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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT TO FORM 6-K ON
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 10, 1998
OFFICELAND INC.
(Exact name of registrant as specified in its charter)
Ontario, Canada
(State or other jurisdiction of incorporation)
86732971
(Canadian Federal Tax Account No.)
312 Dolomite Drive, Suite 212
Downsview, Ontario M3J 2N2
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (416) 736-4000
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Item 5 Other Events
On June 4, 1998, the Company entered into a Senior Subordinated Unsecured
Convertible Note Purchase Agreement (the "Note Agreement") with (i) each of
seven purchasers (the "June Purchasers") of the Senior Subordinated Unsecured
Convertible Notes (the "June Convertible Notes") and (ii) International Capital
Partners, Inc. ("ICP") a Connecticut corporation, the "Representative" of the
June Purchasers. Pursuant to the Note Agreement, the Company sold $2,000,000
principal amount of June Convertible Notes to the June Purchasers. The June
Convertible Notes are payable on June 4, 2001 and bear interest at the rate of
12% per annum, with interest payable in arrears on June 4, 1999 and June 4,
2000, except that if the June Convertible Notes are converted, no interest shall
be accrued or payable.
On November 10,1998, the Company entered into a Restructured Purchase
Agreement (the Restructured Purchase Agreement") with Ardara Investment Inc.
(one of the June Purchasers) ("Ardara"), ICP, four of the Company's Directors,
(James F. Kay, Marvyn Budd, Ronald Faust, and Edwin Lax) and Jack McSorley
Vice-President of the Company (collectively the "November Purchasers".) Pursuant
to Restructured Purchase Agreement, the Company sold $1,550,000 in principal
amount of new Senior Subordinated Unsecured Convertible Notes (the "November
Convertible Notes".) The November Convertible Notes are payable on November 10,
2001 and bear interest at the rate of 12% per annum, with interest payable in
arrears on November 10, 1999, and in arrears on December 10, and June 10, in the
two years subsequent to November 10, 1999, with the last interest payment to be
made on November 10, 2001, except that if the November Convertible Notes are
converted, no interest shall be accrued or payable. As part of the Restructured
Purchase Agreement, Ardara exchanged its June Convertible Note in the amount of
$571,428 for a like amount of November Convertible Notes and Ardara was give the
option to purchase an additional $600,000 of November Convertible Notes for a 60
day period following Ardara's receipt of the Company's financial statements for
the six month period ending May 31,1999.
In addition, the Company agreed, prior to July 31, 1999, to sell up to an
additional $5,000,000 principal amount of November Convertible Notes to the
November Purchasers and the November Purchasers agreed to purchase the
additional November Convertible Notes subject to certain conditions as follows:
a) $1,200,000 of November Convertible Notes will be purchased by the
November Purchasers upon the occurrence of a definitive agreement of
purchase and sale of Eastern Equipment Brokers, Inc., the terms of which
are unanimously approved by the Acquisition Committee of the Board of
Directors of the Company. The $1,200,000 purchase of the November
Convertible Notes will be made provided that the Company's gross profit
for the period (the "Period") commencing on December 1, 1997 and ending on
the date of the Company's last completed fiscal quarter is a minimum of
90% of the projected gross profit (the "PGP") for the Period. Should the
gross profit for the Period be less than 90% of the PGP, but more than 70%
of the PGP, then International Capital Partners, Inc. shall have the
option, on behalf of the November Purchasers, within 14 days from the
determination of the percentage of the PGP that the gross profit for the
Period represents, of: (i) completing the purchase of $1,200,000 in
November Convertible Notes; or, (ii) deferring the purchase to the end of
the Company's next succeeding fiscal quarter, at which time a calculation
of the percentage of
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PGP that the then gross profit of the Company represents will be made and
at which time the parties will refer to the formulae set forth in this
Paragraph to determine the obligations of the Purchasers to purchase the
additional Convertible Notes. Should the gross profit for the Period be
less than 70% of the PGP, then Representative shall have the option, on
behalf of the November Purchasers, within 14 days from the determination
of the percentage of the PGP that the gross profit for the Period
represents, of: (i) completing the purchase of $1,200,000 in November
Convertible Notes; (ii) deferring the purchase to the end of the Company's
next succeeding fiscal quarter, at which time a calculation of the
percentage of PGP that the then gross profit of the Company represents
will be made and at which time the parties will refer to the formulae set
forth in this Paragraph to determine the obligations of the November
Purchasers to purchase the additional November Convertible Notes, or;
(iii) terminating all obligations of the November Purchasers to purchase
any additional November Convertible Notes.
b) The balance of $3,450,000 in November Convertible Notes may be sold
in all or parts thereof, on such dates as may be mutually agreed
upon by the November Note Purchasers and the Company, for the
period expiring July 31,1999.
Note Convertibility
The principal amount of the June Convertible Notes, in whole, is
convertible into Units (the " A Units"), each A Unit being comprised of one
Class "A" Special Share (the "Class "A" Shares") and one warrant (the "June Note
Warrant") to purchase one Common Share. Each Class "A" Share is convertible at
any time into one Common Share. Each June Note Warrant entitles the holder to
purchase one Common Share from the Company at a price of $3.75, subject to
adjustment, during the period expiring on June 4, 2003.
In addition, upon any conversion of the June Convertible Notes, the
Company agreed to make available for sale to any of the Company's non-management
directors or their designees, upon the same terms as the Convertible Notes then
being converted, in amounts they may collectively determine, up to $500,000 in
Class "A" Shares and Note Warrants (the "Additional A Units").
The June Convertible Notes are convertible into A Units upon the
completion of the Company's audited financial statements for the fiscal year
ended November 30, 1998 as follows: (i) automatically at $3.40 per A Unit if the
Company achieves certain audited results; (ii) automatically if the Company
achieves certain audited results; or, (iii) if the Company fails to achieve
certain audited results, the June Purchasers have the option of converting at a
price of $2.72 per A Unit or, retaining the June Convertible Notes, without the
convertibility feature, and receiving, for each $10.00 in principal amount of
the Convertible Notes then outstanding, one warrant to purchase one Common Share
exercisable at $2.72 per Common Share for five years from the date of their
issue.
The principal amount of the November Convertible Notes, in whole, is
convertible into Units (the "B Units"), each B Unit being comprised of one Class
"B" Special Share (the "Class "B" Shares"), one $1.50 Warrant and one $2.00
Warrant. Each Class "B" Share is convertible at any time into one Common Share.
Each $1.50 Warrant and each $2.00 Warrant entitles the holder to purchase one
Common Share from the Company at a price of $1.50 and $2.00 respectively,
subject to adjustment, during the period ending November 10, 2003.
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The November Convertible Notes are convertible into B Units upon the
completion of the Company's audited financial statements for the fiscal year
ended November 30, 1998 as follows: (i) automatically at $3.40 per B Unit if the
Company achieves certain audited results; (ii) automatically if the Company
achieves certain audited results or, (iii) if the Company fails to achieve
certain audited results, the November Purchasers have the option of converting
at a price of $2.72 per B Unit or, retaining the November Convertible Notes,
without the convertibility feature, and receiving, for each $10.00 in principal
amount of the Convertible Notes then outstanding, one warrant to purchase one
Common Share exercisable at $2.72 per Common Share for five years from the date
of their issue.
On June 4, 1998, upon obtaining shareholders' approval, the Company filed
an amendment to its Articles of Incorporation establishing the rights,
preferences, restrictions and conditions attaching to the Class "A" Special
Shares. On November 10, 1998, upon obtaining shareholders' approval, the Company
filed an amendment to its Articles of Incorporation establishing the rights,
preferences, restrictions and conditions attaching to the Class "B" Special
Shares.
On November 9, 1998, in connection with the Restructured Purchase
Agreement, the Company entered into a Loan Amending Agreement with each of
Marvyn A. Budd, Ronald J. Faust and Edwin S. Lax amending the loan agreements
dated June 4, 1998 between the Company and each of Messrs. Budd, Faust and Lax.
Item 7 Exhibits
1. Articles of Amendment to the Articles of Incorporation of the
Company, filed on May 12, 1998 *
2. Articles of Amendment to the Articles of Incorporation of the
Company, filed on June 4, 1998 *
3. Senior Subordinated Unsecured Convertible Notes Purchase Agreement,
dated as of June 4, 1998 *
4. Form of Senior Subordinated Unsecured Convertible Note *
5. Form of Note Warrant *
6. Voting Trust Agreement, dated as of June 4, 1998 *
7. Loan Agreements, dated as of June 4, 1998, between the Company and
each of Marvyn Budd, Ronald J. Faust, and Edwin (Ted) Lax *
8. Employment contracts with each of Marvyn Budd, Ronald J. Faust,
Edwin (Ted) Lax, Christopher Walker and Jack McSorley *
9. Opinion of Robbins Appleby & Taub, dated June 4, 1998 *
10. Consent of Robbins Appleby & Taub *
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11. Press release of Officeland Inc. dated June 15, 1998 announcing the
initial closing of the private placement of a maximum principal
amount of U.S. $7,000,000 Senior Subordinated Unsecured Convertible
Notes *
12. Senior Subordinated Unsecured Convertible Notes Purchase Agreement
of November 10, 1998 ("The Restructured Purchase Agreement").
13. Amending Agreement dated October 23, 1998 to Senior Subordinated
Unsecured Convertible Notes Purchase Agreement of June 4, 1998.
14. Form of Senior Subordinated Unsecured Convertible Note dated
November 10, 1998.
15. Articles of Amendment to the Articles of Incorporation of the
Company filed in November 1998.
16. Form of Common Share ($1.50) Warrant.
17. Form of Common Share ($2.00) Warrant.
18. Amending Agreement dated as of November 10, 1998 to Voting Trust
Agreement of June 4, 1998.
19. Loan Amending Agreements, dated as of November 9, 1998, between the
Company and each of Marvyn Budd, Ronald J. Faust, and Edwin (Ted)
Lax.
20. Press Release
o Previously filed on June 23, 1998 as exhibits to Report of Foreign Issuer
on Form 6-K.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
OFFICELAND INC.
(Registrant)
Dated: February 9, 1999 By: /s/ Marvyn A. Budd
------------------
Marvyn A. Budd,
Chief Executive Officer and President
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SENIOR SUBORDINATED UNSECURED CONVERTIBLE NOTES PURCHASE
AGREEMENT OF NOVEMBER 10, 1998
(THE RESTRUCTURED PURCHASE AGREEMENT)
This Agreement (hereinafter referred to as the "Restructured Purchase
Agreement") dated as of November 10, 1998 is by and between Officeland Inc., an
Ontario corporation, with its principal place of business in Toronto, Ontario
(the "Company"), those purchasers who have executed and who are identified in
Exhibit A attached hereto and their respective affiliates (individually, a
"Purchaser" and collectively, the "Purchasers") and International Capital
Partners, Inc., a Connecticut corporation with its principal place of business
in Stamford, Connecticut ("ICP").
The Company, ICP, BP (as hereinafter defined) and certain investors are
parties to the Initial Purchase Agreement (as hereinafter defined). The Initial
Purchase Agreement, prior to being amended by the Initial Purchase Amending
Agreement (as hereinafter defined), contemplated the sale to the investors named
as "Purchasers" in Exhibit A thereto of Senior Notes for an aggregate principal
amount of $7,000,000 (the "Aggregate Investment"), to be used by the Company for
the purposes contemplated in the Initial Purchase Agreement. By means of the
Initial Purchase Amending Agreement, each of the parties to the Initial Purchase
Agreement agreed, inter alia, to reduce the Aggregate Investment to an aggregate
investment of $2,000,000.
The Purchasers have agreed to enter into this Restructured Purchase
Agreement for the purpose of purchasing New Senior Notes (as hereinafter
defined), for an aggregate principal amount not exceeding $5,000,000, upon the
terms and conditions set out herein.
In consideration of the mutual promises and covenants contained in this
Restructured Purchase Agreement, and intending to be legally bound by the terms
and conditions of this Restructured Purchase Agreement, the parties hereby agree
as follows:
1. Definitions
1.1 Initial Purchase Agreement Definitions All capitalized terms used
in this Restructured Purchase Agreement shall, unless expressly otherwise
defined herein, have the same meanings as given to them, respectively, in the
Initial Purchase Agreement, which defined terms are incorporated by reference in
this Restructured Purchase Agreement. In some instances, definitions of certain
terms, which have been defined in the Initial Purchase Agreement, are repeated
herein for ease of reference.
1.2 Additional Definitions In this Restructured Purchase Agreement, the
following terms shall have the following meanings, respectively:
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(a) "Aggregate Investment" has the meaning ascribed thereto in the
second preamble to this Restructured Purchase Agreement;
(b) "Applicable Percentage" means the applicable percentage of the
aggregate purchase price set out in Exhibit A;
(c) "Ardara" means Ardara Investment Inc.;
(d) "Ardara Initial Investment" means the sum of $571,429 paid by
Ardara to purchase a Senior Note under the terms of the
Initial Purchase Agreement and "Ardara Initial Note" means the
Senior Note so purchased;
(e) "Bassini Group" means, collectively, BP and all of the persons
named as "Purchasers" in Exhibit A to the Initial Purchase
Agreement, other than Ardara;
(f) "BP" means Bassini, Playfair + Associates LLC, an Anguillan
limited liability company with its principal place of business
in New York, New York;
(g) "Class B Stock" has the meaning ascribed to it in Section 2.2;
(h) "Dollar Fifty Warrant" means the warrant in the form set out
in Exhibit F1;
(i) "Initial Purchase Agreement" means the Senior Subordinated
Unsecured Convertible Notes Purchase Agreement made as of the
4th day of June, 1998 among Ardara, the Bassini Group, ICP and
the Company (a copy of which is attached as Exhibit B hereto),
as amended by the Initial Purchase Amending Agreement ;
(j) "Initial Purchase Amending Agreement" means an amending
agreement among each of the parties to the Initial Purchase
Agreement, made as of the 23rd day of October, 1998, a copy of
which is attached as Exhibit C hereto;
(k) "Loan Agreements" means, collectively, the loan agreements
dated June 4, 1998, made between each of the Founders and the
Company and "Loan Agreement" means any one of such loan
agreements;
(l) "New Advisory Fee" has the meaning ascribed to it in Section
2.7;
(m) "New Disclosure Schedule" means the disclosure schedule
attached as Exhibit J hereto;
(n) "New Initial Aggregate Purchase Price" has the meaning
ascribed to it in Subsection 2.4(a);
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(o) "New Initial Closing" and "New Initial Closing Date" have the
meanings respectively ascribed to them in Section 3.2 ;
(p) "New Projections" has the meaning ascribed to it in Section
2.8;
(q) "New Senior Notes" has the meaning ascribed to it in Section
2.1;
(r) "New Subsequent Aggregate Purchase Price" has the meaning
ascribed to it in Section 2.4(b);
(s) "New Subsequent Closing" has the meaning ascribed to it in
Section 2.4(b);
(t) "New Subsequent Closing Date" means the applicable "Subsequent
Closing Date", as defined in Subsections 2.2(d) and (e) of the
Initial Purchase Agreement;
(u) "New Warrants" has the meaning ascribed to it in Section 2.3;
(v) "Non Management Portion" means, for the purposes of Sections
2.7 and 2.8 hereof, the amount remaining after deducting from
the aggregate principal amount of New Senior Notes purchased
and sold hereunder the aggregate prinicpal amount of any New
Senior Notes which may be sold to the existing directors
and/or management of the Company;
(w) "Pre-approved Transaction" means, in respect of the occurrence
thereof, that a definitive binding agreement of purchase and
sale (including all exhibits and schedules) (the "Acquisition
Agreement") has been entered into on substantially the terms
approved by a majority of the members of the Acquisition
Committee in respect of any one of the following intended
acquisitions by the Company: Telecom Corporation of Chicago,
Inc. or Eastern Equipment Brokers, Inc.;
(x) "Purchasers' Solicitors" means Fogler Rubinoff, counsel to ICP
and the Purchasers;
(y) "Restructured Articles of Amendment" has the meaning ascribed
to it in Section 2.2;
(z) "Restructured Purchase Agreement" means this Agreement;
(aa) "Restructured Rights Terms" means, for the purposes of this
Restructured Purchase Agreement, the purchase and conversion
terms of the New Senior Notes and the New Warrants, as set out
in this Restructured Purchase Agreement;
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(bb) "Special Stock" as used herein, and wherever referenced in the
Initial Purchase Agreement, shall be deemed, for the purposes
of this Restructured Purchase Agreement, to mean,
collectively, the Class A Stock and the Class B Stock; and
(cc) "Two Dollar Warrant" means the warrant in the form set out in
Exhibit F2.
2. Authorization and Sale of New Senior Notes, Class "B" Special Shares
and New Warrants
2.1 Authorization of New Senior Subordinated Unsecured Convertible
Notes. The Company has duly authorized the issuance and sale of new three-year
senior subordinated unsecured convertible notes (collectively, the "New Senior
Notes") in an aggregate principal amount not to exceed $5,000,000. The New
Senior Notes shall be convertible by the holder into shares of Class B Stock at
the Conversion Price per Unit (as defined in the New Senior Notes) plus one
Dollar Fifty Warrant and one Two Dollar Warrant for each share of Class B Stock
so issued and shall have the rights, privileges, restrictions and conditions set
forth in the form of New Senior Note attached hereto as Exhibit D.
2.2 Authorization of Class "B" Special Shares. The Company has duly
authorized, for issuance upon conversion of the New Senior Notes, an unlimited
number of Class "B" Special Shares (the "Class B Stock"). The Class B Stock
shall be convertible into Common Shares at the option of the holder at any time
on the basis of one Common Share for each share of Class B Stock so converted
and shall have the rights, privileges, restrictions and conditions set forth in
Articles of Amendment, a copy of which is attached hereto as Exhibit E (the
"Restructured Articles of Amendment"). The Company has duly filed with the
Ontario Ministry of Consumer and Commercial Relations the Restructured Articles
of Amendment which have been endorsed with a certificate thereon by such
Ministry.
2.3 Authorization of Warrants. The Company has duly authorized, upon
conversion of the New Senior Notes, the issuance of the Dollar Fifty Warrants
and the Two Dollar Warrants (collectively, the "New Warrants") entitling the
holders thereof to purchase an aggregate number of Common Shares equal to the
aggregate number of Common Shares issuable upon conversion of the holder's
shares of Class B Stock into Common Shares, at a per share exercise price of
$1.50 per Common Share and $2.00 oer Common Share, respectively, subject to
adjustment as provided for in the New Warrants. The New Warrants shall be in the
form of the warrants respectively set out in Exhibits F1 and F2, with
appropriate insertions.
2.4 Sale of New Senior Notes to the Purchasers. Subject to the terms
and conditions of this Restructured Purchase Agreement, the Company hereby
agrees to sell and issue to each Purchaser, and each Purchaser hereby severally
agrees to purchase from the Company, the principal amount of New Senior Notes
that appears in front of such Purchaser's name in Exhibit A, for an aggregate
purchase price of up to $5,000,000, in two or more tranches, as follows:
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(a) At the time of the New Initial Closing (as hereinafter
defined), the Company hereby sells and issues to each
Purchaser, and each Purchaser hereby severally purchases from
the Company the Applicable Percentage (rounded to the next
highest whole dollar) of the principal amount of New Senior
Notes that appears in front of such Purchaser's name in
Exhibit A, for an aggregate purchase price of $1,550,000 (the
"New Initial Aggregate Purchase Price");
(b) At the time of the closing of the second tranche of the
aggregate purchase price (the "New Subsequent Closing"), the
Company hereby agrees to sell and issue to each Purchaser, and
each Purchaser hereby severally agrees to purchase from the
Company the Applicable Percentage (rounded to the next highest
whole dollar) of the principal amount of New Senior Notes that
appears in front of such Purchaser's name in Exhibit A, for an
aggregate purchase price of $1,200,000 (the "New Subsequent
Aggregate Purchase Price"); and
(c) The closing of any further tranche or tranches of the
aggregate purchase price (in each case, a "New Subsequent
Closing"), the last of which shall take place no later than
July 31, 1999, shall take place on such dates and for such
amounts (in each case, a "Further Subsequent Aggregate
Purchase Price") as may be mutually agreed upon between the
Company and the Purchasers, but otherwise upon the terms and
conditions set out in this Restructured Purchase Agreement.
2.5 Class B Stock and New Warrants. Subject to the terms and conditions
of this Restructured Purchase Agreement, the Company hereby agrees to issue to
each Purchaser that number of shares of Class B Stock and New Warrants into
which the New Senior Notes held by each Purchaser are convertible in accordance
with the terms of the New Senior Notes.
2.6 Common Shares. Subject to the terms and conditions of this
Restructured Purchase Agreement, the Company hereby agrees to issue that number
of Common Shares into which the Class B Stock is convertible and New Warrants
are exercisable in accordance with the terms of the Class B Stock and New
Warrants, respectively.
2.7 New Advisory Fee. The Company hereby agrees to pay to ICP
Investments, Inc. at the direction of ICP an advisory fee (the "New Advisory
Fee") in the aggregate amount of three and one-half per cent (3.5%) of the Non
Management Portion, in consideration for certain advisory financial services
provided by ICP to the Company. The New Advisory Fee shall be payable in respect
of the Non Management Portion of the New Initial Aggregate Purchase Price on the
New Initial Closing Date (as hereinafter defined); in respect of the Non
Management Portion of the New Subsequent Aggregate Purchase Price, on the New
Subsequent Closing Date; and thereafter on account of the Non Management Portion
of any Further Subsequent Aggregate Purchase Price, on the applicable New
Subsequent Closing Date.
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2.8 Additional Advisory Fee. The Company hereby agrees to pay to ICP
Investments, Inc. at the direction of ICP a further advisory fee (the
"Additional Advisory Fee") in the amount of two per cent (2%) of the Non
Management Portion, as further consideration for certain financial advisory
services provided by ICP to the Company. The Additional Advisory Fee shall be
payable to ICP Investments, Inc. in the same ratio and at the same times as
Advances (as defined in the Loan Agreements) are made to the Founders
thereunder, subject to the provisions of Section 7.3 hereof.
2.9 Use of Proceeds. The Company shall use the net proceeds for the
same purposes as provided in Section 1.8 of the Initial Purchase Agreement,
mutatis mutandis. The reference in the Initial Purchase Agreement to the
"Projections" shall be deemed to refer to the revised projections attached as
Exhibit G hereto (the "New Projections").
2.10 Additional Arrangements with Ardara The Company hereby further
agrees with Ardara and the other Purchasers hereby acknowledge and agree as
follows:
(a) Exchange of Ardara Initial Note At the time of the New Initial
Closing, Ardara shall be entitled to exchange the Ardara
Senior Note for a New Senior Note, in the same principal
amount as the Ardara Senior Note; and
(b) Further Ardara Investment Upon receipt of a copy of the
financial statements of the Company for the period ending May
31, 1999, Ardara shall have the right, exercisable by written
notice to the Company, delivered within 60 days following the
receipt by it of a copy of such financial statements, to
purchase additional New Senior Notes for an aggregate
additional purchase price of up to $600,000, upon the same
terms and conditions as set out in the New Senior Notes. The
completion of the transaction of purchase and sale shall take
place within 30 days following the receipt of such written
notice from Ardara and on the same basis, mutatis mutandis, as
the completion of the New Subsequent Closing.
3. The Closings The provisions of Section 2 of the Initial Purchase Agreement
are hereby incorporated by reference into this Restructured Purchase Agreement,
mutatis mutandis, with the intent that such provisions shall apply to this
Restructured Purchase Agreement, subject to the following qualifications and
amendments.
3.1 Initial Closing and Initial Closing Date The defined term "Initial
Closing" in Section 2.1 of the Initial Purchase Agreement shall be deemed to
mean the initial closing of the sale and purchase of the New Senior Notes
pursuant to this Restructured Purchase Agreement (the "New Initial Closing"),
which has taken place simultaneously with the execution of this Agreement at the
offices of the Purchasers' Solicitors; and the defined term "Initial Closing
Date" in Section 2.1 of the Initial Purchase Agreement shall be deemed to mean
the date of
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closing of the New Initial Closing (the "New Initial Closing Date"), being the
date of this Restructured Purchase Agreement.
3.2 Ratios The reference in Section 2.1 of the Initial Purchase
Agreement to " two sevenths (2/7)" shall be deemed to refer to the Applicable
Percentage. Any references in Section 2 of the Initial Purchase Agreement to
"one-half (1/2) of " or "fifty per cent (50%) of " are deemed deleted.
3.3 Dates The references in Subsection 2.2(d) and (f) of the Initial
Purchase Agreement to "December 31, 1998" and "November 30, 1998", respectively,
shall be deemed, in each case, to refer to July 31, 1999.
3.4 Subsequent Closing Any reference in Section 2 of the Initial
Purchase Agreement to "each Pre-Approved Transaction" shall be deemed to refer
to a Pre-Approved Transaction.
4. Further Deeming Provisions
4.1 Conforming References For the purposes of any portions of the
Initial Purchase Agreement which are expressly incorporated by reference herein,
all references in the Initial Purchase Agreement to the "Senior Notes", the
"Warrants", the "Class A Stock", the "Advisory Fee", the "Projections", the
"Initial Aggregate Purchase Price", the "Subsequent Aggregate Purchase Price",
the "Initial Closing", the "Initial Closing Date", the "Subsequent Closing(s)",
the "Subsequent Closing Date" and the "Disclosure Schedule" shall be deemed to
refer to the New Senior Notes, the New Warrants, the Class B Stock, the New
Advisory Fee, the New Projections, the New Initial Aggregate Purchase Price, the
New Subsequent Aggregate Purchase Price, the New Initial Closing, the New
Initial Closing Date, the New Subsequent Closing, the New Subsequent Closing
Date and the New Disclosure Schedule, respectively, except as expressly
otherwise provided herein.
4.2 "this Agreement" Except as expressly otherwise provided herein, any
references in Sections 2 to and including 8 of the Initial Purchase Agreement to
"this Agreement" shall be deemed to refer to this Restructured Purchase
Agreement.
4.3 "Certificate" The term "Certificate" in Section 3.1 of the Initial
Purchase Agreement shall be deemed to include the Restructured Articles of
Amendment.
5. Representations and Warranties of the Company The Company hereby repeats the
representations and warranties given by the Company in Section 3 of the Initial
Purchase Agreement, mutatis mutandis, each of which is hereby incorporated by
reference into this Restructured Purchase Agreement, with the intent that such
representations and warranties read as of the date of and apply to this
Restructured Purchase Agreement, subject to the following qualifications and
amendments:
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(a) Subsections 3.3(a)(b) and (c) of the Initial Purchase
Agreement are hereby amended to read as follows: (a) an
unlimited number of Common Shares, 5,465,348 of which shares
are issued and outstanding, 5,147,058 Common Shares which,
subject to adjustment, have been authorized to be issued upon
conversion of the Class A Stock and exercise of the Warrants,
and 2,930,671 Common Shares which, subject to adjustment, have
been authorized and reserved for issuance upon conversion of
the Class B Stock and exercise of the New Warrants, (b) an
unlimited number of Class A Stock, none of which are issued
and outstanding, but 2,573,529 shares of Class A Stock ,
subject to adjustment, have been authorized and reserved for
issuance upon conversion of the Senior Notes pursuant to the
Initial Purchase Agreement, (c) an unlimited number of Class B
Stock, none of which are issued and outstanding, but 967,890
shares of Class B Stock, subject to adjustment, have been
authorized to be issued upon conversion of the New Senior
Notes pursuant to this Restructured Purchase Agreement.
6. Representations, Warranties and Covenants of the Purchasers and ICP Each
Purchaser and ICP hereby severally represents, warrants and covenants to the
Company in the same manner as the representations, warranties and covenants set
out in Section 4 of the Initial Purchase Agreement, mutatis mutandis, each of
which representations, warranties and covenants is hereby incorporated by
reference into this Restructured Purchase Agreement, with the intent that such
representations, warranties and covenants shall apply to this Restructured
Purchase Agreement.
7. Conditions Precedent to Closing The provisions of Section 5 of the Initial
Purchase Agreement (save and except Subsection 5.7 thereof) are hereby
incorporated by reference into this Restructured Purchase Agreement, mutatis
mutandis, with the intent that such provisions shall apply to this Restructured
Purchase Agreement, subject to the following qualifications and amendments:
7.1 Exhibits The references in Section 5.1 of the Initial Purchase
Agreement to Exhibits F and G, shall be deemed to refer to Exhibits H and I ,
respectively, to this Restructured Purchase Agreement.
7.2 Telecom Corporation of Chicago, Inc. The reference in Section 5.6
of the Initial Purchase Agreement to "The Wholesale Group, Inc." shall be deemed
to refer to Telecom Corporation of Chicago, Inc.
7.3 Founders' Loans A new Subsection 5.13 shall be added, as follows:
5.13 Each of the Founders shall have entered into an
agreement amending the terms of his Loan Agreement with the
Company, pursuant to which he agrees that Advances (as defined
therein) shall, notwithstanding any
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<PAGE>
provision to the contrary in the Loan Agreement, not commence
until May 31, 1999 or such later date as the non-management
directors of the Company shall, by majority vote, determine,
based on the cash position of the Company and its financial
performance.
8. Certain Covenants of the Company The provisions of Section 6 of the Initial
Purchase Agreement are hereby incorporated by reference into this Restructured
Purchase Agreement, mutatis mutandis, with the intent that such provisions shall
apply to this Restructured Purchase Agreement, subject to the following
qualifications and amendments.
8.1 Acquisition Committee For the purposes of Section 6.11 of the
Initial Purchase Agreement, the parties hereto confirm and agree that: (i) the
Acquisition Committee has been constituted and the members thereof are Messrs
Marvyn Budd and Al Lyons representing the Founders, Messrs Ajit Hutheesing and
Larry Lunt representing the Purchasers, and Christopher Walker, who shall
participate as a non-voting member; (ii) the last sentence of Section 6.11 is
hereby amended to read as follows: To recommend approval of any acquisition or
joint venture to the Board of Directors, a majority of the members of the
Acquisition Committee must recommend such approval and, in the event of a
deadlock, the matter shall be referred to the Board of Directors for a decision;
and (iii) the Acquisition Committee has recommended and approved the terms for
acquisition of each of Telecom Corporation of Chicago, Inc. and Eastern
Equipment Brokers, Inc., as more particularly set out in the New Disclosure
Schedule. The provisions of Section 6.11 of the Initial Purchase Agreement are
deemed amended accordingly.
9. Registration Rights The provisions of Section 7 of the Initial Purchase
Agreement are hereby incorporated by reference into this Restructured Purchase
Agreement, mutatis mutandis, with the intent that such provisions shall apply to
this Restructured Purchase Agreement.
10. Miscellaneous The provisions of Section 8 of the Initial Purchase Agreement
are hereby incorporated by reference into this Restructured Purchase Agreement,
mutatis mutandis, with the intent that such provisions shall apply to this
Restructured Purchase Agreement, subject to the following qualifications and
amendments:
10.1 Expenses. Subsection 8.6 of the Initial Purchase Agreement is
hereby deemed deleted. The parties hereby agree that the Company shall bear its
own legal and other expenses in connection with the transactions contemplated by
this Restructured Purchase Agreement and the Initial Purchase Agreement and all
out-of-pocket expenses incurred by ICP on behalf of the Purchasers in respect of
each of such agreements to a maximum of $2,000 and all legal expenses incurred
by ICP on behalf of the Purchasers in connection therewith.
10.2 Notices. Subsection 8.7 of the Initial Purchase Agreement is
hereby amended by deleting therefrom the reference to and address of BP and
Robert A. Margolin.
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10.3 Brokers Subsection 8.8 of the Initial Purchase Agreement is hereby
deemed amended, for the purposes of this Restructured Purchase Agreement, by
deleting therefrom the reference to "Joseph Charles & Associates, Inc.", such
that Subsection 8.8 shall be deemed to commence with the words: "the Company and
ICP represent..."
10.4 Definitions The definitions set out in Section 8.19 of the Initial
Purchase Agreement are deemed to be amended, where applicable, in accordance
with the terms of this Restructured Purchase Agreement.
10.5 Exhibits The following exhibits are attached to and form a
substantive part of this Restructured Purchase Agreement
Exhibit A - Purchasers
Exhibit B - Initial Purchase Agreement (pre-amendment)
Exhibit C - Initial Purchase Amending Agreement
Exhibit D - New Senior Note
Exhibit E - Restructured Articles Of Amendment
Exhibit F1 - New Common Share ($1.50) Warrant
Exhibit F2 - New Common Share ($2.00) Warrant
Exhibit G - New Projections
Exhibit H - Opinion Of Company's Counsel
Exhibit I - Opinion Of Company's U.S. Special Counsel
Exhibit J - New Disclosure Schedule
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Restructured Purchase Agreement as an instrument as of the date first above
written.
Officeland Inc.
By: /s/ Marvyn Budd
-----------------------------
Name: Marvyn Budd
-----------------------------
Title: President
-----------------------------
International Capital Partners, Inc.
By: /s/ Ajit Hutheesing
-----------------------------
Name: Ajit Hutheesing
-----------------------------
Title: Chairman
-----------------------------
<PAGE>
AMENDING AGREEMENT TO SENIOR SUBORDINATED UNSECURED
CONVERTIBLE NOTES PURCHASE AGREEMENT OF JUNE 4, 1998
This Agreement dated as of October 23, 1998 is by and between
Officeland Inc., an Ontario corporation, with its principal place of business in
Toronto, Ontario (the "Company"), those purchasers who have executed and who are
identified in Exhibit A attached hereto and their respective affiliates
(individually, a "Purchaser" and collectively, the "Purchasers"), International
Capital Partners, Inc., a Connecticut corporation with its principal place of
business in Stamford, Connecticut ("ICP") and Bassini, Playfair + Associates
LLC, an Anguillan limited liability company with its principal place of business
in New York, New York ("BP").
The parties hereto are all of the parties to a Senior Subordinated
Unsecured Convertible Notes Purchase Agreement made as of the 4th day of June,
1998 (the "Purchase Agreement") and have agreed to amend the Purchase Agreement
as hereinafter set forth.
In consideration of the mutual promises and covenants contained in this
Agreement, and intending to be legally bound by the terms and conditions of this
Agreement, the parties hereto hereby agree as follows:
1. Definitions
1.1 Purchase Agreement Definitions All capitalized terms used in this
Agreement shall, unless expressly otherwise defined in this Agreement, have the
same meanings as given to them, respectively, in the Purchase Agreement. In some
instances, definitions of certain terms, which have been defined in the Purchase
Agreement, are repeated in this Agreement for ease of reference.
1.2 Additional Definitions In this Agreement, the following terms shall
have the following meanings, respectively:
(a) "Ardara" means Ardara Investment Inc.;
(b) "Bassini Group" means, collectively, BP and all of the
Purchasers other than Ardara;
(c) "Continuing Investors" means Ardara and such other investors
as may agree from time to time to purchase Convertible
Securities under the Restructured Purchase Agreement;
(d) "Convertible Securities" shall mean any evidences of
indebtedness, shares or other securities directly or
indirectly convertible into or exchangeable for Common Shares;
(e) "Special Stock" means, collectively, the Class A Stock and the
Restructured Rights Stock;
Page 1 of 6
<PAGE>
(f) "Restructured Purchase Agreement" means, collectively, one or
more agreements of purchase and sale and any amendments
thereto entered into or to be entered into among ICP, the
Company and the Continuing Investors pursuant to which the
Company will sell and issue Convertible Securities to the
Continuing Investors for an aggregate purchase price not to
exceed $5,000,000 and which provide for one or more closings,
the last of which is no later than November 30, 1999;
(g) "Restructured Rights Terms" means the purchase and conversion
terms currently attaching to the Rights granted or to be
granted by the Company under the Restructured Purchase
Agreement, as more particularly set out in the term sheet
attached as Exhibit A hereto;
(h) "Restructured Rights Stock" means any special shares of any
class (other than the Class A Stock) which may be authorized
for issuance from time to time by the Company for the purposes
of the Restructured Purchase Agreement;
(i) "Rights" shall mean rights, options or warrants to subscribe
for, purchase or otherwise acquire Common Shares or
Convertible Securities;
2. Deeming Provisions
2.1 Aggregate Purchase Price Deemed Reduced The Initial Aggregate
Purchase Price shall be deemed to be the total principal amount of Senior Notes
to be purchased by the Purchasers under the provisions of the Purchase
Agreement. Any reference in the Purchase Agreement to an aggregate purchase
price of $7,000,000 shall be deemed to refer to $2,000,000. All of the
provisions in the Purchase Agreement relating to the Subsequent Aggregate
Purchase Price and the Subsequent Closings, including without limitation the
provisions of Sections 1.4(b), 1.7(b) and 2.2, shall be deemed to be deleted.
Notwithstanding the foregoing, each of the parties hereto acknowledges and
confirms that for all purposes under the Purchase Agreement and under the Senior
Notes, the Performance Ratio was not less than 90%.
2.2 Representations and Warranties All of the representations and
warranties on the part of each of the parties to the Purchase Agreement shall be
deemed to read as of the date of the Initial Closing only.
2.3 Representative Notwithstanding the provisions of section 4.5 of the
Purchase Agreement, all references in the Purchase Agreement and in this
Agreement to the "Representative" shall be deemed to refer to ICP only. For
greater certainty, the last sentence of section 4.5 of the Purchase Agreement is
hereby deleted and the following substituted therefor: In that regard, the
Representative shall be represented by: Ajit G. Hutheesing, on behalf of ICP,
for so long as he is surviving; thereafter by Nicholas E. Sinacori, on behalf of
ICP, for so long as he is surviving, and thereafter by a principal of ICP, or
such other person, approved by the Company, which approval shall not be
unreasonably withheld.
Page 2 of 6
<PAGE>
3. Certain Covenants of the Company - Amendments to section 6 of the Purchase
Agreement
3.1 Financial Statements - Amendments to Section 6.1 Section 6.1 of the
Purchase Agreement is hereby amended by deleting therefrom every reference to
"the Purchasers" and substituting therefor a reference to the Representative.
3.2 Acquisition Committee - Amendments to Section 6.11 Section 6.11 of
the Purchase Agreement is hereby amended by deleting therefrom every reference
to "the Purchasers" and substituting therefor a reference to Ardara. The parties
hereto acknowledge and accept the resignation of Robert Margolin as a member of
the Acquisition Committee and as a director of the Company. Mr. Margolin shall
be initially be replaced on the Acquisition Committee and on the Board of
Directors by [o] on behalf of Ardara.
3.3 Adjustment to Purchase Price - Amendments to Section 6.13
(a) Subsection 6.13(a)(i) is hereby amended by deleting
the references to "Class A Stock" and substituting
therefor the words Special Stock; and
(b) Subsection 6.13(d)(iii) is hereby amended by deleting
the reference to "Class "A" Stock" and substituting
therefor the words Special Stock.
3.4 Anti-Dilution - Amendments to Section 6.14 Purchase Agreement,
Warrants and Class A Special Share Provisions
(a) Subsection 6.14(c)(i)(1) is hereby amended, at the
end of that subsection, by adding the words: and (C)
any Rights granted by the Company pursuant to the
Restructured Purchase Agreement, provided that the
terms attaching to such Rights are not materially
less favorable to the Company than the
Restructured Rights Terms;
(b) Subsection 6.14(c)(i)(3) is hereby amended, at the
end of that subsection, by adding the words: other
than any Rights excluded from the definition of
"Option" in Subsection 6.14(c)(i)(1);
(c) Subsection 6.14(c)(i)(4) is hereby amended, at the
end of that subsection, by deleting the reference to
Subsection 6.14(c)(i)(1)(A) and substituting therefor
the reference: Subsection 6.14(c)(i)(1);
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<PAGE>
(d) Notwithstanding any provision to the contrary in the
Warrants or in the Class A Special Share Provisions
(as defined in the Articles of Amendment of the
Company filed June 4, 1998), Section 3.1 of the
Warrants and Subsection 5.7(5) of the Class A Special
Share Provisions shall be and are hereby deemed
respectively amended in the same manner as set out in
the foregoing provisions of this Section 3.4, mutatis
mutandis, and each of the Purchasers hereby expressly
authorizes and consents to the filing of articles of
amendment of the Company to give effect to such
amended Class A Special Share Provisions; and
(e) Each of the Purchasers hereby expressly approves the
creation and issuance of the Restructured Rights
Stock, notwithstanding any provision to the contrary
in the Class A Special Share Provisions and any
rights which might ultimately accrue to such
Purchaser with respect to such creation and issuance
as a holder of Class A Stock.
At the time of execution of this Agreement by the parties hereto, all Purchasers
shall surrender the Senior Notes issued to them on the Initial Closing for the
purposes of amending the endorsement which appears on the face page thereof to
refer to the Purchase Agreement as amended by this Agreement, which Senior
Notes, as amended, shall be forthwith returned to such Purchasers. All Warrants
and share certificates representing Class A Stock to be issued upon conversion
of the Senior Notes shall bear a legend to the effect that they are held subject
to the terms of the Purchase Agreement as amended by this Agreement.
4. Registration Rights
4.1 Registrable Securities All references in Section 7.1 to "Class
A Stock" are hereby deleted and the words Special Stock are
hereby substituted therefor;
4.2 Representative on behalf of holders All references in Sections
7.2 and 7.4 to "holders of at least 50% of the Registrable
Securities" are hereby deleted and replaced with the words
holders of at least 50% of the Restructured Rights Stock;
4.3 Demand Registration The parties agree that where a written
request from the Representative, as contemplated by Section
7.2(a) (as amended hereby), is made (the "Representative's
Request"), the Bassini Group shall be entitled, by written
notice to the Representative, delivered within 14 days
following receipt of a copy of the Representative's Request,
to have the Registrable Securities then held by the Bassini
Group included in the Representative's Request;
4.4 Piggyback Registration In Subsection 7.3(b)(4), the words "on
behalf of the Purchasers" in the second and third lines are
hereby deleted; and
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<PAGE>
4.5 Registration Procedures In Subsection 7.5(b), the reference to
"the Purchasers" in the first line and the reference to "the
registering Purchasers" in the second last line are deleted
and replaced with the words the Representative.
5. Transfer of Rights
5.1 Transfer of Rights The references in Section 8.1 to "Class A Stock"
are hereby deleted and replaced, in each case, with the words Special Stock.
6. Voting Trust Agreement
6.1 Voting Trust Agreement Effective as of the date of this Agreement,
the Bassini Group shall no longer be parties to the Voting Trust Agreement. At
the time of execution of this Agreement by the parties hereto, the Bassini
Group, on the one hand, and the remaining parties to the Voting Trust Agreement,
on the other, shall exchange mutual releases, releasing one another from the
provisions of the Voting Trust Agreement.
7. Miscellaneous
7.1 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions of this Agreement shall bind and enure to the benefit of
the respective successors, assigns, heirs, executors, and administrators of the
parties hereto.
7.2 Expenses. Each of the parties hereto shall bear its own legal and
other expenses in connection with the preparation and review of this Agreement
and the transactions contemplated by this Agreement.
7.3 Notices. All notices, requests, consents and other communications
under this Agreement shall be in writing and shall be delivered in the same
manner as provided in the Purchase Agreement.
7.4 No Conditions to Effectiveness; Entire Agreement. There are no
conditions to the effectiveness of this Agreement. The Purchase Agreement, as
amended by this Agreement, together with the instruments and other documents
contemplated to be executed and delivered in connection herewith, contains the
entire agreement and understanding of the parties hereto, and supersedes any
prior agreements or understandings between or among them, with respect to the
subject matter hereof.
7.5 Amendments and Waivers. Except as otherwise expressly set forth in
this Agreement, any term of this Agreement may be amended and the observance of
any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the party against whom such amendment or waiver is to be enforced. No
waivers of or exceptions to any term, condition or provision of this Agreement,
Page 5 of 6
<PAGE>
in any one or more instances, shall be deemed to be, or construed as, a further
continuing waiver of any such term, condition or provision.
7.6 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.7 Governing Law. This Agreement shall be governed by and interpreted
and construed in accordance with the laws of the Province of Ontario.
7.8 Currency. All dollar amounts referred to or contemplated herein
shall be in American funds.
7.9 Exhibits The following exhibits are attached to and form a
substantive part of this Agreement
Exhibit A - Purchasers
Exhibit B - Rights Term Sheet
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as an instrument as of the date first above written.
Bassini, Playfair + Associates LLC Officeland Inc.
By: /s/ Robert Margolin By: /s/ Marvyn Budd
------------------------- -----------------------------
Name: Robert Margolin Name: Marvyn Budd
------------------------- -----------------------------
Title: Principal Title: President
------------------------- -----------------------------
International Capital Partners, Inc.
By: /s/ Ajit Hutheesing
-----------------------------
Name: Ajit Hutheesing
-----------------------------
Title: Chairman
-----------------------------
Page 6 of 6
<PAGE>
FORM OF SENIOR SUBORDINATED UNSECURED CONVERTIBLE NOTE
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO THE
SENIOR SUBORDINATED UNSECURED CONVERTIBLE NOTES (THE "NOTES") PURCHASE AGREEMENT
BETWEEN OFFICELAND INC. AND THE PURCHASERS OF THE NOTES, DATED NOVEMBER 10,
1998, AND MAY BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF ONLY IN ACCORDANCE
WITH THE TERMS THEREOF.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") , OR ANY STATE SECURITIES
LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT
WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR (2) THE ISSUER RECEIVES AN OPINION OF COUNSEL TO THE HOLDER
OF SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE
ISSUER, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR
TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.
U.S.$o November 10, 1998
FOR VALUE RECEIVED, OFFICELAND INC., a corporation amalgamated under
the laws of the Province of Ontario (the "Company"), promises to pay to o (the
"Holder"), the principal amount of o U.S. Dollars (US$o) in lawful money of the
United States of America together with interest in the amounts and at the times
set out below:
(i) interest from and including the 10th day of November,
1998 on the principal amount shall be paid at the
rate of twelve percent (12%) per annum payable in
arrears on November 10, 1999 and in arrears on
December 10th and June 10th in the two years
subsequent to November 10, 1999 with the last
interest payment to be paid on November 10, 2001,
both before and after demand, default and judgment;
and
(ii) the principal amount of o U.S. Dollars (US$o) (or the
balance then outstanding) together with all accrued
and unpaid interest thereon shall be paid on November
10, 2001.
The Company will pay or cause to be paid to the Holder all sums
becoming due as principal of and premium, if any, and interest (including
interest on amounts in default) on this Note, at the address set forth on the
books of the Company (or at such other place as the Holder may designate for
such purpose from time to time by written notice to the Company), without
presentation of this Note or making any notation thereon. Such payments shall be
made either by
<PAGE>
- 2 -
cheque or bank draft or other means acceptable to Holder payable at par in New
York at the office of the Holder as hereinafter set forth or at such other place
as shall be designated in writing for such purpose.
Upon any receivership, bankruptcy, assignment for the benefit of
creditors, sale of all or substantially all of the assets of the Company,
dissolution or liquidation of the Company, or in the event that this Note shall
become due and payable upon the occurrence of an Event of Default (as defined
herein) the Company and the Holder, by its acceptance hereof, agree that the
payment of the principal of and interest on this Note shall be subordinated to,
and rank behind, the indebtedness of the Company (whether on account of
principal, interest or otherwise) pursuant to a loan agreement dated July 23,
1997, as amended from time to time (the "Loan Agreement") between the Company
and the Toronto Dominion Bank (the "Bank") and all indebtedness of the Company
under the Loan Agreement and all purchase money security interests of the
Company. The Holder by its acceptance hereof, agrees to enter into from time to
time such agreement or agreements with the Bank as may be necessary to give
effect to the subordination above described.
The principal amount of this Note is convertible, in whole, into units
(collectively the "Units"), each Unit comprised of one fully paid and
non-assessable Class "B" Special Share of the Company (a "Class B Share") and
two warrants, namely, one Dollar Fifty Warrant and one Two Dollar Warrant (each
of which is herein referred to as a "Warrant"), entitling the holder of each
Warrant to purchase one Common Share of the Company (a "Common Share") at an
exercise price of $1.50 per Common Share and $2.00 per Common Share,
respectively. The Warrants of the Holder to be in the form of Exhibits F1 and F2
to that certain Senior Subordinated Unsecured Convertible Notes Purchase
Agreement dated of even date hereof between the Company and the Holder et al.
(the "Restructured Purchase Agreement"), in the manner specified herein and
subject to adjustment as set forth below. The Company and the Holder hereby
acknowledge and agree that twenty per cent (20%) of all Warrants issuable
hereunder shall be issued to ICP Investments, Inc. in lieu of the Holder and any
further reference herein to the issuance of the Warrants shall be deemed to
incorporate such issuance to ICP Investments, Inc. Should this Note be converted
as provided for herein, no interest shall accrue or be payable in respect of the
principal amount of this Note. Conversion of this Note shall be determined as
follows:
(i) If the Performance Ratio (as hereinafter defined) is
not less than ninety per cent 90%, this Note shall be
automatically into Units on the date (the "Conversion
Date") which is fifteen (15) days after delivery to
the Company of its audited financial statements for
the fiscal year ending November 30, 1998, at a
conversion price of Three Dollars and Forty Cents
U.S. (US$3.40) of principal hereof per Unit.
(ii) If the Performance Ratio is not less than seventy per
cent (70%) but less than ninety per cent (90%), this
Note shall be automatically converted into
<PAGE>
- 3 -
Units on the Conversion Date at a conversion price of
Three Dollars and Forty Cents U.S. (US$3.40) of
principal per Unit less a reduction to be applied
thereto on a pro rata basis in accordance with the
percentage by which the Performance Ratio is less
than ninety per cent (90%).
(iii) If the Performance Ratio is less than seventy per
cent (70%), the Holder shall have the option,
exercisable within twenty (20) days of the Conversion
Date, of:
a) converting this Note into Units at a
conversion price of Two Dollars and
Seventy-two Cents U.S. (US$2.72) of
principal per Unit; or
b) retaining this Note and receiving two
five-year warrants (one exercisable at One
Dollar and Fifty Cents U.S. (US$1.50) per
Common Share and the other at Two Dollars
U.S. (US$2.00) per Common Share)per Ten
Dollars U.S. (US$10.00) principal amount
hereof (the number of warrants to be rounded
to the nearest whole number).
For the purposes hereof, "Performance Ratio" means, for the
Company's fiscal year ending November 30, 1998, with reference
to the Company's audited financial statements for the year
then ending, the percentage, calculated by the Company's
auditors, calculated by multiplying one hundred per cent
(100%) by a fraction, the numerator of which is the actual
amount of the gross profit of the Company and the denominator
of which is the forecast amount of the gross profit of the
Company contained in the New Projections (as defined and
included in the Restructured Purchase Agreement).
In the event that this Note is converted as specified herein, the
Holder shall surrender this Note to the Company at its registered office,
together with the conversion form attached hereto, duly executed by the Holder
in form and executed in a manner satisfactory to the Company. Thereupon the
Holder shall be entitled to be entered into the books of the Company, on the
Conversion Date, as the holder of the number of Units into which the principal
amount of this Note is converted into in accordance with the provisions hereof
and, as soon as practicable thereafter, the Company shall deliver to the Holder
certificates for such Units. The Class B Shares received by the Holder as part
of the Units upon any conversion of this Note shall qualify to receive dividends
declared in favour of shareholders of record on and after the Conversion Date
and from such date such Class B Shares will for all purposes be and be deemed to
be issued and outstanding as fully paid and non-assessable Class B Shares. The
Company shall not be required to issue fractional Class B Shares or Warrants
upon the conversion of this Note pursuant hereto. The Company covenants with the
Holder that it will at all times reserve and keep available out of its
authorized Class B Shares and Common Shares, solely for the purpose of
<PAGE>
- 4 -
issue upon conversion of this Note as provided herein, and conditionally allot
to the Holder who may exercise its conversion rights hereunder, such number of
Class B Shares as shall then be issuable upon the conversion of the principal
amount of this Note and such number of Common Shares as would be issued upon the
exercise of the Warrants. The Company covenants with the Holder that all Class B
Shares and Common Shares which shall be so issuable shall be duly and validly
issued as fully paid and non-assessable.
The price at which this Note is convertible and the number of Units
deliverable upon the conversion of the Note will be subject to adjustment in the
events and in the manner following:
(1) If and whenever at any time prior to the Conversion Date, the Company:
(i) subdivides or redivides the outstanding Common Shares into a
greater number of Common Shares;
(ii) reduces, combines or consolidates the outstanding Common
Shares into a smaller number of Common Shares; or
(iii) issues Common Shares or securities exchangeable for or
convertible into Common Shares to the holders of all or
substantially all of the outstanding Common Shares by way of a
stock dividend (other than the issue of Common Shares to
holders of Common Shares pursuant to their exercise of options
or other entitlement to receive dividends in the form of
Common Shares in lieu of dividends paid in the ordinary course
on the Common Shares),
(any of such events being called a "Share Reorganization") the number
of Units to be issued will be adjusted by multiplying such number by a
fraction, the denominator of which is the number of Common Shares
outstanding on such date before giving effect to such Share
Reorganization and the numerator of which is the total number of Common
Shares outstanding immediately after the effective date, in the case of
subsections (i) and (ii) above and the record date in the case of
subsection (iii), including in the case where securities exchangeable
for or convertible into Common Shares are distributed, the number of
Common Shares that would have been outstanding had such securities been
exchanged for or converted into Common Shares on such record or
effective date. Such adjustment will be made successively whenever any
event referred to in this subsection (1) occurs.
(2) If and whenever at any time prior to the Conversion Date there is a
reclassification or change of outstanding Common Shares, other than a
subdivision or consolidation described above, or a consolidation,
merger, reorganization or amalgamation of the Company with or into
another body corporate, or a sale of all or substantially all of the
assets of the Company followed immediately by a liquidation or
winding-up of the Company and distribution of its assets to its
shareholders, the Holder will be entitled to
<PAGE>
- 5 -
receive and will accept, upon any conversion hereunder at any time
after the effective date thereof, in lieu of the number of Units to
which it was theretofore entitled on conversion, the kind and number of
Units or other securities or money or other property that such Holder
would have been entitled to receive as a result of such
reclassification, change, consolidation, merger, reorganization,
amalgamation or winding-up, if, on the effective date thereof it had
been the registered holder of the number of Units to which it was
theretofore entitled upon conversion, subject to adjustment thereafter
in accordance with provisions which are the same, as nearly as
possible, to those contained above.
(3) In any case in which these provisions require an adjustment which shall
become effective immediately after a record date for an event referred
to herein, the Company may defer, until the occurrence of such event,
issuing to the Holder converting after such record date and before the
occurrence of such event, the additional Units issuable upon such
conversion by reason of the adjustment required by such event before
giving effect to such adjustment; provided, however, that the Company
will deliver to the Holder an appropriate instrument evidencing the
Holder's right to receive such additional Units upon the occurrence of
the event requiring such adjustment and the right to receive any
distributions made on such additional Units declared in favour of
holders of record of Class B Shares on and after the Conversion Date or
such later date as the Holder would, but for the provisions of this
subsection (3) have become the holder of record of such additional
Units hereunder.
(4) The adjustments provided for herein are cumulative and will apply to
successive subdivisions, redivisions, reductions, combinations,
consolidations, distributions, issues or other events resulting in any
adjustment under the provisions hereof.
(5) In the event of any question arising with respect to the adjustments
provided herein, such question will be conclusively determined by a
firm of chartered accountants appointed by the Company and acceptable
to the Holder, and such accountants will have access to all necessary
records of the Company and such determination will be binding upon the
Company and the Holder.
(6) At any time prior to the Conversion Date, the Company will give at
least fourteen (14) days' prior written notice of any subdivision,
redivision, reduction, combination, consolidation, distribution, issue
or other events resulting in any adjustment under the provisions hereof
and will not during the period of such notice close the transfer books
for its Class B Shares so as to prevent the Class B Shares resulting
from the conversion of this Note to be voted.
(7) If any of the events referred to in subsections (1) or (2) hereof
occurs, the Company will promptly file with the Holder a certificate of
the Company, setting forth a brief statement of the facts and the
consequent adjustment required to be made by the provisions of this
Note with respect to conversion of this Note.
<PAGE>
- 6 -
This Note is registered on the books of the Company and is transferable
only by surrender thereof at the principal office of the Company, duly endorsed
or accompanied by a written instrument of transfer duly executed by the Holder
of this Note. Payment of or on account of principal and interest on this Note
shall be made only to or upon the order in writing of the Holder.
Upon reasonable request by the Holder and without expense to the
Holder, the Company will exchange the Note held by the Holder for other Notes of
different denominations.
If this Note is placed in the hands of an attorney for collection, or
is collected through court proceedings, or through other legal proceedings, the
Company promises to pay an additional reasonable amount as attorneys' fees.
The Company hereby waives presentment, demand, notice, protest and all
other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note.
No delay or failure on the part of the Holder hereof to exercise any
power or right shall operate as a waiver hereof, and such rights and powers
shall be deemed continuous, nor shall a partial exercise preclude full exercise
thereof; and no right or remedy of the holder hereof shall be deemed abridged or
modified by any source of conduct, and no waiver thereof shall be predicated
thereon, nor shall failure to exercise any such power or right subject the
holder hereof to any liability.
Any one or more of the following shall constitute an "Event of Default"
as the term is used herein:
(a) default occurring in the payment of interest on this Note when
the same shall become due and such default continues for more
than fifteen (15) days; or
(b) default occurring in any payment of principal of this Note at
the expressed or any accelerated maturity date or at any date
fixed for prepayment and such default continues for more than
fifteen (15) days; or
(c) default is made in the payment of the principal of or interest
on any indebtedness of the Company for borrowed money as and
when the same shall become due and payable by the lapse of
time, by declaration, by call for redemption or otherwise, and
such default continues beyond the period of grace, if any,
allowed with respect thereto; or
(d) default or the happening of any event occurring under any
indenture, agreement or other instrument under which the
Company has borrowed money and such default or event continues
for a period of time sufficient to permit the acceleration of
the
<PAGE>
- 7 -
maturity of any indebtedness of the Company outstanding
thereunder; or
(e) if any representation or warranty made by the Company in any
statement or certificate furnished by the Company to the
Holder at the time of the making of this Note or at any time
in respect of this Note is untrue or misleading in any
material respect as of the date of the issuance or making
thereof; or
(f) default is made in the performance of any of other covenant,
agreement or condition herein contained or in any other
agreement to which the Holder and the Company are a party and
such default shall continue for fifteen (15) days after
written notice thereof to the Company by the Holder; or
(g) the Company ceases or threatens to cease to carry on the
business currently being carried on by it or a substantial
portion thereof or makes or agrees to make an assignment,
disposition or conveyance, whether by way of sale or
otherwise, of its assets in bulk or an order is made for the
winding-up of the Company; or
(h) the Company becomes insolvent or admits in writing its
inability to pay its debts as they mature or makes an
assignment for the benefit of creditors, or the Company
applies for or consents to the appointment of a trustee or
receiver for the Company or for any part of its property or a
proposal is made by the Company or a petition is filed by or
against the Company or an authorized assignment is made by the
Company or an application is made under the Companies'
Creditors Arrangement Act or any successor or similar
legislation; or
(i) any one or more of a trustee, receiver and manager, custodian,
liquidator or other person with similar powers is appointed
for the Company or for any material part of its property and
is not discharged within thirty (30) days after such
appointment; or
(j) final judgment or judgments for the payment of money
aggregating in excess of Ten Thousand Dollars ($10,000) is or
are outstanding against the Company or against any property or
assets of the Company and any one of such judgments has
remained unpaid, unvacated, unbonded or unstayed by appeal or
otherwise for a period of thirty (30) days from the date of
its entry; or
(k) any material part of the property of the Company is seized or
otherwise attached by anyone pursuant to any legal process or
other means, including distress, execution or any other step
or proceeding with similar effect, and the same is not
released, bonded, satisfied, discharged or vacated within the
period of ten (10) days less than such period as would permit
such property or any part thereof to be sold pursuant thereto;
or
<PAGE>
- 8 -
(l) bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings for relief of debtors are
instituted by or against the Company and, if instituted
against the Company, are consented to or are not dismissed or
stayed pending the resolution of the matters in dispute within
sixty (60) days after such institution; or
(m) the Company takes any corporate proceedings for its
dissolution or liquidation or amalgamation with another
company or if the corporate existence of the Company shall be
terminated by expiration, forfeiture or otherwise.
When any Event of Default has occurred, or if the holder of any note or
of any other evidence of indebtedness of the Company gives any notice or takes
any other action with respect to a claimed default, the Company shall give
written notice within five (5) business days of such event to the Holder.
When any Event of Default described in subsections (a) through (j)
inclusive has happened and is continuing, the Holder may, by notice in writing
sent by registered or certified mail to the Company, declare the entire
principal and all interest accrued on this Note to be and this Note shall
thereupon become, forthwith due and payable, without any presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived.
When any Event of Default described in subsection (k) has occurred, then this
Note shall immediately become due and payable without presentment, demand or
notice of any kind.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be delivered by hand, by facsimile, by overnight
mail or mailed by first class certified or registered mail, return receipt
requested, posted prepaid, as follows:
Company: Officeland Inc.
312 Dolomite Drive
Suite 212
Toronto, Ontario
M3J 2N2
Attention: Mr. Marvyn Budd, President
Facsimile No.: (416) 736-8445
Holder:
Attention:
<PAGE>
- 9 -
Facsimile No.: ( )
(or at such other address as may have been furnished in writing by either party
to the other), and such notices, requests, consents or other communications
shall be deemed to have been received when delivered, on the business day after
the date of the facsimile (with receipt confirmed), on the fifth day after being
mailed by overnight mail or on the third day after being mailed by first class
certified or registered mail, as the case may be.
<PAGE>
- 10 -
For all purposes, "Holder" shall include the Holder's successors,
assigns or other nominees or attorneys duly appointed by instrument in writing.
IN WITNESS WHEREOF the Company has executed and delivered this
Note on the date first set out above.
OFFICELAND INC.
Per:
Name
Title
Per:
Name
Title
<PAGE>
CONVERSION FORM
TO:
The undersigned registered holder of the Note to which this Conversion
Form is attached hereby irrevocably elects to convert such Note into Units of
Officeland Inc. in accordance with the terms of such Note and directs that the
Units issuable and deliverable upon the conversion be issued and delivered to
the person indicated below other than twenty per cent (20%) of the Warrants
issuable hereunder which shall be issued to ICP Investments, Inc. or ICP
Investments, Inc. (If Units are to be issued in the name of a person other than
the Holder, all requisite transfer taxes must be tendered by the undersigned.)
Dated:
(Signature of Registered Holder)
NOTE: If Units are to be issued in the name of a person other than the Holder
or ICP Investments, Inc., the signature must be guaranteed by a
Canadian chartered bank or a trust company.
(Print name in which Units issued on conversion are to be issued, delivered and
registered)
Name
(Address) (City, Province, and Postal Code)
Name of guarantor:
Authorized signature:
<PAGE>
- 1 -
ARTICLES OF AMENDMENT
The articles of the corporation are amended as follows:
WHEREAS pursuant to Articles of Amendment of the Corporation dated May
12, 1998, the Directors of the Corporation were authorized to fix the number of
Class "B" Special Shares in each series and to determine the rights, privileges,
restrictions and conditions attaching to such number of Class "B" Special Shares
in each series;
AND WHEREAS the Directors of the Corporation now wish to exercise their
authority conferred on them pursuant to the said Article of Amendment of the
Corporation dated May 12, 1998;
A. The Directors of the Corporation hereby fix and authorize and the Corporation
is hereby authorized to issue an unlimited number of Class "B" Special Shares.
B. The Directors of the Corporation hereby determine that the rights,
privileges, restrictions and conditions (collectively, the "Class "B"
Special Share Provisions") attaching to such Class "B" Special Shares
of the Corporation shall be as follows:
The rights, privileges, restrictions and conditions (collectively, the
"Class "B" Special Share Provisions") attaching to the Class "B" Special Shares
are as follows:
1. INTERPRETATION
1.1 Definitions. Where used in these Class "B" Special Share Provisions, the
following words and phrases shall have the following meanings, respectively:
"Capital Reorganization" shall have the meaning ascribed thereto in subsection
5.7.(4);
"Current Market Price" shall have the meaning ascribed thereto in subsection
5.8.(8);
"dividends in the ordinary course" shall have the meaning ascribed thereto in
subsection 5.7.(1);
"Exercise Number" shall have the meaning ascribed thereto in Section 5.1;
"Extraordinary Dividend" shall have the meaning ascribed thereto in subsection
5.7(1);
"Reorganization" shall have the meaning ascribed thereto in subsection 5.7.(1);
"Restructured Purchase Agreement" shall have the meaning ascribed thereto in
subsection 5.7(5)(a)(vi);
<PAGE>
- 2 -
"Rights Offering" shall have the meaning ascribed thereto in subsection 5.7.(2);
"Rights Period" shall have the meaning ascribed thereto in subsection 5.7.(2);
and
"Special Distribution" shall have the meaning ascribed thereto in subsection
5.7.(3).
In addition, there are definitions set forth in subsection 5.7(5)
hereof for the purposes thereof.
1.2 Gender, etc. Words importing only the singular number include the plural and
vice versa and words importing any gender include all genders.
1.3 Currency. All monetary amounts referred to herein shall be in lawful money
of The United States of America.
1.4 Headings. The division of these Class "B" Special Share Provisions into
sections, subsections, paragraphs, or other subdivisions and the insertion of
headings are for convenience of reference only and shall not affect the
construction or interpretation hereof.
2. VOTING
2.1 Voting Rights. Except for meetings at which only holders of another
specified class or series of shares of the Corporation are entitled to vote
separately as a class or series, the holders of the Class "B" Special Shares
shall be entitled to receive notice of and to attend all meetings of the
shareholders of the Corporation and shall be entitled at all meetings of the
shareholders of the Corporation to the greater of (a) one vote per share, and
(b) such number of votes per share as shall equal the number of Common Shares
into which each Class "B" Special Share could be converted at the record date
for determination of the shareholders entitled to vote on any matter, or, if no
such record date is established, at the date such vote is taken or any written
consent of shareholders is solicited, such votes to be counted together with all
other shares of the Corporation having general voting power and not separately
as a class. Fractional votes by the holders of Class "B" Special Shares shall
not, however, be permitted and any fractional voting rights shall, after
aggregating all Common Shares into which Class "B" Special Shares held by each
holder could be converted, be rounded to the nearest whole number.
3. DIVIDENDS
3.1 Discretionary Dividends. The holders of the Class "B" Special Shares shall
be entitled to receive and the Corporation shall pay to them, always in
preference and priority to any payment of dividends on the Common Shares of the
Corporation and any other shares of the Corporation ranking junior to the Class
"B" Special Shares, but rateably with the holders of the Class "A" Special
Shares , as and when declared by the board of directors of the Corporation out
of moneys of the Corporation properly applicable to the payment of dividends,
such dividends as the board of directors of the Corporation may from time to
time declare on the Class "B" Special
<PAGE>
- 3 -
Shares.
3.2 Restrictions. No dividends shall at any time be declared or paid or set
apart for payment on the Class "A" Special Shares or on the Common Shares or any
other shares of the Corporation ranking junior to the Class "B" Special Shares
unless all dividends up to and including the dividend payable for the last
completed period for which such dividends shall be payable on the Class "B"
Special Shares then issued and outstanding shall have been declared and paid or
set apart for payment at the date of such declaration or payment or setting
apart for payment on the Class "A" Special Shares, the Common Shares or such
other shares of the Corporation ranking junior to the Class "B" Special Shares;
nor shall the Corporation call for redemption, redeem, purchase for
cancellation, acquire for value or reduce or otherwise pay off any of the Class
"B" Special Shares (less than the total amount then outstanding) or any the
Class "A" Special Shares, Common Shares or any other shares of the Corporation
ranking junior to the Class "B" Special Shares unless and until all dividends up
to and including the dividends payable for the last completed period for which
such dividends shall be payable on the Class "B" Special Shares then issued and
outstanding shall have been declared and paid or set apart for payment at the
date of such call for redemption, purchase, acquisition, reduction or other
payment.
4. DISSOLUTION, LIQUIDATION OR WINDING-UP
4.1 Priority to Entitlement. In the event of the dissolution, liquidation or
winding-up of the Corporation or other distribution of property or assets of the
Corporation among its shareholders for the purpose of winding up its affairs,
the holders of the Class "B" Special Shares shall be entitled to receive from
the property and assets of the Corporation for each Class "B" Special Share held
by them respectively a sum equivalent to the result obtained when the amount in
the stated capital account for the Class "B" Special Shares is divided by the
number of issued and outstanding Class "B" Special Shares, together with a
fixed, preferential, cumulative cash dividend at the annual rate per share of
eight per cent (8%) of the amount equal to the amount recorded in the stated
capital account maintained in respect of the Class "B" Special Shares divided by
the number of Class "B" Special Shares outstanding, which shall accrue and be
cumulative from the date of issue of such Class "B" Special Shares, before any
amount shall be paid or any property or assets of the Corporation distributed to
the holders of the Common Shares or shares of any other class ranking junior to
the Class "B" Special Shares, but on a rateable basis with the holders of the
Class "A" Special Shares for payments of a like nature to which such holders may
be entitled pursuant to the rights and privileges attaching to the Class "A"
Special Shares. After the payment to the holders of the Class "B" Special Shares
and the Class "A" Shares of the amounts so payable to them, the holders of
Common Shares shall be entitled to receive pro rata from the property and assets
of the Corporation an amount equal to the aggregate amount in the stated capital
account for the Common Shares.
<PAGE>
- 4 -
5. CONVERSION
5.1 Conversion Right. The holders of the Class "B" Special Shares shall have the
right at any time to convert Class "B" Special Shares into Common Shares on the
basis of one Common Share (the "Exercise Number") for each Class "B" Special
Share so converted.
5.2 Manner of Exercise of Conversion Right. The conversion right herein provided
for may be exercised by notice in writing given to the Corporation at its
registered office, accompanied by the certificate or certificates representing
the Class "B" Special Shares in respect of which the holder thereof desires to
exercise such right of conversion. Such notice shall be signed by such holder or
his duly authorized attorney and shall specify the number of Class "B" Special
Shares which the holder desires to have converted. If less than all the Class
"B" Special Shares represented by a certificate or certificates accompanying any
such notice are to be converted, the holder shall be entitled to receive, at the
expense of the Corporation, a new certificate representing the number of Class
"B" Special Shares comprised in the certificate or certificates surrendered as
aforesaid which are not to be converted.
5.3 New Certificates on Conversion. On any conversion of Class "B" Special
Shares, the share certificates for Common Shares of the Corporation resulting
therefrom shall be issued in the name of the registered holder of the Class "B"
Special Shares converted or in such name or names as such registered holder may
direct in writing (either in the notice herein referred to or otherwise). In
either instance the transfer form on the back of the certificates in question
shall be endorsed by the registered holder of the Class "B" Special Shares or
his duly authorized attorney, with signature guaranteed in a manner satisfactory
to the Corporation, provided that the Corporation may waive the necessity for
any such guarantee.
5.4 Deemed Conversion. Subject as hereinafter provided, the right of a holder of
Class "B" Special Shares to convert the same into Common Shares shall be deemed
to have been exercised, and the registered holder of the Class "B" Special
Shares to be so converted (or any person or persons in whose name or names any
such registered holder of Class "B" Special Shares shall have directed
certificates representing Common Shares to be issued) shall be deemed to have
become (and at all times on such date to be) a holder of Common Shares of record
of the Corporation for all purposes on the date of surrender of one or more
certificates duly endorsed representing the Class "B" Special Shares to be
converted.
5.5 Right of Corporation to Convert. On and after either of the following events
having occurred:
(a) the closing price of the Common Shares (which shall be determined prior
to any Reorganization (as hereinafter defined)) on Nasdaq, or, if the
Common Shares are not then quoted on Nasdaq, on such stock exchange on
which the Common Shares are listed as may be selected by the directors
for such purpose, for each and every day of any forty (40) consecutive
trading days was not less than U.S. $11.00; or
<PAGE>
- 5 -
(b) all of the holders of the Class "B" Special Shares as a group
beneficially hold securities convertible, directly or indirectly, or
exercisable into Common Shares, which securities then represent less
than five per cent (5%) of the then issued and outstanding Common
Shares on a fully diluted basis;
the Corporation shall have the right at any time and from time to time to
convert any or all of the Class "B" Special Shares then outstanding or issued
thereafter, in accordance with the procedures set forth in Section 5.6, without
the payment of additional consideration by or to the holder of the Class "B"
Special Shares into the number of fully paid and non-assessable Common Shares in
accordance with the Exercise Number.
5.6 Exercise of Corporation's Right to Convert. In the event the Corporation
wishes to exercise its right to convert pursuant to Section 5.5 hereof, it
shall, at least thirty (30) days prior to the date specified for such
conversion, mail to each person who on such date of mailing is a registered
holder of Class "B" Special Shares, a notice in writing of the exercise by the
Corporation of its right to convert Class "B" Special Shares. Such notice shall
be mailed by letter, postage prepaid, addressed to each such holder at his
address as it appears on the records of the Corporation or in the event of the
address of any such holder not so appearing then to the last known address of
such holder; provided, however, that accidental failure to give any such notice
to one or more of such holders shall not affect the validly of such conversion.
Such notice shall set out the total number of Class "B" Special Shares to be
converted, the number of Class "B" Special Shares held by such holder to be
converted, the Exercise Number and the date on which such conversion will take
place. The Class "B" Special Shares specified for conversion in the
aforementioned notice shall be converted automatically without any further
action by the holders of such shares and whether or not the certificates
representing such shares are surrendered to the Corporation or the transfer
agent, and provided further that the Corporation shall not be obligated to issue
certificates evidencing the Common Shares issuable upon such conversion unless
the certificates evidencing such Class "B" Special Shares specified for
conversion in the aforementioned notice are either delivered to the Corporation
or the transfer agent as above provided, or the holder notifies the Corporation
or the transfer agent that such certificates have been lost, stolen or destroyed
and executes an agreement satisfactory to the Corporation to indemnify the
Corporation from any loss incurred by it in connection with such lost, stolen or
destroyed certificates. The Corporation shall, as soon a practicable after such
delivery, or such agreement regarding indemnification in the case of a lost,
stolen or destroyed certificate, issue and deliver at such office to such holder
of Class "B" Special Shares, a certificate of certificates (as requested by such
holder) representing the aggregate number of Common Shares to which the holder
shall be entitled as aforesaid. Such conversion shall be deemed to have been
made on the date specified in the notice of conversion mailed as aforesaid, and
the person or persons entitled to receive the Common Shares issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such Common Shares on such specified date. If fewer than all of the Class "B"
Special Shares represented by the certificate or certificates are to be
converted, the holder shall be entitled to receive, at the expense of the
Corporation, a new certificate representing the Class "B" Special Shares
represented by the
<PAGE>
- 6 -
certificate or certificates delivered as aforesaid which are not to be
converted.
5.7 Adjustment of Exercise Number. Subject to the provisions of Sections 5.8 and
5.9, the Exercise Number shall be subject to adjustment from time to time in the
following events and manner:
(1) Reorganization. If and whenever at any time after the date
hereof the Corporation shall:
(a) issue Common Shares to all or substantially all the
holders of the Common Shares as a stock dividend (an
"Extraordinary Dividend"), or
(b) make a distribution on its outstanding Common Shares
payable in Common Shares or securities exchangeable
for or convertible into Common Shares (except by way
of a stock dividend representing dividends in the
ordinary course (as hereinafter defined)), or
(c) subdivide its outstanding Common Shares into a
greater number of shares, or
(d) consolidate its outstanding Common Shares into a
smaller number of shares,
(any of such events in these clauses (a), (b), (c) and (d)
being called a "Reorganization"), then the Exercise Number
shall be adjusted, effective immediately after the record date
at which the holders of Common Shares are determined for the
purpose of the Reorganization, by multiplying the Exercise
Number in effect immediately prior to such record date by a
fraction, the denominator of which shall be the number of
Common Shares outstanding on such record date before giving
effect to such Reorganization and the numerator of which shall
be the number of Common Shares outstanding immediately after
giving effect to such Reorganization (including, in the case
where securities exchangeable for or convertible into Common
Shares are distributed, the number of Common Shares that would
have been outstanding had such securities been exchanged for
or converted into Common Shares on such record date). For the
purposes of this subsection (1), "dividends in the ordinary
course" shall mean cash dividends paid on the Common Shares in
any fiscal year of the Corporation provided that where shares
in the capital of the Corporation are distributed to a holder
of Common Shares in lieu of a cash dividend pursuant to a
dividend reinvestment plan, such dividend shall be deemed to
be a cash dividend if the value at which such shares are
issued in satisfaction of such dividend is not less than 95%
of the Current Market Price (as hereinafter defined) of the
Common Shares at the time of declaration thereof.
<PAGE>
- 7 -
(2) Rights Offering. If and whenever at any time after the date
hereof the Corporation shall issue rights, options or warrants
to all or substantially all of the holders of the Common
Shares under which such holders are entitled, during a period
expiring not more than forty-five (45) days after the record
date for such issue (the "Rights Period"), to subscribe for or
purchase Common Shares or securities exchangeable for or
convertible into Common Shares at a price per share to the
holder (or, in the case of securities exchangeable for or
convertible into Common Shares, at a conversion or exchange
price per share at the date of issue of such securities to the
holder) of less than 90% of the Current Market Price (as
hereinafter defined) for the Common Shares on such record date
(any of such events being called a "Rights Offering"), then
the Exercise Number shall be adjusted effective immediately
after the end of the Rights Period to a number determined by
multiplying the Exercise Number in effect immediately prior to
the end of the Rights Period by a fraction:
(a) the denominator of which shall be the aggregate of:
(i) the number of Common Shares outstanding as
of the record date for the Rights Offering,
and
(ii) a number determined by dividing (A) either
(I) the product of the number of Common
Shares issued or subscribed for during the
Rights Period upon the exercise of the
rights, warrants or options under the
Rights Offering and the price at which each
such Common Share is offered, or, as the
case may be, (II) the product of the
exchange or conversion price of such
securities offered and the number of Common
Shares for or into which the securities
issued or subscribed for pursuant to the
Rights Offering could have been exchanged or
converted during the Rights Period, by (B)
the Current Market Price (as hereinafter
defined) of the Common Shares as of the
record date for the Rights Offering, and
(b) the numerator of which shall be the number of Common
Shares outstanding or the number of Common Shares
which would be outstanding if the securities
exchangeable or convertible were exchanged or
converted into Common Shares during the Rights
Period, in both cases after giving effect to the
Rights Offering and including the number of Common
Shares actually issued or subscribed for during the
Rights Period upon exercise of the rights, warrants
or options under the Rights Offering.
(3) Special Distribution. If and whenever at any time after the
date hereof the Corporation shall fix a record date for the
issue or the distribution to all or substantially all the
holders of the Common Shares of (A) shares of the
<PAGE>
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Corporation of any class other than Common Shares, (B) rights,
options or warrants to acquire or securities exchangeable for
or convertible into Common Shares or shares of the Corporation
of any class other than Common Shares or property or other
assets of the Corporation, (C) evidences of indebtedness, or
(D) any property or other assets and if such issuance or
distribution does not constitute a Reorganization or a Rights
Offering (any of such non-excluded events being herein called
a "Special Distribution"), the Exercise Number shall be
adjusted effective immediately after such record date to a
number determined by multiplying the Exercise Number in effect
on such record date of the Special Distribution by a fraction:
(a) the denominator of which shall be:
(i) the product of the number of Common Shares
outstanding on such record date and the
Current Market Price (as hereinafter
defined) of the Common Shares on such record
date, less
(ii) the fair market value, as determined on a
reasonable basis by the directors of the
Corporation (whose determination shall be
conclusive), to the holder of the Common
Shares of the shares, rights, options,
warrants, evidences of indebtedness or
property or other assets issued or
distributed in the Special Distribution, and
(b) the numerator of which shall be the number of Common
Shares outstanding on such record date multiplied by
the Current Market Price (as hereinafter defined) of
the Common Shares on such record date.
(4) Capital Reorganization. If and whenever at any time after the
date hereof there shall be a reclassification of the Common
Shares at any time outstanding or a change of the Common
Shares into other shares or into other securities (other than
a Reorganization), or a consolidation, amalgamation or merger
of the Corporation with or into any other corporation or other
entity (other than a consolidation, amalgamation or merger
which does not result in any reclassification of the
outstanding Common Shares or a change of the Common Shares
into other shares), or a transfer of the undertaking or assets
of the Corporation as an entirety or substantially as an
entirety to another corporation or other entity (any of such
events being herein called a "Capital Reorganization"), any
holder of Class "B" Special Shares who exercises his right of
conversion after the effective date of such Capital
Reorganization shall be entitled to receive, and shall accept
in lieu of the number of Common Shares to which such holder
was theretofore entitled upon such conversion, the aggregate
number of shares, other securities or other property which
such holder would have been entitled to receive as a result of
such Capital Reorganization if, on the effective date thereof,
the holder had been the
<PAGE>
- 9 -
registered holder of the number of Common Shares to which such
holder was theretofore entitled upon conversion. If determined
appropriate by the directors of the Corporation, appropriate
adjustments shall be made as a result of any such Capital
Reorganization in the application of the provisions set forth
in this Section 5.7 with respect to the rights and interests
thereafter of holders of Class "B" Special Shares so that the
provisions set forth in this Section 5.7 shall thereafter
correspondingly be made applicable as nearly as may reasonably
be in relation to any shares, securities or other property
thereafter deliverable upon the conversion of a Class "B"
Special Share.
(5) Adjustments for Sale of Common Shares Below Conversion Price.
(a) Special Definitions. For purposes of this subsection
5.7(5), the following definitions shall apply:
(i) "Additional Common Shares" shall mean all
Common Shares issued (or, pursuant to
paragraph 5.7(5)(c)(i) below, deemed to be
issued) by the Corporation after the
Original Issue Date, other than Common
Shares issued or issuable:
(A) by reason of a dividend, stock
split, split-up or other
distribution on Common Shares issued
(or pursuant to paragraph
5.7(5)(c)(i) below deemed to be
issued) by the Corporation after the
Original Issue Date; or
(B) pursuant to or upon the exercise of
Rights excluded from the definition
of "Option" in paragraph
5.7(5)(a)(iv);
(ii) "Conversion Price" shall mean the conversion
price of Class "B" Special Shares into
Common Shares in effect immediately prior to
any Reorganization, Rights Offering, Special
Distribution or Capital Reorganization,
which shall be deemed to be U.S.$3.40 at the
date hereof;
(iii) "Convertible Securities" means any evidences
of indebtedness, shares or other securities
directly or indirectly convertible into or
exchangeable for Shares, other than any
Rights excluded from the definition of
"Option" in Subsection 5.7(a)(iv);
(iv) "Option" shall mean Shares or rights,
options or warrants to subscribe for,
purchase or otherwise acquire Shares or
Convertible Securities (collectively,
"Rights"), excluding (A) up to that number
of Rights granted to employees or
consultants of the
<PAGE>
- 10 -
Corporation prior to the Original Issue Date
pursuant to an option plan adopted by the
board of directors of the Corporation
(subject to appropriate adjustment for any
stock dividend, stock split, combination or
other similar recapitalization affecting
such Shares); (B) Rights granted by the
Corporation prior to the Original Issue
Date; (C) any Rights granted by the Company
to the Continuing Investors pursuant to the
Restructured Purchase Agreement, provided
that the terms attaching to such Rights are
not materially less favorable to the Company
than the Restructured Rights Terms; and (D)
for greater certainty, any Common Shares
issued or to be issued by the Company as
part of the consideration paid or payable to
the vendors on the acquisition of any one or
more of those corporations named within the
defined term Pre- Approved Transaction in
the Restructured Purchase Agreement. All
capitalized terms used in this subsection
5.7(5)(a)(iv) and not separately defined
herein have the same meanings, respectively,
as ascribed to them in the Restructured
Purchase Agreement;
(v) "Original Issue Date" shall mean the date of
these Articles of Amendment;
(vi) "Restructured Purchase Agreement" means that
certain Senior Subordinated Unsecured
Convertible Notes Purchase Agreement among
the Company, certain investors and others
entered into on November o, 1998; and
(vii) "Shares" means shares of any class in the
capital of the Company (other than the Class
"A" Special Shares) which may be authorized
for issuance from time to time by the
Company.
(b) No Adjustment of Conversion Price. No adjustment in
the number of Common Shares into which the Class "B"
Special Shares are convertible shall be made by
adjustment in the applicable Conversion Price
thereof; (i) unless the consideration per share
(determined pursuant to clause 5.7(5)(e)) for an
Additional Common Share issued or deemed to be issued
by the Corporation is less than the applicable
Conversion Price in effect on the date of, and
immediately prior to, the issue of such Additional
Common Shares, or (ii) if prior to such issuance, the
Corporation receives written notice from the
representative of holders of at least a majority of
the Class "B" Special Shares agreeing that no such
adjustment shall be made as the result of the
issuance of Additional Common Shares.
(c) Issue of Securities; Deemed Issue of Additional
Common Shares.
<PAGE>
- 11 -
(i) If the Corporation at any time or from time
to time after the Original Issue Date shall
issue any Options or Convertible Securities
or shall fix a record date for the
determination of holders of any class of
securities entitled to receive any such
Options or Convertible Securities, then the
maximum number of Common Shares (as set
forth in the instrument relating thereto
without regard to any provision contained
therein for a subsequent adjustment of such
number) issuable upon the exercise of such
Options or, in the case of Convertible
Securities and Options therefor, the
conversion or exchange of such Convertible
Securities, shall be deemed to be Additional
Common Shares issued as of the time of such
issue or, in case such a record date shall
have been fixed, as of the close of business
on such record date, provided that
Additional Common Shares shall not be deemed
to have been issued unless the consideration
per share (determined pursuant to clause
5.7(5)(e) hereof) of such Additional Common
Shares would be less than the applicable
Conversion Price in effect on the date of
and immediately prior to such issue, or such
record date, as the case may be.
(ii) No further adjustment in the Conversion
Price shall be made upon the subsequent
issue of Convertible Securities or Common
Shares upon the exercise of such Options or
conversion or exchange of such Convertible
Securities.
(iii) If such Options or Convertible Securities by
their terms provide, with the passage of
time or otherwise, for any increase in the
consideration payable to the Corporation, or
decrease in the number of Common Shares
issuable, upon the exercise, conversion or
exchange thereof, the Conversion Price
computed upon the original issue thereof (or
upon the occurrence of a record date with
respect thereto), and any subsequent
adjustments based thereon, shall, upon any
such increase or decrease becoming
effective, be recomputed to reflect such
increase or decrease insofar as it affects
such Options or the rights of conversion or
exchange under such Convertible Securities.
(iv) No readjustment pursuant to clause (iii)
above shall have the effect of increasing
the Conversion Price to an amount which
exceeds the lower of (i) the Conversion
Price on the original adjustment date, or
(ii) the Conversion Price that resulted from
any other issuance of Additional Common
Shares between the original adjustment date
<PAGE>
- 12 -
and such readjustment date.
(v) Upon the expiration or termination of any
unexercised Option, the Conversion Price
shall not be adjusted and the Additional
Common Shares deemed issued as the result of
the original issue of such Option shall not
be deemed issued for the purposes of any
subsequent adjustment of the Conversion
Price.
(vi) In the event of any change in the number of
Common Shares issuable upon the exercise,
conversion or exchange of any Option or
Convertible Security, including, but not
limited to, a change resulting from the
anti-dilution provisions thereof, the
Conversion Price then in effect shall
forthwith be readjusted to such Conversion
Price as would have been obtained had the
adjustment which was made upon the issuance
of such Option or Convertible Security not
exercised or converted prior to such change
been made upon the basis of such change, but
no further adjustment shall be made for the
actual issuance of Common Shares upon the
exercise or conversion of any such Option or
Convertible Security.
(d) Adjustment of Conversion Price Upon Issuance of
Additional Common Shares. In the event the
Corporation shall at any time after the Original
Issue Date issue Additional Common Shares (including
Additional Common Shares deemed to be issued pursuant
to clause 5.7(5)(c), but excluding shares issued upon
a Reorganization), without consideration or for a
consideration per share less than the applicable
Conversion Price in effect on the date of and
immediately prior to such issue, then, and in such
event, the Conversion Price shall be reduced,
concurrently with such issue, to a price (calculated
to the nearest cent) determined by multiplying the
Conversion Price at such time by a fraction, (1) the
numerator of which shall be (A) the number of Common
Shares outstanding immediately prior to such issue
plus (B) the number of Common Shares which the
aggregate consideration received by the Corporation
for the total number of Additional Common Shares so
issued would purchase at such Conversion Price; and
(2) the denominator of which shall be the number of
Common Shares outstanding immediately prior to such
issue plus the number of such Additional Common
Shares so issued; provided that, for the purpose of
this clause 5.7(5)(d), all Common Shares issuable
upon exercise of the warrants held by holders of the
Class "B" Special Shares immediately prior to such
issue shall be deemed to be outstanding, and
immediately after any Additional Common Shares are
deemed issued pursuant to clause 5.7(5)(c) (other
than shares excluded from the definition of
"Additional Common Shares"), such Additional
<PAGE>
- 13 -
Common Shares shall be deemed to be outstanding.
Notwithstanding the foregoing, the applicable Conversion Price
shall not be so reduced at such time if the amount of such
reduction would be an amount less than $.01, but any such
amount shall be carried forward and reduction with respect
thereto made at the time of and together with any subsequent
reduction which, together with such amount and any other
amount or amounts so carried forward, shall aggregate $.01 or
more.
(e) Determination of Consideration. For purposes of this
subsection 5.7(5), the consideration received by the
Corporation for the issue of any Additional Common
Shares shall be computed as follows:
(i) Cash and Property: Such consideration shall:
(A) insofar as it consists of cash, be
computed at the aggregate of cash
received by the Corporation,
excluding amounts paid or payable
for accrued interest or accrued
dividends;
(B) insofar as it consists of property
other than cash, be computed at the
fair market value thereof at the
time of such issue, as determined in
good faith by the board of directors
of the Corporation; and
(C) in the event Additional Common
Shares are issued together with
other shares or securities or other
assets of the Corporation for
consideration which covers both, be
the proportion of such
consideration so received, computed
as provided in clauses (1) and (2)
above, as determined in good faith
by the board of directors of the
Corporation; and
(ii) Options and Convertible Securities. The
consideration per share received by the
Corporation for Additional Common Shares
deemed to have been issued pursuant to
clause 5.7(5)(c) relating to Options and
Convertible Securities shall be determined
by dividing (x) the total amount, if any,
received or receivable by the Corporation as
consideration for the issue of such Options
or Convertible Securities, plus the minimum
aggregate amount of additional consideration
(as set forth in the instruments relating
thereto, without regard to any provision
contained therein for a subsequent
adjustment of such consideration) payable to
the Corporation upon the exercise of such
Options or the conversion or exchange of
such Convertible Securities, or in the case
of Options
<PAGE>
- 14 -
for Common Shares, the exercise of such
Options for Convertible Securities and the
conversion or exchange of such Convertible
Securities, by (y) the maximum number of
Common Shares (as set forth in the
instruments relating thereto, without regard
to any provision contained therein for a
subsequent adjustment of such number)
issuable upon the exercise of such Options
or the conversion or exchange of such
Convertible Securities.
5.8 Rules Regarding Calculation of Adjustment of Exercise Number. For the
purposes of Section 5.7:
(1) The adjustments provided for in Section 5.7 are cumulative and
such adjustments shall be made successively whenever an event
referred to therein shall occur, subject to the following
subsections of this Section 5.8.
(2) No adjustment in the Exercise Number shall be required unless
it would result in a change of at least one one-hundredth of a
share, as presently constituted, provided, however, that any
adjustments which, except for the provisions of this
subsection (2) of this Section 5.8 would otherwise have been
required to be made shall be carried forward and taken into
account in any subsequent adjustment.
(3) No adjustment in the Exercise Number shall be made in any of
the following instances:
(a) in respect of any event described in Section 5.7 if
holders of Class "B" Special Shares are entitled to
participate in such event on the same terms, mutatis
mutandis, as if such holders had converted their
Class "B" Special Shares into Common Shares prior to
or on the effective date or record date of such
event; provided that the foregoing shall not prevent
such adjustment to be made in respect of the events
referred to in clauses (c) and (d) of subsection (1)
of Section 5.7;
(b) in respect of the issue from time to time of Common
Shares acquired on the conversion of Class "B"
Special Shares which shall be deemed not to be a
Reorganization;
(c) in respect of the issue from time to time of
dividends which do not constitute Extraordinary
Dividends of Common Shares to holders of Common
Shares who exercise an option or election to receive
substantially equivalent dividends in Common Shares
in lieu of receiving a cash dividend, which issue
shall be deemed not to be a Reorganization; and
<PAGE>
- 15 -
(d) in respect of the issue from time to time of Common
Shares pursuant to the exercise of any
non-transferable right, option or warrant extended or
given from time to time to officers, directors or
employees of the Corporation or of a subsidiary of
the Corporation to subscribe for and purchase Common
Shares or any other shares of the Corporation.
(4) If a dispute shall at any time arise with respect to the
adjustments provided for in Section 5.7, such dispute shall be
conclusively determined by the Corporation's auditors, or if
they are unable or unwilling to act, by such other firm of
independent chartered accountants as may be selected by
resolution of the directors of the Corporation and any such
determination shall be binding upon the Corporation, the
transfer agent of the Class "B" Special Shares, and the
holders of Class "B" Special Shares.
(5) If the Corporation shall set a record date to determine the
holders of the Common Shares for the purpose of entitling them
to receive any dividend or distribution or any subscription or
purchase rights and shall, thereafter and before the
distribution to such shareholders of any such dividend,
distribution or subscription or purchase rights, legally
abandon its plan to pay or deliver such dividend, distribution
or subscription or purchase rights, then no adjustment in the
Exercise Number shall be required by reason of the setting of
such record date.
(6) In the absence of the corporate statute governing the
Corporation or a resolution of the directors of the
Corporation fixing a record date for a Reorganization, Rights
Offering or Special Distribution, the Corporation shall be
deemed to have fixed as the record date therefor the date on
which the Reorganization, Rights Offering or Special
Distribution is effected.
(7) In case the Corporation after the date hereof shall take any
action affecting the Common Shares, other than an action
described in Section 5.7 which, in the opinion of the
directors of the Corporation, would materially affect the
rights of the holders Class "B" Special Shares, the Exercise
Number shall be adjusted in such manner, if any, and at such
time, by action of the directors of the Corporation, in their
sole discretion as they may reasonably determine to be
equitable to the holders of Class "B" Special Shares in the
circumstances. Failure of the taking of action by the
directors so as to provide for an adjustment prior to the
effective date of any action by the Corporation affecting the
Common Shares shall be conclusive evidence that the directors
have determined that it is equitable to make no adjustment in
the circumstances, although the directors may reconsider their
determination in the future.
(8) "Current Market Price" of the Common Shares at any date means
the price per share equal to the average of the closing prices
of the Common Shares on Nasdaq,
<PAGE>
- 16 -
or if the Common Shares are not then quoted on Nasdaq, on such
stock exchange on which the Common Shares are listed as may be
selected by the directors for such purpose or, if the Common
Shares are not then listed on any stock exchange, in the
over-the-counter market, for the thirty (30) trading days
commencing forty-five (45) trading days before such date.
5.9 Postponement of Subscription. In any case where the application of Section
5.7 results in a increase of the Exercise Number taking effect immediately after
the record date for a specific event, if any Class "B" Special Shares are
converted after that record date and prior to completion of the event, the
Corporation may postpone the issuance to the holder of Class "B" Special Shares
of the Common Shares to which he is entitled by reason of the increase of the
Exercise Number, but such Common Shares shall be so issued and delivered to that
holder of Class "B" Special Shares upon completion of that event, with the
number of such Common Shares calculated on the basis of the Exercise Number on
the date of conversion adjusted for completion of that event, and the
Corporation shall deliver to the person or persons in whose name or names the
Common Shares are to be issued an appropriate instrument evidencing his or their
right to receive such Common Shares and the right to receive any dividends or
other distributions which, but for the provisions of this Section 5.9, such
person or persons would have been entitled to receive in respect of such Common
Shares from and after the date of conversion in respect thereof.
5.10 Notice of Adjustment of Exercise Number.
(1) At least fourteen days prior to the effective date or record date,
as the case may be, of any event which requires or might require adjustment to
the Exercise Number pursuant to Section 5.7, the Corporation shall give notice
to the holders of Class "B" Special Shares in the manner prescribed by Section
5.7, of the particulars of such event and, if determinable, the required
adjustment.
(2) In case any adjustment for which a notice in subsection (1) of this
Section 5.10 has been given is not then determinable, the Corporation shall
promptly after such adjustment is determinable give notice in the manner
prescribed by Section 5.7 to the holders of Class "B" Special
Shares of the adjustment.
5.11 No Adjustment on Dividends. A holder of a Class "B" Special Share on the
record date for the determination of holders of Class "B" Special Shares
entitled to receive a dividend declared payable on Class "B" Special Shares will
be entitled to such dividend notwithstanding that such share is converted after
such record date and before the payment date of such dividend, and the
registered holder of any Common Shares resulting from any conversion shall be
entitled to rank equally with the registered holders of all other Common Shares
in respect of all dividends declared payable to holders of Common Shares of
record on any date on or after the date of conversion. Subject as aforesaid, no
payment or adjustment will be made on account of any dividend, accrued or
otherwise, on the Class "B" Special Shares converted or the Common
<PAGE>
- 17 -
Shares resulting from any conversion.
5.12 Taxes on Conversion. The issuance of certificates for Common Shares upon
the conversion of Class "B" Special Shares will be made without charge to the
converting holders of Class "B" Special Shares for any fee or tax in respect of
the issuance of such certificates or the Common Shares represented thereby;
provided, however, that the Corporation shall not be required to pay any tax
which may be imposed upon the person or persons to whom such Common Shares are
issued, in respect of the issuance of such Common Shares or the certificates
therefor or which may be payable in respect of any transfer involved in the
issuance and delivery of any such certificate in a name or names other than that
of the holder of the Class "B" Special Shares converted, and the Corporation
shall not be required to issue or deliver such certificate unless the person or
persons requesting the issuance thereof shall have paid to the Corporation the
amount of such tax or shall have established to the satisfaction of the
Corporation that such tax has been paid or that the Corporation has not and will
not have any liability in respect of such tax.
5.13 Reservation of Common Shares. So long as any Class "B" Special Shares are
outstanding and entitled to the right of conversion herein provided, the
Corporation shall at all times reserve and hold out of its unissued Common
Shares a sufficient number of unissued Common Shares to enable all of the Class
"B" Special Shares to be converted upon the basis and upon the terms and
conditions provided in these Class "B" Special Share Provisions.
6. SPECIFIC MATTERS REQUIRING APPROVAL
6.1 New Shares. The approval of the holders of the Class "B" Special Shares,
given in the manner described in Section 7.1, shall be required for the creation
and issuance of any new shares ranking prior to or on a parity with the Class
"B" Special Shares, and any cumulative dividends shall not be in arrears or any
declared dividends shall not be unpaid on any outstanding Class "B" Special
Shares at the time of the creation and issue of any such shares.
6.2 Amendment of Rights of Class "B" Special Shares. The provisions of clauses
1.1 to 7.1 inclusive may be deleted, amended, modified or varied in whole or in
part by a certificate of amendment issued by the Director appointed under the
Business Corporations Act (Ontario), but only with the prior approval of the
holders of the Class "B" Special Shares given as hereinafter specified in
addition to any other approval required by the Business Corporations Act
(Ontario) or any other statutory provisions of like or similar effect, from time
to time in force.
7. APPROVAL
7.1 Approval of the Holders of the Class "B" Special Shares. The approval of the
holders of the Class "B" Special Shares with respect to any and all matters
hereinbefore referred to may be given by at least two-thirds of the votes cast
at a meeting of the holders of the Class "B" Special Shares duly called for that
purpose and held upon at least twenty-one (21) days' notice at
<PAGE>
- 18 -
which the holders of a majority of the outstanding Class "B" Special Shares are
present or represented by proxy. If at any such meeting the holders of a
majority of the outstanding Class "B" Special Shares are not present or
represented by proxy within one-half hour after the time appointed for such
meeting, then the meeting shall be adjourned to such date being not less than
thirty (30) days later and to such time and place as may be appointed by the
representative of the holders of the Class "B" Special Shares and not less than
twenty-one (21) days' notice shall be given of such adjourned meeting. At such
adjourned meeting the holders of the Class "B" Special Shares present or
represented by proxy may transact the business for which the meeting was
originally called and a resolution passed thereat by not less than two-thirds of
the votes cast at such adjourned meeting shall constitute the approval of the
holders of the Class "B" Special Shares referred to above. The formalities to be
observed with respect to the giving of notice of any such meeting or adjourned
meeting and the conduct thereof shall be those from time to time prescribed by
the Business Corporations Act (Ontario) and the by-laws of the Corporation with
respect to meetings of shareholders. On every poll taken at every such meeting
or adjourned meeting every holder of Class "B" Special Shares shall be entitled
to one vote in respect of each Class "B" Special Share held.
<PAGE>
FORM OF COMMON SHARE ($1.50) WARRANT
Date: ,
NEITHER THIS WARRANT, NOR THE SHARES TO BE ISSUED UPON EXERCISE HEREOF, HAS BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 SECURITIES
ACT"), OR QUALIFIED OR REGISTERED UNDER ANY STATE SECURITIES LAWS (THE "STATE
SECURITIES LAWS"), AND THIS WARRANT HAS BEEN, AND THE COMMON SHARES TO BE ISSUED
UPON EXERCISE HEREOF WILL BE, ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR
FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF. NO SUCH SALE OR OTHER
DISPOSITION MAY BE MADE WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
1933 SECURITIES ACT AND COMPLIANCE WITH THE APPLICABLE STATE SECURITIES LAWS, OR
AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE ISSUER AND ITS COUNSEL,
THAT SAID REGISTRATION IS NOT REQUIRED UNDER THE 1933 SECURITIES ACT AND THAT
APPLICABLE STATE SECURITIES LAWS HAVE BEEN COMPLIED WITH.
TRANSFER AND VOTING OF THE SHARES PURCHASABLE BY THIS WARRANT ARE SUBJECT TO THE
TERMS OF A VOTING TRUST AGREEMENT DATED NOVEMBER 10 1998 AMONG THE HOLDER AND
OTHER INVESTORS, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE
CORPORATION.
This certifies that ("Purchaser" or "Holder"), [specify if individual or type of
entity and address/place of business], or any party to whom this Warrant is
assigned in compliance with the terms hereof (Purchaser and any such assignee
being hereafter sometimes referred to as "Holder"), is entitled to subscribe for
and purchase, during the period commencing at the date first set forth above and
ending at 5 p.m. Toronto, Ontario, local time, on the fifth (5th) anniversary of
such date, the number of shares of fully paid and nonassessable common shares
(the "Common Shares") of Officeland Inc. (the "Company"), an Ontario corporation
with its principal place of business at 312 Dolomite Drive, Suite 212, Toronto,
Ontario, M3J 2N2, that have an aggregate purchase price equal to the Aggregate
Price (as defined below). The purchase price of each such share shall be the
Warrant Price as defined below. This Warrant will be initially exercisable for
[specify number of shares equal to number shares issued/issuable to Holder upon
conversion of his shares of Class B Stock] Common Shares. This Warrant is issued
to Purchaser pursuant to the Restructured Purchase Agreement (as defined below).
ARTICLE I
DEFINITIONS
1.1 "Aggregate Price" shall mean [specify as product of (a) number of
shares issued/issuable to Holder upon conversion of his shares of Class
B Stock, multiplied by (b) $1.50 per Common Share
1.2 "Class A Stock" means the Class "A" Special Shares described in the
Articles of Amendment of the Company filed June 4, 1998;
<PAGE>
1.3 "Class B Stock" means the Class "B" Special Shares described in the
Restructured Articles of Amendment;
1.4 "Common Share Equivalents" shall mean Convertible Securities and
Rights;
1.5 "Continuing Investors" means any one or more investors as may agree
from time to time to acquire Rights under the Restructured Purchase
Agreement;
1.6 "Convertible Securities"shall mean any evidences of indebtedness,
shares or other securities directly or indirectly convertible into or
exchangeable for Shares, other than any Rights excluded from the
definition of "Option" in Subsection 3.1(c)(i)(1);
1.7 "Effective Price" means the quotient obtained by dividing (i) Minimum
Consideration by (ii) Maximum Shares Upon Exercise;
1.8 "Initial Purchase Agreement" means the Senior Subordinated Unsecured
Convertible Notes Purchase Agreement made as of the 4th day of June,
1998 among Bassini, Playfair + Associates LLC, International Capital
Partners, Inc., the Company and other parties named therein as
"Purchasers" (a copy of which is attached as Exhibit B to the
Restructured Purchase Agreement), as amended by the Initial Purchase
Amending Agreement ;
1.9 "Initial Purchase Amending Agreement" means an amending agreement among
each of the parties to the Initial Purchase Agreement, made as of the
23rd day of October, 1998, a copy of which is attached as Exhibit C to
the Restructured Purchase Agreement;
1.10 "Maximum Shares Upon Exercise" means the maximum number of Common
Shares issuable under a Common Share Equivalent upon complete exercise
and full conversion of all Rights or Convertible Securities represented
thereby, computed without regard to contingent adjustments to the
number of shares issuable upon exercise and conversion (other than
adjustments caused solely by the passage of time which increase the
number of shares issuable upon exercise and conversion);
1.11 "Minimum Consideration" means the minimum aggregate consideration paid
or payable at any time for the purchase of the Common Share Equivalents
during the term of the Common Share Equivalents, and upon complete
exercise and full conversion of the Common Share Equivalents, computed
without regard to contingent adjustments to exercise or conversion
price (other than adjustments caused solely by the passage of time
which reduce such minimum aggregate consideration);
1.12 "Restructured Articles of Amendment" means the Company's Articles of
Amendment specifying the rights, privileges, restrictions and
conditions of the Class "B" Special Shares, a copy of which is attached
as Exhibit E to the Restructured Purchase Agreement;
1.13 "Restructured Purchase Agreement" means that certain Senior
Subordinated Unsecured Convertible Notes Purchase Agreement among the
Company, Purchasers and certain other investors entered into on
November 10, 1998;
<PAGE>
1.14 "Restructured Rights Terms" has the meaning ascribed to it in the
Restructured Purchase Agreement;
1.15 "Rights" means Shares or rights, options or warrants to subscribe for,
purchase or otherwise acquire Shares or Convertible Securities;
1.16 "Shares" means shares of any class in the capital of the Company (other
than the Class A Stock) which may be authorized for issuance from time
to time by the Company; and
1.17 "Warrant Price" shall mean the price of a Common Share, as such amount
may be adjusted from time to time. The initial Warrant Price is One
Dollar and 50/100 Dollars ($1.50) per Common Share.
ARTICLE II
EXERCISE AND PAYMENT
2.1 Cash Exercise. The purchase rights represented by this Warrant may be
exercised by Holder, in whole or in part, by the surrender of this
Warrant at the principal office of the Company, and by the payment to
the Company, by certified, cashier's or other check acceptable to the
Company, of an amount equal to the Aggregate Price of the Common Shares
being purchased.
2.2 Net Issue Exercise. In lieu of exercising this Warrant pursuant to
Section 2.1, Holder may elect to receive the number of Common Shares
equal to the value of this Warrant (or of any portion thereof remaining
unexercised) by surrender of this Warrant at the principal office of
the Company together with notice of such election, in which event the
Company shall issue to Holder a number of Common Shares computed using
the following formula:
X = Y (A-B)
-------
A
Where X = the number of Common Shares to be issued to Holder.
Y = the number of Common Shares purchasable under this
Warrant (at the date of such calculation).
A = the fair market value of one Common Share (at the
date of such calculation).
B = Warrant Price (as adjusted to the date of such
calculation).
2.3 Fair Market Value. For purposes of this Section 2, fair market value of
one Common Share shall mean:
<PAGE>
(i) The average of the closing prices of the Common Shares quoted
on the Nasdaq SmallCap Market or any exchange on which the
Common Shares are listed, whichever is applicable, as
published in the Eastern Edition of The Wall Street Journal
for the ten trading days prior to the date of determination of
fair market value; or
(ii) If the Common Shares are not traded on the Nasdaq SmallCap
Market or on an exchange, the per share fair market value of
the Common Shares shall be as determined by an independent
appraiser appointed in good faith by the Company's Board of
Directors. The cost of such appraisal shall be borne by the
Company.
2.4 Share Certificate. In the event of any exercise of the rights
represented by this Warrant, certificates for the Common Shares so
purchased shall be delivered to Holder within a reasonable time and,
unless this Warrant has been fully exercised or has expired, a new
Warrant representing the Aggregate Price with respect to which this
Warrant shall not have been exercised shall also be issued to Holder
within such time.
2.5 Automatic Exercise.
(i) To the extent this Warrant is not previously exercised, and if
the fair market value of one of the Common Shares, as
adjusted, is greater than the Warrant Price, this Warrant
shall be deemed automatically exercised in accordance with
Section 2.2 hereof (even if not surrendered) immediately
before its expiration. For purposes of such automatic
exercise, the fair market value of one share of the Common
Shares upon such expiration shall be the fair market value
determined pursuant to Section 2.3 above.
(ii) To the extent this Warrant or any portion thereof is deemed
automatically exercised pursuant to this Section 2.5, the
Company agrees to notify Holder within a reasonable period of
time of the number of Common Shares, if any, Holder is to
receive by reason of such automatic exercise.
2.6 Shares Fully Paid; Reservation of Shares. The Company covenants and
agrees that all Common Shares which may be issued upon the exercise of
the rights represented by this Warrant will, upon issuance, be fully
paid and non-assessable and free from all taxes, liens and charges with
respect to the issue thereof (excluding taxes based on the income of
Holder). The Company further covenants and agrees that during the
period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized a sufficient
number of Common Shares as would be required upon the full exercise of
the rights represented by this Warrant.
2.7 Fractional Shares. No fractional Common Shares will be issued in
connection with any exercise hereof, but in lieu of a fractional share
upon complete exercise hereof, Holder may purchase a whole share at the
then effective Warrant Price.
<PAGE>
ARTICLE III
CERTAIN ADJUSTMENTS OF NUMBER OF
SHARES PURCHASABLE AND WARRANT PRICE
The number and kind of securities purchasable upon the exercise of this
Warrant and the Warrant Price shall be subject to adjustment from time to time
upon the happening of certain events, as follows:
3.1 Anti-Dilution.
(a) Adjustment for Recapitalization. If outstanding Common
Shares shall be subdivided into a greater number of shares or a dividend in
Common Shares shall be paid in respect of Common Shares, the Warrant Price in
effect immediately prior to such subdivision or at the record date of such
dividend shall simultaneously with the effectiveness of such subdivision or
immediately after the record date of such dividend be proportionately reduced.
If outstanding Common Shares shall be combined into a smaller number of shares,
the Warrant Price in effect immediately prior to such combination shall,
simultaneously with the effectiveness of such combination, be proportionately
increased. When any adjustment is required to be made in the Warrant Price, the
number of Common Shares purchasable upon conversion shall be changed to the
number determined by dividing (i) an amount equal to the number of shares
issuable upon exercise immediately prior to such adjustment, multiplied by the
Warrant Price in effect immediately prior to such adjustment, by (ii) the
Warrant Price in effect immediately after such adjustment.
(b) Adjustment for Reorganization, Consolidation, Merger, etc. If there
shall occur any capital reorganization or reclassification of the Common Shares
(other than a change in par value or a subdivision or combination as provided
for in subsection 3.1(a) above), or any consolidation or merger of the Company
with or into another corporation, or a transfer of all or substantially all of
the assets of the Company, then, as part of any such reorganization,
reclassification, consolidation, merger or sale, as the case may be, lawful
provision shall be made so that the Purchaser shall have the right thereafter to
receive upon the exercise hereof the kind and number of shares or other
securities or property which such Purchasers would have been entitled to receive
if, immediately prior to any such reorganization, reclassification,
consolidation, merger or sale, as the case may be, such Purchaser had held the
number of Common Shares which were then purchasable upon the conversion of the
Class B Stock or exercise of the Warrants. In any such case, appropriate
adjustment (as reasonably determined by the Board of Directors of the Company)
shall be made in the application of the provisions set forth herein with respect
to the rights and interests thereafter of the Purchaser such that the provisions
set forth in this Section 3.1 including provisions with respect to adjustment of
the Warrant Price) shall thereafter be applicable, as nearly as is reasonably
practicable, in relation to any shares or other securities or property
thereafter deliverable upon the exercise.
Adjustments for Sale of Common Shares Below Warrant Price
(i) Special Definitions. For purposes of this
Subsection 3.1(c), the following definitions shall apply:
(1) "Option" shall mean Rights, excluding (i)
up to that number of
<PAGE>
Rights granted to employees or consultants
of the Company pursuant to an option plan
adopted by the Board of Directors (subject
to appropriate adjustment for any stock
dividend, stock split, combination or other
similar recapitalization affecting such
shares) set forth in the Disclosure Schedule
to the Restructured Purchase Agreement; (ii)
Rights granted by the Company prior to the
Original Issue Date; (iii) any Rights
granted by the Company to the Continuing
Investors pursuant to the Restructured
Purchase Agreement, provided that the terms
attaching to such Rights are not materially
less favorable to the Company than the
Restructured Rights Terms; and (iv) for
greater certainty, any Common Shares issued
or to be issued by the Company as part of
the consideration paid or payable to the
vendors on the acquisition of any one or
more of DocuTEAM Inc., Telecom Corporation
of Chicago, Inc. or Eastern Equipment
Brokers, Inc.;
(2) "Original Issue Date" shall mean November
10, 1998;
(3) "Additional Common Shares" shall mean all
Common Shares issued (or, pursuant to
Subsection 3.1(c)(iii) below, deemed to be
issued) by the Company after the Original
Issue Date, other than Common Shares issued
or issuable:
a. by reason of a dividend, stock
split, split-up or other
distribution on Common Shares
issued (or pursuant to Subsection
3.1(c)(iii) below deemed to be
issued) by the Company after the
Original Issue Date; or
b. pursuant to or upon the exercise of
Rights excluded from the definition
of "Option" in Subsection
3.1(c)(i)(1).
(4) "Holders" shall mean the holders of
Warrants, from time to time, issued for so
long as such holders shall hold the
Warrants.
(ii) No Adjustment of Warrant Price. No
adjustment in the number of Common Shares into which the Warrant is exercisable
shall be made by adjustment in the applicable Warrant Price thereof; (i) unless
the consideration per share (determined pursuant to Subsection 3.1(c)(v)) for an
Additional Common Share issued or deemed to be issued by the Company is less
than the applicable Warrant Price in effect on the date of, and immediately
prior to, the issue of such Additional Shares of Common Shares, or (ii) if prior
to such issuance, the Company receives written notice from the Representative on
behalf of the holders of at least a majority of the Warrants or Class B Stock
agreeing that no such adjustment shall be made as the result of the issuance of
Additional Common Shares.
(iii) Issue of Securities / Deemed Issue of
Additional Common Shares.
(1) If the Company at any time or from time to
time after the Original
<PAGE>
Issue Date shall issue any Options or
Convertible Securities or shall fix a record
date for the determination of holders of any
class of securities entitled to receive any
such Options or Convertible Securities, then
the maximum number of Common Shares (as set
forth in the instrument relating thereto
without regard to any provision contained
therein for a subsequent adjustment of such
number) issuable upon the exercise of such
Options or, in the case of Convertible
Securities and Options therefor, the
conversion or exchange of such Convertible
Securities, shall be deemed to be Additional
Common Shares issued as of the time of such
issue or, in case such a record date shall
have been fixed, as of the close of business
on such record date, provided that
Additional Common Shares shall not be deemed
to have been issued unless the consideration
per share (determined pursuant to Subsection
3.1(c)(v) hereof) of such Additional Common
Shares would be less than the applicable
Warrant Price in effect on the date of and
immediately prior to such issue, or such
record date, as the case may be.
(2) No further adjustment in the Warrant Price
shall be made upon the subsequent issue of
Convertible Securities or Common Shares upon
the exercise of such Options or conversion
or exchange of such Convertible Securities.
(3) If such Options or Convertible Securities by
their terms provide, with the passage of
time or otherwise, for any increase in the
consideration payable to the Company, or
decrease in the number of Common Shares
issuable, upon the exercise, conversion or
exchange thereof, the Warrant Price computed
upon the original issue thereof (or upon the
Occurrence of a record date with respect
thereto), and any subsequent adjustments
based thereon, shall, upon any such increase
or decrease becoming effective, be
recomputed to reflect such increase or
decrease insofar as it affects such Options
or the rights of conversion or exchange
under such Convertible Securities.
(4) No readjustment pursuant to clause (3) above
shall have the effect of increasing the
Warrant Price to an amount which exceeds the
lower of (i) the Warrant Price on the
original adjustment date, or (ii) the
Warrant Price that resulted from any other
issuance of Additional Common Shares between
the original adjustment date and such
readjustment date.
(5) Upon the expiration or termination of any
unexercised Option, the Warrant Price shall
not be adjusted and the Additional Common
Shares deemed issued as the result of the
original issue of such Option shall not be
deemed issued for the purposes of any
<PAGE>
subsequent adjustment of the Warrant Price.
(6) In the event of any change in the number of
Common Shares issuable upon the exercise,
conversion or exchange of any Option or
Convertible Security, including, but not
limited to, a change resulting from the
anti-dilution provisions thereof, the
Warrant Price then in effect shall forthwith
be readjusted to such Warrant Price as would
have been obtained had the adjustment which
was made upon the issuance of such Option or
Convertible Security not exercised or
converted prior to such change been made
upon the basis of such change, but no
further adjustment shall be made for the
actual issuance of Common Shares upon the
exercise or conversion of any such Option or
Convertible Security.
(iv) Adjustment of Warrant Price Upon Issuance of
Additional Common Shares. In the event the Company shall at any time after the
Original Issue Date issue Additional Common Shares (including Additional Common
Shares deemed to be issued pursuant to Subsection 3.1(c)(iii), but excluding
shares issued upon a stock split or combination or as a dividend or distribution
as provided in Subsection 3.1(a)), without consideration or for a consideration
per share less than the applicable Warrant Price in effect on the date of and
immediately prior to such issue (adjusted, if applicable, in the event that the
Market Price Test or the Earnings Per Share Test described in section 6.13 of
the Initial Purchase Agreement have been applied), then, and in such event, such
Warrant Price shall be reduced, concurrently with such issue, to a price
(calculated to the nearest cent) determined by multiplying such Purchase Price
by a fraction, (i) the numerator of which shall be (a) the number of Common
Shares outstanding immediately prior to such issue plus (b) the number of Common
Shares which the aggregate consideration received by the Company for the total
number of Additional Common Shares so issued would purchase at such Warrant
Price; and (ii) the denominator of which shall be the number of Common Shares
outstanding immediately prior to such issue plus the number of such Additional
Common Shares so issued; provided that, for the purpose of this subsection
3.1(c)(iv), all Common Shares issuable upon exercise of the Warrants outstanding
immediately prior to such issue shall be deemed to be outstanding, and
immediately after any Additional Common Shares are deemed pursuant to Subsection
3.1(c)(iii) (other than shares excluded from the definition of "Additional
Common Shares"), such Additional Common Shares shall be deemed to be
outstanding.
Notwithstanding the foregoing, the applicable Warrant Price
shall not be so reduced at such time if the amount of such reduction would be an
amount less than $.01, but any such amount shall be carried forward and
reduction with respect thereto made at the time of and together with any
subsequent reduction which, together with such amount and any other amount or
amounts so carried forward, shall aggregate $.01 or more.
(v) Determination of Consideration. For
purposes of this Subsection 3.1(c), the consideration received by the Company
for the issue of any Additional Common Shares shall be computed as follows:
(i) Cash and Property: Such consideration shall:
<PAGE>
(1) insofar as it consists of cash, be computed
at the aggregate of cash received by the
Company, excluding amounts paid or payable
for accrued interest or accrued dividends;
(2) insofar as it consists of property other
than cash, be computed at the fair market
value thereof at the time of such issue, as
determined in good faith by the Board of
Directors; and
(3) in the event Additional Common Shares are
issued together with other shares or
securities or other assets of the Company
for consideration which covers both, be the
proportion of such consideration so
received, computed as provided in clauses
(1) and (2) above, as determined in good
faith by the Board of Directors.
(ii) Options and Convertible Securities. The
consideration per share received by the Company for Additional Common Shares
deemed to have been issued pursuant to Subsection 3.1(c)(iii) relating to
Options and Convertible Securities shall be determined by dividing (x) the total
amount, if any, received or receivable by the Company as consideration for the
issue of such Options or Convertible Securities, plus the minimum aggregate
amount of additional consideration (as set forth in the instruments relating
thereto, without regard to any provision contained therein for a subsequent
adjustment of such consideration) payable to the Company upon the exercise of
such Options or the conversion or exchange of such Convertible Securities, or in
the case of Options for Common Shares, the exercise of such Options for
Convertible Securities and the conversion or exchange of such Convertible
Securities, by (y) the maximum number of shares of Common Shares (as set forth
in the instruments relating thereto, without regard to any provision contained
therein for a subsequent adjustment of such number) issuable upon the exercise
of such Options or the conversion or exchange of such Convertible Securities.
(d) Certificate as to Adjustments. When any adjustment is required to
be made in the Warrant Price, the Company at its expense shall promptly compute
such adjustment in accordance with the terms of the Warrant and prepare a
certificate executed by two executive officers of the Company setting forth such
adjustment and showing in detail the facts upon which such adjustment is based.
The Company shall forthwith mail to the Purchaser a copy of such certificate.
Such certificate shall also set forth the kind and number of shares or other
securities or property into which this Warrant shall be exercisable following
the occurrence of any of the events specified in this Section 3.1.
(e) Fractional Shares. The Company shall not be required upon the
exercise of the Warrants to issue any fractional shares. In lieu of delivering
such fractional interest, the Company shall pay an amount to the Holder equal to
the fair market value of such fractional interest as of the date of exercise.
<PAGE>
ARTICLE IV
TRANSFER, EXCHANGE AND LOSS
4.1 Transfer. This Warrant is transferable on the books of the Company at
its principal office by the registered Holder hereof upon surrender of
this Warrant properly endorsed, subject to compliance with federal and
state securities laws. The Company shall issue and deliver to the
transferee (also referred to as a "Holder") a new Warrant or Warrants
representing the Warrants so transferred. Upon any partial transfer,
the Company will issue and deliver to Holder a new Warrant or Warrants
with respect to the Warrants not so transferred. Notwithstanding the
foregoing, Holder shall not be entitled to transfer a number of shares
or an interest in this Warrant representing less than five percent (5%)
of the aggregate shares initially covered by this Warrant. Any
transferee shall be subject to the same restrictions on transfer with
respect to this Warrant as the Purchaser.
4.2 Securities Laws. Upon any issuance of shares of Common Shares upon
exercise of this Warrant, it shall be the Company's responsibility to
comply with the requirements of: (1) the 1933 Securities Act; (2) the
Securities Exchange Act of 1934, as amended; (3) any applicable listing
requirements of any national securities exchange; (4) any state
securities regulation or "Blue Sky" laws; and (5) requirements under
any other law or regulation applicable to the issuance or transfer of
such shares. If required by the Company, in connection with each
issuance of Common Shares upon exercise of this Warrant, the Holder
will give: (i) assurances in writing, reasonably satisfactory to the
Company, that such shares are not being purchased with a view to the
distribution thereof in violation of applicable laws, (ii) sufficient
information, in writing, to enable the Company to rely on exemptions
from the registration or qualification requirements of applicable laws,
if available, with respect to such exercise, and (iii) its cooperation
to the Company in connection with such compliance.
4.3 Exchange. This Warrant is exchangeable at the principal office of the
Company for Warrants to purchase Common Shares at the same Aggregate
Price purchasable hereunder, each new Warrant to represent the right to
purchase such number of Common Shares as the pro rata portion of the
Aggregate Price as Holder shall designate at the time of such exchange.
Each new Warrant shall be identical in form and content to this
Warrant, except for appropriate changes in the number of Common Shares
covered thereby, the Aggregate Price of such shares, the percentage
stated in Section 4.1 above, and any other changes which are necessary
in order to prevent the Warrant exchange from changing the respective
rights and obligations of the Company and the Holder as they existed
immediately prior to such exchange.
4.4 Loss or Mutilation. Upon receipt by the Company of evidence
satisfactory to it of the ownership of, and the loss, theft,
destruction or mutilation of, this Warrant and (in the case of loss,
theft, or destruction) of indemnity satisfactory to it, and (in the
case of mutilation) upon surrender and cancellation hereof, the Company
will execute and deliver in lieu hereof a new Warrant.
<PAGE>
ARTICLE V
HOLDER RIGHTS
5.1 No Shareholder Rights Until Exercise. No Holder, solely by virtue
hereof, shall be entitled to any rights as a shareholder of the
Company. Holder shall have all rights of a shareholder with respect to
securities purchased upon exercise hereof at the time of cash or net
issue exercise pursuant to Sections 2.1 and 2.2 hereof, or at the time
of automatic exercise hereof (even if not surrendered) pursuant to
Section 2.5 hereof.
ARTICLE VI
MISCELLANEOUS
6.1 Additional Covenants by the Company. The Company further covenants and
agrees that it will:
a. Give each Holder prompt written notice of any
intended changes to the composition of its capital
structure, whether by issuance of new securities or
otherwise;
b. Give each Holder written notice of any shareholders'
meeting and will allow a representative of each
Holder to attend such meetings;
c. Allow, upon reasonable notice and at reasonable
times, the inspection of its minute book and other
corporate records by a representative of the Holder;
d. Not engage, other than on arm's length terms, in any
transaction with any of its shareholders or
affiliates (as such term is defined under Rule 144
issued by the Securities and Exchange Commission
under the 1933 Securities Act, as amended);
e. Provide Holder, within fifteen (15) days after the
date of such filing, copies of all documents filed by
the Company with the Securities and Exchange
Commission including but not limited to all reports
on Forms 20-F, 10-K, 10-Q, 8-K, 6-K and their
exhibits.
6.2 Governmental Approvals. The Company will from time to time take all
action which may be necessary to obtain and keep effective any and all
permits, consents and approvals of governmental agencies and
authorities and securities acts filings under federal and state laws,
which may be or become requisite in connection with the issuance, sale,
and delivery of this Warrant, and the issuance, sale and delivery of
the Common Shares or other securities or property issuable or
deliverable upon exercise of this Warrant.
6.3 Governing Laws. It is the intention of the parties hereto that the
internal laws of the State of New York (irrespective of its choice of
law principles) shall govern the validity of this warrant, the
construction of its terms, and the interpretation and enforcement of
the rights
<PAGE>
and duties of the parties hereto. Notwithstanding the foregoing, the
corporation laws of the Province of Ontario shall govern the procedural
and substantive matters pertaining to the due authorization, issuance,
delivery and exercise of this Warrant and the Common Shares upon
exercise hereof. Except as set forth below, the parties hereby agree
that any suit to enforce any provision of this Warrant arising out of
or based upon this Warrant or the business relationship between any of
the parties hereto shall be brought in the Supreme Court of the State
of New York. Each party hereby agrees that such courts shall have
personal jurisdiction and venue with respect to such party, and each
party hereby submits to the personal jurisdiction and venue of such
courts. In addition to the foregoing jurisdiction, Holder at its sole
option, may commence any such suit in any jurisdiction in which the
Company has a business office or is incorporated.
6.4 Binding Upon Successors and Assigns. Subject to, and unless otherwise
provided in, this Warrant, each and all of the covenants, terms
provisions, and agreements contained herein shall be binding upon, and
inure to the benefit of the permitted successors, executors, heirs,
representatives, administrators and assigns of the parties hereto.
6.5 Severability. If any one or more provisions of this Warrant, or the
application thereof, shall for any reason and to any extent be invalid
or unenforceable, the remainder of this Warrant and the application of
such provisions to other persons or circumstances shall be interpreted
so as best to reasonably effect the intent of the parties hereto. The
parties further agree to replace any such void or unenforceable
provisions of this Warrant with valid and enforceable provisions which
will achieve, to the extent possible, the economic, business and other
purposes of the void or unenforceable provisions.
6.6 Default, Amendment and Waivers. This Warrant may be amended upon the
written consent of the Company and the Holder. The waiver by a party of
any breach hereof for default in payment of any amount due hereunder or
default in the performance hereof shall not be deemed to constitute a
waiver of any other default or any succeeding breach or default.
6.7 No Waiver. The failure of any party to enforce any of the provisions
hereof shall not be construed to be a waiver of the right of such party
thereafter to enforce such provisions.
6.8 Attorneys' Fees. Should suit be brought to enforce or interpret any
part of this Warrant, the prevailing party shall be entitled to
recover, as an element of the costs of suit and not as damages,
reasonable attorneys fees to be fixed by the court (including without
limitation, costs, expenses and fees on any appeal). The prevailing
party shall be the party entitle to recover its costs of suit,
regardless of whether such suit proceeds to final
<PAGE>
judgment. A party not entitled to recover its costs shall not be
entitled to recover attorneys' fees. No sum for attorneys' fees shall
be counted in calculating the amount of a judgment for purposes of
determining if a party is entitled to recover costs or attorneys' fees.
6.9 Notices. Whenever any party hereto desires or is required to give any
notices, demand, or request with respect to this Warrant, each such
communication shall be in writing and shall be effective only if it is
delivered by personal service, sent by facsimile or mailed, United
States certified mail, overnight service, postage prepaid, return
receipt requested, or Canadian registered mail, postage prepaid, return
receipt requested, addressed as follows:
Company: Officeland Inc.
312 Dolomite Drive
Suite 212
Toronto, Ontario
M3J 2N2
Fax No. (416) 736-8445
Holder:
Fax No. ( )
Such communication shall be effective when they are personally
delivered, or faxed, to the addressee thereof; but if sent by certified
mail or registered mail in the manner set forth above, they shall be
effective one business day after being deposited in the United States
mail or two business days after being deposited in the Canadian mail.
Any party may change its address for such communications by giving
notice thereof to the other party in conformity with this Section.
6.10 Time. Time is of the essence of this Warrant.
6.11 Construction of Warrant. This Warrant has been negotiated by the
respective parties hereto and their attorneys and the language hereof
shall not be construed for or against any party.
6.12 No Endorsement. Holder understands that no federal or state securities
administrator has made any finding or determination relating to the
fairness of investment in the Company or purchase of the Common Shares
hereunder and that no federal or state securities administrator has
recommended or endorsed the offering of securities by the Company
hereunder.
6.13 Pronouns. All pronouns and any variations thereof shall be deemed to
refer to the
<PAGE>
masculine, feminine or neuter, singular or plural, as the identity of
the person, persons, entity or entities may require.
6.14 Currency. All dollar amounts referred to or contemplated herein shall
be in American funds.
6.15 Further Assurances. Each party agrees to cooperate fully with the other
parties and to execute such further instruments, documents and
agreements and to give such further written assurances, as may be
reasonably requested by any other party to better evidence and reflect
the transactions described herein and contemplated hereby, and to carry
into effect the intents and purposes of this Warrant.
COMPANY:
OFFICELAND INC.
By:
Name:
Title:
<PAGE>
FORM OF COMMON SHARE ($2.00) WARRANT
Date: ,
NEITHER THIS WARRANT, NOR THE SHARES TO BE ISSUED UPON EXERCISE HEREOF, HAS BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 SECURITIES
ACT"), OR QUALIFIED OR REGISTERED UNDER ANY STATE SECURITIES LAWS (THE "STATE
SECURITIES LAWS"), AND THIS WARRANT HAS BEEN, AND THE COMMON SHARES TO BE ISSUED
UPON EXERCISE HEREOF WILL BE, ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR
FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF. NO SUCH SALE OR OTHER
DISPOSITION MAY BE MADE WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
1933 SECURITIES ACT AND COMPLIANCE WITH THE APPLICABLE STATE SECURITIES LAWS, OR
AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE ISSUER AND ITS COUNSEL,
THAT SAID REGISTRATION IS NOT REQUIRED UNDER THE 1933 SECURITIES ACT AND THAT
APPLICABLE STATE SECURITIES LAWS HAVE BEEN COMPLIED WITH.
TRANSFER AND VOTING OF THE SHARES PURCHASABLE BY THIS WARRANT ARE SUBJECT TO THE
TERMS OF A VOTING TRUST AGREEMENT DATED NOVEMBER 10, 1998 AMONG THE HOLDER AND
OTHER INVESTORS, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE
CORPORATION.
This certifies that ("Purchaser" or "Holder"), [specify if individual or type of
entity and address/place of business], or any party to whom this Warrant is
assigned in compliance with the terms hereof (Purchaser and any such assignee
being hereafter sometimes referred to as "Holder"), is entitled to subscribe for
and purchase, during the period commencing at the date first set forth above and
ending at 5 p.m. Toronto, Ontario, local time, on the fifth (5th) anniversary of
such date, the number of shares of fully paid and nonassessable common shares
(the "Common Shares") of Officeland Inc. (the "Company"), an Ontario corporation
with its principal place of business at 312 Dolomite Drive, Suite 212, Toronto,
Ontario, M3J 2N2, that have an aggregate purchase price equal to the Aggregate
Price (as defined below). The purchase price of each such share shall be the
Warrant Price as defined below. This Warrant will be initially exercisable for
[specify number of shares equal to number shares issued/issuable to Holder upon
conversion of his shares of Class B Stock] Common Shares. This Warrant is issued
to Purchaser pursuant to the Restructured Purchase Agreement (as defined below).
ARTICLE I
DEFINITIONS
1.1 "Aggregate Price" shall mean [specify as product of (a) number of
shares issued/issuable to Holder upon conversion of his shares of Class
B Stock, multiplied by (b) $2.00 per Common Share
1.2 "Class A Stock" means the Class "A" Special Shares described in the
Articles of
<PAGE>
Amendment of the Company filed June 4, 1998;
1.3 "Class B Stock" means the Class "B" Special Shares described in the
Restructured Articles of Amendment;
1.4 "Common Share Equivalents" shall mean Convertible Securities and
Rights;
1.5 "Continuing Investors" means any one or more investors as may agree
from time to time to acquire Rights under the Restructured Purchase
Agreement;
1.6 "Convertible Securities"shall mean any evidences of indebtedness,
shares or other securities directly or indirectly convertible into or
exchangeable for Shares, other than any Rights excluded from the
definition of "Option" in Subsection 3.1(c)(i)(1);
1.7 "Effective Price" means the quotient obtained by dividing (i) Minimum
Consideration by (ii) Maximum Shares Upon Exercise;
1.8 "Initial Purchase Agreement" means the Senior Subordinated Unsecured
Convertible Notes Purchase Agreement made as of the 4th day of June,
1998 among Bassini, Playfair + Associates LLC, International Capital
Partners, Inc., the Company and other parties named therein as
"Purchasers" (a copy of which is attached as Exhibit B to the
Restructured Purchase Agreement), as amended by the Initial Purchase
Amending Agreement ;
1.9 "Initial Purchase Amending Agreement" means an amending agreement among
each of the parties to the Initial Purchase Agreement, made as of the
23rd day of October, 1998, a copy of which is attached as Exhibit C to
the Restructured Purchase Agreement;
1.10 "Maximum Shares Upon Exercise" means the maximum number of Common
Shares issuable under a Common Share Equivalent upon complete exercise
and full conversion of all Rights or Convertible Securities represented
thereby, computed without regard to contingent adjustments to the
number of shares issuable upon exercise and conversion (other than
adjustments caused solely by the passage of time which increase the
number of shares issuable upon exercise and conversion);
1.11 "Minimum Consideration" means the minimum aggregate consideration paid
or payable at any time for the purchase of the Common Share Equivalents
during the term of the Common Share Equivalents, and upon complete
exercise and full conversion of the Common Share Equivalents, computed
without regard to contingent adjustments to exercise or conversion
price (other than adjustments caused solely by the passage of time
which reduce such minimum aggregate consideration);
1.12 "Restructured Articles of Amendment" means the Company's Articles of
Amendment specifying the rights, privileges, restrictions and
conditions of the Class "B" Special
<PAGE>
Shares, a copy of which is attached as Exhibit E to the Restructured
Purchase Agreement;
1.13 "Restructured Purchase Agreement" means that certain Senior
Subordinated Unsecured Convertible Notes Purchase Agreement among the
Company, Purchasers and certain other investors entered into on
November 10, 1998;
1.14 "Restructured Rights Terms" has the meaning ascribed to it in the
Restructured Purchase Agreement;
1.15 "Rights" means Shares or rights, options or warrants to subscribe for,
purchase or otherwise acquire Shares or Convertible Securities;
1.16 "Shares" means shares of any class in the capital of the Company (other
than the Class A Stock) which may be authorized for issuance from time
to time by the Company; and
1.17 "Warrant Price" shall mean the price of a Common Share, as such amount
may be adjusted from time to time. The initial Warrant Price is Two
Dollars ($2.00) per Common Share.
ARTICLE II
EXERCISE AND PAYMENT
2.1 Cash Exercise. The purchase rights represented by this Warrant may be
exercised by Holder, in whole or in part, by the surrender of this
Warrant at the principal office of the Company, and by the payment to
the Company, by certified, cashier's or other check acceptable to the
Company, of an amount equal to the Aggregate Price of the Common Shares
being purchased.
2.2 Net Issue Exercise. In lieu of exercising this Warrant pursuant to
Section 2.1, Holder may elect to receive the number of Common Shares
equal to the value of this Warrant (or of any portion thereof remaining
unexercised) by surrender of this Warrant at the principal office of
the Company together with notice of such election, in which event the
Company shall issue to Holder a number of Common Shares computed using
the following formula:
X = Y (A-B)
-------
A
Where X = the number of Common Shares to be issued to Holder.
Y = the number of Common Shares purchasable under this
Warrant (at the date of such calculation).
<PAGE>
A = the fair market value of one Common Share (at the
date of such calculation).
B = Warrant Price (as adjusted to the date of such
calculation).
2.3 Fair Market Value. For purposes of this Section 2, fair market value of
one Common Share shall mean:
(i) The average of the closing prices of the Common Shares quoted
on the Nasdaq SmallCap Market or any exchange on which the
Common Shares are listed, whichever is applicable, as
published in the Eastern Edition of The Wall Street Journal
for the ten trading days prior to the date of determination of
fair market value; or
(ii) If the Common Shares are not traded on the Nasdaq SmallCap
Market or on an exchange, the per share fair market value of
the Common Shares shall be as determined by an independent
appraiser appointed in good faith by the Company's Board of
Directors. The cost of such appraisal shall be borne by the
Company.
2.4 Share Certificate. In the event of any exercise of the rights
represented by this Warrant, certificates for the Common Shares so
purchased shall be delivered to Holder within a reasonable time and,
unless this Warrant has been fully exercised or has expired, a new
Warrant representing the Aggregate Price with respect to which this
Warrant shall not have been exercised shall also be issued to Holder
within such time.
2.5 Automatic Exercise.
(i) To the extent this Warrant is not previously exercised, and if
the fair market value of one of the Common Shares, as
adjusted, is greater than the Warrant Price, this Warrant
shall be deemed automatically exercised in accordance with
Section 2.2 hereof (even if not surrendered) immediately
before its expiration. For purposes of such automatic
exercise, the fair market value of one share of the Common
Shares upon such expiration shall be the fair market value
determined pursuant to Section 2.3 above.
(ii) To the extent this Warrant or any portion thereof is deemed
automatically exercised pursuant to this Section 2.5, the
Company agrees to notify Holder within a reasonable period of
time of the number of Common Shares, if any, Holder is to
receive by reason of such automatic exercise.
2.6 Shares Fully Paid; Reservation of Shares. The Company covenants and
agrees that all Common Shares which may be issued upon the exercise of
the rights represented by this Warrant will, upon issuance, be fully
paid and non-assessable and free from all taxes, liens and charges with
respect to the issue thereof (excluding taxes based on the income of
Holder). The Company further covenants and agrees that during the
period within
<PAGE>
which the rights represented by this Warrant may be exercised, the
Company will at all times have authorized a sufficient number of Common
Shares as would be required upon the full exercise of the rights
represented by this Warrant.
2.7 Fractional Shares. No fractional Common Shares will be issued in
connection with any exercise hereof, but in lieu of a fractional share
upon complete exercise hereof, Holder may purchase a whole share at the
then effective Warrant Price.
ARTICLE III
CERTAIN ADJUSTMENTS OF NUMBER OF
SHARES PURCHASABLE AND WARRANT PRICE
The number and kind of securities purchasable upon the exercise of this
Warrant and the Warrant Price shall be subject to adjustment from time to time
upon the happening of certain events, as follows:
3.1 Anti-Dilution.
(a) Adjustment for Recapitalization. If outstanding Common
Shares shall be subdivided into a greater number of shares or a dividend in
Common Shares shall be paid in respect of Common Shares, the Warrant Price in
effect immediately prior to such subdivision or at the record date of such
dividend shall simultaneously with the effectiveness of such subdivision or
immediately after the record date of such dividend be proportionately reduced.
If outstanding Common Shares shall be combined into a smaller number of shares,
the Warrant Price in effect immediately prior to such combination shall,
simultaneously with the effectiveness of such combination, be proportionately
increased. When any adjustment is required to be made in the Warrant Price, the
number of Common Shares purchasable upon conversion shall be changed to the
number determined by dividing (i) an amount equal to the number of shares
issuable upon exercise immediately prior to such adjustment, multiplied by the
Warrant Price in effect immediately prior to such adjustment, by (ii) the
Warrant Price in effect immediately after such adjustment.
(b) Adjustment for Reorganization, Consolidation, Merger, etc.
If there shall occur any capital reorganization or reclassification of the
Common Shares (other than a change in par value or a subdivision or combination
as provided for in subsection 3.1(a) above), or any consolidation or merger of
the Company with or into another corporation, or a transfer of all or
substantially all of the assets of the Company, then, as part of any such
reorganization, reclassification, consolidation, merger or sale, as the case may
be, lawful provision shall be made so that the Purchaser shall have the right
thereafter to receive upon the exercise hereof the kind and number of shares or
other securities or property which such Purchasers would have been entitled to
receive if, immediately prior to any such reorganization, reclassification,
consolidation, merger or sale, as the case may be, such Purchaser had held the
number of Common Shares which were then purchasable upon the conversion of the
Class B Stock or exercise of the Warrants. In any such case, appropriate
adjustment (as reasonably determined by
<PAGE>
the Board of Directors of the Company) shall be made in the application of the
provisions set forth herein with respect to the rights and interests thereafter
of the Purchaser such that the provisions set forth in this Section 3.1
including provisions with respect to adjustment of the Warrant Price) shall
thereafter be applicable, as nearly as is reasonably practicable, in relation to
any shares or other securities or property thereafter deliverable upon the
exercise.
Adjustments for Sale of Common Shares Below Warrant Price
(i) Special Definitions. For purposes of this
Subsection 3.1(c), the following definitions shall apply:
(1) "Option" shall mean Rights, excluding (i) up
to that number of Rights granted to
employees or consultants of the Company
pursuant to an option plan adopted by the
Board of Directors (subject to appropriate
adjustment for any stock dividend, stock
split, combination or other similar
recapitalization affecting such shares) set
forth in the Disclosure Schedule to the
Restructured Purchase Agreement; (ii) Rights
granted by the Company prior to the Original
Issue Date; (iii) any Rights granted by the
Company to the Continuing Investors pursuant
to the Restructured Purchase Agreement,
provided that the terms attaching to such
Rights are not materially less favorable to
the Company than the Restructured Rights
Terms; and (iv) for greater certainty, any
Common Shares issued or to be issued by the
Company as part of the consideration paid or
payable to the vendors on the acquisition of
any one or more of DocuTEAM Inc., Telecom
Corporation of Chicago, Inc. or Eastern
Equipment Brokers, Inc.;
(2) "Original Issue Date" shall mean November 10,
1998;
(3) "Additional Common Shares" shall mean all
Common Shares issued (or, pursuant to
Subsection 3.1(c)(iii) below, deemed to be
issued) by the Company after the Original
Issue Date, other than Common Shares issued
or issuable:
a. by reason of a dividend, stock
split, split-up or other
distribution on Common Shares
issued (or pursuant to Subsection
3.1(c)(iii) below deemed to be
issued) by the Company after the
Original Issue Date; or
b. pursuant to or upon the exercise of
Rights excluded from the definition
of "Option" in Subsection
3.1(c)(i)(1).
<PAGE>
(4) "Holders" shall mean the holders of
Warrants, from time to time, issued for so
long as such holders shall hold the
Warrants.
(ii) No Adjustment of Warrant Price. No
adjustment in the number of Common Shares into which the Warrant is exercisable
shall be made by adjustment in the applicable Warrant Price thereof; (i) unless
the consideration per share (determined pursuant to Subsection 3.1(c)(v)) for an
Additional Common Share issued or deemed to be issued by the Company is less
than the applicable Warrant Price in effect on the date of, and immediately
prior to, the issue of such Additional Shares of Common Shares, or (ii) if prior
to such issuance, the Company receives written notice from the Representative on
behalf of the holders of at least a majority of the Warrants or Class B Stock
agreeing that no such adjustment shall be made as the result of the issuance of
Additional Common Shares.
(iii) Issue of Securities / Deemed Issue of
Additional Common Shares.
(1) If the Company at any time or from time to
time after the Original Issue Date shall
issue any Options or Convertible Securities
or shall fix a record date for the
determination of holders of any class of
securities entitled to receive any such
Options or Convertible Securities, then the
maximum number of Common Shares (as set
forth in the instrument relating thereto
without regard to any provision contained
therein for a subsequent adjustment of such
number) issuable upon the exercise of such
Options or, in the case of Convertible
Securities and Options therefor, the
conversion or exchange of such Convertible
Securities, shall be deemed to be Additional
Common Shares issued as of the time of such
issue or, in case such a record date shall
have been fixed, as of the close of business
on such record date, provided that
Additional Common Shares shall not be deemed
to have been issued unless the consideration
per share (determined pursuant to Subsection
3.1(c)(v) hereof) of such Additional Common
Shares would be less than the applicable
Warrant Price in effect on the date of and
immediately prior to such issue, or such
record date, as the case may be.
(2) No further adjustment in the Warrant Price
shall be made upon the subsequent issue of
Convertible Securities or Common Shares upon
the exercise of such Options or conversion
or exchange of such Convertible Securities.
(3) If such Options or Convertible Securities by
their terms provide, with the passage of
time or otherwise, for any increase in the
consideration payable to the Company, or
decrease in the number of Common Shares
issuable, upon the exercise, conversion or
exchange thereof, the Warrant Price computed
upon the original
<PAGE>
issue thereof (or upon the Occurrence of a
record date with respect thereto), and any
subsequent adjustments based thereon, shall,
upon any such increase or decrease becoming
effective, be recomputed to reflect such
increase or decrease insofar as it affects
such Options or the rights of conversion or
exchange under such Convertible Securities.
(4) No readjustment pursuant to clause (3) above
shall have the effect of increasing the
Warrant Price to an amount which exceeds the
lower of (i) the Warrant Price on the
original adjustment date, or (ii) the
Warrant Price that resulted from any other
issuance of Additional Common Shares between
the original adjustment date and such
readjustment date.
(5) Upon the expiration or termination of any
unexercised Option, the Warrant Price shall
not be adjusted and the Additional Common
Shares deemed issued as the result of the
original issue of such Option shall not be
deemed issued for the purposes of any
subsequent adjustment of the Warrant Price.
(6) In the event of any change in the number of
Common Shares issuable upon the exercise,
conversion or exchange of any Option or
Convertible Security, including, but not
limited to, a change resulting from the
anti-dilution provisions thereof, the
Warrant Price then in effect shall forthwith
be readjusted to such Warrant Price as would
have been obtained had the adjustment which
was made upon the issuance of such Option or
Convertible Security not exercised or
converted prior to such change been made
upon the basis of such change, but no
further adjustment shall be made for the
actual issuance of Common Shares upon the
exercise or conversion of any such Option or
Convertible Security.
(iv) Adjustment of Warrant Price Upon Issuance of
Additional Common Shares. In the event the Company shall at any time after the
Original Issue Date issue Additional Common Shares (including Additional Common
Shares deemed to be issued pursuant to Subsection 3.1(c)(iii), but excluding
shares issued upon a stock split or combination or as a dividend or distribution
as provided in Subsection 3.1(a)), without consideration or for a consideration
per share less than the applicable Warrant Price in effect on the date of and
immediately prior to such issue (adjusted, if applicable, in the event that the
Market Price Test or the Earnings Per Share Test described in section 6.13 of
the Initial Purchase Agreement have been applied), then, and in such event, such
Warrant Price shall be reduced, concurrently with such issue, to a price
(calculated to the nearest cent) determined by multiplying such Purchase Price
by a fraction, (i) the numerator of which shall be (a) the number of Common
Shares outstanding immediately prior to such issue plus (b) the number of Common
Shares which the aggregate consideration received by the Company for the total
number of Additional Common
<PAGE>
Shares so issued would purchase at such Warrant Price; and (ii) the denominator
of which shall be the number of Common Shares outstanding immediately prior to
such issue plus the number of such Additional Common Shares so issued; provided
that, for the purpose of this subsection 3.1(c)(iv), all Common Shares issuable
upon exercise of the Warrants outstanding immediately prior to such issue shall
be deemed to be outstanding, and immediately after any Additional Common Shares
are deemed pursuant to Subsection 3.1(c)(iii) (other than shares excluded from
the definition of "Additional Common Shares"), such Additional Common Shares
shall be deemed to be outstanding.
Notwithstanding the foregoing, the applicable Warrant Price
shall not be so reduced at such time if the amount of such reduction would be an
amount less than $.01, but any such amount shall be carried forward and
reduction with respect thereto made at the time of and together with any
subsequent reduction which, together with such amount and any other amount or
amounts so carried forward, shall aggregate $.01 or more.
(v) Determination of Consideration. For
purposes of this Subsection 3.1(c), the consideration received by the Company
for the issue of any Additional Common Shares shall be computed as follows:
(i) Cash and Property: Such consideration shall:
(1) insofar as it consists of cash, be computed
at the aggregate of cash received by the
Company, excluding amounts paid or payable
for accrued interest or accrued dividends;
(2) insofar as it consists of property other
than cash, be computed at the fair market
value thereof at the time of such issue, as
determined in good faith by the Board of
Directors; and
(3) in the event Additional Common Shares are
issued together with other shares or
securities or other assets of the Company
for consideration which covers both, be the
proportion of such consideration so
received, computed as provided in clauses
(1) and (2) above, as determined in good
faith by the Board of Directors.
(ii) Options and Convertible Securities. The
consideration per share received by the Company for Additional Common Shares
deemed to have been issued pursuant to Subsection 3.1(c)(iii) relating to
Options and Convertible Securities shall be determined by dividing (x) the total
amount, if any, received or receivable by the Company as consideration for the
issue of such Options or Convertible Securities, plus the minimum aggregate
amount of additional consideration (as set forth in the instruments relating
thereto, without regard to any provision contained therein for a subsequent
adjustment of such consideration) payable to the Company upon the exercise of
such Options or the conversion or exchange of such Convertible Securities, or in
the case of Options for Common Shares, the exercise of such Options for
Convertible Securities and the conversion or exchange of such Convertible
Securities, by (y) the
<PAGE>
maximum number of shares of Common Shares (as set forth in the instruments
relating thereto, without regard to any provision contained therein for a
subsequent adjustment of such number) issuable upon the exercise of such Options
or the conversion or exchange of such Convertible Securities.
(d) Certificate as to Adjustments. When any adjustment is required to
be made in the Warrant Price, the Company at its expense shall promptly compute
such adjustment in accordance with the terms of the Warrant and prepare a
certificate executed by two executive officers of the Company setting forth such
adjustment and showing in detail the facts upon which such adjustment is based.
The Company shall forthwith mail to the Purchaser a copy of such certificate.
Such certificate shall also set forth the kind and number of shares or other
securities or property into which this Warrant shall be exercisable following
the occurrence of any of the events specified in this Section 3.1.
(e) Fractional Shares. The Company shall not be required upon the
exercise of the Warrants to issue any fractional shares. In lieu of delivering
such fractional interest, the Company shall pay an amount to the Holder equal to
the fair market value of such fractional interest as of the date of exercise.
ARTICLE IV
TRANSFER, EXCHANGE AND LOSS
4.1 Transfer. This Warrant is transferable on the books of the Company at
its principal office by the registered Holder hereof upon surrender of
this Warrant properly endorsed, subject to compliance with federal and
state securities laws. The Company shall issue and deliver to the
transferee (also referred to as a "Holder") a new Warrant or Warrants
representing the Warrants so transferred. Upon any partial transfer,
the Company will issue and deliver to Holder a new Warrant or Warrants
with respect to the Warrants not so transferred. Notwithstanding the
foregoing, Holder shall not be entitled to transfer a number of shares
or an interest in this Warrant representing less than five percent (5%)
of the aggregate shares initially covered by this Warrant. Any
transferee shall be subject to the same restrictions on transfer with
respect to this Warrant as the Purchaser.
4.2 Securities Laws. Upon any issuance of shares of Common Shares upon
exercise of this Warrant, it shall be the Company's responsibility to
comply with the requirements of: (1) the 1933 Securities Act; (2) the
Securities Exchange Act of 1934, as amended; (3) any applicable listing
requirements of any national securities exchange; (4) any state
securities regulation or "Blue Sky" laws; and (5) requirements under
any other law or regulation applicable to the issuance or transfer of
such shares. If required by the Company, in connection with each
issuance of Common Shares upon exercise of this Warrant, the Holder
will give: (i) assurances in writing, reasonably satisfactory to the
Company, that such shares are not being purchased with a view to the
distribution thereof in violation of applicable laws, (ii) sufficient
information, in writing, to enable the Company to rely on exemptions
from the registration or qualification requirements of
<PAGE>
applicable laws, if available, with respect to such exercise, and (iii)
its cooperation to the Company in connection with such compliance.
4.3 Exchange. This Warrant is exchangeable at the principal office of the
Company for Warrants to purchase Common Shares at the same Aggregate
Price purchasable hereunder, each new Warrant to represent the right to
purchase such number of Common Shares as the pro rata portion of the
Aggregate Price as Holder shall designate at the time of such exchange.
Each new Warrant shall be identical in form and content to this
Warrant, except for appropriate changes in the number of Common Shares
covered thereby, the Aggregate Price of such shares, the percentage
stated in Section 4.1 above, and any other changes which are necessary
in order to prevent the Warrant exchange from changing the respective
rights and obligations of the Company and the Holder as they existed
immediately prior to such exchange.
4.4 Loss or Mutilation. Upon receipt by the Company of evidence
satisfactory to it of the ownership of, and the loss, theft,
destruction or mutilation of, this Warrant and (in the case of loss,
theft, or destruction) of indemnity satisfactory to it, and (in the
case of mutilation) upon surrender and cancellation hereof, the Company
will execute and deliver in lieu hereof a new Warrant.
ARTICLE V
HOLDER RIGHTS
5.1 No Shareholder Rights Until Exercise. No Holder, solely by virtue
hereof, shall be entitled to any rights as a shareholder of the
Company. Holder shall have all rights of a shareholder with respect to
securities purchased upon exercise hereof at the time of cash or net
issue exercise pursuant to Sections 2.1 and 2.2 hereof, or at the time
of automatic exercise hereof (even if not surrendered) pursuant to
Section 2.5 hereof.
ARTICLE VI
MISCELLANEOUS
6.1 Additional Covenants by the Company. The Company further covenants and
agrees that it will:
a. Give each Holder prompt written notice of any
intended changes to the composition of its capital
structure, whether by issuance of new securities or
otherwise;
b. Give each Holder written notice of any shareholders'
meeting and will allow a representative of each
Holder to attend such meetings;
c. Allow, upon reasonable notice and at reasonable
times, the inspection of
<PAGE>
its minute book and other corporate records by a
representative of the Holder;
d. Not engage, other than on arm's length terms, in any
transaction with any of its shareholders or
affiliates (as such term is defined under Rule 144
issued by the Securities and Exchange Commission
under the 1933 Securities Act, as amended);
e. Provide Holder, within fifteen (15) days after the
date of such filing, copies of all documents filed by
the Company with the Securities and Exchange
Commission including but not limited to all reports
on Forms 20-F, 10-K, 10-Q, 8-K, 6-K and their
exhibits.
6.2 Governmental Approvals. The Company will from time to time take all
action which may be necessary to obtain and keep effective any and all
permits, consents and approvals of governmental agencies and
authorities and securities acts filings under federal and state laws,
which may be or become requisite in connection with the issuance, sale,
and delivery of this Warrant, and the issuance, sale and delivery of
the Common Shares or other securities or property issuable or
deliverable upon exercise of this Warrant.
6.3 Governing Laws. It is the intention of the parties hereto that the
internal laws of the State of New York (irrespective of its choice of
law principles) shall govern the validity of this warrant, the
construction of its terms, and the interpretation and enforcement of
the rights and duties of the parties hereto. Notwithstanding the
foregoing, the corporation laws of the Province of Ontario shall govern
the procedural and substantive matters pertaining to the due
authorization, issuance, delivery and exercise of this Warrant and the
Common Shares upon exercise hereof. Except as set forth below, the
parties hereby agree that any suit to enforce any provision of this
Warrant arising out of or based upon this Warrant or the business
relationship between any of the parties hereto shall be brought in the
Supreme Court of the State of New York. Each party hereby agrees that
such courts shall have personal jurisdiction and venue with respect to
such party, and each party hereby submits to the personal jurisdiction
and venue of such courts. In addition to the foregoing jurisdiction,
Holder at its sole option, may commence any such suit in any
jurisdiction in which the Company has a business office or is
incorporated.
6.4 Binding Upon Successors and Assigns. Subject to, and unless otherwise
provided in, this Warrant, each and all of the covenants, terms
provisions, and agreements contained herein shall be binding upon, and
inure to the benefit of the permitted successors, executors, heirs,
representatives, administrators and assigns of the parties hereto.
6.5 Severability. If any one or more provisions of this Warrant, or the
application thereof, shall for any reason and to any extent be invalid
or unenforceable, the remainder of this Warrant and the application of
such provisions to other persons or circumstances shall be interpreted
so as best to reasonably effect the intent of the parties hereto. The
parties further agree to replace any such void or unenforceable
provisions of this Warrant with
<PAGE>
valid and enforceable provisions which will achieve, to the extent
possible, the economic, business and other purposes of the void or
unenforceable provisions.
6.6 Default, Amendment and Waivers. This Warrant may be amended upon the
written consent of the Company and the Holder. The waiver by a party of
any breach hereof for default in payment of any amount due hereunder or
default in the performance hereof shall not be deemed to constitute a
waiver of any other default or any succeeding breach or default.
6.7 No Waiver. The failure of any party to enforce any of the provisions
hereof shall not be construed to be a waiver of the right of such party
thereafter to enforce such provisions.
6.8 Attorneys' Fees. Should suit be brought to enforce or interpret any
part of this Warrant, the prevailing party shall be entitled to
recover, as an element of the costs of suit and not as damages,
reasonable attorneys fees to be fixed by the court (including without
limitation, costs, expenses and fees on any appeal). The prevailing
party shall be the party entitle to recover its costs of suit,
regardless of whether such suit proceeds to final judgment. A party not
entitled to recover its costs shall not be entitled to recover
attorneys' fees. No sum for attorneys' fees shall be counted in
calculating the amount of a judgment for purposes of determining if a
party is entitled to recover costs or attorneys' fees.
6.9 Notices. Whenever any party hereto desires or is required to give any
notices, demand, or request with respect to this Warrant, each such
communication shall be in writing and shall be effective only if it is
delivered by personal service, sent by facsimile or mailed, United
States certified mail, overnight service, postage prepaid, return
receipt requested, or Canadian registered mail, postage prepaid, return
receipt requested, addressed as follows:
Company: Officeland Inc.
312 Dolomite Drive
Suite 212
Toronto, Ontario
M3J 2N2
Fax No. (416) 736-8445
Holder:
Fax No. ( )
Such communication shall be effective when they are personally
delivered, or faxed, to
<PAGE>
the addressee thereof; but if sent by certified mail or registered mail
in the manner set forth above, they shall be effective one business day
after being deposited in the United States mail or two business days
after being deposited in the Canadian mail. Any party may change its
address for such communications by giving notice thereof to the other
party in conformity with this Section.
6.10 Time. Time is of the essence of this Warrant.
6.11 Construction of Warrant. This Warrant has been negotiated by the
respective parties hereto and their attorneys and the language hereof
shall not be construed for or against any party.
6.12 No Endorsement. Holder understands that no federal or state securities
administrator has made any finding or determination relating to the
fairness of investment in the Company or purchase of the Common Shares
hereunder and that no federal or state securities administrator has
recommended or endorsed the offering of securities by the Company
hereunder.
6.13 Pronouns. All pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person, persons, entity or entities may require.
6.14 Currency. All dollar amounts referred to or contemplated herein shall
be in American funds.
6.15 Further Assurances. Each party agrees to cooperate fully with the other
parties and to execute such further instruments, documents and
agreements and to give such further written assurances, as may be
reasonably requested by any other party to better evidence and reflect
the transactions described herein and contemplated hereby, and to carry
into effect the intents and purposes of this Warrant.
COMPANY:
OFFICELAND INC.
By:
Name:
Title:
<PAGE>
AMENDING AGREEMENT TO VOTING TRUST AGREEMENT OF JUNE 4, 1998
This Agreement dated as of November 10, 1998 is made by and among
International Capital Partners, Inc. ("ICP"), the parties who have executed and
who are identified in Exhibit A hereto (collectively, together with ICP, the
"Shareholders") and Officeland Inc., an Ontario corporation with its principal
place of business in Toronto, Ontario (the "Company").
ICP, the Company, certain investors and Bassini, Playfair + Associates
LLC ("BP") were parties to a Voting Trust Agreement made as of the 4th day of
June, 1998 (the "VTA"), which was entered into pursuant to the terms of the
Initial Purchase Agreement (as hereinafter defined). Pursuant to the Initial
Purchase Amending Agreement (as hereinafter defined), BP ceased to be a party
to the VTA.
ICP, the Company and certain of the Shareholders are parties to the
Restructured Purchase Agreement (as hereinafter defined) and wish to enter into
this agreement (the "VTA Amending Agreement") to affirm that the terms of the
VTA, as amended by this VTA Amending Agreement, are binding on all of the
parties hereto.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained in this VTA Amending Agreement, and intending to be legally bound by
the terms and conditions herein, the parties hereby agree as follows:
1. Definitions
1.1 VTA Definitions All capitalized terms used in this VTA Amending
Agreement shall, unless expressly otherwise defined in this VTA Amending
Agreement, have the same meanings as given to them, respectively, in the VTA.
In some instances, definitions of certain terms, which have been defined in the
VTA, are repeated in this VTA Amending Agreement for ease of reference.
1.2 Additional Definitions In this VTA Amending Agreement, the
following terms shall have the following meanings, respectively:
(a) "Bassini Group" means, collectively, BP and all of the
persons named as "Purchasers" in Exhibit A to the Initial
Purchase Agreement, other than Ardara Investment Inc.;
(b) "Initial Purchase Agreement" and "Initial Purchase Amending
Agreement" have the respective meanings ascribed to them in
the Restructured Purchase Agreement;
Page 1 of 5
<PAGE>
(c) "Loan Amending Agreements" means, collectively, the loan
amending agreements dated the date hereof made between each
of the Founders and the Company, amending the terms of the
Loan Agreements ; and
(d) "Restructured Purchase Agreement" means that certain Senior
Subordinated Unsecured Convertible Notes Purchase Agreement
among the Company, ICP and certain investors entered into on
November 10, 1998.
2. Adoption and Deeming Provisions
2.1 Adoption The parties hereto adopt and affirm as their agreement,
as if they had all been original signatories thereto, all of the provisions of
the VTA, subject to the qualifications and amendments set out in this VTA
Amending Agreement.
2.2 Deeming Provisions
(a) Bassini References Any references in the VTA to BP,
any one or more of the Bassini Group, Robert
Margolin or Eric C. Salzman are deemed deleted
therefrom;
(b) Voting Power The reference in Recital A to the VTA
to "46%"shall be deemed to refer to 37.5%;
(c) Restructured Purchase Agreement Any reference in the
VTA to the "Purchase Agreement" is deemed to refer
to the Restructured Purchase Agreement;
(d) Pre-emptive Rights The provisions of section 6 of
the VTA are deemed amended in the same manner,
mutatis mutandis, as provided in section 6.3 of the
Initial Purchase Amending Agreement, with the intent
that the Offer (as defined in section 6.1 of the
VTA) shall be made to the Representative on behalf
of the ICP Group (as defined in subsection 6.3(a) of
the Initial Purchase Amending Agreement);
(e) Restriction on Transfer by Founders. The reference,
in section 7 of the VTA, to "the loan documents (the
"Loan Documents") entered into on the date hereof "
shall be deemed to refer to the loan documents (the
"Loan Documents") entered into on June 4, 1998, as
amended by the Loan Amending Agreements;
Page 2 of 5
<PAGE>
(f) Transferees, Successors and Assigns. The reference,
in section 9 of the VTA, to the terms of "a Voting
Trust Agreement dated June 4, 1998" shall be deemed
to refer to the VTA, as amended by this VTA Amending
Agreement.
3. Board of Directors
3.1 Board of Directors The provisions of section 1.1 of the VTA are
hereby deleted and the following substituted therefor:
Each of the Shareholders agrees that, from and after the date
hereof, such Shareholder will vote (or cause to be voted) all
of the Shares owned or held of record or beneficially by such
Shareholder from time to time so as to effect the following:
(a) The election of a Board of Directors of seven
members consisting of the following:
(i) four directors as designated by Marvyn
Budd, Ronald Faust and Ted Lax (the
"Founders"), three of whom shall each be an
officer and full-time employee of the
Company (a "Management Director") and one
of whom shall not be a Management Director
and shall not be related to any one of the
Founders (the "Unrelated Director"), such
Management Directors initially to be the
Founders and such Unrelated Director to
initially be Al Lyons;
(ii) two directors as designated by ICP, such
directors to initially be Ajit G.
Hutheesing and Larry Lunt; and
(iii) one director, as mutually designated by the
Founders and ICP, such mutual designate to
initially be James F. Kay.
One of such directors shall be the Chairman of the
Board of Directors, as mutually designated by the
Founders and the ICP Group, such mutual designate
initially to be Ajit G. Hutheesing;
(b) The constitution of an Acquisition Committee of five
members, to be composed of two representatives of
each of the Founders and the ICP Group, who shall
initially be Messrs. Marvyn Budd and Al Lyons
representing the Founders, Messrs Ajit Hutheesing
and Larry Lunt representing the ICP Group and
Christopher Walker, who shall participate as a
non-voting member. The mandate of the Acquisition
Committee will be the evaluation and recommendation
to the Board of Directors of potential acquisition
or joint venture candidates. To recommend approval
of any acquisition or joint venture to the Board of
Directors, a majority of the members of the
Page 3 of 5
<PAGE>
Acquisition Committee must recommend such approval
and, in the event of a deadlock, the matter shall be
referred to the Board of Directors for a decision.
In this regard, the parties confirm that the
Acquisition Committee has recommended and approved
the terms for acquisition of each of Telecom
Corporation of Chicago and Eastern Equipment
Brokers, Inc., as more particularly set out in the
New Disclosure Schedule attached as Exhibit J to the
Restructured Purchase Agreement; and
(c) The constitution of a Compensation Committee of
three members, to be composed of one representative
of the ICP Group and two representatives who are not
Management Directors.
4. Miscellaneous
4.1 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions of this VTA Amending Agreement shall bind and enure to
the benefit of the respective successors, assigns, heirs, executors, and
administrators of the parties hereto.
4.2 No Conditions to Effectiveness; Entire Agreement. There are no
conditions to the effectiveness of this VTA Amending Agreement. The VTA, as
amended by this VTA Amending Agreement, together with the instruments and other
documents contemplated to be executed and delivered in connection herewith,
contains the entire agreement and understanding of the parties hereto, and
supersedes any prior agreements or understandings between or among them, with
respect to the subject matter hereof.
4.3 Amendments and Waivers. Except as otherwise expressly set forth in
this VTA Amending Agreement, any term of this VTA Amending Agreement may be
amended and the observance of any term of this VTA Amending Agreement may be
waived (either generally or in a particular instance and either retroactively
or prospectively), only with the written consent of the party against whom such
amendment or waiver is to be enforced. No waivers of or exceptions to any term,
condition or provision of this VTA Amending Agreement, in any one or more
instances, shall be deemed to be, or construed as, a further continuing waiver
of any such term, condition or provision.
4.4 Counterparts. This VTA Amending Agreement may be executed in
several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
4.5 Governing Law. This VTA Amending Agreement shall be governed by
and interpreted and construed in accordance with the laws of the Province of
Ontario.
4.6 Further Assurances. Each party agrees to cooperate fully with the
other parties and to execute such further instruments, documents and
agreements, attend such meetings and pass
Page 4 of 5
<PAGE>
such resolutions and exercise such votes and influence and do and perform or
cause to be done and performed such further and other acts and things as may be
reasonably necessary or desirable from time to time to better evidence and
reflect the transactions described herein and contemplated hereby, and to carry
into effect the intents and purposes of this VTA Amending Agreement.
4.7 Exhibits The following exhibits are attached to and form a
substantive part of this Agreement
Exhibit A - Shareholders
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this VTA Amending Agreement as an instrument as of the date first above
written.
Officeland Inc.
By: /s/ Marvyn Budd
---------------------
Name: Marvyn Budd
Title: President
International Capital Partners, Inc.
By: /s/ Ajit Hutheesing
---------------------
Name: Ajit Hutheesing
Title: Chairman
Page 5 of 5
<PAGE>
EXHIBIT A
Shareholders
Name of Shareholders Signature of Shareholders
- -------------------- -------------------------
Ardara Investment Inc. by: DUCAT Ltd.
---------------------------
by: /s/ Michael J. Mello
---------------------------
by: /s/ Wendell M. Hollis
---------------------------
James F. Kay /s/ James F. Kay
---------------------------
ICP, LLC. /s/ Ajit Hutheesing
---------------------------
Ronald Faust /s/ Ronald Faust
---------------------------
Gail Faust /s/ Gail Faust
---------------------------
Marvyn Budd /s/ Marvyn Budd
---------------------------
Susan Budd /s/ Susan Budd
---------------------------
Ted Lax /s/ Ted Lax
---------------------------
Bonnie Lax /s/ Bonnie Lax
---------------------------
Jack McSorley /s/ Jack McSorley
---------------------------
<PAGE>
LOAN AMENDING AGREEMENT
THIS AGREEMENT made as of the 9th day of November, 1998
A M O N G :
MARVYN BUDD of the City of Toronto
(hereinafter called the "Borrower")
OF THE FIRST PART
A N D :
OFFICELAND INC., an Ontario Corporation,
(hereinafter called the "Lender")
OF THE SECOND PART
The parties hereto have entered into a loan agreement made as
of the 4th day of June, 1998 (the "Loan Agreement") and have agreed to amend
the Loan Agreement as hereinafter set forth. All capitalized terms used in this
Loan Amending Agreement shall, unless expressly otherwise defined herein, have
the same meanings as given to them, respectively, in the Loan Agreement.
In consideration of the mutual covenants herein contained and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby mutually acknowledged the parties hereto agree as follows:
ARTICLE 1.00 - AMENDING PROVISIONS
1.1 Deeming Provisions
(a) The term "Voting Trust Agreement" shall be deemed to mean the
Voting Trust Agreement, as defined in the Loan Agreement, as
amended by the agreement entitled "AMENDING AGREEMENT TO
VOTING TRUST AGREEMENT OF JUNE 4, 1998" bearing the same date
as this Loan Amending Agreement and entered into among the
Lender and the Shareholders (as therein defined);
(b) The terms "First Tranche Date"`and "Second Tranche Date"
shall be deemed to be deleted from the Loan Agreement.
1.2 Advances Section 2.1(a) of the Loan Agreement is hereby deleted and the
following substituted therefor:
<PAGE>
2
2.1(a) The Loan shall be advanced in two Advances, both the First
Tranche and the Second Tranche to be advanced on or after May
31, 1999 or such later date as the non-management directors
of the Lender shall, by majority vote, determine, based on
the cash position of the Lender and its financial
performance. Each Advance shall be evidenced by a Note;
ARTICLE 2.00 - MISCELLANEOUS
2.1 Enuring This Agreement shall enure to the benefit of and shall be binding
upon the parties hereto and their respective heirs, executors, administrators,
personal representatives, successors and assigns .
2.2 No Conditions to Effectiveness; Entire Agreement There are no conditions to
the effectiveness of this Loan Amending Agreement. The Loan Agreement, as
amended by this Loan Amending Agreement, together with the instruments and
other documents contemplated to be executed and delivered in connection
herewith, contains the entire agreement and understanding of the parties
hereto, and supersedes any prior agreements or understandings between or among
them, with respect to the subject matter hereof.
2.3 Governing Law This Loan Amending Agreement shall be governed by and
interpreted and construed in accordance with the laws of the Province of
Ontario.
IN WITNESS WHEREOF the parties hereto have executed this
Agreement this on the day and year first above written.
SIGNED, SEALED AND DELIVERED )
in the presence of )
) /s/ Marvyn Budd
) -----------------------------
) MARVYN BUDD
OFFICELAND INC.
Per: /s/ Marvyn Budd
-------------------------
(I have authority to bind the Corporation)
<PAGE>
LOAN AMENDING AGREEMENT
THIS AGREEMENT made as of the 9th day of November, 1998
A M O N G :
RONALD FAUST of the City of Toronto
(hereinafter called the "Borrower")
OF THE FIRST PART
A N D :
OFFICELAND INC., an Ontario Corporation,
(hereinafter called the "Lender")
OF THE SECOND PART
The parties hereto have entered into a loan agreement made as
of the 4th day of June, 1998 (the "Loan Agreement") and have agreed to amend
the Loan Agreement as hereinafter set forth. All capitalized terms used in this
Loan Amending Agreement shall, unless expressly otherwise defined herein, have
the same meanings as given to them, respectively, in the Loan Agreement.
In consideration of the mutual covenants herein contained and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby mutually acknowledged the parties hereto agree as follows:
ARTICLE 1.00 - AMENDING PROVISIONS
1.1 Deeming Provisions
(a) The term "Voting Trust Agreement" shall be deemed to mean the
Voting Trust Agreement, as defined in the Loan Agreement, as
amended by the agreement entitled "AMENDING AGREEMENT TO
VOTING TRUST AGREEMENT OF JUNE 4, 1998" bearing the same date
as this Loan Amending Agreement and entered into among the
Lender and the Shareholders (as therein defined);
(b) The terms "First Tranche Date"`and "Second Tranche Date"
shall be deemed to be deleted from the Loan Agreement.
1.2 Advances Section 2.1(a) of the Loan Agreement is hereby deleted and the
following substituted therefor:
<PAGE>
2
2.1(a) The Loan shall be advanced in two Advances, both the First
Tranche and the Second Tranche to be advanced on or after May
31, 1999 or such later date as the non-management directors
of the Lender shall, by majority vote, determine, based on
the cash position of the Lender and its financial
performance. Each Advance shall be evidenced by a Note;
ARTICLE 2.00 - MISCELLANEOUS
2.1 Enuring This Agreement shall enure to the benefit of and shall be binding
upon the parties hereto and their respective heirs, executors, administrators,
personal representatives, successors and assigns .
2.2 No Conditions to Effectiveness; Entire Agreement There are no conditions to
the effectiveness of this Loan Amending Agreement. The Loan Agreement, as
amended by this Loan Amending Agreement, together with the instruments and
other documents contemplated to be executed and delivered in connection
herewith, contains the entire agreement and understanding of the parties
hereto, and supersedes any prior agreements or understandings between or among
them, with respect to the subject matter hereof.
2.3 Governing Law This Loan Amending Agreement shall be governed by and
interpreted and construed in accordance with the laws of the Province of
Ontario.
IN WITNESS WHEREOF the parties hereto have executed this
Agreement this on the day and year first above written.
SIGNED, SEALED AND DELIVERED )
in the presence of )
) /s/ Ronald Faust
) --------------------------
) RONALD FAUST
OFFICELAND INC.
Per: /s/ Marvyn Budd
-------------------------
(I have authority to bind the Corporation)
<PAGE>
LOAN AMENDING AGREEMENT
THIS AGREEMENT made as of the 9th day of November, 1998
A M O N G :
EDWIN (TED) LAX of the City of Toronto
(hereinafter called the "Borrower")
OF THE FIRST PART
A N D :
OFFICELAND INC., an Ontario Corporation,
(hereinafter called the "Lender")
OF THE SECOND PART
The parties hereto have entered into a loan agreement made as
of the 4th day of June, 1998 (the "Loan Agreement") and have agreed to amend
the Loan Agreement as hereinafter set forth. All capitalized terms used in this
Loan Amending Agreement shall, unless expressly otherwise defined herein, have
the same meanings as given to them, respectively, in the Loan Agreement.
In consideration of the mutual covenants herein contained and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby mutually acknowledged the parties hereto agree as follows:
ARTICLE 1.00 - AMENDING PROVISIONS
1.1 Deeming Provisions
(a) The term "Voting Trust Agreement" shall be deemed to mean the
Voting Trust Agreement, as defined in the Loan Agreement, as
amended by the agreement entitled "AMENDING AGREEMENT TO
VOTING TRUST AGREEMENT OF JUNE 4, 1998" bearing the same date
as this Loan Amending Agreement and entered into among the
Lender and the Shareholders (as therein defined);
(b) The terms "First Tranche Date"`and "Second Tranche Date"
shall be deemed to be deleted from the Loan Agreement.
1.2 Advances Section 2.1(a) of the Loan Agreement is hereby deleted and the
following substituted therefor:
<PAGE>
2
2.1(a) The Loan shall be advanced in two Advances, both the First
Tranche and the Second Tranche to be advanced on or after May
31, 1999 or such later date as the non-management directors
of the Lender shall, by majority vote, determine, based on
the cash position of the Lender and its financial
performance. Each Advance shall be evidenced by a Note;
ARTICLE 2.00 - MISCELLANEOUS
2.1 Enuring This Agreement shall enure to the benefit of and shall be binding
upon the parties hereto and their respective heirs, executors, administrators,
personal representatives, successors and assigns .
2.2 No Conditions to Effectiveness; Entire Agreement There are no conditions to
the effectiveness of this Loan Amending Agreement. The Loan Agreement, as
amended by this Loan Amending Agreement, together with the instruments and
other documents contemplated to be executed and delivered in connection
herewith, contains the entire agreement and understanding of the parties
hereto, and supersedes any prior agreements or understandings between or among
them, with respect to the subject matter hereof.
2.3 Governing Law This Loan Amending Agreement shall be governed by and
interpreted and construed in accordance with the laws of the Province of
Ontario.
IN WITNESS WHEREOF the parties hereto have executed this
Agreement this on the day and year first above written.
SIGNED, SEALED AND DELIVERED )
in the presence of )
) /s/ Edwin Lax
) ---------------------------
) EDWIN (TED) LAX
OFFICELAND INC.
Per: /s/ Marvyn Budd
--------------------------
(I have authority to bind the Corporation)
<PAGE>
Monday November 16, 8:31 am Eastern Time
Company Press Release
SOURCE: Officeland Inc.
Officeland Inc. Completes Purchase of Telecom Corporation of Chicago
TORONTO, Nov. 16 /PRNewswire/ -- Officeland Inc. (Nasdaq: OFLDF - news, OFLUF -
news) announced today that it has completed its acquisition of Telecom
Corporation of Chicago. Telecom, based in Wauconda, Illinois, is a leading
re-manufacturer and marketer of used fax machines, small copiers and printers.
The acquisition was for a combination of cash and stock.
Marvyn Budd, President of Officeland, stated, "We completed the acquisition of
The Wholesale Group in May and this completes our second strategic acquisition
this year in furtherance of our industry consolidation plan. Telecom and The
Wholesale Group annual revenues when combined with Officeland will result in
consolidated annual revenues in excess of US$25 million. We intend to continue
our growth through acquisitions and the addition of Telecom will enhance the
desirability for those in our industry to become part of our organization."
Mr. Budd continued, "We are pleased to have acquired a company with the solid
operations and profitability of Telecom. The synergy between our product lines,
channels of distribution and strategic relationships will contribute
significantly to future revenue growth."
John Einarsen, President of Telecom Corporation of Chicago, added, "We are
excited to become part of Officeland and we are confident that we can make a
significant contribution to the Company's growth potential. In particular, our
sales success through the Internet as an approved Vendor for e-commerce
companies such as ONSALE Inc., a leading Internet real-time retailer, Bid.com,
Egghead.com and others will provide Officeland with a powerful new marketing
channel."
The acquisition, which was previously announced as "subject to financing" was
completed after Officeland received financing from investors associated with
International Capital Partners, Inc. a Connecticut based investment management
company. The financing is part of an amended overall funding arrangement
pursuant to which private investors will provide up to US$7,000,000 of which
Officeland has received US$3,550,000.
Officeland Inc. is a leading reseller of used photocopiers in North America,
selling to original equipment manufacturer (OEM) dealer networks, commercial,
professional and institutional users, and other wholesalers of photocopiers. To
facilitate both buying and selling used copiers the company maintains strategic
relationships with Danka, Canon, Konica, Minolta, and other major industry
players.
Forward-looking statements and comments in this press release are made pursuant
to the safe-harbor provisions of Section 21E of the Securities Exchange Act of
1934. Such statements
<PAGE>
relating to, among other things, the prospects for the company to increase the
level of sales and maintain profitability, are necessarily subject to risks and
uncertainties, some of which are significant in scope and nature, including
risks related to the demand for used photocopiers, competition, availability of
capital and continuation of sales levels. These risks are further discussed in
the periodic reports and registration statements filed by the company from time
to time with the Securities and Exchange Commission.
SOURCE: Officeland Inc.
