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 risk factors and other cautionary statements identifying
important factors that could cause actual results to differ materially from
those in the forward-looking statements.
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 for all
periods prior to October 6, 1999, and (b) Planet411.com Inc., a Delaware
corporation, after such date.
The Company has only recently commenced pilot operations. It has not yet
commenced full scale commercial operations. The business of the Company as set
forth herein is a description of the goals that the Company has established for
itself. There can be no assurance that it will be able to achieve these goals or
that, if the goals are achieved, the business reflected therein will be
commercially viable.
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 on a city-by-city basis. The Company's marketing concept
is the "virtual city": for every real city that the Company or its franchisees
determines it would like to attract merchant partners, it will establish a
virtual city on the Internet, in which the Company will integrate the various
e-merchants' stores with the intention of creating a fully-integrated,
high-consumer-traffic environment. The initial city for which the Company is
establishing a virtual city is Montreal. The Company intends to establish
additional virtual cities as it obtains merchant partners from other Canadian
cities and cities in Europe, the United States, South America and Asia, and
hopes ultimately to create a worldwide network of interrelated virtual cities.
The Company plans to offer a package of services to e-merchants that will
facilitate the process by which prospective entrepreneurs and small and medium
size business owners establish their stores in a virtual city and execute
on-line transactions. By bundling store and catalogue creation, web site
hosting, Visa and MasterCard merchant numbers, 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's products and services have been developed in a modular fashion.
This means that it can use essentially the same software and format as are being
used in Montreal, with the only change being the city-dependent information
inputted into the Company's pre-formatted database for the respective city. The
remaining portions of the infrastructure that enable the Company's products and
services to function with respect to the Montreal virtual city will already be
in place.
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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 customers with all of
these services. For example, the Company has an agreement with Open Market Inc.
permitting the Company's customers to use that company's catalogue creation
software and back-end commerce application software (ShopSite(TM) and Transact4
, respectively) that 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 has engaged EMC2 Corp. to monitor the servers
on which it hosts its customers' websites and prevent and repair any glitches or
problems, so as to maintain the availability of the websites for the merchant
partners. Additionally, the Company has arrangements with two Canadian chartered
banks that allow the Company to provide its customers with Visa and MasterCard
merchant numbers within three days, as opposed to a potential six-to-eight week
delay, without the typical upfront security deposit (for chargebacks) of Cdn.$5
- - 20,000. These arrangements also provide for transaction processing at a lower
discount rate than is charged to most e-commerce businesses. The Company holds
"rolling" security for these Visa or MasterCard merchants, in accordance with
risk analysis provided by the respective bank. The Company is ultimately
responsible for the e-merchants' chargebacks.
The Company has also entered into an agreement in principal with UPS that allows
its customers to benefit from discounted shipping rates, which the Company
believes are more typically applicable to large volume shippers. Under this
agreement, UPS charges the e-merchants based upon the aggregate of the Company's
merchant partners' shipments, and the Company receives one master invoice
reflecting the various subaccounts of these merchants. The Company then invoices
the subaccounts itself. This allows the Company to generate additional income by
virtue of the disparity between the amount UPS invoices and the amount that the
Company invoices. The Company remains responsible to UPS for all amounts owed.
Revenues
The Company plans to charge e-merchants a flat monthly fee plus a small
percentage of the e-merchant's sales for the use of its complete e-business
solution. Additional revenues will be received for e-business support provided
by the Company's service department. The Company will also derive revenues when
a merchant pays for advertising via billboards, banners and/or sponsorships of
particular sections of "virtual cities" with which the respective merchant
wishes to be associated.
In order to promote the success of the Company's e-merchants' online stores, the
Company plans to offer strategic advertising consulting services for its
e-merchant partners who wish to have a window on one or more specialized
portals. The links on these other specific portals will lead directly to the
e-merchant's store, which is located on the Company's portal.
Another source of revenues will be franchising, licensing and/or joint
venturing. The Company intends to establish virtual cities for other cities, but
has not determined whether it will do so as a franchisor, licensor or as a
partner in a joint venture. The Company's focus has been on establishing its
virtual city for Montreal. As a result of the foregoing, the Company has not yet
responded to the applications for franchises that it has received from
entrepreneurs in other cities looking to become affiliated with the Company.
Employees.
The Company is establishing its base of programmers, developers, data entry,
content creation and news editing, digital photography, research and quality
control personnel in Montreal. The Company outsources hosting and hardware
maintenance and related hosting needs, and is evaluating the benefits and cost
savings of outsourcing other related technical tasks. The Company is in the
process of evaluating potential sites for its business center. This facility
will be staffed seven days a week during regular business hours by qualified
representatives and customer service personnel. The Company is in the process of
bolstering
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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. The Company
intends to build business centers 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 currently employs 34 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.
Market
The primary market for the Company's services is e-merchants, which are
businesses that sell goods or services over the Internet. To date, the Company
believes that two industry sectors have dominated e-commerce: computer hardware
and software sales and the travel industry (support). The majority of the
remaining online commerce is the sale of miscellaneous goods including books,
music, videocassettes, apparel, gifts, flowers, food and beverages.
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. Recent estimates are that e-commerce is expected to
account for six percent of U.S. gross domestic product in less than a decade,
and that U.S. e-commerce transactions are expected to grow from an estimated $43
billion in 1998 (compared with approximately $9 billion in on-line transactions
in 1997) to $1.3 trillion in 2003.
For Internet use to grow, consumers must be confident in the security measures
taken by providers. The Company believes that there has been an increase in
public confidence that transactions on the Internet are secure: only 21% of
those surveyed recently cited concern about credit card fraud, as compared with
approximately twice that amount 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 attract more e-merchants to the Company's
websites and virtual cities.
Sales and Marketing
The Company plans to launch an aggressive direct selling strategy intended to
secure a strong position in the market place and to use strategic alliances to
develop business. The Company has initially focused its marketing efforts in
Montreal, the first of its "virtual cities", and intends to focus its future
efforts in major cities in Canada and then in Europe, the United States, South
America and Asia. Upon directing its marketing efforts at a "real" city, the
Company will seek to develop a virtual city that will generate anticipated
synergies for the e-merchants use the Company's products and services. The
marketing campaign will focus on high-growth industries, and will be aimed at
the potential entrepreneurs and small retail business owners, who have the
ability to make decisions more rapidly than larger businesses. Studies have
shown that the vast majority of the 200,000 businesses in Montreal fall into
this category. The Company will also target companies that are not computer or
Internet familiar by being what it believes to
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be the first e-business company to establish physical locations staffed with
support personnel to assist its merchant partners in a "face-to-face" setting.
The Company has entered into an agreement with CPM Cartier Promotion Marketing
("CPM") in which CPM has agreed to help develop the marketing strategy of the
Company and to plan and produce the required communication tools for the launch
campaign of its e-business solution scheduled this fall. CPM has agreements with
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 Carat-Strategem for its media placement; and
o Morin des Roberts to plan and manage its public and investor
relations.
An advertising, promotion and public relations campaign will be 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.
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 assigned to business centers in order to respond to the clients
on site. The second team will be a "ground force" that will visit potential
merchant partners. The third team will be located in the call center, as some
agents will be responsible for telemarketing. Initially the sales team will be
composed of 15 representatives, with about half of them being in the business
center.
Competition
The market for Internet e-merchants, visitors and advertising is 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 Internet users 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
fully integrated "virtual city," it is possible that one or a few suppliers may
dominate one or more market sectors. The Company believes that the primary
competitive factors for companies seeking to create a community on the Internet
are critical mass, functionality, dependability and cost-efficiency of the
Company's host services, brand recognition (both with respect to the Company's
products and services and with that of the e-merchants in the virtual cities),
the affinity and loyalty of the Company's e-merchants, a broad demographic
focus/ content of broad appeal, the ability to integrate related content
(including the various virtual cities hosted by the Company) and open access to
visitors. Other companies who are primarily interested in creating Web-based
communities on the Internet include Lycos and imall. The Company will also
likely face competition in the future from Web directories, search engines such
as Yahoo, content sites, commercial online services, sites maintained by
Internet Service Providers (ISPs) and other entities that attempt to or
establish communities on the Internet by developing their own or purchasing one
of the Company's competitors. Further, there can be no assurance that the
Company's competitors and potential competitors will not develop communities
that are equal or superior to the Company' virtual cities. The Company also
competes for visitors with many Internet content providers and ISPs, including
Web directories, search engines, content sites, commercial online services and
sites maintained by ISPs, as well of the thousand s of Internet sites operated
by individuals and government and educational institutions. These competitors
include free information, search and content sites or services.
The Company also competes with traditional forms of media, such as newspapers,
magazines, radio and television, for advertisers and advertising revenues, the
providers of which are likely to have greater
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capacity than the Company to make investments in or otherwise acquiring the
Company's competition. The Company believes that the principal competitive
factors in attracting advertisers include the amount of traffic in its virtual
cities compared to other companies' Web sites, brand recognition, customer
service, the demographics of the Company's e-merchants and its and their
viewers, the Company's success in generating the target audience it envisions,
and the overall cost-effectiveness of the advertising medium offered by the
Company. The Company believes that the number of Internet companies relying at
least in part on Web-based advertising will increase greatly in the future, and,
accordingly, the company will face increased competition, resulting in increased
pricing pressures on its advertising rates, which could in turn have a material
adverse effect on the Company's business, results of operations and financial
condition.
Many of the company's existing and potential competitors, including Web
directories and search engines and large traditional media companies, have
longer operating histories in the Web market, greater name recognition, larger
customer bases and significantly greater financial, technical and marketing
resources than the Company. Such competitors are able to undertake more
extensive marketing campaigns for their products and services, adopt more
aggressive advertising pricing policies and make more attractive offers to
potential employees, distribution partners, commerce companies, advertisers and
third party content providers. There can be no assurance that other Internet
content providers and ISPs will not be perceived by advertisers as having more
desirable Web sites for placement of advertising, or that the package of host
services provided by the Company will be found to be less useful than those
provided by other companies. There is also no assurance that the companies 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.
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 period
commencing on August 1, 1998 (date of inception) through June 30, 1999 are
derived from the audited 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.
Eleven Months ended
Statement of Consolidated Earnings Data June 30, 1999
- --------------------------------------- -------------------
Operating and administration expenses
Salaries $ 246,733
Rent 52,472
Internet connection 58,856
Advertising and promotion 26,702
Professional fees 213,362
Travelling 29,993
Service Contracts 65,679
Interest expense 3,051
Other expenses 287,698
-----------
Net loss for the period $ (984,546)
-----------
Balance sheet data June 30, 1999
- ------------------ -------------
Current Assets $ 144,833
Capital Assets 968,591
Total Assets 1,183,042
Current Liabilities 348,371
Total Liabilities 640,616
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 commencing limited operations, including
the establishment of relationships with financial institutions and the various
other providers of services described herein. The Company is a corporation with
a limited operating history. It (through its current subsidiary) commenced its
present operations on July 31, 1998. It is a development stage company with no
operating revenues to date. The Company hopes to derive revenues from one-time
initiation fees when e-merchants establish accounts with it and from ongoing
fees that will be both fixed and variable depending, among other things, upon
the sales and advertising and promotional efforts of its customers. The Company
has insufficient operating 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 need for additional
capital. There is no assurance
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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 possible. The Company and
its predecessors in interest did not conduct any business that would yield a
meaningful analysis of results of operations prior to that time. Operating and
administrative expenses incurred through June 30, 1999 were $984,546 and
represent the cost of forming the Company, building its infrastructure, hiring
and paying employees, and advertising and marketing. As of June 30, 1999, the
Company had an accumulated deficit of $984,546.
Liquidity and Capital Resources.
On September 17, 1999, the Company issued 107,800 Units (each consisting of one
share of common stock, par value $0.001 ("Common Stock") and one warrant to
purchase another for $5.00) in consideration of an aggregate of $539,000.
The Company has a revolving line of credit from a Canadian chartered bank to the
Company's indirectly owned operating subsidiary 9066-4871 Quebec Inc. (as a
borrower, the "Borrower"). The bank will make available to the Borrower a
revolving credit facility, the proceeds of which the Company will use to develop
Internet sites and to finance the marketing expenses associated with the launch
of service and the Borrower's day to day activities. Up to $2,000,000 of such
proceeds may also be used to fund a special Internet entertainment event. Under
the terms of the financing, surety bonds in an aggregate principal amount of
$5,000,000 were issued in favor of the Company, which surety bonds support the
bank's revolving credit facility. The bank has made funds available to the
Company contingent upon the bank's receipt of confirmation of the reinsurance of
such surety bonds, which confirmation the Company expects to receive in
mid-October. In connection with the issuance and re-insurance of the surety
bonds, one of the Company's shareholders pledged approximately 3.3 million
shares of the Company's Common Stock to the surety, and certain of the
shareholders of 3560309 Canada Inc., the Company's indirect subsidiary, pledged
an aggregate of 1.7 million Exchangeable Shares in that company to the surety.
None of the pledgors received any compensation for such pledges.
These financings represent the sole source of the Company's working capital to
date.
On September 30, 1999, the Company had $22,286 in cash available to fund
operations. The Company believes that this amount, when combined with the funds
available from its revolving credit facility, is sufficient to support the
Company's commencement of operations on schedule, including the completion of
the Montreal virtual city and implementing the desired franchising, licensing or
joint venture transactions. The failure to obtain funds from the bank under the
revolving facility 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, and any such financing will be affected by the covenants in the bank
and surety bond documentation and/or may be at terms that are extremely dilutive
to the Company's existing shareholders.
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 industry 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.
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The Company has completed its assessment of the Year 2000 issues in the software
contained in its internal systems. Based on its current 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 cost of this assessment to the Company was not
material. All software and systems installed hereafter will be tested and
verified for Year 2000 readiness at the time of installation at minimal
additional cost.
The Company has been unable to determine the Year 2000 readiness of its third
party providers. In addition, 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. 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.
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. It leases an aggregate of 9,000
square feet of office space at the address of its headquarters in Montreal under
2 leases that expire on February 28, 2003 and August 31, 2003. Aggregate
payments under the leases are $256,717. 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 believes that its present facilities are adequate to meet its
current business requirements and that suitable facilities for expansion will be
available when necessary.
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.
<TABLE>
<CAPTION>
Name and Address of Number of Shares Percentage Ownership
Beneficial Owner Beneficially Owned
<S> <C> <C>
Bank August Roth AG 15,682,401 66.5%
Bellariastrasse 23
Zurich, Switzerland
Joseph Farag 11,873,814(1)(2) 34.4
Stephane Chouinard 11,873,814(1)(2) 34.4
Johnson Joseph 6,079,754(1)(3)
Ec-Assiste Inc. 3,300,000 14.0
Varujan Tasci 1,519,939(1) 6.1
Executive Officer and Directors 22,185,385 48.5
As a group (4)(4 Total)
</TABLE>
(1) All of such shares are Exchangeable Shares in 3560309 Canada Inc., all of
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.
(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 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.) Beneficial ownership is disclaimed
as to 5,128,694 of such Exchangeable Shares.
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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
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 has been President and a director of the Company since July 1998.
From 1994 through 1998, he was a private investor. From 1992 to 1993, he was the
Chief Operating Officer of Proclam Electrique Inc., a manufacturer and
distributor of heating systems.
Stephane Chouinard has been a Secretary and Vice President, Corporate
Development of the Company since July 1998. Between 1995 and 1997, he was an
independent marketing/communication consultant for major adult movie
distributors. From 1994 to 1995, Mr. Chouinard was a sales representative for a
Saturn/ Saab/ Isuzu automobile dealership. From 1993 to 1994, Mr. Chouinard was
a sales manager for Les Boulangeries St. Augustin.
Johnson Joseph has been Vice President, Product Development and Treasurer of the
Company since July 1998. Before joining the Company, he was Development
Counselor of an Internet hub called "CityView" from 1997 to 1999. From 1996
through 1997, Mr. Joseph 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.
Varujan Tasci has been with the Company as Chief Technical Officer of its
subsidiary 9066-4871 Quebec Inc. ("9066") since July 1998. He is the founder of
COSS'N CREW Corp., a computer consulting firm, which he owned and for which he
served as President and Director for over five years prior to joining the
Company.
11
<PAGE>
Item 6. EXECUTIVE COMPENSATION.
Directors may be paid a fixed sum for attendance at each meeting or a stated
salary as a director over and above their executive salaries.
The Company paid no executive officer more than Cdn.$100,000 in 1998. Mr.
Farag's salary (paid by 9066) was Cdn.$1,500 in 1998 and is Cdn.$100,000 in
1999. The Company has no employment agreements with any employee, director or
officer.
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 1 share of Common
Stock in the Company pursuant to the merger agreement, 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 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 for one Exchangeable Share. The
Exchangeable Shares of Canco 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 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
12
<PAGE>
Exchangeable Shares in Canco for shares in the Company, the Voting Agreement
also 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.
Furthermore, the Voting Agreement provides 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.
In addition to the foregoing, Mergeco had also entered into the following
related party transactions:
Professional fees of $22,487 were paid to Jonathan Levinson, in-house
counsel to and a shareholder of the Company.
Subcontracting fees for support services amounting to $5,293 were paid to a
company controlled by Varujan Tasci, an officer of the Company's operating
subsidiary and a shareholder of the Company.
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. 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) has been quoted on the OTC Bulletin Board under the symbol "PFOO". On
October 7, 1999, pursuant to NASD Rule 6530, the Common Stock became ineligible
for the OTC Bulletin Board because the Company was not required to file reports
under the Secruties 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 bulletin board. 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
(through Oct. 13th) $2.5625 $2.125
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 6, 1999, there were approximately 35 holders of record of the
Company's 23,592,115 issued and outstanding shares of Common Stock. On October
13, 1999, the last reported sales price of the Company's Common Stock was $1.625
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."
13
<PAGE>
The transfer agent and registrar of the Company's Common Stock is Nevada Agency
and Trust Company.
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 on share of common stock and warrants to purchase two
additional shares. The Company relied on the exemption from registration
provided in Regulations D and 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
(a) Regulations D and S of the Securities Act with respect to its issuances of
shares to CBN and (b) Regulation D of the Securities Act with respect to its
share issuances to WT. (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.
The Company received aggregate consideration of $539,000 for 107,800 Units, each
Unit consisting of (a) one share of Common Stock (which share was issued on
September 17, 1999) and (b) one option to purchase one additional share of
Common Stock for $5.00 within one year from the date of the closing of the
offer, August 30, 1999. The Company relied on the exemption from registration
provided for in Regulation S with respect to this issuance of securities.
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 23,592,115 shares of Common Stock are
presently issued and outstanding. Also outstanding are warrants held by third
parties to purchase an aggregate of 107,800 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).
14
<PAGE>
Holders of Common Stock are each entitled to 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 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.
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 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
15
<PAGE>
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
3.2 By-laws
9.1 Voting, Support and Exchange Trust Agreement
9.2 Assignment and Assumption Agreement
21 Subsidiaries
4.1 Specimen stock certificate
16
<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: October 13, 1999
17
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Planet 411.com Corporation
(A Company in the Development Stage)
Consolidated Financial Statements
June 30, 1999
Auditors' Report F-2
Financial Statements
Consolidated Earnings F-3
Consolidated Deficit F-3
Consolidated Cash Flows F-4
Consolidated Balance Sheet F-5
Notes to Consolidated Financial Statements F-6 to 12
F-1
<PAGE>
Auditors' Report
To the Shareholders of
Planet 411.com Corporation
We have audited the consolidated balance sheet of Planet 411.com Corporation as
at June 30, 1999 and the consolidated statements of earnings, deficit and cash
flows for the 11-month period then ended. 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 at 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
Chartered Accountants
Montreal
September 9, 1999
F-2
<PAGE>
Planet 411.com Corporation
Consolidated Earnings
Consolidated Deficit
For the 11-month period ended June 30, 1999
(In U.S. dollars)
<TABLE>
<CAPTION>
$
<S> <C>
CONSOLIDATED EARNINGS
Revenue --
-----------
Operating and administrative expenses
Salaries 246,733
Fringe benefits 29,130
Subcontracts 10,805
Training 24,392
Advertising 47,950
Transportation 1,654
Promotion 26,702
Rent 52,472
Internet connection 58,856
Equipment rental 2,977
Maintenance and repairs 4,688
Taxes and permits 11,300
Insurance 2,469
Office supplies and courier 52,353
Communications 15,553
Professional fees 213,362
Bank charges 1,606
Interest on long-term debt 3,051
Service contracts 65,679
Travel 29,993
Foreign exchange (30,104)
Amortization of capital assets 112,925
984,546
Net loss 984,546
Basic loss per share 0.04
Weighted average number of outstanding shares of common stock (the special
voting stock considered as 25,094,996 shares of common stock) 27,942,964
CONSOLIDATED DEFICIT
Deficit, beginning of period --
Net loss 984,546
Deficit accumulated during the development stage, end of period 984,546
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-3
<PAGE>
Planet 411.com Corporation
Consolidated Cash Flows
For the 11-month period ended June 30, 1999
(In U.S. dollars)
<TABLE>
<CAPTION>
$
<S> <C>
OPERATING ACTIVITIES
Net loss (984,546)
Non-cash item
Amortization of capital assets 112,925
Changes in non-cash working capital items
Sales taxes receivable (37,782)
Prepaid expenses (31,212)
Accounts payable and accrued liabilities 124,445
Cash flows from operating activities (816,170)
----------
INVESTING ACTIVITIES
Cash position of acquired company 2F(Note 3) 263
Term deposit (10,196)
Advances to directors and shareholders (3,127)
Advance to companies under common control (13,695)
Capital assets 2F(Note 4) (859,091)
Effect of exchange rate changes 3,079
Cash flows from investing activities (882,767)
----------
FINANCING ACTIVITIES
Advances from related companies (44,242)
Advance from a director 656
Repayment of long-term debt (6,953)
Issuance of preferred shares of a subsidiary company - non-controlling interest 285,474
Issuance of capital stock 1,014,444
Capital stock not issued 539,000
Effect of exchange rate changes (26,472)
Cash flows from financing activities 1,761,907
Net increase in cash 62,970
Cash, beginning of period --
Cash, end of period 62,970
SUPPLEMENTAL DATA
Cash paid during the period for interest 1,344
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE>
Planet 411.com Corporation
Consolidated Balance Sheet
June 30, 1999
(In U.S. dollars)
<TABLE>
<CAPTION>
$
<S> <C>
ASSETS
Current assets
Cash 62,970
Term deposit, 3.75%, maturing on April 19, 2000 10,196
Sales taxes receivable 37,782
Advances to directors and shareholders, without interest 2,673
Prepaid expenses 31,212
144,833
Advance to companies under common control, without interest or repayment terms
2F(Note 9) 13,695
Capital assets 2F(Note 4) 968,591
Goodwill 2F(Note 3) 55,923
1,183,042
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities 339,537
Instalments on long-term debt 8,834
348,371
Advances from a director, without interest or repayment terms 2F(Note 9) 656
Long-term debt 2F(Note 5) 6,115
Non-controlling interest 2F(Note 6) 285,474
640,616
----------
SHAREHOLDERS' EQUITY
Capital stock 2F(Note 7) 24,192
Contributed surplus 2F(Note 7) 1,529,252
Cumulative translation adjustments 2F(Note 8) (26,472)
Deficit accumulated during the development stage (984,546)
542,426
1,183,042
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE>
Planet 411.com Corporation
Notes to Consolidated Financial Statements
June 30, 1999
(In U.S. dollars)
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 a new Internet concept, which reduces
the global concept of finding information and conducting business on the World
Wide Web, to a more localized platform. The Company plans to develop a network
of virtual cities that will replicate the existing major cities in the world. In
conjunction with local partners, they will develop these virtual cities with an
emphasis on the Internet's most practical applications: information,
transactions and interaction, under the Company's brand name and image.
F-6
<PAGE>
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 accounting principles generally accepted in the United States.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles 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
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 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
earnings.
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
F-7
<PAGE>
2 - ACCOUNTING POLICIES (Continued)
Goodwill
Goodwill is recorded at cost and will be amortized on a straight-line basis over
three years when the Company is no longer in the development stage.
The Company will evaluate the carrying value of goodwill each year to determine
if there has been a decline in value based on estimates of current and expected
discounted cash flows from operations of each underlying business taking into
consideration operating trends and other relevant factors.
Financial instruments
The estimated fair value of cash, term deposit and accounts payable and accrued
liabilities approximates their carrying value due to their short-term maturity.
Cash and cash equivalents
The Company's policy is to present cash and temporary investments having a term
of three months or less from the acquisition date as cash and cash equivalents.
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.
As at the date of acquisition, the fair value of net assets acquired was as
follows:
$
Cash 263
Goodwill 29,904
Loans payable to shareholders (454)
Accounts payable (55,732)
(26,019)
Consideration
8,484,294 common shares --
Goodwill upon acquisition 26,019
4 - CAPITAL ASSETS
Cost Amortization Net
$ $ $
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
During the period, 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.
F-8
<PAGE>
5 - LONG-TERM DEBT
$
Obligations under capital leases, 16%, payable in
monthly instalments of $883, capital and interest,
maturing in February 2001 14,949
Instalments due within one year 8,834
6,115
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
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 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.
7 - CAPITAL STOCK
Authorized
1 share of 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
10,000,000 shares of preferred stock, having a par value of $0.001
300,000,000 shares of common stock, having a par value of $0.001
<TABLE>
<CAPTION>
Number of Contributed
shares Par value surplus
$ $
<S> <C> <C> <C>
Issued and fully paid
Special voting stock (25,094,996 votes) 1 -- 104,444
----------
Common stock
Balance outstanding on April 20, 1999, date of
reverse takeover 2F(Note 3) 8,484,294 8,484 (8,484)
June 1999 - exercise of warrants 2F(Note 14) 15,600,000 15,600 894,400
24,084,294 24,084 885,916
---------- ----------
bNot issued and fully paid u(a)
Common stock 107,800 108 538,892
24,192 1,529,252
</TABLE>
u(a) 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. As
at June 30, 1999, no shares of common stock have been issued with respect
to the above subscription agreement.
F-9
<PAGE>
7 - CAPITAL STOCK (Continued)
Transactions during the 11-month period ended June 30, 1999
Special voting stock
Pursuant to the combination agreement (see Note 1), the Company issued one
share of special voting stock.
Common stock
On July 31, 1998, there were 2,828,098 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 Company repurchased from CBN and World Transport the
2,500,000 shares of common stock for $34,400.
In November 1998, the outstanding 2,828,098 shares of common stock were
split 3 for 1 resulting in 8,484,294 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
8,484,294 shares of common stock and the fair value of the net assets
amounted to ($26,019) which was allocated to goodwill.
In June 1999, shareholders exercised their outstanding warrants and
purchased 15,600,000 shares of common stock for $910,000 cash (Note 14).
F-10
<PAGE>
8 - CUMULATIVE TRANSLATION ADJUSTMENTS
$
Balance, beginning of period --
Effect of exchange rate changes (26,472)
Balance, end of period (26,472)
9 - 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:
- - Professional fees of $22,487 were paid to a shareholder of the Company;
- - Subcontracting fees for support services amounting to $5,293 were paid to a
company controlled by a shareholder of the Company.
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 advance to companies under common control,
determined by discounting future cash flows at current rates, is approximately
$11,000.
The estimated fair value of advances from a director, determined by discounting
future cash flows at current rates, is approximately equal to the carrying
value.
10 - INCOME TAXES
a) The tax benefits arising from operating losses and capital assets
amortization for income tax purposes of approximately $1,050,000 are not
recorded in the financial statements. The operating loss carry-forwards for
income tax purposes of $937,000 expire in 2006.
b) The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets are as follows:
$
Operating loss carry-forwards 365,430
Capital assets, due to amortization taken for accounting purposes 44,070
409,500
Valuation allowance (409,500)
Net deferred tax assets --
F-11
<PAGE>
11 - 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 $181,088 for support
services and maintenance, which expire on March 31, 2000.
The Company has also entered into an Internet Management Services contract
aggregating $741,593 for providing hosting services for their main Website. The
contract expires on April 30, 2002 and payments for the next three years are
$261,739 in 2000 and 2001, and $218,115 in 2002.
12 - 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.
13 - 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 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.
14 - SUBSEQUENT EVENTS
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.
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 $35,000 will be returned to the original investors.
F-12
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
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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.
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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.
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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.
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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.
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>
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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.
<PAGE>
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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).
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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,
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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
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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
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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
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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;
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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>
-32-
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>
-33-
(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>
-34-
(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>
-35-
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>
-36-
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>
-37-
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>
-38-
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
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 21
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
Other names under which
Name Owner Jurisdiction doing business
<S> <C> <C> <C>
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
CONSOLIDATED FINANCIAL STATEMENTS OF PLATNET411.COM CORPORATION DATED JUNE 30,
1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> AUG-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 62,970<F1>
<SECURITIES> 0
<RECEIVABLES> 2,673
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 112,925
<PP&E> 1,084,595
<DEPRECIATION> 116,004
<TOTAL-ASSETS> 1,183,042
<CURRENT-LIABILITIES> 348,371
<BONDS> 6,115
0
0
<COMMON> 24,192
<OTHER-SE> 1,011,018
<TOTAL-LIABILITY-AND-EQUITY> 1,183,042
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 984,546
<OTHER-EXPENSES> 981,495
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,051
<INCOME-PRETAX> (984,546)
<INCOME-TAX> (984,546)
<INCOME-CONTINUING> (984,546)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (984,546)
<EPS-BASIC> (0.035)<F2>
<EPS-DILUTED> (0.023)<F2><F3>
<FN>
(1) 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.
(2) 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.
(3) Reflects 15,000,000 shares of common stock subject to warrants.
</FN>
</TABLE>
