SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the approximate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-12
VIRTUALSELLERS.COM, INC.
------------------------
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(1)
and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
<PAGE>
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
VIRTUALSELLERS.COM, INC.
SUITE 1000, 120 NORTH LASALLE STREET
CHICAGO, ILLINOIS 60602
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD ON AUGUST 4, 2000
JUNE 29, 2000 (approximate date proxy statement first sent to shareholders)
TO THE HOLDERS OF COMMON SHARES OF VIRTUALSELLERS.COM, INC.
The annual meeting (the "Annual Meeting") of the shareholders of
Virtualsellers.com, Inc. (the "Company"), will be held at the offices of the
Company's lawyers, Clark, Wilson, Suite 800 - 885 West Georgia Street,
Vancouver, British Columbia, Canada, on August 4, 2000, at 10:00 a.m., local
time, for the purposes of:
1. setting the number of directors of the Company at five (5);
2. electing the members of the Board of Directors;
3. considering and approving the Company's 2000 Stock Option Plan;
4. approving the appointment of the Company's auditors; and
5. transacting any other business that may properly come before the meeting
or any adjournment or adjournments thereof.
The record date for the Annual Meeting is June 23, 2000 (the "Record Date).
Only shareholders of record at the close of business on the Record Date are
entitled to notice of, and to vote at, the Annual Meeting, and any adjournment
or postponement of the Annual Meeting.
A copy of the Company's Annual Report for the year ended February 29, 2000
accompanies this notice.
The Board of Directors hopes that you will find it convenient to attend the
Annual Meeting in person, but whether or not you attend, please complete, sign,
date and return the enclosed Proxy immediately to ensure that your Common Shares
are represented at the Annual Meeting. Returning your Proxy does not deprive
you of the right to attend the Annual Meeting and vote your Common Shares in
person.
PLEASE VOTE, DATE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY.
By Order of the Board of Directors
"Dennis Sinclair"
Dennis Sinclair
June 26, 2000 President and CEO
<PAGE>
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
OF VIRTUALSELLERS.COM, INC.
AUGUST 4, 2000
VIRTUALSELLERS.COM, INC.
SUITE 1000, 120 NORTH LASALLE STREET
CHICAGO, ILLINOIS 60602
The accompanying Proxy is solicited on behalf of the Board of Directors of the
Company, to be used at the Annual Meeting to be held at the offices of the
Company's lawyers, Clark, Wilson, Suite 800 - 885 West Georgia Street,
Vancouver, British Columbia, Canada, on August 4, 2000, at 10:00 a.m., local
time. This Proxy Statement, accompanying Proxy, Notice of Meeting and Annual
Report to shareholders for the fiscal year ended February 29, 2000, are first
being mailed to shareholders on or about June 29, 2000. The Annual Report
(mailed to shareholders with this Proxy Statement) constitutes part of this
Proxy Statement.
The expense of this solicitation will be borne by the Company. In addition to
solicitation by use of the mails, certain directors, officers and regular
employees of the Company may solicit the return of Proxies by telephone,
facsimile or other means. Requests will also be made of brokerage houses and
custodians, nominees or fiduciaries to forward Proxy material at the expense of
the Company to the beneficial owners of stock held of record by such persons.
The Company's transfer agent, Montreal Trust Company of Canada, has agreed to
assist the Company in the tabulation of Proxies and the counting of votes at the
Annual Meeting.
All of a shareholder's Common Shares registered in the same name will be
represented by one Proxy.
WHO CAN VOTE
Only shareholders of record as of the close of business on June 23, 2000 are
entitled to notice of and to vote at the Annual Meeting. As of June 23, 2000,
there were 127,131,127 common shares in the capital of the Company (the "Common
Shares") issued and outstanding owned by approximately 1,934 shareholders of
record. Each shareholder of record on the Record Date is entitled to one vote
for each Common Share held.
HOW YOU CAN VOTE
COMMON SHARES CANNOT BE VOTED AT THE ANNUAL MEETING UNLESS THE HOLDER OF RECORD
IS PRESENT IN PERSON OR BY PROXY. A SHAREHOLDER MAY APPOINT A PERSON TO
REPRESENT HIM/HER AT THE ANNUAL MEETING BY COMPLETING THE ENCLOSED PROXY, WHICH
AUTHORIZES A PERSON OTHER THAN THE HOLDER OF RECORD TO VOTE ON BEHALF OF THE
SHAREHOLDER, AND RETURNING IT TO THE COMPANY. All shareholders are urged to
complete, sign, date and promptly return the Proxy in the enclosed postage-paid
envelope after reviewing the information contained in this Proxy Statement.
Valid Proxies will be voted at the Annual Meeting and at any postponements or
adjournments thereof as you direct in the Proxy.
The Common Shares of the Company represented by the Proxy will be voted as
directed in the Proxy, but if no direction is given and the Proxy is validly
executed, the Proxy will be voted FOR setting the number of Directors of the
Company at five (5), FOR the election of the nominees for the Board of Directors
set forth in this Proxy Statement, FOR the approval of the 2000 Stock Option
Plan and FOR the appointment of the Company's independent auditors, KPMG LLP.
If any other matters properly come before the Annual Meeting, the persons
authorized under the Proxies will vote upon such other business as may properly
come before the Annual Meeting in accordance with their best judgment.
QUORUM
A quorum of shareholders is necessary to take action at the Annual Meeting. A
majority of the outstanding Common Shares on June 23, 2000, represented in
<PAGE>
person or by Proxy, will constitute a quorum for the transaction of business at
the Annual Meeting. However, if a quorum is not present, the shareholders
present at the Annual Meeting have the power to adjourn the meeting until a
quorum is present. At any such adjourned meeting at which a quorum is present
or represented, any business may be transacted that might have been transacted
at the original meeting. Broker non-votes occur when a nominee holding Common
Shares for a beneficial owner has not received voting instructions from the
beneficial owner with respect to a particular matter and such nominee does not
possess or choose to exercise discretionary authority with respect thereto.
Broker non-votes and abstentions will be included in the determination of the
number of Common Shares present at the Annual Meeting for quorum purposes but
will not be counted as votes cast on any matter presented at the Annual Meeting.
YOUR VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE ASKED TO COMPLETE, DATE, SIGN AND
RETURN THE ACCOMPANYING PROXY WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING. IF YOU PLAN TO ATTEND THE ANNUAL MEETING TO VOTE IN PERSON AND YOUR
SHARES ARE REGISTERED WITH OUR TRANSFER AGENT (MONTREAL TRUST COMPANY OF CANADA)
IN THE NAME OF A BROKER OR BANK, YOU MUST SECURE A PROXY FROM THE BROKER OR BANK
ASSIGNING VOTING RIGHTS TO YOU FOR YOUR COMMON SHARES.
REVOCATION OF PROXIES
You may revoke your Proxy at any time prior to the start of the Annual Meeting
in three ways:
1. by delivering a written notice of revocation to the Secretary of the
Company;
2. by submitting a duly executed Proxy bearing a later date; or
3. by attending the Annual Meeting and expressing the desire to vote your
Common Shares in person (attendance at the Annual Meeting will not in and of
itself revoke a Proxy).
CURRENCY
Except where otherwise indicated, all dollar ($) amounts referred to herein are
expressed in U.S. dollars.
PROPOSAL ONE-- NUMBER OF DIRECTORS
The Board of Directors of the Company presently consists of four (4) directors.
At the Annual Meeting, the shareholders will be asked to approve a proposal that
the number of directors be set at five (5).
Each shareholder is entitled to cast one vote for each Common Share held on June
23, 2000. The majority vote of the Common Shares represented in person or by
Proxy at the Annual Meeting is required to approve this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE TO SET THE
NUMBER OF DIRECTORS AT FIVE (5), AS SET FORTH IN PROPOSAL ONE.
PROPOSAL TWO -- ELECTION OF DIRECTORS
The Board of Directors has proposed that the number of directors be set at five
(5) although the present Board of Directors consists of only four (4) directors.
The Company wishes to have the flexibility to elect one more director during the
year should the need arise. Accordingly, only four (4) directors are to be
elected at the Annual Meeting. Three of these directors are to be re-elected
and one is to be elected at the Annual Meeting. Greg Burnett, a current
director of the Company, is not standing for re-election at the Annual Meeting.
Each director will serve until an annual meeting is held for the fiscal period
ending February 28, 2001, and until his successor has been elected and qualified
or until the director's earlier death, resignation or removal. Each nominee has
consented to being named in this Proxy Statement and to serve if elected. The
Company has no reason to believe that any of the nominees will be unable to
serve if elected, but if any of them should become unable to serve as a
director, and if the Board of Directors designates a substitute nominee, the
persons named in the accompanying Proxy will vote for the substitute nominee
designated by the Board of Directors, unless a contrary instruction is given in
the Proxy.
<PAGE>
Each shareholder is entitled to cast one vote for each Common Share held on June
23, 2000. The majority vote of the Common Shares represented in person or by
Proxy at the Annual Meeting is required to elect each director. Votes may be
cast in favor or withheld. Votes that are withheld will be excluded entirely
from the vote and will have no effect. Votes that are withheld for a particular
nominee will be excluded from the vote for that nominee only.
NOMINEES
The persons nominated to be directors are listed below. All of the nominees,
with the exception of Raymond Mol, are currently directors. Raymond Mol was a
director of the Company between November 14, 1996 and March 15, 2000. The
following information as of June 1, 2000 is submitted concerning the nominees
named for election as directors:
<TABLE>
<CAPTION>
POSITION WITH
NAME AGE THE COMPANY DATE POSITION FIRST HELD
<S> <C> <C> <C>
Director: November 14, 1996
Dr. Dennis Sinclair 57 President, CEO and Director President/CEO: September 30, 1997
---------------------------- --------------------------- -----------------------------------
Mel Baillie . . . . 50 Director November 14, 1996
---------------------------- --------------------------- -----------------------------------
Grayson Hand. . . . 63 Director March 15, 2000
---------------------------- --------------------------- -----------------------------------
Raymond Mol . . . . 52 Not applicable Not applicable(1)
=================== ============================ =========================== ===================================
<FN>
1. Raymond Mol was a director of the Company from November 14, 1996 to March 15, 2000, when he resigned to
allow the Company to appoint one more independent director.
</TABLE>
Dr. Dennis Sinclair
Dr. Sinclair obtained his Ph.D., Economics and Sociology, M.A., Sociology and
B.A., Psychology from the University of Michigan and has been an adjunct
professor at various universities, including the University of Michigan,
University of Southern California, University of Redlands, Pepperdine University
and a full-time professor at UCLA Graduate School of Management. He has
developed extensive experience in consulting to corporate clients by providing
general management and corporate consulting services to many companies through
his own consulting company. Dr. Sinclair has developed extensive experience in
all aspects of operating, directing and managing both private and public
companies through his positions as Senior Analyst and Investment Banker with
H.J. Meyers Inc. (August, 1995 to December, 1996), an Investment Advisor with
Securities America (August, 1994 to August, 1995), a Director of New Business
Development with Validyne Engineering Corporation (August, 1992 to August, 1994)
and his various other corporate positions prior to 1992.
Mel Baillie
Mr. Baillie obtained a Bachelor of Education Degree from the University of
Alberta subsequent to which he undertook post degree studies in Business
Administration. In addition to his formal education, Mr. Baillie has taken
numerous on the job courses relating to strategic marketing and planning,
selling, financial management, management development and leadership and process
design and management. Mr. Baillie is currently the Vice President and General
Manager of Bell Intrigna Inc., a telecommunication services company. He started
with Bell Intrigna in March, 2000. Mr. Baillie has significant marketing,
sales, operations and strategic management experience acquired from over 20
years in the telecommunications industry. He was the Vice President for Western
Canada for Ericson from September, 1998 to March, 2000. Ericson is a
manufacturer of telecommunication products. Prior to that he was self-employed
as a telecommunications consultant with his own company, Baillie & Associates,
Inc. (September, 1996 to September, 1998). He was the Vice President of
Marketing and Sales for Westel Telecommunications (October, 1995 to September,
1996) where he directed the marketing department, the major account sales group
<PAGE>
and commercial sales teams throughout the province of British Columbia. Prior
to that Mr. Baillie was the Vice President Sales for Western Canada of Unitel
Communications Inc. (1991 to 1995) and the Executive Director of Carrier
Relations for AT&T Canada (1991). Mr. Baillie was also a Director, Major
Accounts, Western Canada for Northern Telecom Canada Ltd. (1989 to 1991),
General Manager, Sales, Western Canada for C.N.C.P. Telecommunications (1988 to
1989), Executive Director, Canadian Government and Offshore Sales for Microtel
Ltd. (1983 to 1988) and Marketing Manager and Global Project Manager for
Northern Telecom Canada Ltd. (1977 to 1983).
Grayson Hand
Mr. Hand has over 25 years of senior management and executive business
experience. He has acted as a director of Global Technologies Inc., Medical
Polymers Technologies Inc., Tanisys Technology Inc. and Leigh Resources Ltd.,
each of which is a Canadian publicly traded company. Mr. Hand is currently a
director of Adventure Minerals Inc., a company whose common shares are
registered under the Securities Exchange Act of 1934.
Raymond Mol
Mr. Mol was a director of the Company between November 14, 1996 and March 15,
2000, and acted as the Chief Operating Officer until June 20, 1998. Mr. Mol has
over 20 years' experience in the teleconstrution industry, and has taken courses
through the American Management Association in project management, inventory
control, strategic planning, financial marketing and costing control. Mr. Mol
was a promoter for CallDirect Capital Corp. between January and October, 1996,
and was CFO and founding partner of Lifestart Multimedia from April, 1993 to
October , 1995. Mr. Mol is currently acts as a director of CallDirect Capital
Corp., a publicly held company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
ELECTION OF DIRECTORS AS SET FORTH IN PROPOSAL TWO.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended February 29, 2000, the Board of Directors held four
(4) meetings. All of the directors serving on the Board of Directors at the
time of each of those meetings attended the meetings. Most of the Board of
Directors' actions are conducted by written consent resolution after the
directors have discussed the proposed action to be taken by the Board.
For the year ended February 29, 2000, the Board of Directors had one standing
committee, the Audit Committee.
The Board of Directors maintains an Audit Committee. During the year ended
February 29, 2000, the Audit Committee was composed of Mel Baillie and Raymond
Mol. The function of the Audit Committee is to review and approve the scope of
audit procedures employed by the Company's independent auditors, to review the
results of the auditor's examination, the scope of audits, the auditor's
opinions on the adequacy of internal controls and quality of financial
reporting, and the Company's accounting and reporting principles, policies and
practices, as well as the Company's accounting, financial and operating
controls. The Audit Committee also reports to the Board of Directors with
respect to such matters and recommends the selection of independent auditors.
The Audit Committee met two (2) times during the financial year ended February
28, 1999 but did not meet during the financial year ended February 29, 2000.
BOARD REPORT ON EXECUTIVE COMPENSATION
The Board of Directors did not, during the fiscal year ended February 29, 2000,
have a compensation or similar committee. Accordingly, the full Board of
Directors is responsible for determining and implementing the compensation
policies of the Company.
The Board's executive compensation policies are designed to offer competitive
compensation opportunities for all executives which are based on personal
performances, individual initiative and achievement, as well as assisting the
Company in attracting and retaining qualified executives. The Board also
endorses the position that stock ownership by management and stock-based
compensation arrangements are beneficial in aligning management's and
stockholder's interests in the enhancement of stockholder value.
Compensation paid to the Company's executive officers generally consists of the
following elements: base salary, annual bonus and a long-term compensation in
the form of the issuance of Common Shares. Compensation levels for executive
<PAGE>
officers of the Company is determined by a consideration of each officer's
initiative and contribution to overall corporate performance and the officer's
managerial abilities and performance in any special projects that the officer
may have undertaken. Competitive base salaries that reflect the individual's
level of responsibility are important elements of the Company's executive
compensation philosophy. Subjective considerations of individual performance
are considered in establishing annual bonuses and other incentive compensation.
In addition, the Board considers the Company's financial position and cash flow
in making compensation decisions.
Dr. Sinclair's base salary, annual incentive compensation and long-term
compensation are determined by the Board based upon the same factors as
discussed above. The total compensation package of Dr. Sinclair is designed to
be competitive while creating awards for short and long term performance in line
with the financial interests of the shareholders. During the year ended
February 29, 2000, the compensation package for Dr. Sinclair was consistent with
this policy, and his base annual salary was $210,000. The Board agreed to
increase his base annual salary to $300,000 in May, 1999.
COMPENSATION OF DIRECTORS
During the fiscal year ended February 29, 2000, the Company paid no cash
compensation (including salaries, directors' fees, commissions, bonuses paid for
services rendered in a previous year or any compensation other than stock option
bonuses or Common Shares issued by the directors for services rendered) to the
directors for services rendered as directors.
Directors are reimbursed for out-of-pocket expenses, including travel expenses
and receive Common Shares as compensation for their services as directors of the
Company and its subsidiaries. The number of Common Shares issued as
compensation for the services of a director is determined by the Board of
Directors. During the fiscal year ended February 29, 2000, the following
directors were granted Common Shares and compensation for serving as directors
of the Company or one of its subsidiaries:
NAME NUMBER OF COMMON SHARES
---------------------- --------------------------
Dr. Dennis Sinclair Nil
Mel Baillie Nil
Raymond Mol 100,000(1)
(1) Raymond Mol received 100,000 Common Shares on January 24, 2000, for
services as a director of one of the Company's subsidiaries, Preferred
Telemanagement Inc.
EXECUTIVE COMPENSATION
Employment Agreements and Change of Control Agreements
------------------------------------------------------------
Dr. Dennis Sinclair
The Company entered into an agreement with Dr. Sinclair on January 1, 2000 (the
"Management Agreement"), pursuant to which Dr. Sinclair serves as a director,
and the President and CEO of the Company. The Management Agreement continues
until otherwise terminated in accordance with the terms of the Management
Agreement. If the Company terminates the Management Agreement without cause,
Dr. Sinclair must be given 24 months' prior written notice or an amount equal to
24 months' salary. If the Management Agreement is terminated for cause (as
defined in the Management Agreement), Dr. Sinclair is not entitled to notice or
payment in lieu of notice. The Management Agreement provides for an annual
salary of $300,000, together with annual bonuses and various other benefits.
The Management Agreement contains provisions with respect to a "Change of
Control" (as specifically defined in the Management Agreement). If a Change in
Control occurs, Dr. Sinclair may, for a period of six (6) months following the
date of the Change of Control, elect that the Change of Control is a termination
of the Management Agreement, without cause, by the Company. In the event that
<PAGE>
Dr. Sinclair makes this election, he is entitled to receive: (a) an additional
severance payment of $600,000; and (b) 1,000,000 Common Shares. In the event
that Dr. Sinclair does not elect to terminate the Management Agreement, it will
continue in full force and effect in accordance with its terms.
Kevin Wielgus
On April 23, 1999, the Company entered into an employment agreement (the
"Wielgus Agreement") with Kevin Wielgus, pursuant to which Mr. Wielgus is
currently employed as a Vice President of the VirtualSellers.com division of the
Company. The Wielgus Agreement continues until it is otherwise terminated. The
Wielgus Agreement may be terminated with or without cause by either party with
ninety (90) days' written notice. If the Company terminates the Wielgus
Agreement without cause, Mr. Wielgus is entitled to payment of a termination
allowance equivalent to 1.5 months of the base monthly salary payable to Mr.
Wielgus (currently $10,000). If the Wielgus Agreement is terminated for cause,
Mr. Wielgus is not entitled to notice or payment in lieu of notice. Mr.
Wielgus' annual salary pursuant to the Wielgus Agreement is currently $120,000.
The Wielgus Agreement also provides for a signing bonus, a performance bonus
(which is dependent upon Mr. Wielgus attaining certain performance criteria) and
various other benefits.
Cary Berman
On May 10, 1997, the Company entered into an employment agreement (the "Berman
Employment Agreement") with Cary Berman, pursuant to which Mr. Berman served as
the Vice President of Business Development, at an annual salary (at the time of
its termination) of $75,000. The Berman Employment Agreement was terminated by
the Company on August 15, 1999.
EXECUTIVE COMPENSATION
SUMMARY OF COMPENSATION OF EXECUTIVE OFFICERS
The following table summarizes the compensation the Company paid for the fiscal
years ended February 29, 2000, February 28, 1999 and February 28, 1998 to the
Chief Executive Officer and the other most highly compensated executive officers
who received a total annual salary (including bonus) in excess of $100,000. All
numbers in United States dollars unless otherwise noted.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM PAY-
ANNUAL COMPENSATION COMPENSATION(1) OUTS
------------------- ---------------- ----------
SECURITIES
OTHER UNDER RESTRICTED
ANNUAL OPTIONS/ SHARES OR LTIP
NAME AND PRINCIPAL COMPEN- SAR'S RESTRICTED PAY-
POSITION YEAR SALARY BONUS SATION(2) GRANTED SHARE UNITS OUTS
--------------------------- ------------------- ---------------- ---------- --------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Dr. Dennis Sinclair 2000 $ 285,000 N/A N/A Nil N/A N/A
President, . . . . 1999 $ 210,000 N/A N/A Nil N/A N/A
CEO and Director. . . . . . 1998 $ 210,000 N/A N/A Nil N/A N/A
Raymond Mol(7). . . . . . . 2000 N/A N/A N/A Nil N/A N/A
Former Director, Former . . 1999 N/A N/A N/A Nil N/A N/A
COO . . . . . . . . . . . . 1998 $ 43,500 N/A N/A Nil N/A N/A
Cary Berman(9)
Former Secretary and. . . . 2000 $ 53,125 N/A N/A Nil N/A N/A
Former VP Corporate . . . . 1999 $ 75,000 N/A N/A Nil N/A N/A
Development . . . . . . . . 1998 $ 75,000 N/A N/A Nil N/A N/A
Kevin Wielgus(10) 2000 $ 80,000 N/A N/A Nil N/A N/A
Secretary . . . . . 1999 Nil N/A N/A Nil N/A N/A
. . . . . . . . . 1998 Nil N/A N/A Nil N/A N/A
--------------------------- ------------------- ---------------- ---------- --------- --------- ----------- ----------
SUMMARY COMPENSATION TABLE
ALL OTHER
NAME AND PRINCIPAL COMPEN-
POSITION SATION
--------------------------- ------------
<S> <C>
Dr. Dennis Sinclair $ 150,000(4)
President, . . . . $ Nil
CEO and Director. . . . . . $ 425,000(3)
Raymond Mol(7) $ 95,500(5)
Former Director, Former . . Nil
COO . . . . . . . . . . . . $ 32,000(6)
Cary Berman(9) $ 50,000(8)
Former Secretary and. . . . $ 93,500(8)
Former VP Corporate . . . . $ 6,000(8)
Development . . . . .
Kevin Wielgus(10) . . . . . $ 125,000(11)
Secretary . . . . . . . . . N/A
N/A
<FN>
(1) Other than indicated below or otherwise in this Proxy Statement, the Company has not granted any restricted shares or
restricted share units, stock appreciation rights or long term incentive plan payouts to the named officers and directors
during the fiscal years indicated.
(2) The value of perquisites and other personal benefits, securities and property for the named officers and directors
that do not exceed the lesser of $50,000 or 10% of the total of the annual salary and bonus, are not reported herein.
(3) Dr. Dennis Sinclair received 2,500,000 Common Shares valued at $425,000 as part of his compensation as President and
CEO for the period ended February 28, 1998.
(4) Dr. Dennis Sinclair received 1,500,000 Common Shares valued at $150,000 as a bonus for his services as President and
CEO of the Company. for the period ending February 29, 2000.
(5) Raymond Mol received the following Common Shares as part of his compensation for the period ended February 29, 2000:
(a) 350,000 Common Shares valued at $45,500, as bonus for his assistance with co-ordinating a private placement
on the Company's behalf in December, 1999; and
(b) 500,000 Common Shares valued at $50,000 for his services in completing the acquisition of the assets and
undertakings of CallDirect Enterprises Inc.
(6) Raymond Mol received 800,000 Common Shares valued at $32,000 as part of his compensation for services as COO, for the
period ended February 28, 1998.
(7) Raymond Mol resigned as COO on June 30, 1998, and continued as a director of the Company until March 15, 2000.
Raymond Mol, although not an official employee, was a de facto executive officer and employee of the Company.
(8) Cary Berman received 150,000 Common Shares valued at $6,000 as part of his compensation as Vice-President, CFO and
Corporate Secretary for the period ended February 28, 1998, 900,000 Common Shares valued at $93,500 for the period ended
February 28, 1999, and 500,000 Common Shares valued at $50,000 for the period ended February 29, 2000.
(9) Cary Berman's position as Secretary and Vice President - Corporate Development was terminated by the Company on
August 15, 1999.
(10) Kevin Wielgus was appointed Secretary of the Company on January 31, 2000.
(11) Kevin Wielgus received a signing bonus of 1,250,000 Common Shares valued at $125,000 in connection with the
execution of the Wielgus Agreement.
</TABLE>
<PAGE>
STOCK PERFORMANCE GRAPH
The graph set forth below compares the cumulative total shareholder return on
the Company's Common Shares between February 28, 1995 and February 29, 2000 with
the cumulative return of (i) the Russell 2000 index and (ii) Standard and Poors
MidCap index, over the same period. This graph assumes the investment of $100
on February 28, 1995 in the Company's Common Shares, the Russell 2000 index and
Standard and Poors MidCap index, and assumes the reinvestment of dividends, if
any.
The Comparisons shown in the graph below are based upon historical data. The
Company cautions that the share price performance shown in the graph below is
not indicative of, nor intended to forecast, the potential future performance of
the Company's Common Shares. Information used in the graph was obtained from
Bloomberg, a source believed to be reliable, but the Company is not responsible
for any errors or omissions in such information.
[GRAPHIC OMITED]
<TABLE>
<CAPTION>
02/28/95 02/28/96 02/28/97 02/28/98 02/28/99 02/29/00
-------- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
VirtualSellers.com, Inc. 100 19.70 N/A(1) 3.15 22.88 134.85
-------- -------- --------- -------- -------- --------
Russell 2000 . . . . . . 100 126.77 140.33 180.00 152.87 225.16
-------- -------- --------- -------- -------- --------
S&P MidCap . . . . . . . 100 129.61 146.12 196.82 198.55 257.02
------------------------ -------- -------- --------- -------- -------- --------
<FN>
(1) Prior to October 1996, the Company's Common Shares were traded on the Vancouver
Stock Exchange and The NASDAQ National Market System. The Company's Common Shares
were delisted from both of those trading systems in October and November of 1996.
The Company's Common Shares commenced trading on the National Association of
Securities Dealer Inc.'s Over-the-Counter Bulletin Board. Shortly before the
Company's were quoted on the Over-the-Counter Bulletin Board, the Company's
management was replaced with its current management.
</TABLE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
----------------------------------------------------
The follow table sets forth information as to the beneficial ownership of Common
Shares as of June 23, 2000, for each of the persons are known to the Company to
be the beneficial owner of more than five percent (5%) of the Company's Common
Shares:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS(1)
------------------------ -------------------- -----------
<S> <C> <C>
Dr. Dennis Sinclair
194 North Harbour Drive
Suite 903
Chicago, Illinois 60601. 7,730,000 6.08%
-------------------- -----------
Cede & Co.
P.O. Box 20
Bowling Green Stn.,
New York, NY 10274 . . . 77,843,741 61.23%
------------------------ -------------------- -----------
CDS & Co.
25 The Esplanade,
P.O. Box 1038, Station A
Toronto, Ontario M5W 1G5 9,041,393 7.11%
======================== ==================== ===========
<FN>
(1) Based on 127,131,127 Common Shares issued and outstanding on June 23,
2000. The information for the above table was derived from a registered
shareholders list as provided by the transfer agent on June 23, 2000. Note that
the Company did not receive any Schedule 13D or 13G during the fiscal year.
</TABLE>
Security Ownership of Management
-----------------------------------
The follow table sets forth information as to the beneficial ownership of Common
Shares as of June 23, 2000, for each of the directors and Named Executive
Officers, and for all directors and executive officers as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS(1)
<S> <C> <C>
Dr. Dennis Sinclair . . . . . . . 7,730,000 6.08%
-------------------- -----------
Mel Baillie . . . . . . . . . . . Nil N/A
--------------------------------- -------------------- -----------
Grayson Hand. . . . . . . . . . . Nil N/A
-------------------- -----------
Greg Burnett. . . . . . . . . . . Nil N/A
-------------------- -----------
Kevin Wielgus . . . . . . . . . . 1,119,000 0.88%
-------------------- -----------
Directors and Officers as a Group 8,849,000 6.96%
================================= ==================== ===========
<FN>
(1) Based on 127,131,127 Common Shares issued and outstanding on June 23,
2000.
</TABLE>
PROPOSAL THREE - 2000 STOCK OPTION PLAN
On January 24, 2000, the Board of Directors of the Company adopted the Company's
2000 Stock Option Plan (the "2000 Plan") and directed that it be presented to
the shareholders for their approval and adoption. Shareholders will be asked to
consider and approve the adoption of the 2000 Plan. The following is a general
description of certain features of the 2000 Plan.
Purpose of the 2000 Stock Option Plan/Material Features
--------------------------------------------------------------
The 2000 Plan provides for the granting to the Company's directors, officers,
full-time employees and consultants of stock options to purchase up to 5,000,000
Common Shares. The purpose of the 2000 Plan is to ensure that the Company
retains the services of valued key directors, officers, employees and
consultants, and to encourage such people to acquire a greater proprietary
interest in the Company, thereby strengthening their incentive to achieve the
objectives of the shareholders of the Company. The 2000 Plan also serves as an
<PAGE>
aid and inducement in the attracting and hiring of new directors, officers,
employees and consultants as needed.
Plan Administrator
-------------------
The 2000 Plan will initially be administered by the Board of Directors of the
Company, except that the Board may, at its discretion, establish a committee
comprised of two (2) or more members of the Board or two (2) or more other
persons to administer the 2000 Plan.
Eligible Participants
----------------------
Incentive stock options (those stock options that qualify under Section 422 of
the Internal Revenue Code of 1986 ("the "Code")) may be granted to any
individual who is, at the time of the grant, an employee of the Company or its
subsidiaries. Non-qualified stock options (those options that do not qualify
under Section 422 of the Code) may be granted to employees and other people,
including directors and officers of the Company or its subsidiaries.
Material Terms of Stock Options Granted Pursuant to the 2000 Plan
---------------------------------------------------------------------------
No stock options have been granted pursuant to the 2000 Plan. Any stock options
granted pursuant to the 2000 Plan will be evidenced by a written agreement (a
"Stock Option Agreement"), each of which will be approved by the Plan
Administrator. Each Stock Option Agreement will state, among other things, the
following:
1. the number of Common Shares which can be acquired on exercise of the
Stock Option;
2. the date of grant and expiry of the stock option;
3. the exercise price of the stock option; and
4. the vesting schedule of the stock options, if any.
Maximum Issuance of Stock Options
-------------------------------------
Any one person will not be granted stock options to acquire more than 5% of the
issued and outstanding Common Shares of the Company.
Duration and Expiry of Stock Options
-----------------------------------------
Stock options granted under the 2000 Plan will expire on the dates determined by
the Plan Administrator but shall expire on a date which is not later than ten
(10) years from the date of grant of the stock option. Stock options granted to
a greater-than-ten-percent shareholder of the Company shall expire on a date
which is not later than five (5) years from the date of grant.
Vesting of Options and Determination of Exercise Price
-------------------------------------------------------------
The Plan Administrator may determine the time during which any stock options may
vest and the method of vesting of such stock options. The Plan Administrator
shall act in good faith to establish the exercise price in accordance with all
applicable laws, provided that:
1. the per share exercise price for an incentive stock option will not be
less than the fair market value per Common Share at the date of grant;
2. with respect to incentive stock options granted to greater-than-ten
percent shareholders of the Company, the exercise price per share will not be
less than one hundred ten percent (110%) of the fair market value per Common
Share at the date of grant;
<PAGE>
3. the per share exercise price for non-qualified stock options will be the
price established by the Plan Administrator acting in good faith; and
4. options granted in substitution for outstanding options of another
corporation in connection with the merger, consolidation, acquisition of
property or stock or other reorganization involving such other corporation and
the Company or any subsidiary of the Company may be granted with an exercise
price equal to the exercise price for the substituted option of the other
corporation, subject to any adjustment consistent with the terms of the
transaction pursuant to which the substitution is to occur.
Termination of Options
------------------------
Unless otherwise determined by the Plan Administrator, a stock option will
terminate (among the other ways in which it may be terminated as set forth in
the 2000 Plan) upon the occurrence of the first of the following events:
1. the expiration of the stock option;
2. the date of an optionee's termination of employment or contractual
relationship with the Company for cause (as determined by the Plan Administrator
acting reasonably);
3. the expiration of three (3) months from the date of an optionee's
termination of employment or contractual relationship with the Company for any
reason whatsoever other than cause, death or disability;
4. the expiration of one year (1) from termination of an optionee's
employment or contractual relationship by reason of death or disability; or
5. three (3) months from the date the optionee ceases to serve as a director
of the Company, if applicable.
Transferability of Options
----------------------------
Stock options granted under the 2000 Plan are non-transferable other than by
will or by applicable laws of descent and distribution.
Exercise of Options
---------------------
Stock options are exercisable in full or in part, at any time after vesting,
until termination of the stock option.
Federal Tax Consequences
--------------------------
Non-Qualified Stock Options
The grant of non-qualified stock options under the 2000 Plan will not result in
the recognition of any taxable income by the optionee. An optionee will
recognize ordinary income on the date of exercise of the non-qualified stock
option equal to the excess, if any, of (1) the fair market value of the Common
Shares acquired as of the exercise date, over (2) the exercise price. The tax
basis of these Common Shares for purposes of a subsequent sale includes the
non-qualified option price paid and the ordinary income reported on exercise of
the non-qualified stock option. The income reportable on exercise of a
non-qualified stock option is subject to federal income and employment tax
withholding. Generally, the Company will be entitled to a deduction for its
taxable year within which the optionee recognizes compensation income in the
amount reportable as income by the optionee on the exercise of a non-qualified
stock option.
<PAGE>
Incentive Stock Options (qualified under Section 422 of the Code)
In general, an optionee will not recognize taxable income upon the grant or
exercise of an incentive stock option. However, upon the exercise of an
incentive stock option, the excess of the fair market value on the date of
exercise of the Common Shares received over the exercise price of the stock
option is treated as an item of adjustment for the purpose of calculating
alternative minimum taxable income.
If the optionee has held the Common Shares acquired upon exercise of an
incentive stock option for at least two years after the date of grant, and for
at least one year after the date of exercise, upon disposition of the Common
Shares by the optionee, the difference (if any) between the sales price of the
Common Shares and the exercise price of the stock option is treated as long-term
capital gain or loss. If the optionee does not satisfy these incentive stock
option holding period requirements, the optionee will recognize ordinary income
at the time of the disposition of the Common Shares, generally in an amount
equal to the excess of the fair market value of the Common Shares at the time
the stock option was exercised over the exercise price of the stock option. The
balance of the gain realized (if any) will be long-term or short-term capital
gain, depending on the holding period. If the optionee sells the Common Shares
prior to the satisfaction of the incentive stock option holding period
requirements, but at a price below the fair market value of the Common Shares at
the time the stock option was exercised, the amount of ordinary income is
limited to the amount realized on the sale over the exercise price of the stock
option.
In order for the exercise of an incentive stock option to qualify for the
foregoing tax treatment, the optionee generally must be an employee (within the
meaning of section 422 of the Code) of the Company or one of its subsidiaries
from the date the incentive stock option is granted through the date three
months before the date of exercise (one year before the date of exercise in the
case of an optionee who is terminated due to disability).
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
APPROVAL AND ADOPTION OF THE COMPANY'S 2000 STOCK OPTION PLAN.
PROPOSAL FOUR - APPOINTMENT OF AUDITOR
KPMG LLP, of Vancouver, British Columbia, has been selected by the Board of
Directors to serve as the Company's independent public accountants for the
fiscal year ending February 29, 2001, as they have served for the past 6 years.
It is proposed that the remuneration to be paid to the auditor of the Company be
fixed by the Board of Directors.
A representative of KPMG LLP is not expected to be present at the Annual
Meeting, nor is a representative of KPMG LLP expected to make a statement. In
the event that a representative of the Company's auditors is present at the
Annual Meeting, he/she will have an opportunity to make a statement if he/she so
desires, and will be available to respond to appropriate questions.
Adoption of Proposal Four requires approval by the holders of a majority of the
Common Shares present in person or represented by Proxy, and entitled to vote at
the Annual Meeting. Abstentions may be specified on this proposal to ratify the
selection of the independent auditors. Abstentions will be considered present
and entitled to vote at the annual meeting but will not be counted as votes cast
in the affirmative. Abstentions will have the effect of a negative vote for
this proposal to ratify the selection of the independent auditors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING FEBRUARY 28, 2001.
INCLUSION OF FUTURE SHAREHOLDER PROPOSALS IN PROXY MATERIALS
All proposals of shareholders intended to be presented at the annual meeting of
shareholders for the year ended February 28, 2001 (the "2001 Annual Meeting")
must be received by the Company, addressed to the Secretary of the Company,
Suite 1000, 120 North LaSalle Street, Chicago, Illinois, 60602, not later than
January 30, 2001, for inclusion in the Company's Proxy Statement and form of
<PAGE>
Proxy relating to the 2001 Annual Meeting. Upon timely receipt of such
proposal, the Company will determine whether or not to include such proposal in
the Proxy statement and Proxy in accordance with applicable regulations and
provisions governing the solicitation of Proxies. All such proposals must
comply with the requirements of Rule 14a-8 under the Securities Exchange Act of
1934.
Any shareholders of Common Shares of the Company wishing to bring business
before the 2001 Annual Meeting in a form other than a shareholder proposal in
accordance with the preceding paragraph must give written notice that is
received by the Company, addressed to the Secretary of the Company, Suite 1000,
120 North LaSalle Street, Chicago, Illinois, 60602, not later than February 28,
2001. In order for a shareholder to bring other business before an annual
meeting of shareholders, timely notice must be given to and received by the
Company within the time limits described. Such notice must include a
description of the proposed business (which must otherwise be a proper subject
for action by the shareholders), the reasons therefor, and other matters. The
Board of Directors or the presiding officer at the meeting may reject any such
proposals that are not made in accordance with these procedures or that are not
a proper subject for shareholder action in accordance with applicable law. The
Articles of Incorporation and bylaws set forth specific requirements and
limitations applicable to nominations and proposals at special meetings of
shareholders.
A shareholder who wishes to present a proposal must be a shareholder of the
Company who was a shareholder of record both at the time of giving the notice
and at the time of the 2001 Annual Meeting and who is entitled to vote at the
2001 Annual Meeting. Any such notice must be given to the Secretary of the
Company, whose address is Suite 1000, 120 North LaSalle Street, Chicago,
Illinois 60602. Any shareholder desiring a copy of the Articles of
Incorporation or Bylaws will be furnished a copy without charge upon written
request to the Secretary. The time limits described above also apply in
determining whether notice is timely for purposes of Rule 14a-4(c)(1) under the
Securities Exchange Act of 1934, relating to discretionary voting authority, and
are separate from and in addition to the Securities and Exchange Commission's
requirements that a shareholder must meet to have a proposal included in the
Company's Proxy Statement for the annual meeting.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Dr. Dennis Sinclair, a director and the President and CEO of the Company, is the
principal and sole shareholder of Concept 10 Incorporated ("Concept 10"). The
Company entered into an Agency Agreement with Concept 10, dated October 25,
1999, pursuant to which Concept 10 agreed to assist the Company in offering and
selling up to 15,384,615 Common Shares in the capital of the Company (at a price
of $0.13 per share) pursuant to a private placement, for total gross proceeds of
up to $2,000,000. The Company agreed to pay Concept 10 a finder's fee in
connection with the Agency Agreement.
On February 25, 2000, the Company entered into a further Agency Agreement with
Concept 10, pursuant to which Concept 10 agreed to assist the Company in
offering and selling up to 1,693,324 Common Shares in the capital of the Company
(at a price of $2.50 per share) pursuant to a private placement, for total gross
proceeds of up to $4,233,350. Pursuant to the terms of the February 25, 2000
Agency Agreement, in addition to a finder's fee, Concept 10 is entitled to
receive 200,000 share purchase warrants entitling Concept 10 to purchase up to
200,000 Common Shares in the capital of the Company at a price of $2.50 per
share for a period of two (2) years from the closing of the private placement.
During the year ended February 29, 2000, the Company paid a total finders fee of
$267,000 to Concept 10 in conjunction with the above-noted private placements
and Agency Agreements.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934, as amended, requires
the Company's executive officers and directors, and persons who own more than
10% of the Company's Common Shares to file with the Securities and Exchange
Commission initial statements of beneficial ownership, reports of changes in
ownership and annual reports concerning their ownership of Common Shares and
other equity securities of the Company, on Form 3, 4 and 5 respectively.
Executive officers, directors and greater than 10% shareholders are required by
Commission regulations to furnish the Company with copies of all Section 16(a)
reports they file.
To the best of the Company's knowledge, all executive officers, directors and
greater than 10% shareholders filed the required reports in a timely manner,
with the exception of the following:
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF TRANSACTIONS NOT FAILURE TO FILE
NAME LATE REPORTS REPORTED ON A TIMELY BASIS REQUESTED FORMS
--------------- ------------ -------------------------- ---------------
<S> <C> <C> <C>
Dennis Sinclair 2 4 Nil
------------ -------------------------- ---------------
Mel Baillie . . 1 9 Nil
------------ -------------------------- ---------------
Raymond Mol . . 1 40 Nil
------------ -------------------------- ---------------
Grayson Hand. . 1 1 Nil
------------ -------------------------- ---------------
Greg Burnett. . 1 1 Nil
------------ -------------------------- ---------------
Kevin Wielgus . 1 1 Nil
--------------- ------------ -------------------------- ---------------
</TABLE>
ANNUAL REPORT AND FINANCIAL STATEMENTS
Attention is directed to the financial statements contained in the Company's
Annual Report for the year ended February 29, 2000. A copy of the Annual Report
has been sent, or is concurrently being sent, to all shareholders of record as
of June 23, 2000.
AVAILABILITY OF FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED FEBRUARY
29, 2000 AND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE
FINANCIAL STATEMENTS AND THE FINANCIAL STATEMENT SCHEDULES, BUT WITHOUT
EXHIBITS, WILL BE PROVIDED WITHOUT CHARGE TO ANY SHAREHOLDER OR BENEFICIAL OWNER
OF THE COMPANY'S COMMON SHARES UPON WRITTEN REQUEST TO KEVIN WIELGUS, SECRETARY
OF THE COMPANY, AT SUITE 1000, 120 NORTH LASALLE STREET, CHICAGO, ILLINOIS
60602.
OTHER MATTERS TO COME BEFORE THE MEETING
In addition to the matters to be voted upon by the shareholders of the Company's
Common Shares, the Company will receive and consider both the Report of the
Directors to the Shareholders, and the financial statements of the Company for
the years ended February 29, 2000, February 28, 1999 and February 28, 1998,
together with the auditors report thereon. These matters do not require
shareholder approval, and therefore shareholders will not be required to vote
upon these matters.
Except for the above-noted matters, the Board of Directors does not intend to
bring any other matters before the meeting and does not know of any matters
which will be brought before the meeting by others. If other matters properly
come before the meeting, it is the intention of the persons named in the
solicited Proxy to vote the Proxy on such matters in accordance with their good
judgment.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, SHAREHOLDERS ARE
URGED TO VOTE, DATE, SIGN AND RETURN THE ENCLOSED PROXY.
By Order of the Board of Directors
/s/ Dennis Sinclair
Dennis Sinclair
President and CEO
DATED: JUNE 26, 2000
<PAGE>
PROXY PROXY
VIRTUALSELLERS.COM, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON AUGUST 4, 2000
The undersigned hereby appoints Dr. Dennis Sinclair and Mel Baillie or either of
them, the attorneys and proxies of the undersigned, with full power of
substitution, for and in the name of the undersigned to represent and vote the
shares of the undersigned at the Annual Meeting of Shareholders of the Company
be held at Suite 800 - 885 West Georgia Street, Vancouver, British Columbia,
Canada V6C 3H1 on Friday, August 4, 2000 at 10:00 a.m. (Vancouver time) and at
any adjournment or adjournments thereof.
UNLESS OTHERWISE MARKED, THIS PROXY WILL BE VOTED "FOR" PROPOSAL 1, "FOR" THE
NOMINEES LISTED IN PROPOSAL 2, "FOR" PROPOSAL 3, AND "FOR" PROPOSAL 4.
THE UNDERSIGNED SHAREHOLDER HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL
MEETING OF SHAREHOLDERS AND PROXY STATEMENT RELATING TO THE ANNUAL MEETING AND
HEREBY REVOKES ANY PROXY OR PROXIES HERETOFORE GIVEN. THE UNDERSIGNED
SHAREHOLDER MAY REVOKE THIS PROXY AT ANY TIME BEFORE IT IS VOTED BY FILING WITH
THE SECRETARY OF THE CORPORATION A WRITTEN NOTICE OF REVOCATION OR A DULY
EXECUTED PROXY BEARING A LATER DATE, OR BY ATTENDING THE ANNUAL MEETING AND
VOTING IN PERSON.
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. THE PROXY SHOULD BE RETURNED TO MONTREAL TRUST COMPANY OF CANADA, 4TH
FLOOR, 510 BURRARD STREET, VANCOUVER, BRITISH COLUMBIA, CANADA, V6C 3B9
PLEASE MARK VOTE IN BOX IN THE FOLLOWING MANNER USING DARK
INK ONLY - [X]
For Against Abstain
Proposal 1: To set the number
of Directors at five (5) [ ] [ ] [ ]
For Withhold For all Except
Proposal 2: To elect the four (4)
nominees below as directors to serve on the [ ] [ ] [ ]
Board of Directors, each for a one (1)
year term and until their respective
successors are elected and qualified. INSTRUCTION: TO
WITHHOLD AUTHORITY
TO VOTE FOR ANY
INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S
NAME(S) ON THE
SPACE PROVIDED
BELOW:
--------------------
Nominees: Dr. Dennis Sinclair, Mel Baillie,
Grayson Hand and Raymond Mol
For Against Abstain
Proposal 3: To approve the Company's
2000 Stock Option Plan [ ] [ ] [ ]
For Against Abstain
Proposal 4: To appoint KPMG LLP as
independent auditors of the Corporation [ ] [ ] [ ]
If you plan to attend the Annual Meeting in person, please indicate the number
of shareholder(s) attending in the following space: ________________.
ALL SHARES PRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS MADE IN THE ABOVE BALLOT UNLESS REVOKED. IN THEIR DISCRETION,
THE PERSON'S NAMED ABOVE ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING.
Dated: Signature:
------------------------------- -------------------------
Please sign exactly as your name appears hereon. Joint owners should each sign.
When signing as attorney, executor, trustee, administrator or guardian, please
give full title as such if a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
<PAGE>
VIRTUALSELLERS.COM, INC.
2000 STOCK OPTION PLAN
This 2000 Stock Option Plan (the "Plan") provides for the grant of options
to acquire common shares (the "Common Shares") in the capital of
Virtualsellers.com, Inc., a corporation formed under the federal laws of Canada
(the "Corporation"). Stock options granted under this Plan that qualify under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), are
referred to in this Plan as "Incentive Stock Options". Incentive Stock Options
and stock options that do not qualify under Section 422 of the Code
("Non-Qualified Stock Options") granted under this Plan are referred to
collectively as "Options".
1. PURPOSE
1.1 The purpose of this Plan is to retain the services of valued key
employees and consultants of the Corporation and such other persons as the Plan
Administrator shall select in accordance with Section 3 below, and to encourage
such persons to acquire a greater proprietary interest in the Corporation,
thereby strengthening their incentive to achieve the objectives of the
shareholders of the Corporation, and to serve as an aid and inducement in the
hiring of new employees and to provide an equity incentive to consultants and
other persons selected by the Plan Administrator.
1.2 This Plan shall at all times be subject to all legal requirements
relating to the administration of stock option plans, if any, under applicable
corporate laws, applicable United States federal and state securities laws, the
Code, the rules of any applicable stock exchange or stock quotation system, and
the rules of any foreign jurisdiction applicable to Options granted to residents
therein (collectively, the "Applicable Laws").
2. ADMINISTRATION
2.1 This Plan shall be administered initially by the Board of Directors of
the Corporation (the "Board"), except that the Board may, in its discretion,
establish a committee composed of two (2) or more members of the Board or two
(2) or more other persons to administer the Plan, which committee (the
"Committee") may be an executive, compensation or other committee, including a
separate committee especially created for this purpose. The Board or, if
applicable, the Committee is referred to herein as the "Plan Administrator".
2.2 If and so long as the Common Stock is registered under Section 12(b) or
12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
the Board shall consider in selecting the Plan Administrator and the membership
of any Committee, with respect to any persons subject or likely to become
subject to Section 16 of the Exchange Act, the provisions regarding (a) "outside
directors" as contemplated by Section 162(m) of the Code, and (b) "Non-Employee
Directors" as contemplated by Rule 16b-3 under the Exchange Act.
2.3 The Committee shall have the powers and authority vested in the Board
hereunder (including the power and authority to interpret any provision of the
Plan or of any Option). The members of any such Committee shall serve at the
pleasure of the Board. A majority of the members of the Committee shall
<PAGE>
constitute a quorum, and all actions of the Committee shall be taken by a
majority of the members present. Any action may be taken by a written
instrument signed by all of the members of the Committee and any action so taken
shall be fully effective as if it had been taken at a meeting.
2.4 Subject to the provisions of this Plan and any Applicable Laws, and with
a view to effecting its purpose, the Plan Administrator shall have sole
authority, in its absolute discretion, to:
(a) construe and interpret this Plan;
(b) define the terms used in the Plan;
(c) prescribe, amend and rescind the rules and regulations relating to this
Plan;
(d) correct any defect, supply any omission or reconcile any inconsistency
in this Plan;
(e) grant Options under this Plan;
(f) determine the individuals to whom Options shall be granted under this
Plan and whether the Option is an Incentive Stock Option or a Non-Qualified
Stock Option;
(g) determine the time or times at which Options shall be granted under this
Plan;
(h) determine the number of Common Shares subject to each Option, the
exercise price of each Option, the duration of each Option and the times at
which each Option shall become exercisable;
(i) determine all other terms and conditions of the Options; and
(j) make all other determinations and interpretations necessary and
advisable for the administration of the Plan.
2.5 All decisions, determinations and interpretations made by the Plan
Administrator shall be binding and conclusive on all participants in the Plan
and on their legal representatives, heirs and beneficiaries.
3. ELIGIBILITY
3.1 Incentive Stock Options may be granted to any individual who, at the
time the Option is granted, is an employee of the Corporation or any Related
Corporation (as defined below) ("Employees").
3.2 Non-Qualified Stock Options may be granted to Employees and to such
other persons, including directors and officers of the Corporation or any
Related Corporation, who are not Employees as the Plan Administrator shall
select, subject to any Applicable Laws.
<PAGE>
3.3 Options may be granted in substitution for outstanding Options of
another corporation in connection with the merger, consolidation, acquisition of
property or stock or other reorganization between such other corporation and the
Corporation or any subsidiary of the Corporation. Options also may be granted
in exchange for outstanding Options.
3.4 Any person to whom an Option is granted under this Plan is referred to
as an "Optionee". Any person who is the owner of an Option is referred to as a
"Holder".
3.5 As used in this Plan, the term "Related Corporation" shall mean any
corporation (other than the Corporation) that is a "Parent Corporation" of the
Corporation or "Subsidiary Corporation" of the Corporation, as those terms are
defined in Sections 424(e) and 424(f), respectively, of the Code (or any
successor provisions) and the regulations thereunder (as amended from time to
time).
4. STOCK
4.1 The Plan Administrator is authorized to grant Options to acquire up to a
total of 5,000,000 Common Shares. The number of Common Shares with respect to
which Options may be granted hereunder is subject to adjustment as set forth in
Section 5.1(m) hereof. In the event that any outstanding Option expires or is
terminated for any reason, the Common Shares allocable to the unexercised
portion of such Option may again be subject to an Option granted to the same
Optionee or to a different person eligible under Section 3 of this Plan;
provided however, that any cancelled Options will be counted against the maximum
number of shares with respect to which Options may be granted to any particular
person as set forth in Section 3 hereof.
5. TERMS AND CONDITIONS OF OPTIONS
5.1 Each Option granted under this Plan shall be evidenced by a written
agreement approved by the Plan Administrator (each, an "Agreement"). Agreements
may contain such provisions, not inconsistent with this Plan or any Applicable
Laws, as the Plan Administrator in its discretion may deem advisable. All
Options also shall comply with the following requirements:
(a) Number of Shares and Type of Option
Each Agreement shall state the number of Common Shares to which it pertains and
whether the Option is intended to be an Incentive Stock Option or a
Non-Qualified Stock Option; provided that:
(i) the number of Common Shares that may be reserved pursuant to the
exercise of Options granted to any person shall not exceed 5% of the issued and
outstanding Common Shares of the Corporation;
(ii) in the absence of action to the contrary by the Plan Administrator in
connection with the grant of an Option, all Options shall be Non-Qualified Stock
Options;
<PAGE>
(iii) the aggregate fair market value (determined at the Date of Grant, as
defined below) of the Common Shares with respect to which Incentive Stock
Options are exercisable for the first time by the Optionee during any calendar
year (granted under this Plan and all other Incentive Stock Option plans of the
Corporation, a Related Corporation or a predecessor corporation) shall not
exceed U.S.$100,000, or such other limit as may be prescribed by the Code as it
may be amended from time to time (the "Annual Limit"); and
(iv) any portion of an Option which exceeds the Annual Limit shall not be
void but rather shall be a Non-Qualified Stock Option.
(b) Date of Grant
Each Agreement shall state the date the Plan Administrator has deemed to be the
effective date of the Option for purposes of this Plan (the "Date of Grant").
(c) Option Price
Each Agreement shall state the price per Common Share at which it is
exercisable. The Plan Administrator shall act in good faith to establish the
exercise price in accordance with Applicable Laws; provided that:
(i) the per share exercise price for an Incentive Stock Option or any Option
granted to a "covered employee" as such term is defined for purposes of Section
162(m) of the Code shall not be less than the fair market value per Common Share
at the Date of Grant as determined by the Plan Administrator in good faith;
(ii) with respect to Incentive Stock Options granted to greater-than-ten
percent (>10%) shareholders of the Corporation (as determined with reference to
Section 424(d) of the Code), the exercise price per share shall not be less than
one hundred ten percent (110%) of the fair market value per Common Share at the
Date of Grant as determined by the Plan Administrator in good faith; and
(iii) Options granted in substitution for outstanding options of another
corporation in connection with the merger, consolidation, acquisition of
property or stock or other reorganization involving such other corporation and
the Corporation or any subsidiary of the Corporation may be granted with an
exercise price equal to the exercise price for the substituted option of the
other corporation, subject to any adjustment consistent with the terms of the
transaction pursuant to which the substitution is to occur.
(d) Duration of Options
At the time of the grant of the Option, the Plan Administrator shall designate,
subject to Section 5.1(g) below, the expiration date of the Option, which date
<PAGE>
shall not be later than ten (10) years from the Date of Grant; provided, that
the expiration date of any Incentive Stock Option granted to a greater-than-ten
percent (>10%) shareholder of the Corporation (as determined with reference to
Section 424(d) of the Code) shall not be later than five (5) years from the Date
of Grant. In the absence of action to the contrary by the Plan Administrator in
connection with the grant of a particular Option, and except in the case of
Incentive Stock Options as described above, all Options granted under this
Section 5 shall expire ten (10) years from the Date of Grant.
(e) Vesting Schedule
No Option shall be exercisable until it has vested. The vesting schedule for
each Option shall be specified by the Plan Administrator at the time of grant of
the Option prior to the provision of services with respect to which such Option
is granted; provided, that if no vesting schedule is specified at the time of
grant, the Option shall vest according to the following schedule:
NUMBER OF YEARS PERCENTAGE OF TOTAL
FOLLOWING DATE OF GRANT OPTION VESTED
----------------------- -------------
One 25%
Two 50%
Three 75%
Four 100%
The Plan Administrator may specify a vesting schedule for all or any portion of
an Option based on the achievement of performance objectives established in
advance of the commencement by the Optionee of services related to the
achievement of the performance objectives. Performance objectives shall be
expressed in terms of objective criteria, including but not limited to, one or
more of the following: return on equity, return on assets, share price, market
share, sales, earnings per share, costs, net earnings, net worth, inventories,
cash and cash equivalents, gross margin or the Corporation's performance
relative to its internal business plan. Performance objectives may be in
respect of the performance of the Corporation as a whole (whether on a
consolidated or unconsolidated basis), a Related Corporation, or a subdivision,
operating unit, product or product line of either of the foregoing. Performance
objectives may be absolute or relative and may be expressed in terms of a
progression or a range. An Option that is exercisable (in full or in part) upon
the achievement of one or more performance objectives may be exercised only
following written notice to the Optionee and the Corporation by the Plan
Administrator that the performance objective has been achieved.
<PAGE>
(f) Acceleration of Vesting
The vesting of one or more outstanding Options may be accelerated by the Plan
Administrator at such times and in such amounts as it shall determine in its
sole discretion.
(g) Term of Option
(i) Vested Options shall terminate, to the extent not previously exercised,
upon the occurrence of the first of the following events:
A. the expiration of the Option, as designated by the Plan Administrator in
accordance with Section 5.1(d) above;
B. the date of an Optionee's termination of employment or contractual
relationship with the Corporation or any Related Corporation for cause (as
determined by the Plan Administrator, acting reasonably);
C. the expiration of three (3) months from the date of an Optionee's
termination of employment or contractual relationship with the Corporation or
any Related Corporation for any reason whatsoever other than cause, death or
Disability (as defined below) unless, in the case of a Non-Qualified Stock
Option, the exercise period is extended by the Plan Administrator until a date
not later than the expiration date of the Option; or
D. the expiration of one year (1) from termination of an Optionee's
employment or contractual relationship by reason of death or Disability (as
defined below) unless, in the case of a Non-Qualified Stock Option, the exercise
period is extended by the Plan Administrator until a date not later than the
expiration date of the Option.
(ii) Notwithstanding Section 5.1(g)(i) above, any vested Options which have
been granted to the Optionee in the Optionee's capacity as a director of the
Corporation or any Related Corporation shall terminate upon the occurrence of
the first of the following events:
A. the event specified in Section 5.1(g)(i)A above;
B. the event specified in Section 5.1(g)(i)D above; and
C. the expiration of three (3) months from the date the Optionee ceases to
serve as a director of the Corporation or Related Corporation, as the case may
be.
<PAGE>
(iii) Upon the death of an Optionee, any vested Options held by the Optionee
shall be exercisable only by the person or persons to whom such Optionee's
rights under such Option shall pass by the Optionee's will or by the laws of
descent and distribution of the Optionee's domicile at the time of death and
only until such Options terminate as provided above.
(iv) For purposes of the Plan, unless otherwise defined in the Agreement,
"Disability" shall mean medically determinable physical or mental impairment
which has lasted or can be expected to last for a continuous period of not less
than twelve (12) months or that can be expected to result in death. The Plan
Administrator shall determine whether an Optionee has incurred a Disability on
the basis of medical evidence acceptable to the Plan Administrator. Upon making
a determination of Disability, the Plan Administrator shall, for purposes of the
Plan, determine the date of an Optionee's termination of employment or
contractual relationship.
(v) Unless accelerated in accordance with Section 5.1(f) above, unvested
Options shall terminate immediately upon termination of employment of the
Optionee by the Corporation for any reason whatsoever, including death or
Disability.
(vi) For purposes of this Plan, transfer of employment between or among the
Corporation and/or any Related Corporation shall not be deemed to constitute a
termination of employment with the Corporation or any Related Corporation.
Employment shall be deemed to continue while the Optionee is on military leave,
sick leave or other bona fide leave of absence (as determined by the Plan
Administrator). The foregoing notwithstanding, employment shall not be deemed
to continue beyond the first ninety (90) days of such leave, unless the
Optionee's re-employment rights are guaranteed by statute or by contract.
(h) Exercise of Options
(i) Options shall be exercisable, in full or in part, at any time after
vesting, until termination. If less than all of the shares included in the
vested portion of any Option are purchased, the remainder may be purchased at
any subsequent time prior to the expiration of the Option term. Only whole
shares may be issued pursuant to an Option, and to the extent that an Option
covers less than one (1) share, it is unexercisable.
(ii) Options or portions thereof may be exercised by giving written notice
to the Corporation, which notice shall specify the number of shares to be
purchased, and be accompanied by payment in the amount of the aggregate exercise
price for the Common Shares so purchased, which payment shall be in the form
specified in Section 5.1(i) below. The Corporation shall not be obligated to
issue, transfer or deliver a certificate representing Common Shares to the
Holder of any Option, until provision has been made by the Holder, to the
<PAGE>
satisfaction of the Corporation, for the payment of the aggregate exercise price
for all shares for which the Option shall have been exercised and for
satisfaction of any tax withholding obligations associated with such exercise.
During the lifetime of an Optionee, Options are exercisable only by the
Optionee.
(i) Payment upon Exercise of Option
Upon the exercise of any Option, the aggregate exercise price shall be paid to
the Corporation in cash or by certified or cashier's check. In addition, if
pre-approved in writing by the Plan Administrator who may arbitrarily withhold
consent, the Holder may pay for all or any portion of the aggregate exercise
price by complying with one or more of the following alternatives:
(i) by delivering to the Corporation Common Shares previously held by such
Holder, or by the Corporation withholding Common Shares otherwise deliverable
pursuant to exercise of the Option, which Common Shares received or withheld
shall have a fair market value at the date of exercise (as determined by the
Plan Administrator) equal to the aggregate exercise price to be paid by the
Optionee upon such exercise;
(ii) by delivering a properly executed exercise notice together with
irrevocable instructions to a broker promptly to sell or margin a sufficient
portion of the shares and deliver directly to the Corporation the amount of sale
or margin loan proceeds to pay the exercise price; or
(iii) by complying with any other payment mechanism approved by the Plan
Administrator at the time of exercise.
(j) No Rights as a Shareholder
A Holder shall have no rights as a shareholder with respect to any shares
covered by an Option until such Holder becomes a record holder of such shares,
irrespective of whether such Holder has given notice of exercise. Subject to
the provisions of Section 5.1(m) hereof, no rights shall accrue to a Holder and
no adjustments shall be made on account of dividends (ordinary or extraordinary,
whether in cash, securities or other property) or distributions or other rights
declared on, or created in, the Common Shares for which the record date is prior
to the date the Holder becomes a record holder of the Common Shares covered by
the Option, irrespective of whether such Holder has given notice of exercise.
(k) Non-transferability of Options
Options granted under this Plan and the rights and privileges conferred by this
Plan may not be transferred, assigned, pledged or hypothecated in any manner
(whether by operation of law or otherwise) other than by will, by applicable
laws of descent and distribution, and shall not be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign, pledge,
<PAGE>
hypothecate or otherwise dispose of any Option or of any right or privilege
conferred by this Plan contrary to the provisions hereof, or upon the sale, levy
or any attachment or similar process upon the rights and privileges conferred by
this Plan, such Option shall thereupon terminate and become null and void.
(l) Securities Regulation and Tax Withholding
(i) Shares shall not be issued with respect to an Option unless the exercise
of such Option and the issuance and delivery of such shares shall comply with
all Applicable Laws, and such issuance shall be further subject to the approval
of counsel for the Corporation with respect to such compliance, including the
availability of an exemption from prospectus and registration requirements for
the issuance and sale of such shares. The inability of the Corporation to
obtain from any regulatory body the authority deemed by the Corporation to be
necessary for the lawful issuance and sale of any shares under this Plan, or the
unavailability of an exemption from prospectus and registration requirements for
the issuance and sale of any shares under this Plan, shall relieve the
Corporation of any liability with respect to the non-issuance or sale of such
shares.
(ii) As a condition to the exercise of an Option, the Plan Administrator may
require the Holder to represent and warrant in writing at the time of such
exercise that the shares are being purchased only for investment and without any
then-present intention to sell or distribute such shares. If necessary under
Applicable Laws, the Plan Administrator may cause a stop-transfer order against
such shares to be placed on the stock books and records of the Corporation, and
a legend indicating that the stock may not be pledged, sold or otherwise
transferred unless an opinion of counsel is provided stating that such transfer
is not in violation of any Applicable Laws, may be stamped on the certificates
representing such shares in order to assure an exemption from registration. The
Plan Administrator also may require such other documentation as may from time to
time be necessary to comply with applicable securities laws. THE CORPORATION
HAS NO OBLIGATION TO UNDERTAKE REGISTRATION OF OPTIONS OR THE COMMON SHARES
ISSUABLE UPON THE EXERCISE OF OPTIONS.
(iii) The Holder shall pay to the Corporation by certified or cashier's
check, promptly upon exercise of an Option or, if later, the date that the
amount of such obligations becomes determinable, all applicable federal, state,
local and foreign withholding taxes that the Plan Administrator, in its
discretion, determines to result upon exercise of an Option or from a transfer
or other disposition of Common Shares acquired upon exercise of an Option or
otherwise related to an Option or Common Shares acquired in connection with an
Option. Upon approval of the Plan Administrator, a Holder may satisfy such
obligation by complying with one or more of the following alternatives selected
by the Plan Administrator:
<PAGE>
A. by delivering to the Corporation Common Shares previously held by such
Holder or by the Corporation withholding Common Shares otherwise deliverable
pursuant to the exercise of the Option, which Common Shares received or withheld
shall have a fair market value at the date of exercise (as determined by the
Plan Administrator) equal to any withholding tax obligations arising as a result
of such exercise, transfer or other disposition;
B. by executing appropriate loan documents approved by the Plan
Administrator by which the Holder borrows funds from the Corporation to pay any
withholding taxes due under this Section 5.1(l)(iii), with such repayment terms
as the Plan Administrator shall select; or
C. by complying with any other payment mechanism approved by the Plan
Administrator from time to time.
(iv) The issuance, transfer or delivery of certificates representing Common
Shares pursuant to the exercise of Options may be delayed, at the discretion of
the Plan Administrator, until the Plan Administrator is satisfied that the
applicable requirements of all Applicable Laws and the withholding provisions of
the Code have been met and that the Holder has paid or otherwise satisfied any
withholding tax obligation as described in Section 5.1(l)(iii) above.
(m) Adjustments Upon Changes In Capitalization
(i) The aggregate number and class of shares for which Options may be
granted under this Plan, the number and class of shares covered by each
outstanding Option, and the exercise price per share thereof (but not the total
price), and each such Option, shall all be proportionately adjusted for any
increase or decrease in the number of issued Common Shares of the Corporation
resulting from:
A. a subdivision or consolidation of shares or any like capital adjustment,
or
B. the issuance of any 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, or securities exchangeable for or convertible into Common
Shares, to holders of Common Shares pursuant to their exercise of options to
receive dividends in the form of Common Shares, or securities convertible into
Common Shares, in lieu of dividends paid in the ordinary course on the Common
Shares).
<PAGE>
(ii) Except as provided in Section 5.1(m)(iii) hereof, upon a merger (other
than a merger of the Corporation in which the holders of Common Shares
immediately prior to the merger have the same proportionate ownership of common
shares in the surviving corporation immediately after the merger),
consolidation, acquisition of property or stock, separation, reorganization
(other than a mere re-incorporation or the creation of a holding Corporation) or
liquidation of the Corporation, as a result of which the shareholders of the
Corporation, receive cash, shares or other property in exchange for or in
connection with their Common Shares, any Option granted hereunder shall
terminate, but the Holder shall have the right to exercise such Holder's Option
immediately prior to any such merger, consolidation, acquisition of property or
shares, separation, reorganization or liquidation, and to be treated as a
shareholder of record for the purposes thereof, to the extent the vesting
requirements set forth in the Option agreement have been satisfied.
(iii) If the shareholders of the Corporation receive shares in the capital
of another corporation ("Exchange Shares") in exchange for their Common Shares
in any transaction involving a merger (other than a merger of the Corporation in
which the holders of Common Shares immediately prior to the merger have the same
proportionate ownership of Common Shares in the surviving corporation
immediately after the merger), consolidation, acquisition of property or shares,
separation or reorganization (other than a mere re-incorporation or the creation
of a holding Corporation), all Options granted hereunder shall be converted into
options to purchase Exchange Shares unless the Corporation and the corporation
issuing the Exchange Shares, in their sole discretion, determine that any or all
such Options granted hereunder shall not be converted into options to purchase
Exchange Shares but instead shall terminate in accordance with, and subject to
the Holder's right to exercise the Holder's Options pursuant to, the provisions
of Section 5.1(m)(ii). The amount and price of converted options shall be
determined by adjusting the amount and price of the Options granted hereunder in
the same proportion as used for determining the number of Exchange Shares the
holders of the Common Shares receive in such merger, consolidation, acquisition
or property or stock, separation or reorganization. Unless accelerated by the
Board, the vesting schedule set forth in the option agreement shall continue to
apply to the options granted for the Exchange Shares.
(iv) In the event of any adjustment in the number of Common Shares covered
by any Option, any fractional shares resulting from such adjustment shall be
disregarded and each such Option shall cover only the number of full shares
resulting from such adjustment.
(v) All adjustments pursuant to Section 5.1(m) shall be made by the Plan
Administrator, and its determination as to what adjustments shall be made, and
the extent thereof, shall be final, binding and conclusive.
<PAGE>
(vi) The grant of an Option shall not affect in any way the right or power
of the Corporation to make adjustments, reclassifications, reorganizations or
changes of its capital or business structure, to merge, consolidate or dissolve,
to liquidate or to sell or transfer all or any part of its business or assets.
6. EFFECTIVE DATE; AMENDMENT; SHAREHOLDER APPROVAL
6.1 Options may be granted by the Plan Administrator from time to time on or
after the date on which this Plan is adopted by the Board (the "Effective
Date").
6.2 Unless sooner terminated by the Board, this Plan shall terminate on the
tenth anniversary of the Effective Date. No Option may be granted after such
termination or during any suspension of this Plan.
6.3 Any Options granted by the Plan Administrator prior to the ratification
of this Plan by the shareholders of the Corporation shall be granted subject to
approval of this Plan by the holders of a majority of the Corporation's
outstanding voting shares, voting either in person or by proxy at a duly held
shareholders' meeting within twelve (12) months before or after the Effective
Date. If such shareholder approval is sought and not obtained, all Options
granted prior thereto and thereafter shall be considered Non-Qualified Stock
Options and any Options granted to Covered Employees will not be eligible for
the exclusion set forth in Section 162(m) of the Code with respect to the
deductibility by the Corporation of certain compensation.
7. NO OBLIGATIONS TO EXERCISE OPTION
7.1 The grant of an Option shall impose no obligation upon the Optionee to
exercise such Option.
8. NO RIGHT TO OPTIONS OR TO EMPLOYMENT
8.1 Whether or not any Options are to be granted under this Plan shall be
exclusively within the discretion of the Plan Administrator, and nothing
contained in this Plan shall be construed as giving any person any right to
participate under this Plan. The grant of an Option shall in no way constitute
any form of agreement or understanding binding on the Corporation or any Related
Corporation, express or implied, that the Corporation or any Related Corporation
will employ or contract with an Optionee for any length of time, nor shall it
interfere in any way with the Corporation's or, where applicable, a Related
Corporation's right to terminate Optionee's employment at any time, which right
is hereby reserved.
9. APPLICATION OF FUNDS
9.1 The proceeds received by the Corporation from the sale of Common Shares
issued upon the exercise of Options shall be used for general corporate
purposes, unless otherwise directed by the Board.
<PAGE>
10. INDEMNIFICATION OF PLAN ADMINISTRATOR
10.1 In addition to all other rights of indemnification they may have as
members of the Board, members of the Plan Administrator shall be indemnified by
the Corporation for all reasonable expenses and liabilities of any type or
nature, including attorneys' fees, incurred in connection with any action, suit
or proceeding to which they or any of them are a party by reason of, or in
connection with, this Plan or any Option granted under this Plan, and against
all amounts paid by them in settlement thereof (provided that such settlement is
approved by independent legal counsel selected by the Corporation), except to
the extent that such expenses relate to matters for which it is adjudged that
such Plan Administrator member is liable for willful misconduct; provided, that
within fifteen (15) days after the institution of any such action, suit or
proceeding, the Plan Administrator member involved therein shall, in writing,
notify the Corporation of such action, suit or proceeding, so that the
Corporation may have the opportunity to make appropriate arrangements to
prosecute or defend the same.
11. AMENDMENT OF PLAN
11.1 The Plan Administrator may, at any time, modify, amend or terminate
this Plan or modify or amend Options granted under this Plan, including, without
limitation, such modifications or amendments as are necessary to maintain
compliance with the Applicable Laws. The Plan Administrator may condition the
effectiveness of any such amendment on the receipt of shareholder approval at
such time and in such manner as the Plan Administrator may consider necessary
for the Corporation to comply with or to avail the Corporation and/or the
Optionees of the benefits of any securities, tax, market listing or other
administrative or regulatory requirements.
Effective Date: January 24, 2000
