WHICH IT INTENDS TO EMPLOY TO SATISFY
COMPANY'S REQUIREMENTS; AND,
WHEREAS, COMPANY DESIRES TO HAVE EMC PERFORM INTERNET SERVICES FOR COMPANY; AND,
WHEREAS, COMPANY OWNS AND OPERATES ONLINE INFORMATION SERVICES WHICH CONSIST OF
CERTAIN HARDWARE, SOFTWARE AND APPLICATION SUBSYSTEMS THAT IT WISHES EMC TO
INSTALL, OPERATE AND MAINTAIN FOR COMPANY AT EMC'S INTERNET SERVICES CENTER AS
FURTHER DEFINED IN THE STATEMENT(S) OF WORK,
NOW, THEREFORE, IN CONSIDERATION OF THE ABOVE AND OTHER GOOD AND VALUABLE
CONSIDERATION, THE PARTIES AGREE AS FOLLOWS:
Definitions:
"Services" shall mean the computer hardware and all related interfaces,
software, data storage and network interface connections and other such items
necessary for operation of the internet services complex as defined in each
Statement of Work; the network connections necessary for Company to manage
Applications and deliver content as defined in each Statement of Work; the
internet services described in Section 2 below and in the Statement of Work; all
other services described in the Statement of Work.
"Application" shall be defined in each Statement of Work.
"Content" shall mean editorial content contained in the Application(s).
1. General Scope of Agreement.
Company is solely responsible for the Applications and the Content of the
Applications as well as issuing a purchase order once agreement is signed. EMC
is responsible for the equipment, facilities and services as defined herein and
in each Statement of Work.
1
<PAGE>
2. Services to be Performed
EMC will perform the Services as detailed in each Statement of Work, appended to
this Agreement as defined herein, and perform the Services according to the
Functional Specifications in Section 2.1.
2.1 Functional Specification
EMC shall supply, maintain and operate the Services including its various parts
in accordance with the functional specification (the "Functional Specification")
set forth below:
The hardware and software and other equipment items as specified in each
Statement of Work to be attached to this Agreement.
A protected and secure computer room environment with physical access restricted
to authorized personnel and network and remote access restricted by firewall and
other electronic means to authorized users, sufficient fire repression equipment
so as to protect the computer hardware and network hardware used by the
applications, and backup power supplies to provide uninterrupted supplies of
electricity; automatic and regularly scheduled backup of all related data and
the restoration of such backups on demand by Company, with such backups stored
at a location different than that of the original data; twenty-four hour per
day, seven days per week support of the computer room; and complete facilities
management, including data backups, computer hardware maintenance, network
hardware maintenance, installation of software updates and fixes as supplied by
the manufacturers of the computer and network hardware in place, and any such
other tasks as required to operate the computer hosting services in accordance
with the requirements and obligations identified in each Statement of Work.
During the term of this Agreement, the allocation of hardware, software and
other equipment and services supplied by EMC may be re-allocated to other
projects by Company and EMC upon submission of a revised Statement of Work,
subject to both parties acceptance which will not be unreasonably withheld or
delayed.
2.2 Statement of Work
The parties will use documents ("Statements of Work") that define each
assignment, task or project to be performed by EMC for Company. The Statements
of Work will be as complete in details as is required to meet the function of
the work. As a minimum, each Statement of Work must contain the following items:
explanation of the project; coordinators for both EMC and Company that will be
responsible for the efforts; schedule for performance; reports and/or meetings
required, and, for a list of equipment and services with prices.
As each Statement of Work is prepared and approved by both parties, that
Statement of Work will be incorporated by reference into this Agreement.
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3. Other Duties of EMC
3.1 Appointment of Contact Personnel
EMC shall appoint a single, primary contact person who shall be Company's main
representative at EMC and whose primary responsibility will be to assure that
the obligations and responsibilities herein are performed in accordance with the
specifications and requirements herein stated.
From time to time it may be necessary to designate a new primary contact person.
EMC will notify Company promptly in writing of the new primary contact person.
Upon reasonable request from Company, EMC will change the primary contact
person.
3.2 Proprietary Rights
EMC is the sole owner of all right, title and interest in the Services,
including any patent, copyright or trade secret rights, provided EMC does not
use the Confidential Information of the Company.
4. Duties of Company
4.1 Supply of Operational Data
Company shall supply to EMC all necessary operational data and all such other
data that EMC reasonably requires in order to perform the Services.
4.2 Supply of Server and Database Software and Licenses
Company shall supply Applications, Hardware, Software and associated licenses or
maintenance agreements as defined in each Statement of Work
4.3 Appointment of Contact Personnel
Company shall appoint a single, primary contact person who shall be EMC's main
representative at Company and whose primary responsibility will be to assure
that the obligations and responsibilities herein are performed in accordance
with the specifications and requirements herein stated.
From time to time it may be necessary to designate a new primary contact person.
Company will notify EMC promptly in writing of the new primary contact person.
4.4 Proprietary Rights
Company represents that the Application(s) contain information gathered,
selected, coordinated and arranged by company at considerable expense by the
application of methods, editorial standards and judgment that is proprietary to
company and that that Content is a valuable asset of company, and that title and
ownership of the Content and Application(s) remains exclusively
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with company and its licensors.
EMC acknowledges that it is not acquiring any proprietary or copyright interest
in the Content or Application(s).
5. Payment
Payment terms will be established by the parties and included in each Statement
of Work. Unless specified otherwise in an agreed Statement of Work, Company
shall pay all invoices within 10 days following the receipt of the invoice by
Company, or upon such other terms as the parties may agree.
6. Term and Termination
6.1 Term of the Agreement
This Agreement is effective as of the Effective Date and shall remain in effect
for two (2) years or until terminated in accordance with the terms contained in
the following sections and elsewhere in the Agreement.
6.2 Renewal of the Agreement
This Agreement shall automatically renew for successive one (1) year periods.
Either party may elect not to renew by giving written notice to the other party
in accordance with the notice provisions contained in Section 9 of this
Agreement, not less than ninety (90) days prior to the end of the then current
term.
6.3 Termination of the Agreement
Either party may terminate this Agreement upon written notice in the event of a
material breach by the other party; provided however, that the non-breaching
party has provided written notice of such material breach, and such material
breach was not cured to the reasonable satisfaction of the non-breaching party
within thirty (30) days after the providing of the written notice.
7. Limitation of Liability
7.1 EMC'S ENTIRE LIABILITY FOR ANY CLAIM, LOSS, DAMAGE OR EXPENSE FROM ANY
CAUSE WHATSOEVER, REGARDLESS OF THE FORM OF THE ACTION, WHETHER IN
CONTRACT, TORT OR OTHERWISE, INCLUDING NEGLIGENCE, STRICT LIABILITY OR
OTHERWISE, SHALL BE LIMITED TO THE GREATER OF THE AMOUNTS PAID BY THE
COMPANY TO EMC DURING THE PREVIOUS 12 MONTH PERIOD OR $100,000.
7.2 NEITHER PARTY SHALL BE LIABLE FOR ANY INCIDENTAL, CONSEQUENTIAL, OR ANY
OTHER INDIRECT LOSS OR DAMAGE, INCLUDING LOST PROFITS OR LOST DATA, ARISING
OUT OF THIS AGREEMENT OR ANY OBLIGATION RESULTING THEREFROM, OR THE USE
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OR PERFORMANCE OF ANY SERVICE, WHETHER IN AN ACTION FOR OR ARISING OUT OF
ANY CAUSE WHATSOEVER, REGARDLESS OF THE FORM OF ACTION, WHETHER IN
CONTRACT, TORT, INCLUDING NEGLIGENCE, STRICT LIABILITY OR OTHERWISE. NO
ACTION OR PROCEEDING AGAINST EITHER PARTY MAY BE COMMENCED MORE THAN
EIGHTEEN (18) MONTHS AFTER THE CAUSE OF ACTION ACCRUES
7.3 EMC SHALL NOT BE LIABLE FOR ANY CONTENT PROCESSED OR STORED ON THE
SYSTEM EVEN IF SUCH CONTENT WAS KNOWN BY EMC. COMPANY SHALL HOLD HARMLESS
AND INDEMNIFY EMC FROM ANY LOSS OR DAMAGES (INCLUDING REASONABLE ATTORNEYS
FEES) INCURRED BY EMC BECAUSE OF ANY CLAIMS, SUITS OR DEMANDS OF THIRD
PARTIES ARISING OUT OF OR RESULTING FROM ANY CONTENT PROVIDED BY COMPANY TO
EMC FOR PLACEMENT ON THE APPLICATION.
8. Confidentiality
8.1 "Confidential Information" shall mean information or materials provided
by one party to the other which are in tangible form and labeled
"confidential" or the like, or, if disclosed orally, are identified as
being confidential at the time of disclosure and are followed up within two
(2) weeks in a tangible form that is appropriately labeled.
8.2 Confidential Information shall not include information or materials
that (1) were, on the effective date of this Agreement, generally known to
the public; or (2) become generally known to the public after the effective
date of this Agreement other than as the result of an act or omission of
the receiving party; or (3) were rightfully known to the receiving party
prior to that party receiving same from the disclosing party; (4) are or
were disclosed by the disclosing party to a third party generally without
that third party's breach of agreement or obligation of trust; or (6) are
independently developed by the receiving party without the use of the
Confidential Information.
8.3 The receiving party shall not (1) disclose Confidential Information to
any third party, (2) make Confidential Information available to any of its
employees or consultants who do not have a "need to know" in order to any
third party; or (3) use Confidential Information for any purpose other than
contemplated by this Agreement. The receiving party shall be held to the
same standard of care it applies to its own information and materials of a
similar nature.
8.4 All Confidential Information disclosed under this Agreement shall
remain the property of the disclosing party.
9. General
9.1 This Agreement, including any Statement(s) of Work attached, is the
complete and exclusive statement of the parties and supersedes all prior
written agreements with respect to the subject matter. Neither this
Agreement nor any Statement of Work may be altered
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or amended except in writing and executed by their authorized
representatives.
9.2 Neither party will be liable for any failure or delay in performance,
except the obligation to pay money, due in whole or in part to the extent
that such failure or delay is caused by events beyond the control of the
parties.
9.3 This Agreement shall be governed by the laws of the Commonwealth of
Massachusetts, excluding its choice of laws provisions.
9.4 Sections 3.2, 4.4, 5, 6, 7, 8 and 9 shall survive termination of this
Agreement.
9.5 All notices under this Agreement shall be in writing and shall be given
in person or by certified or registered mail or overnight courier to the
attention of the respective General Corporate Counsel at the addresses set
forth above.
9.6 All headings in this Agreement are inserted for convenience only and
are not intended to effect the meaning or interpretation of this Agreement
or any clause.
9.7 No omission or delay on the part of either party in requiring the
fulfillment by the other party of its obligations hereunder shall
constitute a waiver of its rights to require the fulfillment of any other
obligation hereunder, or a waiver of any remedy it might have hereunder.
9.8 EMC shall not be in breach of this Agreement due to any failure to meet
any Target Completion Date (as defined in the (Statement of Work) due to
any cause under the reasonable control of Company or as stated in section
9.2.
Signed by authorized representatives of both parties.
9066-4871 Quebec Inc. EMC Corporation
By: /s/ Joseph Farag By: /s/ Charles Loewwy
--------------------------- --------------------------
Name: Joseph Farag Name: Charles Loewwy
Title: President Title: Director, Internet Solutions Group
[OPEN MARKET, INC. LOGO]
EXHIBIT 10.2
TRANSACT SOFTWARE ORDER FORM
(With Terms and Conditions)
9066-4871 Quebec Inc. (dba "PLANET 411")
Full Legal Name of Licensee
440 Rene Levesque West, Suite 400
Montreal, Quebec H2Z 1V7 CANADA
Address of Principal Place of Business
Contact Person: Varujan Tasci
Telephone: 514-866-4638 Fax: 514-866-5020 Email: [email protected]
(Please provide Ship-To/Bill-To information below if different from above) Ship
to -- Planet411 440 Rene Levesque Ouest #400
- --------------------------------------------------------------------------------
Bill to -- Same
- --------------------------------------------------------------------------------
Purchase Order # (if applicable) ______________________
Licensee is incorporated in the province of: Quebec, Canada
Effective Date: March 18, 1999
BY SIGNING THIS ORDER FORM, LICENSEE AGREES TO ALL THE TERMS AND CONDITIONS
ATTACHED (collectively, the "AGREEMENT"). UPON EXECUTION BY THE PARTIES,
LICENSEE SHALL HAVE THE RIGHT TO USE TRANSACT AND ALL RELATED SOFTWARE PROVIDED
HEREUNDER IN ACCORDANCE WITH THE AGREEMENT.
Executed by authorized representatives of the parties as of the Effective Date.
OPEN MARKET, INC. LICENSEE
By: /s/ Eric Pyerson By: /s/ Joseph Farag
----------------------- -----------------------
(Signature) (Signature)
Name: Eric Pyerson Name: Joseph Farag
(Print) (Print)
Title: Legal Counsel, Open Market, Inc. Title: President
Agreement Consists Of:
1. TRANSACT Software Order Form
2. Attachment A - Products and Fees
3. Attachment B - Terms and Conditions
TX-CSP-INT-New1 [3/16/99 revised draft]
<PAGE>
NOTE: THE INFORMATION ON THIS PAGE IS SUBJECT TO A CONFIDENTIALITY REQUEST
Attachment A
PRODUCTS and FEES
I. Fees ---THIS SCHEDULE OF FEES IS SUBJECT TO A REQUEST FOR CONFIDENTIAL
TREATMENT
Please indicate currently required items only. Promptly following the Effective
Date, Licensee shall issue a purchase order to OPEN MARKET for these items.
Grand Total:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
II. Payment Terms:
A. TRANSACT and all other software products:
Due and payable as follows:
3/18/99 $o
3/26/99 $o THIS INFORMATION IS SUBJECT TO
5/3/99 $o A CONFIDENTIALITY REQUEST
6/3/99 $o
B. Merchant Licenses:
Due and payable in full Net Thirty (30) days from shipment
C. SUPPORT Services and Best Practices Program Fees:
Due and payable according to the follow schedule:
Date Due Amount
5/15/99 $o
7/15/99 $o THIS INFORMATION IS SUBJECT TO
9/15/99 $o A CONFIDENTIALITY REQUEST
11/15/99 $o
All fees payable hereunder are non-refundable.
III. Entitlements:
Base license fee includes the following: one (1) Production copy of TRANSACT
containing the TRANSACT Core Modules, one (1) copy of SecureLink
CommerceOperator for Windows NT, one (1) copy of SecureLink CommerceOperator for
UNIX, one (1) copy SecureLink SDK and one (1) Merchant License as defined in
Exhibit 4.2. In addition, the base license fee entitles Licensee to all required
initial training courses. Licensee shall pay all reasonable travel and lodging
expenses incurred and documented by OPEN MARKET in connection with the delivery
and installation of TRANSACT.
Any third party software provided to Licensee by OPEN MARKET shall be subject to
the terms and conditions of the separate shrinkwrap end user license agreement
accompanying each copy of the applicable software that Licensee may obtain from
OPEN MARKET hereunder. The foregoing also applies to OPEN MARKET's ShopSite
software. Each TRANSACT Production License requires one (1) Netscape Enterprise
Server per hardware platform and each TRANSACT Development License requires one
(1) Netscape Enterprise Server.
Terms applicable to optional SalesTax Module: In addition to the then-current
fees and rates for the optional SalesTax Module, Licensee is subject to an
annual subscription fee for monthly tax updates at the then-current published
rates. OPEN MARKET and its third party supplier do not warrant the accuracy of
the data or other tax calculations made by the SalesTax Module. For purposes of
this paragraph, "data" means any and all representations and/or compilations of
facts, concepts, instructions and other similar information and materials,
including without limitation sales and use tax information and compilations of
such information owned or acquired by OPEN MARKET's third party supplier.
Licensee bears full responsibility for the determination of the accuracy and
applicability of the output from the SalesTax Module and acknowledges that tax
calculations often involve interpretation and that the data of many
jurisdictions can change rapidly. OPEN MARKET and its third party supplier are
not providing specific tax advice and Licensee should obtain the advice of
qualified tax professionals with respect to all tax issues.
IV. Merchant Business Customer ("Merchant") license fees
<PAGE>
For each Merchant Business Customer subscribing to the services of the TRANSACT
system, there is an annual Merchant License fee based on actual Merchant
Business Customer revenue. Licensee may order Merchant Licenses (see Exhibit
4.2) from OPEN MARKET in accordance with the following rate table:
Merchant Tier Monthly Merchant Revenue Monthly per Merchant fee
- ------------- ------------------------ ------------------------
Tier 1 up to $5k/month $o /month THESE #S
Tier 2 >$5k/mo up to $33k/month $o /month SUBJECT TO A
Tier 3 >$33k/mo up to $167k/mont $o /month CONFIDEN-
Tier 4 >$167k/mo $o /month TIALITY
REQUEST
Merchant Reporting and Payment Terms
A. Reporting. Within five (5) business days of the end of each calendar quarter
during the term of this Agreement, Licensee shall furnish Open Market with a
report (using the Transaction Report from TRANSACT) for each such quarter
setting forth the details of all new Merchants in each Tier receiving services
from Licensee's TRANSACT including the following information: (i) the number of
Active Accounts in each tier receiving services from Licensee's TRANSACT at
quarter end and (ii) the maximum number of Active Accounts in each tier during
such quarter. Should Open Market develop an automated reporting tool to trace
merchant details, the parties shall review and mutually agree on use.
B. Payment. The report shall be accompanied by payment in full of all Merchant
license fees for each Merchant in each Tier for each such quarter based upon the
Transaction Report. If payment is not made in full at such time, interest shall
accrue on monies outstanding from the due date of payments at the lesser of the
rate of one and one-half percent per month (1.5%) or the maximum legal rate
allowed.
C. Records/Audit Right. Licensee shall maintain complete and accurate records of
all documentation relating to the number of Merchants receiving services from
Licensee's TRANSACT during the term of this Agreement and shall provide Open
Market (or its designated independent certified public accountant) with
information upon reasonable request relating to such records in connection with
audits that OPEN MARKET may conduct. Audits may not be conducted more frequently
than every six (6) months. If such audits should disclose any under-reporting,
Licensee shall promptly pay Open Market such amount, together with interest
thereon in accordance with subsection (b) above. If the amount under-reported by
Licensee is equal to or greater than ten percent (10%) of the total payment due
Open Market for the payment period so audited, then the cost of the audit shall
be borne by Licensee.
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Attachment B
TRANSACT TERMS AND CONDITIONS
[CSP - International]
Defined terms used herein are listed in Exhibit 1.
In consideration of the mutual promises herein contained and other valuable
consideration, the parties hereto agree as follows:
1. LICENSES.
1.1 OPEN MARKET Grant of Licenses. OPEN MARKET hereby grants Licensee the
following non-exclusive, non-transferable, non-assignable, perpetual (subject to
Section 8.2) worldwide licenses, for the term of this Agreement:
a. To use the licensed copy(ies) of TRANSACT, on Licensee's designated
computer system, in Executable Code form only, in order to provide Internet
transaction services to TRANSACT End User Customers;
b. To use the licensed copy(ies) of TRANSACT, on Licensee's designated
computer system, in Executable Code form only, in order to conduct
demonstrations to prospective TRANSACT End User Customers; and
c. To make one (1) back-up copy of TRANSACT solely for archival or recovery
purposes, as long as the Production copy is in active use.
(If Licensee elects to receive a Development copy of TRANSACT):
d. To use the Development copy of TRANSACT, on the computer system which it
is installed, in Executable Code form only, solely for internal development,
testing and staging purposes and with all standard TRANSACT Payment Modules and
Fulfillment Modules and for no other purpose and to make one backup copy of the
Development copy solely for archival purposes.
(If Licensee elects to receive a Cold Spare Back-Up copy of TRANSACT):
e. To use the Cold Spare Back-Up copy of TRANSACT, on the computer system
on which it is installed, in Executable Code form only, solely in order to
provide emergency back-up to the Production copy of TRANSACT licensed hereunder
for the duration of such emergency and for no other purpose and to make one
backup copy of the Cold Spare Back-Up copy solely for archival purposes.
1.2 Option to License Optional Modules. OPEN MARKET hereby grants Licensee
an option to purchase licenses and an option to obtain related installation
services at any time during the term of this Agreement for any of the optional
modules of TRANSACT made available by OPEN MARKET at OPEN MARKET's then-current
fees and rates. If the option to license any optional modules of TRANSACT is
exercised by Licensee pursuant to this Section 1.2, each such additional module
shall thereupon be deemed included in TRANSACT and in the applicable license
grants set forth in Section 1.1.
1.3 No Implied License. Licensee acknowledges and agrees that this
Agreement in no way shall be construed to provide to Licensee, or any third
party, any express or implied license to use, copy or otherwise exploit TRANSACT
or any portion thereof, (including any intellectual property embodied therein)
other than as specifically set forth in this Agreement. Without limiting the
foregoing, Licensee may not sublicense or otherwise distribute TRANSACT or any
portion thereof to any
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third party, including any subsidiary or affiliate of Licensee, unless otherwise
authorized by OPEN MARKET in writing.
1.4 Trademarks. OPEN MARKET hereby grants Licensee the non-exclusive,
non-transferable, non-assignable (except as otherwise expressly provided
herein), worldwide license solely during the Term to use the OPEN MARKET's trade
and service marks (collectively, the "Marks") solely in connection with
Licensee's use of TRANSACT pursuant to this Agreement. Licensee acknowledges
that OPEN MARKET owns all rights to the Marks. Licensee shall not during the
Term of this Agreement and anytime thereafter use or attempt to use or register
anywhere in the world a tradename or mark or service name or mark or symbol
which in any way is identical or confusingly similar to any one of the Marks.
2. CERTAIN LICENSEE OBLIGATIONS.
2.1 Proprietary Markings. Licensee agrees that it will not remove any
copyright, trademark or other proprietary notices of OPEN MARKET or its
suppliers affixed to or displayed on TRANSACT or the Documentation.
2.2 Compliance with Laws. Licensee shall comply with all applicable laws,
rules and regulations in its performance of this Agreement. In particular,
Licensee shall not transfer, either directly or indirectly, TRANSACT or the
Documentation, either in whole or in part, to any destination subject to export
restrictions under U.S. law, unless prior written authorization is obtained from
the appropriate U.S. agency and shall otherwise comply with all other applicable
import and export laws, rules and regulations.
2.3 OPEN MARKET Acknowledgment and HTML Link. Licensee may insert the
following acknowledgment on a Web page(s) presented by Licensee's Transaction
Service to TRANSACT End User Customers: "This software infrastructure powered by
TRANSACT, a product of Open Market, Inc." This text may contain the URL of OPEN
MARKET's Web site.
2.4 Publicity. Licensee and OPEN MARKET shall mutually agree to a news
release regarding Licensee's purchase of the TRANSACT licenses under this
Agreement. Neither Licensee nor OPEN MARKET shall make any public statements,
including without limitation, press releases or public announcements regarding
TRANSACT, without the prompt prior review and approval of the other party, which
shall not be unreasonably withheld or delayed. Notwithstanding the foregoing,
OPEN MARKET may include Licensee in any general listing of TRANSACT customers.
3. SUPPORT AND MAINTENANCE SERVICES.
3.1 OPEN MARKET Support and Maintenance. During the term of this Agreement,
Licensee may purchase annual support and maintenance from OPEN MARKET at either
the Basic or Premier levels, at the applicable annual support fee, in accordance
with the terms and conditions of OPEN MARKET's standard Agreement for Annual
Software Support (the "Support Agreement") available on OPEN MARKET's Web site.
4. FEES.
4.1 License Fees. Licensee shall pay OPEN MARKET the License Fees in US
Dollars in accordance with the terms and conditions set forth in Attachment A.
4.2 Option to Purchase Merchant Licenses. OPEN MARKET hereby grants
Licensee an option to purchase Merchant Licenses in accordance with the terms
and conditions set forth in Exhibit 4.2.
4.3 Net of Taxes. All amounts payable by Licensee to OPEN MARKET hereunder
are exclusive of any sales, use and/or all other taxes or duties, however
designated, including without
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limitation, withholding taxes or royalties, or know-how payments, customs,
privilege, excise, sales, use, value-added and property taxes (collectively
"Taxes") except for Taxes on OPEN MARKET's net income. Licensee shall pay any
such Taxes, unless Licensee provides to OPEN MARKET an appropriate certificate
of exemption from the applicable taxing authority, and shall not withhold any
Taxes from any amounts due OPEN MARKET.
5. OWNERSHIP AND TRADE SECRETS; CONFIDENTIALITY.
5.1 OPEN MARKET Ownership Rights. Except for the licenses granted
hereunder, all rights, title and interests, including without limitation all
copyright, patent, trademark, trade secret and any other intellectual property
rights, in and to TRANSACT and the Documentation are retained by OPEN MARKET.
5.2 No Decompilation. Except as expressly provided in the applicable local
laws of Canada and Quebec, if any, and then only in strict accordance with, and
solely for the purposes specified in, such laws, Licensee shall not attempt to
(i) obtain the Source Code of TRANSACT or any Optional Component, Update or
Upgrade or any trade secret or know-how embodied in any of the foregoing,
whether through decompilation, disassembly or other means or (ii) modify,
enhance, translate or create derivative works of any of the same. Licensee shall
not duplicate any portion of TRANSACT or any Optional Component, Update, Upgrade
or Documentation, except as expressly authorized in this Agreement.
5.3 Confidentiality. Licensee and OPEN MARKET shall each safeguard the
other's Proprietary Information in the same manner as they safeguard their own
valuable proprietary information. The parties each agree that the terms of this
Agreement, including without limitation the amount of license or other fees
payable hereunder and the payment terms, shall be deemed Proprietary
Information. Results of benchmark tests run by Licensee shall not be disclosed
unless OPEN MARKET consents to such disclosure in writing. Each of the parties
acknowledges that the other's Proprietary Information constitutes such party's
valuable proprietary information and trade secrets. Each of the parties
expressly agrees and acknowledges that it is entering into this Agreement, and
providing the other party copies of its Proprietary Information hereunder, in
reliance upon the other's foregoing promise of confidentiality.
5.4 Nondisclosure. During the term of this Agreement, and for a period of
five (5) years thereafter, neither party shall use, disclose, make or have made
any copies of the other party's Proprietary Information in whole or in part,
except as provided herein, without the prior express written authorization of
the other party. The parties shall only disclose or otherwise allow access to
the Proprietary Information of the other party, to employees, consultants or
contractors who (i) have a need to obtain access thereto in order to give effect
to the rights granted to Licensee under this Agreement, and (ii) are legally
bound to maintain the proprietary and confidential nature of such materials
under a written agreement.
5.5 Exceptions. Any provisions herein concerning non-disclosure and non-use
of confidential information of a party shall not apply to any such information
which (a) is already rightfully known to the other party when received, (b) is
or becomes publicly known through publication or otherwise and through no
wrongful act of the other party, contrary to the foregoing terms of the present
section on confidentiality, (c) is received from a third party without similar
restriction and without breach of this Agreement, (d) is approved for release or
use by written authorization of the other party, (e) is required to be disclosed
pursuant to any government statute, regulation or order.
6. WARRANTY.
6.1 Warranties. (a) OPEN MARKET warrants to Licensee that TRANSACT shall
perform substantially in accordance with its then-current
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Documentation during the ninety (90) day period following installation (the
"Warranty Period"). OPEN MARKET shall have no liability with respect to any
failure of TRANSACT to perform as warranted under this Section 6.1 if such
failure results from improper use or any changes or modifications made to
TRANSACT by Licensee or any third party. This warranty is made solely to
Licensee and Licensee shall be solely responsible for any warranty to, or claims
by, Licensee's TRANSACT End User Customers or any other third parties.
(b) OPEN MARKET further represents and warrants that (i) the occurrence in or
use by TRANSACT of dates on or after January 1, 2000 ("Millennial Dates") will
not adversely affect its performance at any level with respect to date-dependent
data, computation, output, or other functions (including without limitation,
calculating, comparing and sequencing); and (ii) TRANSACT will create, store,
receive, process and output information related to or including Millennial Dates
without error or omissions. OPEN MARKET shall cooperate with Licensee as may be
reasonably necessary and appropriate to facilitate Licensee's review of OPEN
MARKET's Year 2000 compliance processes and procedures.
6.2 Licensee Remedies. Licensee's sole and exclusive remedy and OPEN
MARKET's sole and exclusive obligation under the warranty set forth in Section
6.1 shall be, at OPEN MARKET's sole discretion, (i) for OPEN MARKET to correct
any material failure of TRANSACT to perform as warranted (remedies may include,
without limitation, software patches or workarounds as required) or (ii) for
OPEN MARKET to replace TRANSACT with a new copy or Update; provided that such
failure is reported to OPEN MARKET within the Warranty Period.
6.3 Warranty Exclusions. SUBJECT TO ANY STATUTORY PROVISIONS OR LIMITATIONS
UNDER CANADIAN AND QUEBEC LAW THAT ARE MADE APPLICABLE TO THIS AGREEMENT
NOTWITHSTANDING SECTION 9.6, THE WARRANTIES UNDER SECTIONS 6.1 AND 7.1.1 ARE THE
ONLY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, THAT ARE MADE BY OPEN
MARKET AND OPEN MARKET DISCLAIMS ALL OTHER WARRANTIES, INCLUDING BUT NOT LIMITED
TO THE IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE AND
MERCHANTABILITY. OPEN MARKET shall have no liability in contract, tort,
negligence or otherwise arising out of the use of any root key certificates or
any related certificate authority technology or services provided by Licensee or
any third party to OPEN MARKET for use with TRANSACT.
6.4 Limitations of Remedy. Neither OPEN MARKET nor anyone else who has been
involved in the creation, production or delivery of TRANSACT shall be liable
Licensee or any third party for any liquidated, indirect, consequential,
exemplary or incidental damages (including damages for loss of business profits,
business interruption, loss of business information, and the like) arising out
of this Agreement or the use or inability to use TRANSACT even if OPEN MARKET
has been advised of the possibility of such damages. OPEN MARKET and its
suppliers shall have no liability whatsoever to any third party, including but
not limited to, TRANSACT End User Customers, and Licensee shall use reasonable
efforts to disclaim all liability of OPEN MARKET and its suppliers in any
applicable third party agreements. In no case shall OPEN MARKET's aggregate
liability for all matters arising out of the subject matter of this Agreement,
whether in contract, tort or otherwise, exceed the amounts actually received by
OPEN MARKET under this Agreement.
LICENSEE ACKNOWLEDGES THAT OPEN MARKET'S LIABILITY AND WARRANTY LIMITATIONS OR
EXCLUSIONS SET FORTH HEREIN
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ARE REASONABLE UNDER THE CIRCUMSTANCES AND THAT THE LICENSEE'S CONSENT THERETO
AND AGREEMENT THERWITH IS FAIRLY REFLECTED IN THE LICENSE FEES AND CONSTITUTES A
MATERIAL INDUCEMENT FOR OMI'S ENTRY INTO THIS AGREEMENT. HOWEVER NOTHING IN THIS
AGREEMENT SHALL BE DEEMED TO RESTRICT OMI'S POSSIBLE LIABILITY FOR PERSONAL
INJURY, DEATH OR TANGIBLE PROPERTY DAMAGE UNDER APPLICABLE LAW.
7. INDEMNIFICATION.
7.1 Infringement.
7.1.1 Warranty. OPEN MARKET warrants to Licensee that TRANSACT will
not infringe any copyright, U.S. patent, trademark, trade secret or mask
work right of any third party.
7.1.2 Defense. In the event of any claim or allegation against
Licensee of any infringement or misappropriation of any third party
copyright, U.S. patent, trademark, trade secret, or mask work rights by
reason of the use by Licensee of TRANSACT as permitted hereunder, OPEN
MARKET shall, at its expense defend such claim, and pay any costs, expenses
and finally awarded damages actually awarded in connection therewith,
including the fees and expenses of the attorneys engaged by OPEN MARKET for
such defense provided that (i) Licensee shall promptly notify OPEN MARKET
of such claim or action, (ii) OPEN MARKET shall have the sole and exclusive
authority to defend and/or settle any such claim or action and (iii)
Licensee will reasonably cooperate with OPEN MARKET in connection
therewith.
7.1.3 Certain Actions in Response to Infringement. If the use of
TRANSACT by Licensee has become, or in OPEN MARKET's opinion is likely to
become, the subject of any claim of infringement, OPEN MARKET may at its
option and expense (i) procure for Licensee the right to continue using
TRANSACT as set forth hereunder, (ii) replace or modify TRANSACT to make it
non-infringing, (iii) substitute an equivalent for TRANSACT or, if options
(i)-(iii) are not reasonably practicable, (iv) terminate this Agreement and
refund to Licensee all License Fees paid by Licensee under Article 4.
7.1.4 Limitation of Indemnification for OPEN MARKET.
(a) OPEN MARKET shall have no liability or obligation hereunder with
respect to any infringement claim if such infringement is caused by (i)
compliance with designs, guidelines, plans or specifications of Licensee;
(ii) use of TRANSACT by Licensee in an application or environment other
than as specified in applicable Documentation; (iii) modification of
TRANSACT by any party other than OPEN MARKET; or (iv) the combination,
operation or use of TRANSACT with other product(s) or services not supplied
by OPEN MARKET where TRANSACT would not by itself be infringing. Licensee
agrees to defend OPEN MARKET from and against all liabilities, obligations,
costs, expenses and judgments, including court costs, reasonable attorneys
fees and expert fees, arising out of any of the circumstances stated in
subsections (i) - (iv) above.
(b) THIS ARTICLE 7 STATES OPEN MARKET'S ENTIRE AND EXCLUSIVE LIABILITY
AND OBLIGATION, AND LICENSEE'S EXCLUSIVE REMEDY, WHETHER STATUTORY,
CONTRACTUAL, EXPRESS, IMPLIED OR OTHERWISE, FOR CLAIMS OF INTELLECTUAL
PROPERTY INFRINGEMENT.
7.2 By Licensee. Licensee shall defend OPEN MARKET against any and all
claims, damages, losses, liabilities, costs and expenses (including reasonable
attorney's fees) directly or indirectly brought against OPEN MARKET by any third
party arising out of Licensee's or a Merchant
9
<PAGE>
Business Customer's products or services or arising out of Licensee's breach of
this Agreement. Licensee shall have the sole and exclusive authority to defend
any such claim or action, provided that (i) OPEN MARKET shall promptly notify
Licensee of such claim or action, (ii) Licensee shall have the sole and
exclusive authority to defend and/or settle any such claim or action and (iii)
OPEN MARKET will reasonably cooperate with Licensee in connection therewith.
8. TERMINATION.
8.1 Term. The term of this Agreement shall commence on the Effective Date
and shall continue perpetually unless terminated pursuant to Section 8.2 hereof.
8.2 Termination. Licensee may terminate this Agreement without cause at any
time after a period of two (2) years from the Effective Date upon ninety (90)
day prior written notice. Either party may terminate this Agreement in the event
the other party (i) commits any material and substantial breach or default and
fails to provide an acceptable remedy of such breach or default within thirty
(30) days after written notice of such breach or default from the non-breaching
or non-defaulting party or (ii) ceases to carry on business as a going concern,
becomes the object of the institution of voluntary or involuntary proceedings in
bankruptcy or liquidation, or a receiver is appointed with respect to a
substantial part of its assets. Notwithstanding the foregoing, either party may
terminate this Agreement immediately in the event of a material breach by the
other party of its obligations under Article 6. Overdue payments shall bear
interest at the lesser of twelve percent (12%) per annum or the highest legal
rate.
8.3 Licensee Obligations on Termination. Upon termination of this
Agreement, for any reason except OPEN MARKET's uncured material breach, all
licenses granted hereunder shall immediately terminate and Licensee shall return
all portions of TRANSACT and the Documentation in its possession or control to
OPEN MARKET. Termination of this Agreement shall not relieve Licensee from
paying all fees accruing prior to termination. After termination, Articles 5, 6,
7 and 9 shall survive for a period of two (2) years.
9. GENERAL.
9.1 No Assignment. Licensee shall not assign this Agreement (or any of its
rights hereunder), or delegate its obligations hereunder without the prior
written consent of OPEN MARKET.
9.2 Amendment; Waiver. No amendment or modification to this Agreement, nor
any waiver of any rights hereunder, shall be effective unless assented to in
writing by both parties. The waiver of any breach or default shall not
constitute a waiver of any other right hereunder or any subsequent breach or
default.
9.3 Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
9.4 Relationship. Nothing contained herein shall in any way constitute any
association, partnership, agency, employment or joint venture between the
parties hereto, or be construed to evidence the intention of the parties to
establish any such relationship. The parties' relationship is solely that of
independent contractors.
9.5 Unenforceability. If a court of competent jurisdiction determines that
any provision of this Agreement is invalid, illegal, or otherwise unenforceable,
such provision shall be enforced as nearly as possible in accordance with the
stated intention of the parties, while the remainder of this Agreement shall
remain in full force and effect and bind the parties according to its terms. To
the extent any provision cannot be enforced in accordance with the stated
intentions of the parties, such provision shall be deemed not to be a part of
this Agreement.
10
<PAGE>
9.6 Governing Law. (a) This Agreement shall for all purposes be governed
by, construed and enforced solely in accordance with the laws of the
Commonwealth of Massachusetts USA, without reference to its conflict of laws
rules. The United Nations Convention on International Sale of Goods shall not
apply to this Agreement. (b) Any and all disputes between the parties arising
under or in connection with this Agreement or TRANSACT, which cannot amicably be
resolved by the parties, shall be resolved solely and exclusively in the courts
located in the Commonwealth of Massachusetts USA. Licensee hereby expressly
consents to the service of process in connection therewith and irrevocably
waives any objections to the jurisdiction of such courts on any grounds,
including without limitiation, forum non conveniens. Any judgment or award by
such courts may be entered and enforced by any court having jurisdiction over
the parties or their assets.
9.7 Government Contracts. TRANSACT and the Documentation are provided with
restricted and limited rights for purposes of government contracting and
subcontracting. TRANSACT and the Documentation provided by OPEN MARKET hereunder
to any agency of the U. S. Government or U. S. Government subcontractor shall be
subject to restrictions as set forth in FAR 52.227-19 or DFARS
252.227-7013(c)(1) or success or regulations. Contractor/manufacturer is Open
Market, Inc., 1 Wayside Road, Burlington, Massachusetts 01803.
9.8 Notices. Any notice required or permitted to be given hereunder shall
be given in writing to the party at the address specified above by personal
delivery, certified mail, return receipt requested, or by overnight delivery.
9.9 Entire Agreement. This Agreement, including all attached Exhibits
referenced herein, is the entire agreement between Licensee and OPEN MARKET with
respect to its subject matter, and supersedes all prior and contemporaneous
proposals, statements and agreements (oral and written) with respect to such
subject matter, including but not limited to any inconsistent or conflicting
terms contained in any Licensee purchase order issued in connection with this
Agreement. No oral or written information or advice given by OPEN MARKET, its
agents or employees shall create a warranty or in any way increase the scope of
the warranties in this Agreement.
11
<PAGE>
EXHIBIT 1
DEFINITIONS
"Active Account" means either a Buyer Consumer or Merchant Business Customer
account that has been established in the TRANSACT system and is registered
appropriately in the TRANSACT account database. Once established, the Active
Account is enabled for use by the applicable Buyer Consumer or Merchant Business
Customer.
"Buyer Consumer" means any customer either of Licensee or a Merchant Business
Customer, who establishes an Active Account with either Licensee or a Merchant
Business Customer with respect to transaction services provided via TRANSACT.
"Documentation" means the documentation, manuals or similar materials relating
to TRANSACT and all applicable Upgrades and generally made available by OPEN
MARKET to its TRANSACT licensees.
"Executable Code" means a form of computer program or portion thereof which can
be executed by a computer without further translation or modification. Examples
include binary code and code which can be directly executed by an interpreter.
"Merchant Business Customer" means any customer of Licensee who establishes an
Active Account with Licensee in order to provide transaction services to Buyer
Consumers via TRANSACT.
"Proprietary Information" is the confidential and valuable information of the
respective parties which the parties desire to protect against disclosure or
competitive use and which is either in written form and designated as
proprietary or confidential or is disclosed orally and is designated in writing
as being proprietary or confidential within ten (10) days of disclosure. OPEN
MARKET's Proprietary Information includes, without limitation, Source Code and
other proprietary information, trade secrets and know-how embodied in TRANSACT
and any results of benchmark tests run on TRANSACT.
"Source Code" means a form of computer program or portion thereof written in a
programming language employed by computer programmers which must be translated
into the language of a machine before it can be executed.
"TRANSACT" means OPEN MARKET's proprietary TRANSACT software, including the Core
Module bundle for the "Production", "Cold Spare Back-Up" and "Development"
licenses of TRANSACT, Upgrades and all optional Add-On Module components
("Optional Components")
"TRANSACT End User Customer" means any Merchant Business Customer or Buyer
Consumer to whom Licensee (or Licensee's Merchant Business Customer) will
provide products or services using TRANSACT. In each case, Merchant Business
Customers and Buyer Consumers must establish Active Accounts.
"Updates" means any modification by OPEN MARKET of TRANSACT that OPEN MARKET may
hereafter develop and make generally available to its TRANSACT Licensees in
accordance with OPEN MARKET's support program. Updates are represented by a
release number one or more places to the right of the decimal point.
"Upgrades" means all new versions, new releases and enhancements of TRANSACT
that OPEN MARKET may hereafter develop and make generally available to its
TRANSACT Licensees in accordance with OPEN MARKET's support program. Upgrades
are represented by a release number one or more places to the left of the
decimal point.
12
<PAGE>
EXHIBIT 4.2
MERCHANT LICENSES
I. Merchant Licenses
Initial Merchant License Fee includes the following: one (1) gold master of
SecureLink CommerceOperator for Windows NT and associated Documentation Frame
Source Code; one (1) gold master of SecureLink CommerceOperator for UNIX and
associated Documentation Frame Source Code; and one (1) gold master of
SecureLink SDK and associated Documentation Frame Source Code (collectively,
"SecureLink software").
Subject to the terms of this Agreement, Licensee is granted the non-exclusive
right to provide transaction services to Buyer Consumers via TRANSACT on behalf
of licensed Merchant Business Customers. Licensee may redistribute the
SecureLink software, in Executable Code form only, to licensed Merchant Business
Customers under terms substantially similar to Open Market's standard shrinkwrap
end user SecureLink license agreement.
Licensee may grant each Merchant Business Customer the non-exclusive,
non-transferable, non-sublicensable right to the following: one (1) StoreID on
Licensee's TRANSACT and SecureLink software and documentation as needed.
Licensee may customize and redistribute SecureLink software and documentation to
licensed Merchant Business Customers as needed to support StoreIDs. Licensee is
responsible for first and second line support of Merchant licenses and
associated software. Open Market will provide back-up support only to Licensee.
For purposes hereunder, "Store ID" means a number that identifies a registered
store to the TRANSACT administrator, which is provided to the Merchant Business
Customer when it registers a store and which will appear on the appropriate
registration screens.
SecureLink for Windows NT gold master ("SecureLink Gold Master") Use
Restrictions
Use and Distribution Rights
Licensee can use the SecureLink Gold Master solely for the purpose of
customization and redistribution of SecureLink software to its Merchant Business
Customers in Executable Code form only. Proprietary rights to the Licensed
Programs described hereunder shall be governed by Article 4 of this Agreement.
Under no circumstances shall Licensee develop products that, either directly or
indirectly, are competitive with the SecureLink software licensed hereunder
based on access to and use of such SecureLink Gold Master as authorized
hereunder.
SecureLink Documentation Frame Source Code ("SecureLink Documentation") Use
Restrictions
Use and Distribution Rights
Licensee can use the SecureLink Documentation solely for the purposes of
customization and redistribution to its Merchant Business Customers in
Executable Code form only. Open Market shall have final review and approval
authority on all customized SecureLink Documentation to confirm technical
accuracy. Proprietary rights to the Licensed Programs described hereunder shall
be governed by Article 5 of the Agreement.
Under no circumstances shall Licensee develop products that, either directly or
indirectly, are competitive with the SecureLink Documentation licensed hereunder
based on access to and use of such SecureLink Documentation as authorized
hereunder.
13
EXHIBIT 10.3
FORM OF UPS CONTRACT
UPS LOGO
Johnson Joseph December 8, 1999
VP Product Development
9066-4871 Quebec Inc. d.b.a. "Planet411"
440 Rene-Levesque West
Suite 400
Montreal, Qc.
H2Z 1V7
This Agreement and all UPS Service Guides in effect at the time of shipment
contain the basic terms under which United Parcel Service will provide pickup
and delivery service.
UPS and Planet411 agree to the following:
General Terms And Conditions
Account Numbers: UPS will make available to Planet411 a range of UPS account
numbers. Planet411 at its sole discretion will have the right to assign any and
all of the UPS account numbers reserved for Planet411 to any Planet411 client so
long as Planet411 notifies UPS of such assignment by fax or email prior to the
newly assigned UPS account number being used by the aforementioned Planet411
client to ship letters, documents, paks or packages. Only letters, documents,
paks, and packages shipped under the account number(s) listed on Addendum A are
eligible to participate in these designated incentives, and only these letters,
documents, paks, and packages will be used to determine whether Planet411 has
reached the minimum requirements of this Agreement. If a shipment's UPS waybill
does not indicate one of the specified account numbers from Addendum A, UPS
cannot apply the incentive in billing Planet411. UPS, on a daily basis, will
send by Electronic File Transfer or make available to Planet411 via login and
password the details of all shipping orders completed by UPS on behalf of
Planet411's clients; details such as ship to address, total weight of shipment,
date of shipment, service level requested and total cost of shipment for each of
the reserved Planet411 UPS account numbers. Account numbers may be added or
deleted only by mutual written Agreement by both UPS and Planet411. Additions to
Addendum A require five business days advance notice to become effective.
Billing: UPS will bill Planet411 for shipments made using any of the UPS account
numbers specifically reserved for Planet411 and its clients according to the
rate schedule included in Addendum A of the present agreement. Planet411 agrees
to supply package level shipping detail to UPS in a form acceptable to UPS.
Requests for invoice adjustments due to an overcharge or requests for refunds
due to a duplicate payment must be received within 90 days from invoice date.
Endorsement: Planet411 agrees to endorse UPS as the recommended delivery company
for Planet411 and its related divisions, subsidiaries, and affiliates. Subject
to final written approval by UPS, UPS agrees to support and/or endorse marketing
and/or promotional initiatives aimed at promoting Planet411's services in which
the UPS registered trademark and/or logo appears.
1
<PAGE>
Payment Terms: Planet411 agrees to pay for all shipments in full within the time
period required by UPS.
Confidentiality: Planet411 agrees that the rates, incentives, and terms of this
Agreement are only applicable to Planet411 and its subsidiaries as described in
Addendum A - Eligible Accounts and Incentive Levels, as end users and may not be
used for resale to any other party without prior written Agreement between UPS
and Planet411. Planet411 understands that breach of this clause of this
Agreement between UPS and Planet411 may result in immediate cancellation of this
Agreement. Planet411 agrees to maintain the Confidentiality of this program,
both its existence and the conditions, unless disclosure is required by law.
Planet411 agrees not to post or otherwise publicly display the confidential
incentives covered by this Agreement.
Term of Contract: This Agreement may be terminated by either party for any
reason upon 30 calendar days prior written notice.
Incentive Program: The specific details of the incentives provided in this
program covered by this Agreement are included in Addendum A.
Implementation: UPS will provide the incentive program as set forth in this
Agreement and the attached addenda. These incentives will commence Monday
[Contract_Start_Date] and remain in effect until Saturday
[Contract_Expiry_Date]. This contract is subject to periodic review for customer
compliance.
Language: The Parties hereto hereby acknowledge that they have required this
agreement and all related documents to be drawn up in the English language. Les
parties reconnaissent avoir demande que le present contrat ainsi que les
documents qui s'y rattachent soient rediges en langue anglaise.
________________________
Customer's Authorized
Representative Initials
This contract offer is void if an executed copy is not returned to UPS by
[Offer_End_Date] [AE_Name]
2
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
Other names under which
Name Owner Jurisdiction doing business
<S> <C> <C> <C>
Egress Technologies Inc. The Registrant has 100% Nevada None
direct ownership interest
9066-4871 Quebec Inc. 3560309 Canada Inc. Quebec, Canada Planet411
3560309 Canada Inc. The Registrant's Canada (federal) None
interest (all of the
voting/ common shares)
is owned through Planet
411 (Nova Scotia) Company
Planet 411 (Nova Scotia) The Registrant has 100% Nova Scotia, Canada None
Company direct ownership interest
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
CONSOLIDATED FINANCIAL STATEMENTS OF PLANET411.COM CORPORATION DATED JUNE 30,
1999 AND THE UNAUDITED FINANCIAL STATEMENTS OF PLANET411.COM INC. DATED
SEPTEMBER 30, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 11-MOS 3-MOS
<FISCAL-YEAR-END> JUN-30-1999 JUN-30-2000
<PERIOD-START> AUG-01-1998 JUL-01-1999
<PERIOD-END> JUN-30-1999 SEP-30-1999
<CASH> 62,970<F1> 15,239<F1>
<SECURITIES> 0 0
<RECEIVABLES> 2,673 2,637
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 144,833 150,605
<PP&E> 1,084,595 1,118,403
<DEPRECIATION> 116,004 167,937
<TOTAL-ASSETS> 1,183,042 1,101,071
<CURRENT-LIABILITIES> 348,371 404,626
<BONDS> 6,115 3,637
0 0
0 0
<COMMON> 24,086 23,592
<OTHER-SE> 1,446,965 1,788,836
<TOTAL-LIABILITY-AND-EQUITY> 1,127,119 1,183,042
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 981,495 426,149
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 3,051 565
<INCOME-PRETAX> (984,546) (426,714)
<INCOME-TAX> (984,546) (426,714)
<INCOME-CONTINUING> (984,546) (426,714)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (984,546) (426,714)
<EPS-BASIC> (0.035)<F2> (0.01)<F4>
<EPS-DILUTED> (0.023)<F2><F3> (0.008)<F5>
<FN>
<F1> The Company's consolidated financial statements from which this table has
been derived have been prepared in accordance with generally accepted
accounting principles in Canada and conform in all material respects with
the accounting principles generally accepted in the United States.
<F2> For purposes of this calculation, the weighted average number of shares of
common stock was 27,942,964, including counting the special voting stock as
25,094,996 shares of common stock.
<F3> Reflects 15,000,000 shares of common stock subject to warrants.
<F4> For purposes of this calculation, the weighted average number of shares of
common stock was 49,000,042, including counting the special voting stock as
25,094,996 shares of common stock.
<F5> Reflects 107,800 shares of common stock subject to warrants.
</FN>
</TABLE>
